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Economy Grows, Stocks Sink; GDP Grows in Third Quarter; Stocks Tumble Despite Positive Reports; Gap Widening Between Rich and Poor; Fast Food Workers Strike; Obama Speaks on Raise of Minimum Wage; American Killed in Benghazi Identified; Passwords May Be Hacked; President Only Allowed to Use Blackberry; GOP Schools Men about Women; FSU QB Rape Probe

Aired December 05, 2013 - 13:00   ET

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

WOLF BLITZER, CNN ANCHOR: Right now, the economy's growing, but stocks are sinking. We're going to tell you why.

Also right now, fast food workers are sending a message, minimum wage is not enough to live on. They're walking off their jobs. Their goal is to try to double their pay.

And right now, the killing of an American in Benghazi, Libya. It's being investigated. Reportedly he was a school teacher and he's described as someone who is, quote, "sweet to everyone."

Hello. I'm Wolf Blitzer in Washington.

First up, the health of the U.S. economy and your 401(k). A key checkup today shows the economy growing at a quicker pace than expected. You'd think that would send stocks soaring, but that's not necessarily the case.

Zain Asher is joining us from the New York Stock Exchange.

Zain, let's start with that key economic report that came out today. How much growth are we talking about?

ZAIN ASHER, CNN BUSINESS CORRESPONDENT: Hey, Wolf. Yes, third quarter GDP coming in at 3.6 percent. Certainly a good headline number and the biggest growth we've seen since the first quarter of 2012. Now, part of the reason for this is we're seeing a bigger boost in inventories, a bigger buildup in inventories. But when you dig a little deeper into the data, you'll see that consumer spending is actually weak.

But -- so, if you remove inventories from the data, GDP third quarter actually would have come in at 1.9 percent so not necessarily that impressive. However, the headline number's certainly getting stronger. And if you compare it to what we've seen this year, the first three months of the year, 1.1 percent, the last quarter 2.5 percent. And also, this number is certainly in line with stronger economic reports we've seen just this week from the car industry, and also housing and also jobless claims as well -- Wolf.

BLITZER: Yes, 3.6 percent for the third quarter is very encouraging. But stocks not necessarily all that -- what, it's down about 25 points right now, right? So, explain why investors are a bit nervous even though there have -- has been this positive economic growth number.

ASHER: Absolutely. So, here's the thing. When you have a positive number like third quarter GDP or good numbers in housing, the market sort of looks at it a little bit differently because the fear right now is all about tapering. When you have positive economic reports, the idea is that the fed might actually pull back on stimulus early next year. That is -- that is the fear. Also, we're seeing lower volume also being traded.

But you've got to understand as well that December is historically a good month in terms of stocks but we've had a good rally this year that investors are pulling profits off the table -- Wolf.

BLITZER: All right, Zain, thank you.

Wall Street investors, as we see, they're holding back. So are consumers, by the way. Even with the deep discounts, the holiday shopping season got off to a relatively sluggish start. Americans decidedly not yet confident in how things are going.

Let's go to New York and continue our conversation with our global Economic Analyst Rana Foroohar. Rana, job growth is up. The stock market has made major gains throughout this year, not necessarily in the last few days, but Americans remain skeptical. Take a look at CNN ORC poll that I'm putting up on the screen right now. Only 24 percent believe the economy is starting to recover, 39 percent actually believe it's getting worse. So, what do you think of this disconnect?

RANA FOROOHAR, CNN GLOBAL ECONOMIC ANALYST: Well, I think that what you're seeing is the long-term trend of higher than average unemployment which has started to tick down a little bit in recent months but is still much higher than it should be at this point in recovery. And as a consequence of that, you have flat wages. So, when you think about what makes consumer feels -- what makes consumers feel more confident, it's having more money in their pockets. And the average person in this country hasn't gotten a raise in over four years.

BLITZER: The market may be down over last few days but overall this year, major, major gains. Record highs on the S&P. The Dow Jones boosting a lot of Americans' 401ks, the retirement plans that are out there. So, why aren't Americans feeling things are moving in the right direction?

FOROOHAR: Well, you just pointed out the major disconnect in the economy. Yes, stocks have been up but they've been up in large part because the Federal Reserve has been pumping so much money into the economy. There are a lot of smart investors out there that actually feel that real earnings growth, real growth in the economy that would buoy (ph) stocks longer term isn't there. Also, consider this. The top 25 percent of Americans own 75 percent of the stocks. So, if you're wealthy, you're feeling it. But if you're in the middle and certainly on the lower end of the economic spectrum, you really aren't. BLITZER: As President Obama pointed out yesterday in that speech he delivered, there is clearly a growing disparity between the haves and the have-nots here in the country. Is that a real threat to the overall economy?

FOROOHAR: I think it absolutely is. I think it is the key economic problem of our time, the growing income gap and stagnant wages. If you just think about it for a minute. Our economy is made up of 70 percent consumer spending. And if you have the majority of Americans really not doing better, not getting raises, not feeling more confident, you cannot have a more robust recovery longer term. So, we've got to get unemployment down and wages up.

BLITER: I know you're always talking to the smartest analysts out there in New York. What is their prediction going into 2014? What can we anticipate?

FOROOHAR: Well, I think that people are expecting the Federal Reserve to start tapering back on its asset buying. They've been pouring $85 billion a month into the economy. That's one of the reasons stocks remain so high. I actually did a cover story this week in "Time" on Carl Icahn, one of the top investors in the world, who believes that the market is going to break at some point, in part because of things we've been talking about, higher inequality, low wages and generally low growth. So, I think we're looking at 2 percent, not too much more than 2 percent, going forward in the next few months anyway.

BLITZER: And if the fed curtails some of that stimulus money that they've been pumping into the economy, that presumably would have an impact on Wall Street as well, right?

FOROOHAR: That's right. You know, I think that -- it's interesting, the public sector versus the private sector, there are parts of the private economy that actually have been pretty robust. Manufacturing has made a comeback. But people still aren't spending enough and I think the fact that government has been a headwind to growth rather than a help through, you know, making Washington function better, getting rid of gridlock, just coming to consensus about political issues. I think that that's been a real underminer (ph) for people's confidence and hopefully that will change going forward.

BLITZER: Rana, thanks very much.

FOROOHAR: Thank you.

BLITZER: Hungry for fast food today? Well, at least in some parts of the country, good luck. Minimum wage worker at McDonald's, Burger King, Wendy's, other fast-food chains, they are walking off the job. It's part of an organized labor effort to raise the hourly rate for these workers to $15.00. That's twice what many of them are making right now. The demand for a livable wage began one year ago in New York. It's now become a coast-to-coast movement. Today's work stoppage is expected to involve fast-food chains in 100 cities. Even President Obama is offering his moral support.

(BEGIN VIDEO CLIP) BARACK OBAMA, PRESIDENT OF THE UNITED STATES: We know that we're going to have a greater and greater portion of our people in the service sector and we know that there are airport workers and fast food workers and nurse assistants and retail salespeople who work their tails off and are still living at or barely above poverty. And that's why it's well past the time to raise a minimum wage --

(END VIDEO CLIP)

BLITZER: An executive with the White Castle burger chain says paying employees $15.00 an hour, in his words, would kill the company.

Other news, the state department has now confirmed that a United States citizen was killed in Benghazi, Libya. Details are still coming in to CNN. The man worked as a chemistry teacher at an international school in Benghazi. Our Senior International Correspondent Nic Robertson is joining us now from New York. I understanding, Nic, the American has just been identified.

NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: He has. Ronnie Smith was his name. A young man from -- believed to be from Texas, was a chemistry teacher at that international school in Benghazi. By the Web postings, social media postings that have been put up, he was well liked. His principal of the international school there is quoted as saying, he was a very sweet man, somebody who was cherished by his students.

What appears to have happened, he was gunned down today while exercising, gunned down by gunmen, unidentified gunmen so far. No claim of responsibility yet. But clearly Benghazi, a very troubled city and one that is very -- a difficult place for westerners to live in at the moment -- Wolf.

BLITZER: And I understand an Al Qaeda representative has put out a video asking Libyans to rise up against the United States. So, what does this say? Could there be an Al Qaeda potential link to this attack on this American school teacher?

ROBERTSON: Wolf, it's certainly something that can't be overlooked at the moment. The Al Qaeda spokesman, the American, in fact, Al Qaeda spokesman, Adam Gadahn, just a few days ago in 17-minute audio Web posting told Libyans to rise up and take vengeance against American interests and he cited 911 attacks and other attacks against U.S. interests around the world in this. And he said it was to -- it was -- they were to do this in revenge for the United States two months ago arresting Abu Anas Al Libi (ph). You remember he was the man brought to the United States accused of being involved in the 1998 attacks on the U.S. embassies in Kenya and Tanzania. This is what Gadahn is saying, there are -- there are echoes here of the statement put out by the Al Qaeda leader, Ayman al-Zawahiri, on the eve of killing Chris Stevens in Benghazi. The threats then, again, for Libyans to attack Americans -- Wolf.

BLITZER: All right, Nic, thanks very much. Nic Robertson, who has himself spent lots of days in Libya over these years. Thanks very much. Meanwhile, there's a disturbing, new report on cyber security. According to the firm Trust Wave, hackers in the Netherlands have accessed more than 2 million user names and passwords from thousands of popular Web sites including Facebook, Gmail, Yahoo!, Twitter and many others.

Laurie Segall is joining us from New York right now. Laurie, this sounds like a pretty sophisticated operation. How did it work?

LAURIE SEGALL, CNN MONEY TECH CORRESPONDENT: Wolf, it absolutely was. It was something called pony malware. And essentially, you'd get a link, and it would like something you might click on. You would click on it and what would happen is they would -- malware would be on the computer. They would be able to look at your browsing history and be able to get many of your passwords. And as you said, you know, 2 million accounts affected. This scope of attack was huge -- Wolf.

BLITER: Well, one surprising outcome was how many people use what are described as weak passwords which is obviously a big no-no, as far as this kind of situation is concerned. Tell us about that.

SEGALL: You're absolutely right. What happened -- you know, this didn't happen because the passwords were weak, it was because people clicked on a link. But what we were able to see and gather from the attack is that a lot of people have weak passwords. Of the 2 million accounts affected, Wolf, about 15,000 people, the most common passwords they have is one, two, three, four, five six. And then you're looking right there, all these iterations, of this one, two, three-digit combo. Another common password was the word, password. A lot of folks using that.

And then, again, you see these digits, the one, two, three iteration, and I will say, you know, hackers probably already knew that these were weak passwords but now they actually have evidence that these are weak passwords. So, if these -- if your password looks anything like this, I'll say this, change it immediately. You know, use a number of characters, use symbols, use upper and lower case letters, so important when it comes to kind of dodging hackers. The more creative you are, the better you have -- the better chance you have against a hacker.

BLITZER: So, what do people need to know now to protect their accounts?

SEGALL: You know, besides strong passwords, which we've obviously seen a lot of people have weak passwords, you know, install anti-virus software on your computer. That's very, very important. You know, don't click on suspicious links. That's how this happened in the first place. Even if it's from a friend. If it looks suspicious, don't click on it. And also, have separate passwords for different accounts. It's so important that, you know, maybe your Twitter password is different than your Facebook password. So, if something like this, god forbid, does happen to you, you don't have to change all of your passwords -- Wolf.

BLITZER: And an unrelated matter, the White House obviously takes cyber security very seriously, including the type of mobile device the president is allowed to use. And apparently, it's not an iPhone, right? You know, he was joking. He said that he -- his security doesn't allow him to use an iPhone. And at first, I was thinking to myself, well, that -- you know, the iPhone is -- I talked to a hacker friend of mine. He said it's looked as being pretty secure or more secure so than the Android. That being said, think about all we do on our iPhones. We check our mail. We check our bank accounts. We tweet. We use Facebook. And what this hacker friend said to me -- he said, the president is going to be the number one target. So, obviously, they've got to take extra precautions for him -- Wolf.

BLITZER: Obviously, indeed. All Right, Laurie, thanks very much.

So, you remember Mitt Romney and his statement about his so-called binders full of women or a congressman's comment about rape that probably cost him an election. We're going to tell you what Republicans are now doing to prevent those kinds of gaffes. Stay with us. We have details.

(COMMERCIAL BREAK)

BLITZER: Republican candidates are getting schooled about how to run against women in the upcoming elections. The story was first reported by Politico. The sessions are designed to prevent gaffes like the ones that plagued some Republicans in 2012. Former Congressman Todd Akin, a prime example. Remember this comment on abortion during his run for the U.S. Senate?

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: What about in the case of rape? Should it be legal or not?

TODD AKIN (R), FORMER CONGRESSMAN (voice-over): Well, you know, people always want to try and make that as one of those things, well how do you slice this particularly tough sort of ethical question. It seems to me, first of all, from what I understand from doctors, that's really rare. If it's a legitimate rape, the female body has ways to try to shut that whole thing down. But let's assume that maybe that didn't work or something. You know, I think there should be some punishment, but the punishment ought to be on the rapist and not attacking the child.

(END VIDEO CLIP)

BLITZER: All right, Dana Bash is joining us now from Capitol Hill.

Dana, even the House speaker, John Boehner, said today that Republicans need to do a whole lot better on this front. Listen to what he said.

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER (R), HOUSE SPEAKER: Trying to get them to be a little more sensitive, you know? You look around the Congress, there are a lot more females in the Democrat caucus than are in the Republican caucus. And, you know, some of our members just aren't as sensitive as they ought to be.

(END VIDEO CLIP)

BLITZER: All right, so, Dana, what are you hearing on The Hill right now about these tutoring sessions?

DANA BASH, CNN CHIEF CONGRESSIONAL CORRESPONDENT: Well, what we're told is that what they're doing over at the NRCC, which is the political arm of the Republican Party and the House that tries to get members elected, is they're doing broad tutorials, media training for all of their candidates, which is not new. Both parties do that.

But as part of those tutorials, they are being much more focused on avoiding the gaffes, like you just played from Todd Akin, on explaining how to, when you're asked about abortion, when you're asked about subjects that certainly are sensitive and are prone to foot in mouth moments, to not answer those the way Todd Akin did. But then also, more broadly, to talk more in a way -- for Republicans to talk more in a way that is relatable to women voters. To talk about themselves as husbands, as fathers and things like that. And, in fact, this is something that I had a chance to talk to the House majority leader, Eric Cantor, about earlier today, about what he thinks the issue is. Listen to what he said.

(BEGIN VIDEO CLIP)

BASH: Do you not know how to talk to women, sir?

REP. ERIC CANTOR (R), MAJORITY LEADER: What we have any number of Republican women in our conference who are real leaders on all kinds of issues.

BASH: But for -- is there a problem with men in the Republican Party, your rank and file, who don't know how to communicate to reach female voters?

CANTOR: You know it is our policies that are going to appeal to both female and male voters.

BASH: They haven't.

CANTOR: When we're -- when we're talking about health care, right now, our health care starts with people and patients.

BASH: There are times when you hear Republican candidates, even Republican members, talk about rape, talk about things that I know that you would rather them not talk about message wise, language wise. Are you trying to put a stop to that?

CANTOR: Again, Dana, I would say that our policies, the underlying prescriptions that we have for people, is what most are concerned about, men and women.

(END VIDEO CLIP)

BASH: Now, Wolf, one of the big problems Republicans across the board admit that they have in reaching female voters is that they simply don't have that many female candidates, female representatives. Right now, in the House majority, this is a great example, 232 Republicans, a really big number. Of those 232 Republicans, 19 are women. Only 19 female Republicans in the House of Representatives. That is another thing that they're trying to change inside the House Republican leadership.

BLITZER: Yes, I remember this comment from Mitt Romney during the campaign last year that also agitated a lot of folks, especially women. Listen to this.

(BEGIN VIDEO CLIP)

MITT ROMNEY (R), PRESIDENTIAL NOMINEE: And I said, well, gosh, can't we -- can't we find some women that are also qualified? And - and so we -- we took a concerted effort to go out and find women who had backgrounds that could be qualified to become members of our cabinet. I went to a number of women's groups and said, can you help us find folks? And they brought us whole binders full of women.

(END VIDEO CLIP)

BLITZER: Yes, binders full of women obviously caused him some grief out there. How serious is this -- the gender gap problem for the Republicans right now?

BASH: It's a huge problem. Mitt Romney lost with the women vote I believe by about 11 percent and it is certainly not new and not just about Mitt Romney. It has been like that for Republicans for years.

And you talk to Democrats who are really, really trying to retake the House and, of course, keep control of the Senate in the next election. Any time a Republican says anything that can be used by Democrats as, you know, a message about Republicans and their war on women, they take it and they seize on it because the predisposition is already there in the electorate to listen to something like Mitt Romney and saying binders of women and what he was trying to say, I tried really hard to hire women and put women in my cabinet and business and it sort of - it turned on its head because of the way people perceive Republicans and women, and that is the fundamental thing that they're trying to change back as we started this conversation in those media training sessions that House Republicans are having.

BLITZER: Dana's going to have a lot more at 5:00 p.m. Eastern in "The Situation Room" on this during - including more of her interview with Eric Cantor. Dana, thanks very much.

We're learning new information right now about those rape allegations against a Florida State University quarterback, Jameis Winston. We have details of a police affidavit. That's coming up.

(COMMERCIAL BREAK)

BLITZER: He's the star quarterback on the number one college football team in the country and a front-runner for the Heisman trophy, but the future of the Florida State University quarterback Jameis Winston could change dramatically next now. That's when a state attorney in Florida will announce whether he's charging Winston with a rape. Martin Savidge is joining us from the CNN Center in Atlanta. Our legal analyst, Paul Callan, is joining us from New York.

Martin, you're - I understand you're getting some new information about the allegations against Winston? What are you learning?

MARTIN SAVIDGE, CNN CORRESPONDENT: That's right, Wolf.

Yes, the authorities, that's the Tallahassee Police Department, has released to CNN now what is really a probable cause statement. Now this statement was actually taken in January of this year. So it goes back some time. But it gives us some insight and detail as to what the victim says happened to her.

She said on the night of the attack she was out with a number of friends and in a bar called Potbelly's in Tallahassee. She had about five or six shots. And then after that time, her friends left and she says she began feeling the effects of the alcohol. And that's when her memory becomes rather broken, she says. And she admits at one point she thought she was in the back of the taxicab with a nondescript male. He takes her to an apartment. It was in that apartment that he begins to undresses her and apparently starts to rape her. She protests, but he continues. At one point she says another black male with dreadlocks says, "stop that," to which point the suspect apparently drags her into the bathroom and, according to this report, completes the act. And then takes her on a motor bike and drops her off in a street.

So this is the sort of detail we're learning, but the answer as to whether there is really going to be prosecution, well that's going to come in about 35 minutes from now when that's announced in Tallahassee.

BLITZER: Yes, so we'll know sooner rather than later. No need to speculate about that.

SAVIDGE: Right.

BLITZER: But, Paul, give us your assessment right now, based on what you know as far as this case is concerned, when prosecutors have to go through the evidence, they've got to come up with strong evidence to make these formal charges, right?

PAUL CALLAN, CNN LEGAL ANALYST: Well they do, Wolf. And what really surprises me about this is, well, of course, the rape allegedly happened back in December of 2012. So an enormous amount of time has gone by. But prosecutors, when they're announcing an indictment or criminal charges, they don't usually do it in advance of the surrender of the potential defendant. And they -- for a very simple reason, he might get on a plane and flee if he knows he's going to be indicted. Now you can say, well, this is a famous football player, where would he go? But normally a prosecutor only has a press conference after an indictment has been handed down, after an arrest has been made, to outline what's going to happen next. You rarely have a case where in advance you trigger and signal the arrest of somebody. So I'll be surprised if they announce that there's an indictment here or that he's going to be charged. They may be saying they can't charge him because there are problems with the case. I think most lawyers probably would view it that way, at least at this stage, but we won't' know until 2:30.

BLITZER: Yes, we'll know it in a half an hour, I think at the top of the hour we should know. Thanks very much.

Guys, stand by, because we'll have coverage of that, the Florida state attorney, Willie Meggs, scheduled to announce his decision on this controversial case, 2:00 p.m. Eastern, about a half an hour or so for now. We'll have live coverage here on CNN. Stand by for that.

President Obama tries to fire up the Democratic Party base, but will Democrats be running away from Obamacare? The chair of the Democratic National Committee, Representative Debbie Wasserman Schultz, she is here to talk to us about the road ahead. We'll talk about that and a lot more. Stay with us.

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