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Markets Reacts to Possible Debt Deal; Congress to Vote on Debt Deal; Global Reaction to Debt Deal; Candidates Reach to Debt Deal; Tea Partiers React to Debt Deal; Minnesota School District Bans Teachers from Talking About Homosexuality; Uprisings: Region in Revolt; Debt Worries in Orange, New Jersey

Aired August 01, 2011 - 09:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

KYRA PHILLIPS, CNN ANCHOR: It's 9:00 a.m. on the East Coast, 6:00 a.m. out West. I'm Kyra Phillips. Here's some of the stories that have us talking this morning.

Marathon talks lead to a new debt deal. At least in theory. The president backs it. So do leaders of both parties. But still, no reason to celebrate just yet.

In Syria, a violent crackdown on anti-government protests. More than 70 people killed and counting.

And new this morning, a big change to health coverage. The federal government will require insurers to provide birth control without co- payments.

Now in just a few hours we could see the beginning of the end of the debt crisis. It's been the issue in Washington for weeks. And you're probably tired of the finger-pointing and doomsday predictions. But today, that could all come to an end if the House and Senate approve a compromised plan.

The deal identifies about $1 trillion in spending cuts over 10 years and raises the debt ceiling by about the same amount. Then a bipartisan committee must find ways to trim another trillion and change from the deficit later this year. A so-called deficit posse.

And both chambers of Congress must vote on adding a balanced budget amendment to the Constitution. The president and House speaker admit the plan isn't perfect, but it may be just good enough to avoid a disastrous default.

Well, we're covering all the angles of this story for you. Ali Velshi in New York, Athena Jones, Washington. At the White House Brianna Keilar and Zain Verjee watching the international reaction from London.

Ali, let's go ahead and start with you. U.S. markets lost about 4 percent of value last week because of all this uncertainty.

ALI VELSHI, ANCHOR, CNN'S AMERICAN MORNING: Yes.

PHILLIPS: So what do you expect to see with the Opening Bell? I guess it's less than 30 minutes from now.

VELSHI: It's going to be strong. It's going to be strong. The belief is that there is a deal. We had Strong Asian markets overnight. Things started to weaken a little bit earlier today in Europe and our futures were much stronger earlier than they are now.

They've -- they tempered down a little bit for two reasons. One is this talk that it's not done until it's done and some people saying they're not going to support it. But generally the betting is that this deal is going to get done. Now the realization is setting in that this isn't euphoria.

We weren't supposed to have this debate ever. This was not supposed to happen. So we weren't supposed to lose that 4 percent last week. So some sense that well, we're not quite sure how this all benefits the economy. What we know is we dodged a bullet and that we should be happy about it.

But we're not quite sure what the effects are. So I think what you're seeing is analysts and investors poring through the details of this deal, trying to make sense of it. I've seen some analyst reports coming up, bottom line for your 401(k) and your investments today, the markets are going to open higher. For those people who didn't sell out on Friday and put their faith on the fact that something was going to get done, you got rewarded.

PHILLIPS: All right. Ali, let's turn it over to Athena now.

You know, the agreement between the president and congressional leaders means nothing if the rank-and-file members of Congress don't approve it. So what do you think? What's that vote going to look like?

ATHENA JONES, CNN CORRESPONDENT: Well, that's anybody's guess but we're certainly going to watch the drama continue to unfold here on the Hill.

The hope is that both the Senate and the House will vote on this bill today. We just don't know what those votes will bring. In a couple of more hours, leaders on both sides of the aisle and in both chambers will be meeting with their caucuses, talking about this deal. You can expect there to be some explaining, some cajoling. Everyone realizes what's at stake and the fact that we're really down to the wire. Tomorrow is the deadline.

As far as the opponents, it's interesting. People on both sides, liberals and conservatives, who have some problem with his this deal, which President Obama and Speaker Boehner both said it's not the perfect deal.

On the Democratic side of the aisle, you have people who want to see tax increases included in this measure. And they aren't being included so they're disappointed with that. Then you have conservatives -- Republican conservatives, Tea Party members, in particular on the House side, who don't want to see the debt ceiling raised at all. And so it will be interesting to see if they're able to cobble together enough votes from each side. It's going to take people from both parties to come together on this -- Kyra.

PHILLIPS: All right. Athena.

And, Brianna, you know, this compromise plan, a win or a loss for the president? What's the reaction there?

BRIANNA KEILAR, CNN WHITE HOUSE CORRESPONDENT: Well, Kyra, certainly he gave a lot. And I think the White House understands that. But at the same time, there's still a lot of this deal that is to be determined, because while the debt ceiling will be increased here in the short term, this committee, this bipartisan committee is going to will determine exactly what, perhaps, comprehensive deficit reduction looks like.

And we don't know the endgame on that. So I think in several months we'll have a better sense of really who the win -- who is the winner and who is the loser.

But the other thing is, I think it was obvious that Democrats in the White House lost certainly a lot of leverage when Republicans won over the House in November. And this is sort of the obvious result from that.

Another way to look at this in the game of politics as well, Kyra, is that President Obama has been playing very much to independents, talking about compromise. So, certainly with a lot of these spending cuts, he's losing with his base for sure. But in his play for independence, going into the November 2012 election, this is something that he has been trying to do as well, Kyra.

PHILLIPS: Brianna, thanks.

International reaction, of course, a lot of that going down right now in the debt deal. Zain Verjee has been monitoring that.

You know, Zain, we were losing a lot of street cred overseas when all this bickering was going on -- still going on.

ZAIN VERJEE, CNN INTERNATIONAL ANCHOR: Major street cred, Kyra.

Let's take a look at the headlines immediately. This is "The Independent." It says any reduction in America's credit rating will affect every person on the planet. It goes on to say, "U.S. government debt has become so substantial that there is now the small risk it will one day become unsustainable. A debt of these proportions threatens to overwhelm the economy's ability to service the debt. It's also overwhelming America's political system."

Kyra, check out the "International Herald Tribune." It says, "A tilt to the right leaves Obama with a party rift." If says, "However the debt limit showdown ends, one thing is clear. Under pressure from congressional Republicans, President Barack Obama has moved rightward on budget policy, deepening a rift within his party, heading into the next election."

And the general view from the world, too, Kyra, is that, yes, the U.S. has avoided a market meltdown with this current situation but they haven't got a solution to the long-term debt problem. And that's what they're worried about still, too.

PHILLIPS: Yes.

And back here in Washington, Peter Hamby, candidates on the campaign trail talking about the debt deal as well.

PETER HAMBY, CNN POLITICAL REPORTER: Yes, that's right, Kyra. The candidates, though, have kind of been all over the place on this and they've been reluctant to weigh in on the specific details of the framework, as they kind of wait to see how the politics of this deal shakes out because they're appealing to the conservative base during the Republican nomination fight.

But one candidate who has been taking a hard line against raising the debt ceiling from day one is Michele Bachmann. And she also happens to be one of the leading candidates who actually has an actual say in the vote.

Michele Bachmann will leave the campaign trail in Iowa to come back and vote against this framework. And she put out a statement. And here's what she had to say.

"Throughout this process, the president has failed to lead and failed to provide a plan. The deal he announced spends too much and doesn't cut enough. This isn't the deal the American people preferred either, Mr. President. Someone has to say no. I will."

That's Congresswoman Michele Bachmann, who is making an appeal to the Tea Party, grassroots conservatives, as she seeks the Republican nomination.

One candidate we haven't heard from is the Republican frontrunner, Mitt Romney. He's kind of evaded taking a position throughout this process. He came out in support of the cut, cap and balance plan that was voted on in the House. But obviously, that went nowhere.

The other candidates are taking shots at Romney for not taking a position on this, including former Utah governor Jon Huntsman who is still in a low single-digit in polling but is trying to position himself as an alternative to Romney.

Here's what he had to say. "A debt crisis like this is a time for leadership, not a time for waiting to see which way the political winds blow."

He did not name Romney in that statement, but the implication is clear who he is referring to -- Kyra.

PHILLIPS: Peter Hamby, thanks.

And for all the latest political news, you can always go to our Web site 24/7, CNNPolitics.com.

Coming up world markets reacting positively to word of a debt deal. But many Tea Partiers, well, they're not going to be celebrating. We'll get into that with Poppy Harlow.

And how fast is a snake? Well, if it's this one, it can go up to 65 miles an hour. Details in three minutes.

(COMMERCIAL BREAK)

PHILLIPS: Checking stories "Cross Country."

Federal agents fear that some of the 26 assault rifles stolen from a California army post may be in Fresno now. A $10,000 reward is being offered for information about the theft from Ft. Irwin army post.

Now check this out.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Water moccasin. A huge water moccasin.

(END OF VIDEO CLIP)

PHILLIPS: Well, the snake was apparently making its way home on the car's engine when the family in Memphis went for a ride and it slithered into the hood. Luckily, it eventually fell off.

And he hijacked a Boeing 747 40 years ago, parachuting to an uncertain fate, leaving us with the only unsolved airline hijacking in American history. Now the FBI says it may know D.B. Cooper's real name. Feds are testing fingerprints of a new suspect and claim this is the most promising lead since the 1971 incident.

Now this debt deal that Congress will vote on is a compromise. Not exactly what anyone wanted. And it's sure not what a lot of Tea Party supporters hoped to see.

Poppy Harlow joins us more on that.

Poppy, you've actually been talking to a number of Tea Party folks.

POPPY HARLOW, CNNMONEY.COM CORRESPONDENT: Absolutely. Always in focus, the Tea Party members, but especially in this whole debt ceiling debate. They were the focal point, freshmen members of Congress, elected with all that Tea Party support. They were the reason that Speaker Boehner could not get his bill through on Thursday night.

We spoke to a bunch of Tea Party supporters and representatives at a county fair in Connecticut. And we let them give -- give us their pitch. What did they feel was so critical that we shouldn't raise the debt ceiling? Take a listen.

(BEGIN VIDEO CLIP) MICHAEL BARNES, ORGANIZER, NEW MILFORD TEA PARTY PATRIOTS: Debt is a promise to collect a future tax. So debt is a tax on children. What kind of person puts a tax on their children?

We're about return to rule of law, limited government, return to free markets and live within our means. It's as simple as that. And how can anybody say they're not for that?

It's the job of the people in Congress to spend the money wisely. That's why they were put there. They were put there with a certain budget and they were supposed to stay within that budget.

(END OF VIDEO CLIP)

HARLOW: All right. So those are some of the Tea Party representatives. They had a lot of supporters at that county fair in Connecticut as well. Here is their take.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: This debt has gotten so out of control in the past couple of years that our children and grandchildren are going to have a quality of life that's anywhere near what I have because they'll be saddled with so much debt, they won't have any money for themselves.

UNIDENTIFIED FEMALE: We have enough of a deficit now. We don't need it to be more sky high. You know if it's not working now, what makes you think it's going to work when it's 100 times more or 10 times more or whatever.

No, leave it alone. Handle what you have. Pay the deficit. Handle it and be done with it.

(END OF VIDEO CLIP)

HARLOW: You can see the emotion in that woman, Kyra. We will have votes later today, obviously, on that agreement in Washington. So it looks like those Tea Party members are not getting their way.

But one thing the Tea Party members must be happy about in all of this, Kyra, there's no tax hikes. No tax hikes at all. And that is something that we can't forget in this agreement. Tax hikes were on the table just a few weeks ago, off the table now -- Kyra.

PHILLIPS: Poppy, thanks.

We're going to have a lot more on the debt deal coverage just straight ahead. But, first, it's given us "The Real World," "Teen Mom," "Jersey Shore." Oh, yes, and a little music, too. Today, MTV turns 30.

British royals celebrate another wedding. This one, though, slightly smaller than Will and Kate's.

(COMMERCIAL BREAK)

PHILLIPS: All right. Let's hit some showbiz headlines for you.

(VIDEO CLIP)

PHILLIPS: Happy 30th birthday, MTV. Network launched on this day in 1981 with the song you're listening to right there, "Video Killed the Radio Star." How can we forget it? Well, MTV officially dropped its music television logo and tag line last years, a nod to all its reality shows and non-video programming.

Actor Matt Damon is speaking up for teachers. He took part in this weekend's "Save Our Schools" rally, protesting the government policies and focus on standardized tests. Damon's mom is a professor of early childhood education.

And never mind all those negative reviews. "Smurfs" movie earned more than 36 million bucks in its opening weekend, tying "Cowboys & Aliens" for number one at the box office. The movie is a mix of live action and animation, with Neil Patrick Harris as the main human.

Her cousin's wedding in April was a bit splashier, but Zara Phillips was still a beaming beautiful bride this weekend, the queen's granddaughter tying the knot in Scotland.

Zain Verjee is joining us from London with all the details. And I don't know, still, your friend -- what's her name again? K-Middy? K- Middy still got so much attention, took it away from the bride.

(LAUGHTER)

ZAIN VERJEE, CNN INTERNATIONAL CORRESPONDENT: I know. There was no upstaging here. Although it's actually was a pretty private wedding. It was very low key, nothing like the big hoopla that we had in April between William and Catherine.

The whole royal gang was out in full force in Edinburgh, Scotland, Kyra. The queen was there. Prince Phillip was there. William, Catherine/Kate, Harry was there, too.

It was very low key.

The bride wore a lovely ivory silk gown there and her husband, Mike Tindall, is actually a famous rugby player. She is also well known in this country for being quite a good equestrian and that's really her passion. She's always interviewed about horses, photographed that way. She has her own clothing line also around horses as well.

So, it was apparently a lovely wedding, but very low key. And everyone had a good time but it was nothing like the huge royal wedding.

PHILLIPS: Yes.

VERJEE: It was kind of the other wedding.

PHILLIPS: Yes, all kinds of interesting tidbits here. What's the deal on Princess Anne saying, hey, can your future husband get a nose job because he's just been whacked too many times on the rugby field? I mean, I've been reading this. Are you serious? And she even said she'd pay for it.

(LAUGHTER)

VERJEE: She did. She even said she would pay for it, because his nose is so -- it's just really -- it's wonky, because it's been busted up so much, playing rugby.

So when her daughter called her up and said, hey, guess what, I'm getting married, she said, can we please fix the groom's nose? And -- you know, come on. She doesn't care that much.

PHILLIPS: No, it didn't affect --

VERJEE: Even though that a Facebook --

PHILLIPS: Yes?

VERJEE: -- of major of like 900 people just dedicated to his nose. She loves him for his personality, not his looks, Kyra.

PHILLIPS: Yes.

VERJEE: You know all about that.

PHILLIPS: Exactly. And it didn't, in any way, interrupt the kiss. So, you know, it was OK. They were able to work it all out.

Thanks, Zain.

VERJEE: Only dress (ph).

PHILLIPS: Here you go.

Well, it's all over but the voting. A debt deal is done, specifically because investors -- well, especially foreign ones, rather, we're going to tell you how they're reacting to the news.

And don't forget, if you're walking away from the TV, it doesn't mean you have to stop watching us. You can actually keep streaming right along with us on your phone, your computer, your iPad.

Here you go. Check it out. CNN.com/video, or just download the app and go. It's easy.

You're seeing a delay, obviously. But when you log on, you'll hit live TV up in the corner. You'll have your choice of NEWSROOM on the side and, boom, there you go. You're off and running.

We'll be right back.

(COMMERCIAL BREAK)

PHILLIPS: Checking top stories. The debt deal expected to send stocks higher when Wall Street opens in just a couple of minutes. Both the Senate and the House could vote on the debt deal today.

And new this morning, a big change to health coverage. The federal government will require insurers to provide birth control without co- payments.

And Mexican police say a suspected drug gang leader ordered 1,500 killings. Jose Antonio Acosta Hernandez was captured over the weekend.

Well, after weeks of bitter debate, lawmakers on Capitol Hill may be just hours away from passing a debt compromise and preventing the government from running out of money. And here are some of the key points of the compromise. It calls for some $2.4 trillion in spending cuts over the next decade. The debt ceiling would be raised and extended through the end of next year.

The Senate could vote, and if passed, would then move on to a vote in the House. Now, the bill has to pass both chambers and get the president's signature in order to avoid tomorrow's default deadline.

So, with all the debt deal all but done, I guess, are we out of the woods?

We're going to talk with our Ali Velshi in just second. He's going to join us once again from New York.

But Richard Quest with "QUEST MEANS BUSINESS" is live in Washington this morning. Of course, he's been getting all kinds of reaction from folks there.

But, Richard, I'm curious. Let's get your reaction from overseas to here and the impact on what you think it's going to do here in the U.S. Hurt us, help us -- what's your take?

RICHARD QUEST, CNN CORRESPONDENT: All right. My thought is this. The reaction this morning is -- you know, it's an inch thick and a mile wide in terms of celebration. There are people who are delighted that a deal has been done. So, you're seeing markets up from Asia, Tokyo, Hong Kong, London, Frankfurt. And I suspect you'll get that same reaction when the New York market opens just in a few moments from now.

But it is only an inch thick. There is nothing sustaining that enthusiasm other than the general bon ami of people who are just so grateful that this bus didn't go over the cliff. What will happen in the weeks ahead will be far more telling.

Now, I am sure, Kyra, that some of your viewers are going to down me and they're going to drop and they're going to say why am I being such a pessimist? Because the fact is the deal is still not done on the House side by any means, where it will be like herding cats, trying to get them to come to an agreement to pass this thing. You then got this super committee, which is an entire box of -- or nest of frogs in its own right.

And then, finally, if all that's done and dusted, you've got swinging cuts which will be imposed by default.

Now, in that scenario, you tell me what there is to be that cheerful about this morning.

PHILLIPS: Ali Velshi, help me out. Is Richard being too much of a pessimist?

ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: No. I'll tell you why. I mean -- and I never miss an opportunity to take a piece out of Richard. But I'll tell you why he's not.

The reality is that this debt ceiling crisis was a little bit manufactured. The reality, you didn't need to be a rating agency, you don't need to be anybody. You just need to once in a while read a newspaper to know that the U.S. has a lot of indebtedness. So, that problem hasn't changed substantially, except we have a deal to make some cuts. How the U.S. employs those cuts is going to be very interesting.

Richard is talking from experience because in Great Britain, they impose these austerity measures. So, they're seeing it play out. But it's a highly specific matter. Remember, Kyra, we watched those people rioting in the streets of London? Because they had specific matter they were addressing.

We don't have specific matters yet. We have numbers, but we're not entirely sure what gets cut, who suffers and who does what. So, until we have those specifics, then the markets and the world will react properly.

PHILLIPS: Interesting. You know, we've seen it in Greece. We saw it in London, you know? I mean, could we ever see that here on the streets in the U.S.?

Richard Quest, I'm sure, will weigh in on that.

QUEST: I always hesitate to ever go down that road. I think you've got to bear in mind -- you're talking about $2 trillion or $3 trillion. It sounds like a vast amount of money. It is a lot of money.

But put in relation to the $11 trillion, $12 trillion U.S. economy, and you start to see that it's not that much. And you also start to see that at the moment, the deficit is by Secretary Geithner's own numbers -- the deficit is rising at $125 billion a month. So, making cuts while --

VELSHI: Right.

QUEST: -- trying to do it purely on that, without revenue raises, at the same time not making seriously deep cuts, you're just putting off the inevitable. Now, none of that -- once again, I feel I'm being --

(CROSSTALK)

PHILLIPS: And there's the -- there's the opening bell. So, we're going to see how it's going to impact the markets right now.

Go ahead, finish your thought, Richard. I just want to draw attention to the opening bell.

QUEST: Well, my thought is this. It's a brilliant start. It shows work can be done. But anybody who thinks that this is game over really needs to go and lie down in a darkened room.

PHILLIPS: There we go, Ali. Our first shot at the New York Stock Exchange and the numbers -- look at that. It's heading up. Here we go, plus-69 --

VELSHI: I wouldn't be surprised if we get up 200 points right at the beginning. I mean, it's quite possible that we're going to see that kind of gain right now.

It's a sigh of relief. As Richard said, this is not a reward. Look how much we lost in the markets in the last six or seven days. This is not even going to make up the losses that we've seen.

But Richard is right, Kyra. And I get -- boy I get in such trouble. My Twitter board goes nuts when I say this. There is no way to make the math work on balancing the U.S. budget or even coming close to it, without both spending cuts and tax increases. Now, there are a couple of ways to do it. You'd have to have much better economic growth like India's or China's which we're not going to have. Or we're going to have very low --

QUEST: Inflation.

VELSHI: -- unemployment. Not going to happen.

PHILLIPS: Got it. But, final thought. You were saying inflation, Richard.

QUEST: Well, because if you get -- if the U.S. economy started to grow anything like India or China -- and you should be so lucky and I should be so lucky to have the UK grow, we'd end up with rampant inflation worse than they've got.

The truth is, let's just celebrate today's victory of common sense for not going over the cliff. But do remember, the gains you're seeing -- and I can't see the numbers.

PHILLIPS: Up 125 now.

QUEST: Yes. And the heat is still to come on this deal.

PHILLIPS: Richard Quest, Ali Velshi. Guys, thanks so much.

Once again, Ali was calling it. It's almost there at 200. It's up 126 points right now, Dow Industrial is. OK. Well, because this deal is still kind of a work in progress, here's what we're going to do to follow it throughout the day. The House convenes around 10:00 this morning and in the Senate, we have separate meetings starting in -- about an hour later at 11:00. Then we could see the first votes in the House by about noon today. And after 2:00, the Senate is expected to vote to end debate on the bill. And then all of that could lead up to a vote to pass this bill this evening.

So we'll have it, obviously, hour by hour for you all throughout the day here on CNN.

So how worried are you about reaching a debt deal? In 15 minutes we're going to go live to a cash-strapped Orange, New Jersey. Both the city and its sizable older population are worried about what's in and out of this deal.

And it was a bold move designed to help students. Minnesota school district tells teachers to hold their opinions on homosexuality. But now it seems to be backfiring. We're going to hear from our columnists on whether this is an idea ahead of its time.

(COMMERCIAL BREAK)

Well, after weeks of pretty bitter debate, you know, lawmakers on Capitol Hill are possibly just hours away from that compromise.

And Alison Kosik, we've been watching the numbers second by second here. They started to rise pretty well right at the opening bell.

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: They did.

PHILLIPS: Where are we now?

KOSIK: They backed off a little bit since the start of the opening bell. It's only been six minutes. We saw the Dow go as high as 120. It's now up to 87. Look, it's a good start after the week we had last week. And this follows in the footsteps of what we've seen in the overseas markets overnight. In the Asian, European indices, they're up across the board.

You know what? We can all call this the debt relief rally. Hey, even the vics, that measures fear here on Wall Street, that's shot up more than 40 percent last week. That's calming down now, down nine percent. Look, we took the negative off the table and Wall Street's focusing on the positive, Kyra.

PHILLIPS: All right. That's what we want to do, focus on the positive.

Thanks, Alison.

All right. Let's check some other stories Cross Country now.

After a weekend of air, ground and water searches, still no sign of a missing 11-year-old New Hampshire girl. Eleven-year-old Celina Cass hasn't been seen since last Monday night. Her father spoke publicly for the first time yesterday. He says Celina is not the type to run away so he does fear that she has been kidnapped.

A teenager is dead and three other people wounded after a shooting near a George Clinton concert in Cleveland. Police say it started as a fist fight and quickly got out of hand. They don't think it was related, in any way, to the show.

And this:

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: You may now share your vows with one another.

(END VIDEO CLIP)

PHILLIPS: A bit of an unusual wedding in Houston. The happy couple is married by computer. The groom, who's a web developer, created the program as a stand-in for their minister friend who couldn't be there. So, they did still have to get a justice of the peace to formally sign off, by the way.

Well, don't teach, don't tell. A Minnesota school district has developed a policy that essentially bars teachers from taking a position on homosexuality in the classroom. Here's what parents are saying. (BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: I mean, this idea of check your identity at the door shall would you tolerate that? We are not advocating that we teach homosexuality, that we teach anything other than tolerance.

UNIDENTIFIED FEMALE: They don't need to be promoting a particular point of view on that. Parents have a right to raise their children the way they want to and the school district doesn't need to be sitting there, telling kids, your parents are wrong.

(END VIDEO CLIP)

PHILLIPS: So, what's your take? I'm joined by CNN's contributors Will Cain from New York and LZ Granderson from Grand Rapids, Michigan.

LZ, let's start with you. What do you think of the policy?

LZ GRANDERSON, CNN CONTRIBUTOR: I think it's a good start. I agree. I think a policy in which we're telling teachers not to inject their opinion in the conversation of the GLBT community in the classroom is a good thing. But I think omitting the contributions of GLBT people is terrible and it's not teaching history and it's not giving students the education that they need.

PHILLIPS: Will, what's your take?

WILL CAIN, CNN CONTRIBUTOR: Well, that's the key, right LZ, Kyra? I mean, what does that mean, neutral? Because that's completely unclear and it appears to be unclear to the teachers. Does neutral mean showing both sides of the issue? Does neutral mean being factual? Does neutral mean being silent? Those are not all the same. So that's why this policy right now completely falls short. You need to find out what neutral means.

PHILLIPS: Yes. How would you define that, LZ? I mean, for you, what exactly should that mean? If a young boy comes to their teacher or to a discussion, or a young girl and says, look, this is how I feel. I think I'm gay. I'm attracted to the same sex.

I mean, how do you remain neutral in that conversation when a young male or female is being so blunt about their feelings?

GRANDERSON: Well, I think my interpretation is that when you're teaching in the classroom and you're, for instance, talking about civil rights and you find a way to not talk about the contributions of Harvey Milk, I think that is being wrong because his contributions to the overall conversation of civil rights is very important.

Now, if you have an individual student that comes to you and wants to discuss their sexuality, their sexual orientation, that's probably something that should be directed to the counselor and that teachers should not be injecting their personal opinions about. I do agree with that.

PHILLIPS: And -- but then Will, what do you do, I mean, just knowing how kids nowadays have been bullied. We have followed the suicides that have taken place because kids haven't been able to express themselves with regard to their sexuality.

And the reason why, apparently, the head of the Gay Straight Alliance there in Minnesota where they've implemented this policy says, look, on a daily basis I'm getting text messages and Facebook postings from these kids saying I don't know who to turn to and I'm thinking about taking my life.

CAIN: Yes. Well that's obviously a bad situation all around. I really don't know, Kyra, if this neutrality policy contributes to that or not. There is no proven link.

That being said, let me just say this, Kyra. This wasn't an easy topic for me. I started out with I've got a three-year-old son. Do I want a teacher addressing this topic with him? But the more I subjected my opinion to rigorous thought, it gets easier. Yes, you've got to address homosexuality when it gets to sex-ed education.

LZ brought up a big point, though. What about when you talk about history in fourth grade, you talk about the civil rights movement? Are you going to leave out the gay rights movement? The bottom line is it's about education. Education is about open discussion and thinking. I think you have to be able to address these topics to encourage that.

PHILLIPS: And Will, just real quickly. Will brought up his son --

GRANDERSON: Absolutely. PHILLIPS: LZ, you're openly gay. You also are raising a child. What would you want for your child to experience in school?

GRANDERSON: I would want him to experience tolerance and understanding exactly what that means. I don't want the teacher to tell my son whether or not homosexuality is right or wrong. That's up to me. But I want my son to have as much information as possible about the facts and being in an environment whoever he want to be and also encourage other students to do just that, as well.

PHILLIPS: Final thought, Will.

CAIN: What's the risk? What's the risk to facts, that the teacher's advocating for it, influencing it? Look, I'm straight. I like girls. LZ couldn't wink charmingly enough to woo me over. The point is, you are what you are and you can withstand the facts.

PHILLIPS: Will, LZ, guys --

GRANDERSON: With a six-pack, Will, I can get just about anybody.

(LAUGHTER)

PHILLIPS: Oh, boy. This is a whole other debate. Stay tuned -- offline.

Thank you, gentlemen.

All right. How do I segue from that into continuing coverage of debt crisis? Well, I'm going to try to. Let's take a closer look at how Wall Street is reacting to today's impending votes. There you go. Dow Industrial is up 77 points.

More ahead in the NEWSROOM.

And we're also following the military crackdown in Syria. Reports now, people helping the wounded that are being shot, allegedly, by the military. We'll have details on that attack right after the break.

(COMMERCIAL BREAK)

PHILLIPS: President Bashar al-Assad's tanks storm in the Hama; activists say that the Syrian military just opened fire on its own people. Yet another violent uprising in a massive revolt for democracy spreading across the Middle East.

And our Arwa Damon is live from Beirut. Arwa, pretty symbolic attack as the holy month of Ramadan begins.

ARWA DAMON, CNN INTERNATIONAL CORRESPONDENT: That's right, Kyra.

It most certainly was. And this latest military operation, according to activists, began early Sunday morning, where they're saying the tanks tried to enter into Hama. They allegedly opened fire, indiscriminately shelling residential areas. Hundreds of people poured into the streets, some of them seeking shelter, others trying to set up makeshift barricades. Some even using Molotov cocktails, whatever they could find to try to stop the tanks and the troops from advancing.

It does seem as if at some point then overnight the Syrian military did withdraw. But then activists began reported shelling and hearing gunfire early this morning. According to one doctor who we spoke to, in Hama alone, at least 115 people were killed. There have been varying casualty reports.

But this most certainly would seem, especially according to the activists, as a very direct sign from the government. Activist had been planning large scale Friday-style demonstrations to happen every single day during Ramadan, to take place after they break their fast.

And this, it would seem, is the government's warning to those activists, telling them to stay off the streets or face the consequences -- Kyra.

PHILLIPS: Arwa Damon, live from Beirut. Arwa, thanks.

The impact of the debt debate: Orange, New Jersey laid off more than 50 city workers earlier this year. Could the debt deal mean more layoffs? Fewer city services? A live report from Orange, right after the break.

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PHILLIPS: Well, we've been talking so much this morning about the impact of the debt ceiling. Now imagine being retired on a fixed income, waiting for a check that you just may not get.

Felicia Taylor, you've been talking to a lot of stressed-out seniors there in New Jersey.

FELICIA TAYLOR, CNN CORRESPONDENT: Kyra, that's right. I've spoken to quite a few people this morning and frankly they're very worried about some of these cuts. And we're joined now by the Mayor of Orange, New Jersey, Mayor Eldridge Hawkins, to explain what that would mean.

You have quite a few senior citizens in this municipality. If they were not able to receive their checks in the next weeks and months to come, what would it mean for them?

ELDRIDGE HAWKINS JR., (D), MAYOR, ORANGE, NEW JERSEY: Oh, it would actually be devastating. Many of our seniors are on fixed income whether it's, you know, Social Security or otherwise and they depend on that money to get through their day to day living.

So if they were to not to receive at all or there will be significant delay in receiving that due to what's happening with our national debt ceiling and the vote that are pending, it can have dire consequences to them. So, you know, I would hope that this legislation would move forward so that we can avert the national crisis that we're faced at. But also that once they get to the super committee as they call it and they start really making these decisions about what is going to get cut, that they do what is necessary to protect those that are most vulnerable.

For our seniors that worked a lifetime under the promise of Social Security and other benefits whether it's Medicare and Medicaid and they need that for their day to day living.

TAYLOR: You've also been the recipient of certain grants. How would this municipality be affected if you didn't get those grants in the future?

HAWKINS JR.: Well, I think it would certainly curtail our ability to move forward with a lot of the products that we've had. We've used federal funds to help whether it's community development-backed grants, to help rebuild our infrastructure whether streets lighting or other things in the community.

We've also used it to hire new police officers and new fire personnel. We recently got a $1.2 million FEMA grant that will fund 12 firemen for the next three years.

And this is critical. Because in tough economic times when we're forced to have layoffs and so on and so forth, it really impedes our ability to deliver services. We lost ten firemen; it forced the closure of one of our firehouses.

TAYLOR: That's very severe. Mayor Hawkins, thank you very much.

HAWKINS JR.: Thank you.

TAYLOR: So Kyra, you can see that while it's a victory in Washington on a macro picture, when it comes to individual Americans, it doesn't feel like much of a victory. And there are some very serious concerns out there that will remain for a long time.

PHILLIPS: Yes, we'll keep talking about all of them. Felicia thanks.

Well, there are some other stories making news later today. At noon Eastern, a status hearing is being held in the Chicago courtroom for convicted former governor, Rod Blagojevich.

NASA is unveiling images from the dawn space craft's orbit of the Asteroid Vesta during a news conference at noon Eastern.

And at 6:00 Eastern, a memorial garden is being dedicated to the victims of the Interstate 35 bridge collapse in Minneapolis just four years ago today.

Well, we're following lots of developments in the next of the CNN NEWSROOM. Let's check in first with Kate Bolduan on the Hill -- Kate.

KATE BOLDUAN, CNN CONGRESSIONAL CORRESPONDENT: Hey there Kyra, well, congressional leaders they have struck a debt deal, but will the rank and file sign on? The push for votes begins and begins now. We'll have -- we'll have more at the top of the hour.

RICHARD QUEST, CNN INTERNATIONAL CORRESPONDENT: And while Kate is in the cool of the capital, I'm in the heat of the mall. Where in the next hour we will be investigating what might happen and what people think out here of what's going on over there.

ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT: I'm Elizabeth Cohen in Atlanta. Your insurance company will soon have to start paying for your birth control. And I mean paying for all of that. I'll have that at the next top -- at the top of the next hour.

PHILLIPS: Great, thanks guys.

And also coming up next hour, the daring efforts of drug smugglers. A $180 million in cocaine found in a sub, recovered from the ocean floor. I'll talk to the commander of the U.S. Coast Guard ship that located the sunken vessel.

(COMMERCIAL BREAK)

PHILLIPS: Well, it's been a long time coming for tennis star Serena Williams. She won her first tournament since being off the tour for almost a year with health problems. She beat Marianne Bartoli (ph) in straight sets avenging a loss to her at Wimbledon.

Jennifer Farr Davis set the record as she finished her 46-day trek in Georgia yesterday. Davis hiked and ran an average of 45 miles a day for more than six weeks. She calls hiking her passion, career, and calling.

U.S. women soccer goalie Hope Solo drove the pace car at Indianapolis speedway starting up the Brickyard 400. Paul Menard in the 27th car took the checkered flag. It's his first win in 167 NASCAR races. And of course according to tradition, he and his crew kiss the bricks.

Ok, Capitol Hill, just hours away from passing a compromise. We've been watching the numbers; as soon as that opening bell rang. What do you think Alison? How are we looking?

KOSIK: We were looking better at the opening bell. We saw the Dow surge as much as 120 points in the first couple of minutes of the trading day. It's backed off a bit. We're still in the plus column, the Dow up 50, the Nasdaq better by 11.

It looks like at this point that Wall Street thinks that this deal is going to get done; it's putting it behind it. And now the focus is on the broader economy, on economic growth which is anemic and on job growth which is also anemic.

We are getting that big jobs report on Friday. And I think what you are seeing is Wall Street kind of taking a step back and saying look, let's take a look forward in what's going to happen. Right now it is pretty -- you are not seeing as much optimism as far as the broader economy goes and that's why the rally had kind of fizzled out a bit -- Kyra.

PHILLIPS: Ok. Alison, we'll keep talking. Well, it's dominated the headline for weeks but this argument over the nation's debt is nothing new. We have heard the arguments before.

(BEGIN VIDEO CLIP)

REP. WILLIAM GRAY (D), MAJORITY WHIP: Will there be some compromising? Absolutely. I think that there will be. There has to be.

RONALD REAGAN, FORMER PRESIDENT OF THE UNITED STATES: The next time one of those folks gets up and complains about the deficit, they better have a smile on their face.

GEORGE H.W. BUSH, FORMER PRESIDENT OF THE UNITED STATES: But the deficit, the big spending deficit is a dark cloud hovering over the future of these kids.

BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: You have to get the debt down because otherwise the interest payments eat you alive.

NEWT GINGRICH, FORMER SPEAKER OF THE HOUSE: Interests now cost more than the Defense Department so literally you will pay more taxes -- and you go ahead and get a job -- just to pay interest on the debt than you'll pay to defend the country.

HILLARY CLINTON, SECRETARY OF STATE: The President has asked to raise the limit by nearly $1 trillion. They don't want a debt limit. They want unlimited debt.

GEORGE W. BUSH, FORMER PRESIDENT OF THE UNITED STATES: My budget will maintain strict discipline in the spending of tax dollars, and keep our commitment to cutting the deficit in half over five years.

SEN. HARRY REID (D-NV), SENATE MAJORITY LEADER: The Bush plan would take our already record-high $4.3 trillion debt and put us another $2 trillion in the red.

(END VIDEO CLIP)