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House Votes To Restore Death Benefits; Pentagon Making Contract With Fisher House; Obama To Meet With Lawmakers; Obama Takes On Default Deniers; Expert: Death Scene Pictures Point To Foul Play

Aired October 09, 2013 - 14:30   ET

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

BROOKE BALDWIN, CNN ANCHOR: Breaking news here. We've been talking and reporting about this government shutdown. Here we are, day nine, and now we know the House has passed the death benefits for military families. Take a look here at the final tally of votes. The yeas and nays. Dana Bash, let me go straight to you with what you are learning.

DANA BASH, CNN CHIEF CONGRESSIONAL CORRESPONDENT: Hi, Brooke.

That's right. Well, first of all, I should tell you that it looks as though this is not surprisingly a passing with overwhelming support. I'm looking at the screen right now, 424 yeses, to give the families -- give the Pentagon authority for these death benefits.

I have here with me the chairman of the Armed Services Committee in the House.

And I just want to ask you, I was just told that your committee was informed recently by the Pentagon that they think that they can handle this without the legislation that you just passed by contracting out to the Fisher House, which is an outside group that's already giving them help, but making it a more formal relationship. Is that accurate? And can you tell me what you've been told?

REP. BUCK MCKEON (R), CHMN., ARMED SERVICES COMMITTEE: I'm just hearing that just now. I did see in the paper today that Fisher House had said we'll pay these families. And they weren't expecting anything from the government. They just realized it's an important thing to help these families. That's what kind of their whole mission is, helping wounded warriors, the families.

So I was happy to hear that they stepped up. You know, before there was talk of a possible shutdown, we passed a bill that said if we can't get our work done and there is a shutdown, at least the military will be paid. We think in that bill, that original bill. We shouldn't have had the furlough, all of the employees who were furloughed, 400,000.

BASH: At the Pentagon?

MCKEON: At the Pentagon. They have brought them back to work. The Pentagon isn't totally autonomous. They have to deal with the Justice Department. I think the Justice Department attorneys were interpreting it differently. I think that's probably the ones that muddied this up. BASH: But would you be comfortable if that is in fact the solution here for the Pentagon to contract out to the Fisher House to make sure that these death benefits are paid without this legislation going to the Senate? You know what's going on. Senate Democrats would prefer not to do this. They would prefer the Pentagon handle it on its own because it's a slippery slope for Senate Democrats.

MCKEON: Well, you know, when we passed the pay the troops act, the Senate took care of it. We voted just like this one, unanimously, sent it to the Senate, and they passed it. Now if they don't want to deal with it, if they don't want to take care of the survivors of those who pay the ultimate price, shame on them. I think they should take it up this afternoon, have it on the president's desk tomorrow and not have any hijinx. We shouldn't be treating our military like this.

BASH: But with contracting out to the Fisher House be considered hijinx or do you think that that was -- if that's a solution you would be comfortable with that as chairman of the Armed Services Committee with oversight of the Pentagon?

MCKEON: It's not normally the way we do things.

BASH: But there's nothing normal around here.

MCKEON: But this should be. We passed the bill, as you said. It's unanimous. Every single Republican and Democrat on the floor voted for it. The Senate should do the same thing and then they should get it to the president. If we can't do things as simple as this, as meaningful as this, how could we expect to do anything else, I think Harry Reid should be right here, right now saying, great, you did it. We'll pick it up, we'll do it and then we'll move forward.

BASH: Let me ask you one final question. Obviously, this country, understandably, holds people who pay the ultimate sacrifice in battle at the highest level, but --

MCKEON: And so should Harry Reid.

BASH: The question is, if there's a mother out there who can't get their kid into Head Start, who can't get food stamps to pay for their food for kids. If there's a kid or adult out there who can't get clinical trials for health care --

MCKEON: I'm glad you mentioned those because we passed Head Start yesterday, the funding for it. All they have to do is take that up in the Senate and send it to the president and it can get done. Most of these functions we have been passing and they would get done. And the Senate just says no, we don't want to deal with this stuff. Well, what are they doing over there? You know, we're here working. We're passing bills. We're trying to get the government open. Let them do it.

BASH: Thank you, Mr. Chairman. I appreciate you coming over with this breaking news. Brooke, back to you. BROOKE BALDWIN, CNN ANCHOR: OK, Dana Bash, thank you. We just heard what the chairman had to say, some pretty strong words for the Senate Majority Leader, Harry Reid, basically saying, Senate, pass this and let's get going when it comes to those who we hold in the highest regard.

Barbara Starr is at the Pentagon. Barbara, what does the Pentagon have to say about all this?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, Brooke, I can now confirm to you that within the next few minutes, the Pentagon will be issuing a public statement that they are indeed entering a contract with an organization very well known to the military called the Fisher House. This is an amazing organization that has helped the wounded for years, now, stepping in to help the families of the fallen.

What is happening is the Pentagon is entering into a contract, a business contract, with the Fisher House. The Fisher House has stepped forward and said it will pay the funeral expenses, the $100,000 death gratuity benefit, anything the families of the fallen are not getting due to the shutdown.

The Fisher House will pay under this contract, and the Pentagon, the Department of Defense, once the government opens up, will reimburse them. This is the fix that the White House Press Secretary Jay Carney was talking about. What I am also told by a senior official is that now the Pentagon feels it's got the fix.

It no longer is interested, they say, in having any congressional language to fix the problem. So this is absolutely extraordinary. A number of organizations have come forward. Fisher House is one that the military deals with all the time. Let me add one more thing.

BALDWIN: Sure.

STARR: What I'm also told is Defense Secretary Chuck Hagel had brought up with senior White House officials the issue of death benefits not being payable, if you will, in the view of the department once it became apparent a few weeks ago that the government shutdown was imminent. Officials tell me here, they don't know when the president was made aware of all of this, but that Hagel -- they insist that Hagel had told the White House, you know, this is a problem. It's going to be a problem.

We are now at something over 20 military families who have lost their loved ones since October 1st, and this appears to be the solution. But how extraordinary that the government is going to have to enter into a business contract to pay the families of the fallen what that final sacrifice has meant to them.

BALDWIN: Thank goodness for the Fisher House. The Fisher House, helping these families and then the government paying them back once this thing hopefully gets fixed. Barbara Starr, thank you so much for that reporting. We'll be awaiting that officially from the Pentagon.

Meantime, I'm hearing lots of folks saying that defaulting on the nation's debt could bring about such a disaster that cooler heads in Washington won't let it happen. Democrats and Republicans will reach some sort of agreement to stave this off by the 17th of this month or shortly thereafter.

Let me show you a sobering quote. This is from the respected financial adviser. He says, no, he does not expect a default, but he says, and I'm quoting him, "But we recognize some lunatics are driving the nation's policy decisions and some of them are willing to experience a default," lunatics.

You see the word he uses, so says financial adviser David Kotok, are willing to see the U.S. default. I want to go for a different perspective today. Peter Morici, he has the bow tie on. You may see him on many a commercial. He's a professor at the School of Business in the University of Maryland.

So Peter Morici, it's nice to see you back on here again. You are an economist, and from what I gather, you are not quite as concerned as some of your colleagues are, other economists, when it comes to the prospect of a default by the U.S. Treasury. Tell me why not.

PETER MORICI, ECONOMIST: Well, we'll only have a default if the president wills it. Each month, the federal government takes in $250 billion. The interest on the debt is $23 billion. We clearly can make those payments if the Congress doesn't raise the debt ceiling. Other stuff will go unpaid and we'll have to set priorities, but that can be done. Certainly we don't want to go on that way forever, but the debt does not have to be defaulted.

BALDWIN: Peter, here are some folks talking about default, some pretty intelligent minds. Take a listen if you would.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES OF AMERICA: America would not be able to meet all of our financial obligations for the first time in 225 years.

JACK LEW, TREASURY SECRETARY: Let me just read to you from what President Reagan said when he faced this, and I quote, "The full consequences of a default or even the serious prospect of a default by the United States are impossible to predict and awesome to contemplate."

PRESIDENT OBAMA: Warren Buffett likened default to a nuclear bomb.

MARK PATTERSON, FORMER CHIEF OF STAFF, TREASURY DEPARTMENT: We've always been smart enough as a country never to go there, but what most economists believe is that you would have symptoms similar to the financial crisis that we have just been through, and it could potentially lead us right back into recession.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Every American could see their 401(k)s and home values fall, borrowing costs for mortgages and student loans rise, and there would be a significant risk of a very deep recession. (END VIDEO CLIP)

BALDWIN: So Peter, when you see some of these sound bites, you read quotes from the likes of Barack Obama, Ronald Reagan, Warren Buffett, Jack Lew, tell me why they're all wrong.

MORICI: Well, if we default, if we didn't make the interest payments then those terrible and bad things would happen. However, just because Congress doesn't raise the debt ceiling does not mean we need to default. The government will have plenty of money to pay the interest on the debt. It just won't have money of money to pay for everything it likes.

It will have about three quarters of the cash it needs to do business. The treasury secretary says he can't set priorities. Well, he's the nation's chief financial officer. I know I could set the priorities and any good financial person could and it's his job to do so. If he doesn't have the financial acumen to deal with that kind of eventuality then he really needs to move over for someone that can.

BALDWIN: But Peter, when you talk about dollars and cents, this math is done by my colleague, Christine Romans, this is her bread and butter. In a given month, we take in $277 billion in tax receipts and spend $452 billion. We finance the difference. She says the math doesn't work. So really my question is when we start defaulting on bills and passing out IOUs, I think I know the answer, but I'm going to ask the question. What does it do to confidence when it comes to the U.S. economy?

MORICI: The confidence in the economy would be shaken. There's no two ways about it. Now be clear, we would pay the interest on the debt. We would not default on the debt. There's a difference between not defaulting on the debt and being able to pay for everything you want to pay for, think of it as a 20 percent pay cut. That's what it comes to.

I have my members, Christine has hers. I get mine from the Joint Economic Committee. Now it's about 20 percent. Now think of the state of California. It went through a very similar period where it issued script. I'm not advocating that.

I think if we look longer term, the bipartisan or the nonpartisan Congressional Budget Office indicates that if we stay on the path that we are on or keep raising these debt ceilings without modifying the entitlement programs that we will be in serious financial trouble by the end of the term of the next president, very, very serious.

So it may be that this is what is necessary to get the two sides to sit down and negotiate. Mr. Obama is going to have to be less ambitious about health care. I'm not an advocate of junking his program. The Republicans are going to have to get more realistic about health care and recognize that we don't have the most marvelous system on the planet and it needs reforming and that includes reforming how the government spends money.

And we're going to have to talk about something Mr. Obama doesn't like to talk about. If we don't raise the retirement age, Social Security becomes insolvent along with the country mid next decade.

BALDWIN: OK, Peter Morici, I appreciate it. I appreciate hearing your perspective. Thank you.

Coming up next, xclusive new details about the death of a Georgia teenager found dead inside, wrapped up, this high school gym mat. Investigators say Kendrick Johnson's death was an accident, but his parents say he was murdered and they can prove it, shocking details today in this investigative report. You have to see that next.

(COMMERCIAL BREAK)

BALDWIN: Stunning new evidence in a case we have covered extensively for you here at CNN. It involves this teenager, Kendrick Johnson, and whether his death at his high school gym was an accident or murder. As CNN's Victor Blackwell first reported, Kendrick's parents are convinced his death was not at all an accident, as investigators have been saying, but rather than someone killed him and the truth is being hidden.

To prove that, they recently had Kendrick Johnson's body exhumed for an independent autopsy that concluded he died of blunt force trauma, not accidental suffocation. And now Victor Blackwell has exclusively disturbing new evidence that only raises more questions. But I just have to warn you, before you see this, some of the video you're about to see is graphic and very difficult to watch. Here now is Victor Blackwell's exclusive report.

(BEGIN VIDEOTAPE)

VICTOR BLACKWELL, CNN CORRESPONDENT (voice-over): It's the only video shot inside the Lowndes High School gym the day 17-year-old Kendrick Johnson was found dead and with his parent's approval, we're showing it for the first time. Lowndes County, Georgia investigators say his death was a tragic accident. That he climbed on to these rolled gym mats to reach for this shoe at the center of one mat, slipped, got stuck upside down and died.

County officials say the blood in this photo spilled after Kendrick's heart had stopped pumping hours after he had died. But Kendrick's parents say the photo and the video show something else.

KENNETH JOHNSON, FATHER: There is enough evidence to show that Kendrick was murdered.

BLACKWELL: CNN has exclusively obtained the 15-minute video and nearly 700 photos of the scene taken by investigators and for the first time, Kendrick's parents, Kenneth and Jacquelyn Johnson are ready to look at them including these pictures of orange and black gym shows investigators found just yards from Kendrick's body.

(on camera): Did these shoes belong to Kendrick?

JOHNSON: No.

BLACKWEL: When you look at these shoes at the scene, what stands out to you?

UNIDENTIFIED FEMALE: Blood on the shoe.

BLACKWELL (voice-over): But investigators say tests show the stains are something other than blood so the shoes were not collected as potential evidence.

UNIDENTIFIED MALE: I don't understand why --

BLACKWELL: CNN took the photos to independent private investigator and former FBI special agent, Harold Copus.

(on camera): If you were on the scene, would this have been something you have left?

UNIDENTIFIED MALE: No, bag and tag.

BLACKWELL: There is no indication investigators looked for the owner of the shoes or this hooded sweatshirt found a few feet from Kendrick's body.

HAROLD COPUS, PRIVATE INVESTIGATOR: If you look real close, there is something on this particular cuff, and then the question is was it blood? Did you test it?

BLACKWELL (voice-over): According to the crime lab report, no.

JOHNSON: They know something happened in that gym, and they don't want it to come out.

BLACKWELL: For the Johnsons, there is no stranger indicator than this photo. It's what appears to be blood dripping down a wall. Here is what Lowndes County Lieutenant Stryde Jones told CNN about that wall in May.

LT. STRYDE JONES, LOWNDES COUNTY, GEORGIA SHERIFF'S DEPARTMENT: We tested it and it was blood. We did DNA testing and it was not the blood of Kendrick Johnson.

JOHNSON: If it wasn't Kendrick's blood, whose was it?

BLACKWELL (on camera): Did you ever find who it was or any involved --

JONES: No. As of now, we haven't, no. But it doesn't appear to be related to our crime in any way.

BLACKWELL: What do you think about the decision not to test it further?

COPUS: You can't explain it. If you're running the crime scene, then you're going to say that's potential evidence, obviously, we are going to check this out and find out who does it belong to?

JONES: This is an athletic gym. I mean, obviously, this is where they conduct various athletic classes and instructions at. COPUS: A kid couldn't scrape their knee or arm or something and got that much blood on the wall. There is one, two, three, four, five, six impacts.

JONES: The opinion of the crime scene personnel, the blood appeared to be there for an extended period of time. It didn't appear to be fresh.

COPUS: School gym, there is no way that they would allow whoever was supposed to clean this gym to leave that blood on that wall.

BLACKWELL: And there's question why was there no blood where they expected to see lots of blood? Remember the photo of that shoe investigators say was inches below Kendrick's head? Look at it again.

JOHNSON: If he was inside the mat reaching for that shoe inside this shoe, reaching for the shoe and the shoe is beneath him, why isn't that shoe covered with blood?

BLACKWELL (on camera): And what do you think about that shoe not being covered with blood?

JOHNSON: It was placed there.

BLACKWELL: Sheriff Prine? Hi. Victor Blackwell, CNN.

SHERIFF CRIS PRINE, LOWNDES COUNTY, GEORGIA: Cris Prine.

BLACKWELL (voice-over): The sheriff's department has denied a cover up, but we took the Johnson's concerns to Lowndes County Sheriff Chris Brian.

(on camera): Got some questions about the Kendrick Johnson case.

PRINE: I'm not going to discuss that with you.

BLACKWELL: Why not, sir?

PRINE: Because the case is closed.

BLACKWELL: The family has some concerns why some things were not taken into evidence. There was blood on the wall.

PRINE: I'm not going to discuss the case with you.

BLACKWELL: Why is that?

PRINE: Because I don't want to.

BLACKWELL (voice-over): Then less than a minute after he invited us in.

PRINE: What did you not understand that I said? I'm through talking to you.

BLACKWELL: He ushered us out. (on camera): Thank you, Sheriff Prine.

COPUS: I don't believe this was an accident. I think this young man met with foul play.

BLACKWELL (voice-over): The Justice Department is reviewing the pictures and the videos to decide whether it will launch a federal investigation into Kendrick's death. But for Kendrick's father, the evidence is clear.

JOHNSON: Someone murdered him, they should be in jail. They are covering up. They should be in jail.

(END VIDEOTAPE)

BALDWIN: Victor Blackwell joins me in studio. On the other side of the break, we're going to talk about the photo that has yet to be seen on CNN until now that Victor is sharing with us that could really change the central piece of this case. What's the photo, what does it entail? We'll share that next.

(COMMERCIAL BREAK)

BALDWIN: Back now to our exclusive report and the big question, how did Georgia teenager Kendrick Johnson die? His body was found upside down in this rolled up wrestling mat at a school gym. This was back in January. In the beginning, investigators had ruled his death as an accident.

But our Victor Blackwell has stayed on the story and has just now reported on the new evidence suggesting the circumstances around his death do not add up. So let's begin. You have a couple photographs. The first being one that has yet to air on CNN until now. You do have a quick warning.

BLACKWELL: Yes. I want to warn you this is a picture of Kendrick's hand. He's still in the mat. It's a bit graphic. His fingers are purplish because at this point he had been dead for several hours. But let's put this photograph up, again, the first time airing on CNN.

This is his hand and if you look at his fingertips, his nails are cut so low that the fingertips are almost purple. His parents say Kendrick always wore his nails long. His father's nails are about a half inch to an inch off the finger. This is not normal.

And the parents ask, did someone cut his nails there at the scene to hide potential evidence under his nails? Because they say Kendrick anecdotally said clipping your nails like that is for girls. His nails were always long. This is the first time they've seen him like this and because they're so low, to the point that they're bruised, they wonder if someone did it there at the scene.

BALDWIN: Wow, so this is one photo. The parents, as long as you have been in touch with them, have a lot of questions about the nature surrounding his death. Photo number two, inside this big gym where he was found inside this rolled up wrestling mat were two notebooks. BLACKWELL: Two notebooks, there was a yellow one and a blue one. We see in the surveillance video or stills from the video, when Kendrick walked in, he had them under his arm. Well, there's one in this position about 20 to 30 feet away is another one. Harold Copus, the former FBI special agent, asks OK, if he's running in to grab something quickly, doesn't he drop both notebooks in one space and then climb to the top of the mat?

Why is one in one space and the other 20 to 30 feet away? Is that evidence of a struggle? Now, he's asking the question and what he's trying to get to is that someone else should ask these questions. The U.S. attorney has been reviewing this case for several months now. And he's saying that there are enough questions here, enough unanswered questions that someone should try to get an official answer. And he believes that the U.S. attorney should open this investigation.

BALDWIN: This is the beginning of several pieces that you're unveiling tonight. We'll be watching for piece number two tonight on "AC 360," 8:00 Eastern. Victor Blackwell, we'll watching for you. Thank you so much for staying on that.

Coming up in just a couple minutes, President Obama will be nominating Janet Yellen to become Federal Reserve chairman, chairwoman, taking over for Ben Bernanke. Special coverage with Wolf Blitzer out of Washington starts right after this.

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