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Wal-Mart Announces Employee Boost; Stocks Steady Ahead of Fed Meeting; Chris Brown Legal Trouble; Rebuilding after Superstorm Sandy; Red Sox One Win Away; House Committee Holds Hearing on Obamacare Website

Aired October 29, 2013 - 09:30   ET

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

MARTIN SAVIDGE, CNN ANCHOR: I'm Martin Savidge.

POPPY HARLOW, CNN ANCHOR: And I'm Poppy Harlow, in today for Carol Costello.

Well, today, the nation's largest retailer is announcing a big boost to the employees who may be helping you this holiday season. We're talking about Wal-Mart. It is going public with news of thousands of employee promotions and it's responding to critics who say it underpays a number of its employees. Just minutes ago, our chief business correspondent, Christine Romans, sat down with the U.S. CEO of Wal-Mart. She joins us with that interview.

Christine, he doesn't come out and talk a lot publicly.

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: No.

HARLOW: You just had a one-on-one with him. First of all, what's Wal- Mart announcing here? What are they doing?

ROMANS: Well, what they're saying, Poppy, is that they're going to promote sales associates, 30,000 of them, between now and the end of the year. Just these on the spot promotions. They'll have more responsibility and higher pay. And this is on track now for Wal-Mart to have 160,000 promotions this year.

Now, Poppy, that's about what they had last year. So why - you know, why are they announcing it? Well, I mean, I'm calling it a bit of a charm offensive, a public relations offensive. You know, they've had some bad press recently, quite frankly, about how much their employees are made - the vast majority of their employees are made. They make more than the retail average of $12 an hour. They make about more like $12.83 an hour, more than the retail average. But if that were a full- time job, it would still be only $26,000 a year. And that's what the headlines have been. So Wal-Mart out there trying to say, no, look, we promote people, and we're doing 30,000 promotions right now.

HARLOW: So tell us more about that. I mean I wonder if he talked about how much of a promotion in terms of wage promotions we're talking about here. And then also this issue, this fight that Wal-Mart has been in the middle of because it's the biggest single employee in this country, employing 1.4 million people here, of a living wage, quote/unquote, living wage versus minimum wage or pay that a lot of the workers there are getting.

ROMANS: Right. So Wal-Mart pays more than the minimum wage, right?

HARLOW: Right.

ROMANS: More than $12 an hour even. But there are a lot of people who say that's simply -- that's not enough. You can't live in this country. You can't send a kid to college on some of these jobs. And, quite frankly, these are not the kind jobs that are earning the salaries we had a generation ago when people made much more than that working in factories. These are service industry jobs, not the manufacturing jobs that really built the middle class.

I asked him specifically about that, should we raise the minimum wage? Is that the right debate? And should it be about a living wage? And this is what he told us.

(BEGIN VIDEO CLIP)

BILL SIMON, PRESIDENT & CEO, WAL-MART U.S.: The discussion around the starting wage, minimum wage, is one that the country needs to have. The debate needs to be had. But that's not the issue. The issue isn't where you start, it's where you go to once you've started.

ROMANS: The mobility.

SIMON: The mobility. And so raising the minimum wage will change the starting wage, but it won't adjust where people can go to and the career opportunities that exist in the country today.

(END VIDEO CLIP)

ROMANS: And that's what he's -- part of what he's trying to say about Wal-Mart, is they do have that mobility. Seventy-five percent of their store managers come from the hourly workforce. Their store managers make anywhere from $50,000 to $170,000 a year. So he's saying they do have that mobility.

But I asked him, Poppy and Martin, I asked him, are you worried that so many of the jobs the country is creating are low-wage jobs that don't have mobility? He said, yes, he is - he is concerned about that and what it means for the country.

HARLOW: So this is what Wal-Mart has also become a topic for political fodder, right? You had one Democrat not too long ago accusing some of the company executives of being, quote, "welfare kings." So explain what they mean by that, and then his response to that.

ROMANS: Yes, "welfare kings." That's quite a statement to call the -- America's largest company's executive's "welfare kings." And that was from a congresswoman from Illinois who said, look, when they look at the data, they look at taxpayer subsidies of workers who work at Wal- Mart, they see taxpayers filling the gap of low wagers. And I asked him specifically about this report from the Democratic staff of the U.S. House Committee on Education in the Workforce that estimated a 300 worker Wal-Mart Supercenter in Wisconsin, for example, would likely cost taxpayers at least $904,000 a year in employee -- in taxpayer subsidies, Medicaid, welfare benefits, other benefits, and this is what he said.

(BEGIN VIDEO CLIP)

SIMON: We are no different than any other retailer in America. We provide opportunities for people to join the company and to grow. The level of subsidy that exists is an issue that the, you know, the government decides.

(END VIDEO CLIP)

ROMANS: He also wanted to point out, and did a couple of times in the interview, that those critics are influenced by pro-union groups, you know, who want to unionize Wal-Mart's. He said, no, we provide a good entry level job where you can grow if you want to and have the talents. You know, they get a lot of criticism. They are the biggest player, you guys. I mean there's nobody bigger than Wal-Mart. What Wal-Mart does really, really matters.

HARLOW: Right.

ROMANS: What they're trying to say here now, amidst what has been all of this discussion about are they not paying enough is, they're trying to show that they do promote people and they are a place to work where you do have some mobility. That's the company line.

HARLOW: Yes, and whether the criticism is fair or unfair, your opinion on it, they're coming out, they're talking about it, which is always, always a good thing. I know you're going to have a lot more of the interview on your show, "Your Money," this weekend, right?

ROMANS: Yes. I will. And, you know, it's rare to hear them sit down.

HARLOW: Right.

ROMANS: I mean sometimes you can go months without hearing from corporate executives of Wal-Mart. You know, it's been a long time since I've been able to sit down with them. I really wanted to talk to them also, you know, about the consumer. You know, he says the consumer's very smart and savvy, but he's worried about the shutdown. He's worried about the Washington intransigents and what that's going to mean for consumers. So he's got -- no one knows what's going on with the American consumer more than Wal-Mart.

HARLOW: Yes.

ROMANS: That's for sure, you know, so he had a lot to say about that. I'll have more of that for you later.

HARLOW: That is for sure. Christine, thanks. Appreciate it.

SAVIDGE: Yes, very good stuff.

Meanwhile, investors are watching the opening bell and the start of the two-day Federal Reserve meeting. The bell's already rung, as you see there. Let's go straight now to CNN's Alison Kosik at the New York Stock Exchange to see how the day's starting.

Good morning, Alison.

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Good morning, Martin.

We are seeing stocks start in the green. Got a new housing report out just a few minutes ago and it's showing good news. It was on home prices. And it shows that home prices in the 20 biggest U.S. cities are up 12.8 percent in August. That's compared to last year. So this Case Shiller report is much better than Wall Street expected. You look deep in the report and you see these prices really going up in the areas across the country that were hit the hardest, like in Las Vegas, in Detroit, in Los Angeles. And what that means is that fewer people are under water on their homes and it's becoming easier for them to sell their homes.

But analysts say if you think housing pricings are just going to continue shooting up higher, keep in mind the peak is behind us, that, yes, prices are up, but these gains are slowing because we are seeing mortgage rates slowly creep higher. We are seeing fewer people go into contract on new homes -- so on homes themselves. So those factors can wind up scaring off prospective homebuyers. That's the tradeoff that you don't see, that the home selling is back.

But on the other side of it, it's not necessarily a bad thing. You don't really want to see huge jumps in prices. You want to see a more healthy pace of recovery, especially since the housing market, Martin, is still in recovery mode.

Martin.

SAVIDGE: Yes. Let's talk about Apple. There was some disappointing profit news yesterday, right?

KOSIK: Yes, interesting. We've been watching this stock since Apple reported after the bell yesterday. It's really been all over the place. It was down 4 percent last night. Now it's up almost 1 percent. This is all about its earnings. And the headlines, they've got some really big numbers. Listen to this, 34 million iPhones were sold last quarter, 14 million iPads were sold. It was $38 billion in sales.

Now, all those numbers were better than Wall Street expected. And CEO Tim Cook said Apple is stronger than ever. But there are some on Wall Street that are getting kind of worried because it looks like shoppers are out there bargain hunting for these products. They're buying Apple's cheaper products, buying Apple's older models. That wound up hitting Apple's bottom line. But its -- Apple's CFO is not too concerned about it. And at this moment, investors aren't either. We are seeing Apple shares at $532 a share.

Care for one, Martin?

SAVIDGE: Yes, I do, actually. It's kind of an interesting trend. Alison Kosik, thanks very much.

Checking our top stories. $9.7 billion. That is how much the U.S. government has lost so far on the sale of most of the General Motors shares it received for a bailout four years ago. The Treasury reported the loss in a quarterly report to Congress.

A top Medicare official expected to face some really tough question on Capitol Hill next hour over the disappointing rollout of the Obamacare website. That hearing sets the stage for tomorrow when Health and Human Services Secretary Kathleen Sebelius will testify. On Sunday, healthcare.gov was knocked offline. Service has been restored as of yesterday.

Also on Capitol Hill today, the directors of the National Intelligence Agency and the NSA will appear in front of lawmakers as outrage over spying accusations continues to grow. The NSA reportedly tapped into the phones of about 35 world leaders, including German Chancellor Angela Merkel. Sources differ on when the White House learned of the phone taps of foreign leaders.

HARLOW: All right, still to come in the NEWSROOM, Chris Brown, now a free man after that weekend brawl we told you about yesterday that led to his arrest.

SAVIDGE: A judge reduced the charges against the 24-year-old singer. We'll tell you why he could still face a lot of legal trouble.

(COMMERCIAL BREAK)

HARLOW: All right, well reduced charges for singer Chris Brown after a weekend brawl in Washington, D.C. On Monday, a judge reduced the charge to simple assault, which is a misdemeanor. On Monday, Brown walked out of court flashing a peace sign at his fans. You see it right there. But the singer could still be in some very serious legal trouble. "Showbiz Tonight" anchor A.J. Hammer joins us now from New York.

So what do these reduced charges mean for Brown, because he was already on probation.

A.J. HAMMER, ANCHOR, HLN'S "SHOWBIZ TONIGHT": Right. Poppy, it doesn't mean that he is off the hook at all. The probation rules from his felony domestic violence conviction that happened after he beat up Rihanna four years ago require Brown to stay out of any kind of legal trouble. This new arrest and potential new crime, even without a conviction, can trigger a violation of that probation and a judge can decide to send him to prison for the duration of his probation. That could be up to a year.

Now, Brown has to report to his L.A. probation officer and ultimately to a superior court judge in Los Angeles who will be the one to decide on whether or not there's going to be any prison time for Chris Brown. Understandably, the L.A. courts haven't commented on this yet, but Brown's side is saying he didn't break any laws. He is pleading not guilty to the charges. And his attorney has been arguing that Brown's security guard was just protecting the singer and Brown was just protecting himself, which is obviously legal. Now, Poppy, according to an eyewitness who spoke with CNN, the victim wasn't fighting back and was getting hit in the face hard enough to give him a bloody nose and send him to the hospital, where he was treated for bruises and swelling. So we have a couple of different stories going on.

HARLOW: Right. And it's all going to play out in court. So when is that? When do you think we're going to see Brown in court?

HAMMER: Well, in this case, both men are expected to be in court in D.C. where the incident took place on November 24th. Until then, Brown is required to stay at least 100 yards away from the alleged victim. But Brown's also expected to appear in a Los Angeles court on November 20th. That was already scheduled. It's a hearing on his probation. So, two different court dates. We'll see what happens in each case.

HARLOW: On two different matters. All right, A.J., thanks. Appreciate it.

SAVIDGE: All right, new in the next hour of NEWSROOM, a doctor on trial for the murder of his beauty queen wife. His mistress already told the court that she went to the wife's funeral. What else could we hear from her when she takes the stand today?

Plus, this.

(BEGIN VIDEO CLIP)

BRITNEY SPEARS (singing): Give me a sign. Hit me baby one more time.

(END VIDEO CLIP)

HARLOW: That's right, Britney Spears. We're going to tell you about her fighting crime on the high seas. We're not joking. Why her music has seriously become a secret weapon for some ship captains. That's all ahead at 10:00.

(COMMERCIAL BREAK)

SAVIDGE: Good morning, everybody. It's time for a check of the top stories.

HARLOW: Even tweets from President Obama's Twitter account aren't safe from hackers apparently. The hacktivist group Syrian Electronic Army is claiming responsibility for altering links in a pair of tweets on Monday. One directed followers to a video montage of terror attacks. (Inaudible) tweets were retweeted hundreds of times.

Meantime, tonight, loved ones will say their final good-bye to Andy Lopez. A police officer shot and killed the 13-year-old because he appeared to be carrying an assault rifle. Well, it turned out to be a plastic gun. A preliminary autopsy report says the officer fired eight rounds at the scene and Andy Lopez died of bullets to the chest and right hip.

SAVIDGE: O.J. Simpson's South Florida mansion will be auctioned off online. A Miami Dade judge signed off on the deal to sell his lavish home as part of a bank foreclosure back in August. According to reports, the property's valued at approximately half a million dollars.

And then in weather. Take a look at this. Winter wonderland for some folks out west. Seems early; maybe not. An average of 4 to 7 inches fell in parts of Montana and Wyoming, up to 10 more inches could fall on Wyoming and Colorado. Today we wish those folks good luck with that today.

HARLOW: Yes, winter here we come.

All right. Well, New Jersey Governor Chris Christie is spending today visiting communities impacted by superstorm Sandy. He's going all across the state of New Jersey. And today marks one year after that tragic storm.

There is still a long way to go for many people hit by Sandy. In Seaside Heights, that's right on the Jersey Shore, millions of dollars were poured in to rebuilding, only to have a massive fire in September destroy part of the same boardwalk that was ravaged by Sandy. And get this: investigators blamed that fire in part on wiring damaged by Sandy's floodwaters, really a one-two punch for them.

But they are Jersey strong. And the rebuilding is under way.

(BEGIN VIDEOTAPE)

HARLOW (voice-over): When superstorm Sandy slammed ashore one year ago swallowing this boardwalk and its iconic roller coaster, it took this Bubba's hot dog shop with it.

UNIDENTIFIED MALE: The building was just destroyed. Devastation.

HARLOW (voice-over): But he re-opened this summer, unwilling to give up.

HARLOW: How was the summer for business?

UNIDENTIFIED MALE: It was slow. No one made a lot of money. It was a year of survival.

HARLOW (voice-over): Then in a one-two punch, Bubba's new restaurant was wiped out in a September fire that demolished 60 businesses.

UNIDENTIFIED MALE: It was probably the biggest feeling of helplessness I've ever had in my life.

HARLOW: You named one Superstorm?

UNIDENTIFIED MALE: Superstorm. That's the only type of superstorm I ever want to see again.

HARLOW (voice-over): Vince Torino (ph) is building back the casino pier. UNIDENTIFIED MALE: I think we had 1,000 man-hours a day working on this project. And what we accomplished in several months should have taken a few years.

HARLOW (voice-over): But a large chunk of the pier still isn't rebuilt. And Torino (ph) questions whether it's even worth the investment, not knowing how many people will return; many have no homes to come back to.

UNIDENTIFIED MALE: I think we've come a long way.

HARLOW (voice-over): Seaside Mayor Bill Akers (ph) estimates business here was down 30 percent this summer.

UNIDENTIFIED MALE: There was a time right after Sandy we didn't know if we would be open. So you could look at it as 30 percent or 70 percent up.

HARLOW (voice-over): He says rebuilding the town's infrastructure and mitigation work could cost up to $20 million.

HARLOW: This town gets whacked by Sandy and then this fire.

MAYOR BILL AKERS, SEASIDE HEIGHTS, N.J.: It's a punch in the gut. I'm not going to kid you. You sit there and you -- there's no reason why. There's no good answer. The only thing you can do is deal with it.

HARLOW (voice-over): At the Beachcomber Bar & Grill something astounding happened. The businesses on both sides of Michael Carbone's restaurant burned down but his did not.

MICHAEL CARBONE, OWNER BEACHCOMBER BAR & GRILL: Fire, storm. We're here. This is our life and how we make our living. The lesson is we're Jersey strong.

HARLOW (voice-over): Strong. A good word to describe folks here.

And what Bubba built twice, he's building again, come hell or high water.

STEVEN "BUBBA" DEMURO, OWNER, BUBBA'S DOG HOUSE: If I can get my doors open and pay my rent and pay my employees, I'll be happy. I'll be happy. I'll be open. That's the goal.

(END VIDEOTAPE)

HARLOW: They embody resilience.

SAVIDGE: They do.

HARLOW: Bubba, right there, who you just saw rebuilding for a third time, told me that he has to get a second job just to afford to get by in the off season. But that's really hard to do when you're trying to pay to get your business all rebuilt. And another thing that's really affecting the is the fact that all these homes along the Jersey Shore that aren't rebuilt, well, people aren't renting them out, people aren't coming to live in them, and that means less tourists, less residents to support these businesses to get back on their feet. So it's tough. It's been one ear. They have a long way to go, but they have come so far.

SAVIDGE: We still have a lot of this, though, with Katrina. And the rebuilding has taken place. And even though it can look very dark and people may feel like, wow, haven't made much progress, it happens.

HARLOW: It happens.

SAVIDGE: It really does. And it's good to see.

HARLOW: And they come together.

SAVIDGE: Yes.

HARLOW: Yes.

SAVIDGE: Still to come, we should tell you about Boston's Jon Lester. Turned in another post-season pitching gem as the Red Sox take game five of the World Series, which means they're one away.

(MUSIC PLAYING)

(COMMERCIAL BREAK)

(MUSIC PLAYING)

SAVIDGE: When you are an Indians fan as I am, you learn to live vicariously through the thrills of other fans.

HARLOW: Or Twins fan. It's been since 1987 for us.

SAVIDGE: Well, the Red Sox as you know beat the Cardinals last night. Now they're one win away from winning the World Series.

Wonder what that feels like?

HARLOW: I wonder.

Can we go together, (inaudible) go?

What do you think, Andy?

(LAUGHTER)

ANDY SCHOLES, CNN CORRESPONDENT: I'm an Astros fan. I'm in a worse situation than all of you guys, yes.

But the World Series last night, first time in three games there was no wacky ending. It was just a good old pitchers' duel between the Red Sox' Jon Lester and the Cardinals' Adam Wainwright. Big Poppy has been absolutely on fire in this series. He got things going for Boston in the first inning. He doubles in Dustin Pedroia to make it 1-0. The game was tied at 1 all the way into the seventh inning. That's when David Ross comes to the plate. He doubles in another run. And that would be enough for Lester and Koji Uehara. They combined to give up only one run on four hits.

Red Sox win game five, 3-1. They now look to close out their first World Series title at Fenway Park since 1918.

(Inaudible) game five of the part of sports history. For the first time ever, the World Series and Monday Night Football were played in the same city at the same time. The St. Louis Rams were hosting the Seattle Seahawks down the street.

And St. Louis, of course, a baseball town (inaudible) stadium was only about 65 percent full. But despite not having a great home field advantage, the Rams were (inaudible) in the third quarter. That's when Russell Wilson (inaudible) -- watch the tape here. He waves good-bye to the defender.

Now he got a penalty on that play for taunting. (Inaudible) 80-yard touchdown ran, they had a chance to win this one late, but on the final play, the pass would go incomplete. Seahawks won 14-9, making it a very rough night to be a fan in St. Louis.

Now due to numerous fines and suspensions. the Redskins' Brandon Meriweather says he's going to change the way he plays the game of football. Meriweather was suspended this past Sunday for delivering multiple helmet-to-helmet hits in a game against the Bears earlier this season. Now he says he's going to start targeting players' knees to avoid another suspension.

(BEGIN VIDEO CLIP)

BRANDON MERIWEATHER, WASHINGTON REDSKINS: To be honest, man, you just got to go low now, many. You got to end people career. You got to tear people's ACLs and mess up people knees now. You can't hit them -- you can't hit them the way -- you can't hit them high anymore. You just got to go low.

(END VIDEO CLIP)

SCHOLES: Wow.

Well, the NBA season kicks off tonight. LeBron and the Heat taking on the Chicago Bulls. That's on TNT. That gets going at 8:00 Eastern and that game is followed by the Clippers and the Lakers tonight, excited the NBA season is finally here. We got lots of sports to watch on TV.

SAVIDGE: Remember that other team LeBron played for?

(CROSSTALK)

HARLOW: Yes, you remember it well. SAVIDGE: (Inaudible).

All right, Andy. Thanks very much.

HARLOW: Thanks, Andy, (inaudible).

SAVIDGE: Next hour of the CNN NEWSROOM is going to begin right now.

(MUSIC PLAYING)

SAVIDGE: Good morning. Thank you for joining us. I'm Martin Savidge in for Carol Costello.

HARLOW: I'm Poppy Harlow.

Happening this hour, a House panel takes up the ObamaCare website disaster. An Obama administration official expected to face some very tough questions about the problem-riddled online marketplace. Her name is Marilyn Tavenner. She is the administer for the Centers for Medicare and Medicaid Services.

I want to show you now some live pictures if we can get them up for you as this hearing (inaudible). There it gets underway in Washington.