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V.A. Reform Bill; Troops Amass at Ukraine Border; Big Box Stores Trying to Keep Up with Amazon; Prince William will Return to Work

Aired August 07, 2014 - 09:30   ET

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

(COMMERCIAL BREAK)

CAROL COSTELLO, CNN ANCHOR: Taking a look at some top stories for you at 34 minutes past the hour.

An Israeli government official tells CNN Israel is willing to extend a Gaza cease-fire unconditionally. Talks in Cairo, Egypt, between the Israeli and Palestinian sides have yet to yield a break-through, though, and less than 16 hours remain in the current truce.

An investigating officer today resumes questioning of Sergeant Bowe Bergdahl about his disappearance in Afghanistan five years ago. A civilian attorney for the former Taliban prisoner spoke to CNN about yesterday's proceedings.

(BEGIN VIDEO CLIP)

EUGENE FIDELL, BERGDAHL ATTORNEY: It was a very, very comfortable meeting. Sergeant Bergdahl had the right, of course, like any member of the service, to decline to answer questions. He waived that right. He answered every question that was put to him.

(END VIDEO CLIP)

COSTELLO: Bergdahl is back on regular duty at headquarters of the U.S. Army North in Texas.

President Obama signs a bill today to reform the V.A. health system plagued by poor care and long wait times. The $16 billion -- well that $16 billion is included in the bill. It includes money to pay private doctors for vets who can't get prompt care. It also includes funding for more V.A. doctors, medical staff and clinics, but the reforms come too late, of course, for some families. CNN's Drew Griffin is in Phoenix.

Good morning, Drew.

DREW GRIFFIN, CNN CORRESPONDENT: Good morning, Carol.

I would call this bill the no more excuses bill. It does set aside a huge chunk of money, $10 billion, set aside to the V.A., which basically says, listen, any hospital that has a backup, any hospital that has a list, if you cannot handle servicing a veteran, then give him the money, send him outside the V.A. system to a private health care facility to get care for that veteran. That is the basic nuts and bolts of this.

You also talked about the hiring of doctors and nurses. If there is a capacity problem with doctors and nurses, it gives the V.A. the power to spend $5 billion recruiting and hiring more medical staff, and also gives them some money to open up more clinics, more space, get the physical space they would need to make sure that all these veterans get services.

But as I said, Carol, it's really no more excuses. Here's all the money you could possibly need. Let's get rid of any wait list for any veteran that is out there right now.

COSTELLO: That would be just great. You're in Phoenix today because people died because of delays in care. So what are the victim's families saying about this?

GRIFFIN: You know, this, as you said, this is too little too late and everybody here in Phoenix and San Antonio, in Cheyenne, Wyoming, all over the country that we've been talking to, the victim's families say, OK, this is nice, but where is the accountability? The people that created this problem that they believe contributed to the deaths of their loved ones are still in power. Nobody is getting canned. Nobody, as they say, is getting put in jail for this. They want not only this emergency funding, they want accountability. Who's going to be accountable for what has already happened? They, Carol, are still waiting for that.

COSTELLO: All right, Drew Griffin reporting live this morning. I'll be right back.

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COSTELLO: As tension mounts in eastern Ukraine, the world watches for Vladimir Putin's next move. Twenty thousand troops are amassed along the border and some fear an invasion by the Russian military. But what would that look like and how big is that military? Here's CNN's Jim Sciutto.

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JIM SCIUTTO, CNN CHIEF NATIONAL SECURITY CORRESPONDENT: The renewed focus on Russia's military started with its annexation of Crimea in southern Ukraine, but you should really look back six years ago to 2008 when Russia invaded another former Soviet state, Georgia. There's a view in Russia that that's when the world started taking Russia seriously again because for years Russia had seen itself as being far behind -- hopelessly behind the west in military terms, and that's a problem that Russia's leadership wanted to correct.

In recent years, Russia started what many military analysts call a massive rearmament. $730 billion U.S. dollars over 10 years. In military terms, we're talking about 100 new warships, 600 new war planes, 1,000 new helicopters to go along with what remains the largest nuclear arsenal in the world, larger even than the U.S. Now, the focus is not on another Cold War necessarily, really on what Russia calls the near abroad, those are the former Soviet republics, like Ukraine, like Georgia, that Russia wants to expand, reassert its influence once again, and it feels it needs in order to do that to expand its military again.

But you have to put this in a larger context. Today, Russia's military is about a fifth the size that it was during Soviet times. In terms purely of soldiers, there were 2 million soldiers in the Soviet army, there are about 800,000 in the Russian military today, but it has the intention of adding to those ranks, setting a goal of adding about 400,000 troops to the Russian military.

What does this mean for U.S./Russian military relations? Will it change the relationship? Very likely. And that is a risk that U.S. officials in the administration in the State Department and elsewhere are wrestling with today.

(END VIDEOTAPE)

COSTELLO: That was Jim Sciutto reporting. Russia's military relationship with the United States and its economic relationship very much in decline.

Still to come in the NEWSROOM, the once powerful big box store, is it about to collapse? Wal-Mart gets a high-profile downgrading on Wall Street as it looks to shift its business online. We'll talk about that next.

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COSTELLO: Big box stores like Walmart are starting to lose a bit of their luster. Wall Street king maker Goldman Sachs downgraded Walmart to neutral this month, saying customers are moving away from the retail giant and heading online or to smaller stores. And Walmart isn't alone in its struggles. The mega retailer's stock is down more than 5 percent this year. Target? Target's down more than 8 percent. Another big box mainstay, Sears, closed more than 1,100 stores in the last year alone. So let's talk about this. I'm joined by CNNMoney business correspondent Alison Kosik and senior tax policy expert at The Heritage Foundation Curtis Dubay. Welcome to you both.

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Hi, Carol.

COSTELLO: Hi. Alison, I'll start with you. These are seemingly the last two big box stores still standing. Is it just a matter of time before they disappear?

KOSIK: I think that may be taking it a little too far, especially when you look at Walmart. Walmart is the biggest retailer in the world. I think what you're going to wind up seeing with Walmart, though, is that you're going to see a lot of changes with Walmart.

First and foremost, its recent head of its U.S. division, Bill Simon, was shown the door. The new guy starts actually on August 9th, and what you're really going to see is Walmart starting to focus on its online presence, because that's really where it's at. What you're seeing now is customers wanting convenience, they're finding out that they can find as cheap as you can find in Walmart, they can find it online. Especially with Amazon and Amazon is really the big contender. You look at global sales, online sales between Amazon and Walmart. Walmart is really falling down on the job there.

(CROSSTALK)

KOSIK: Walmart has $10 billion in sales for the year. $68 billion for Amazon. That's really stiff competition for Walmart. Online presence is what Walmart is after at this point.

COSTELLO: Curtis, can you hear me yet?

CURTIS DUBAY, SENIOR TAX POLICY EXPERT: Yes, I can.

COSTELLO: Oh, good. We couldn't hear you for a moment but now we can and I'm glad. So Alison just mentioned that Walmart is trying to compete with Amazon, but it's lagging far behind what Amazon has, what, what did you say, $67 billion compared to $10 billion on Walmart. Can Walmart possibly make that up?

DUBAY: Well, you know, I think it's probably premature to downgrade them because Walmart, Target, the big box retailers are still really well-run companies but they are behind. They're behind Amazon. Amazon is much further along in the online retail space. I think they can catch up and they still do have certain advantages, right? People are big in the supermarket market, and people are still going to go to stores to shop. And they still have the big, a big presence in the market. People will continue to go to physical stores, but I think they're going to have to catch up in terms of how they interact with their customers because Amazon really does have a great big head start.

COSTELLO: And even on the ground, even in the physical store itself, like people tend to gravitate maybe towards smaller stores, and that might be a reason, Alison, why Walmart and Target are thinking of putting these mini stores in places instead of the giant stores they have now.

KOSIK: Right. Sometimes you walk into the giant stores and you go for that one item. Let's say I'm going for the paper towels of the day and they're just not on the store shelves,. It's frustrating to go there and find that the store shelves are empty. That has been a problem for Walmart as well. It hasn't been keeping its store shelves stocked. In fact, last year a lot of customers once loyal, not loyal anymore. Hundreds wrote in on e-mails saying we go to the stores, what we go there for it isn't there so we're going to go shop elsewhere. Also you talk about convenience. Yes, running in and getting a couple of things, that's hard to do in these big box stores so I think, yes, you're going to see the way that Walmart does business, I think you're going to see that change.

COSTELLO: Curtis, would it be such a bad thing to see those giant super stores go away?

DUBAY: I don't think they're going to go away, but I think Alison is on to something because I think they're going to go to smaller spaces. But they're still going to be saddled with these great big stores they have all around the country. Walmart, Target, Best Buy, they have these great big showrooms that they're not going to be able to use anymore. I think that's going to be a problem and they're going to be saddled with that, with that space, with that real estate for a long time.

Would it be a bad thing? Look, it's always a good thing when the economy is evolving and things are -- we had that dynamism, but I just don't think they're going to go away. They have such a big presence and I think that they understand that the -- that people are shopping more and more on-line and they'll evolve. They'll evolve along with the economy. They'll figure out how to compete with the Amazon model, to move into the Amazon Prime type model that Amazon has that's so popular. I think they're going to be getting on that in the very near feature so I think that Amazon will get some competition.

COSTELLO: Alright, we'll see. Alison Kosik, Curtis Dubay, thank you so much.

(BEGIN VIDEOTAPE)

COSTELLO (voice-over): Checking some top stories for you at 52 minutes past. Chicago is turning to the state police to help stop the city's wave of gun violence. 40 Illinois state troopers will work with the Chicago police department's fugitive unit. Governor Pat Quinn pledged his suppor,t saying the state will do whatever is necessary to protect the public.

In Iraq, thousands of Christians are fleeing for their lives as ISIS militants seize the country's largest Christian city. Pope Francis now urging the international community to help end the violence. The foreign minister for the Iraqi Kurdish regional government is calling for American intervention to halt the advance of the terror group.

UNIDENTIFIED MALE: This is something way beyond the capacity of the Iraqi Air Forces. We need the United States and NATO to interfere because we are fighting on behalf of all those who are against terrorism. And I believe the United States has a moral responsibility to support us because this is a fight against terrorism and we have proven to be pro-democracy, pro-west and pro-secularism.

COSTELLO: ISIS, the terror group, has thrived and mutated during the civil war in Syria and the security vacuum in Iraq.

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COSTELLO (on camera): A major announcement from Buckingham Palace this morning about Prince William. The prince apparently will not be quitting his day job any time soon. In fact, he is continuing his passion for flying and will become an air ambulance pilot next spring. He's going to be flying search and rescue missions both day and night. CNN's Max Foster has more for you.

MAX FOSTER, CNN CORRESPONDENT: Carol, Prince William left his job in the Royal Air Force last year so he could spend more time with his family. But now that Prince George is 1, his father is ready to go back to work. (BEGIN VIDEOTAPE)

FOSTER (voice-over): Prince William is currently in what the palace describes as a transitional year. Focusing on his royal and charitable work. But now, he's decided what to do next. He's going back to work as an air ambulance pilot and a spokesman says the prince is hugely excited and motivated. It will also make him the first direct heir to the British throne to take a civilian job. The palace says he will be donating his salary to charity. The prince will start training this autumn and is expected to qualify as a pilot next year. He'll do everything expected of a regular pilot, including night shifts, except that he'll be released for his key public duties. Here's one of his future colleagues.

UNIDENTIFIED MALE: Once we're actually on the job, I'll actually into the scene (ph) and as close as I can to the patient, once they're in back in the helicopter, I close the helicopter down and then provide security for the helicopter if it needs it.

FOSTER: Security is a concern that would have been considered carefully by the palace. There's a worry it could expose the helicopter and the crew to undue interests. Perhaps even hoax calls. Though it wasn't a big problem in his previous role as a military search and rescue pilot.

PRINCE WILLIAM: Its rewarding because every day you come into work and you don't quite know what's going to happen. It's quite exciting in that sense. It's unpredictable. But at the same time, it's great that you get to go out and actually save someone's life, hopefully, or at least make a difference to someone.

FOSTER: William was involved in more than 150 search and rescue operations as a military pilot, often out at sea. The East Anglian Air Ambulance service is one of the busiest in the U.K. and operates over a diverse area. The job will also allow William to remain as a hands on dad to his son and heir, Prince George, who's just turned 1. The young family are currently renovating their idyllic country home on the queen's Sandringham estate which is a short drive from the two airports that William will be working from.

The prince has always been keen on a role beyond his public duties as long as he's second in line to the throne. And this new job will allow him to balance both positions and have his family close by.

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FOSTER (on camera): I think Kate, the duchess, is also going to be happier spending more time in the countryside because here in London she's being hounded by photographers. She feels under siege in the palace here and this country house is idyllic and very, very private, Carol.

COSTELLO: Max Foster, reporting from London. The next hour of CNN NEWSROOM after a break.

(COMMERCIAL BREAK) ANNOUNCER: This is CNN breaking news.

COSTELLO: And good morning. I'm Carol Costello. Thank you so much for joining me.