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Evacuations Underway in Texas; How Will America Pay for Rebuilding?

Aired September 21, 2005 - 14:00   ET

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

KYRA PHILLIPS, CNN ANCHOR: Powerful winds with potential for massive destruction. Hurricane Rita churns across the Gulf. Just where will it make landfall? Heading for higher ground. A million people told to evacuate before the storm. We're live on that story.
Refineries at risk. How will this storm affect America's oil and gas supply? From the CNN Center in Atlanta, I'm Kyra Phillips. This hour of CNN's LIVE FROM starts right now.

Open ocean, full throttle. Hurricane Rita revels in the toasty Gulf of Mexico, growing to a Category 4 as it apparently sets sights on Texas. Rita's top winds 140 miles an hour. And it may get even stronger. Wait and see? Not in Galveston, potentially ground zero in a storm that raises too many ugly memories of 1900, the single deadliest hurricane, deadliest disaster of any sort in U.S. history. Evacuations are mandatory in Galveston, strongly urged in other coastal or low-lying areas along a 250 mile stretch from Port Arthur to Corpus Christi.

And the Keys are up in the clear, partly under water, as Category 2 Rita strafes the florida Straits, causing pockets of flooding but very little damage from wind or anything else. Those who got out when they were told to do so, roughly half the population of the Keys, give or take, are going home today. Tourists are welcome back Friday. Now, as we reported, evacuations are under way in Galveston, Texas, which could feel Hurricane Rita's full force late Friday or early Saturday.

CNN's Deborah Feyerick is in Galveston. Deb?

DEBORAH FEYERICK, CNN CORRESPONDENT: Well, Kyra, a lot of people have been getting out this morning. The city successfully evacuated some 1,500 people on buses that had been brought in. And as a matter of fact, we were told by the mayor that she organized this citizens' committee last week and what these folks did, they went door to door to see who would need evacuation, who would need help who would need public transportation out of the city. So they had a whole list of folks.

And as a matter of fact, they sent school -- buses, city buses, to individual homes to bring them to the evacuation point, which was at a community shelter. But again, they evacuated 1500 people. Some buses still in place. And they think they'll be able to get more people out over the course of the afternoon, people who are showing up a little bit late or those who thought they had more time. The evacuation took place in about two hours. Now, everybody else will be heading out of town, that mandatory evacuations set to go into place at 6:00 this afternoon. One thing that the mayor saying is if you leave now, you have your choice on where to go. If you hit after 6:00, the Department of Public Safety, they're going to be on the highways, they're going to be telling you where you have to be routed to. So that's why they're saying leave now, you have the choice. Leave later, your choice is where we tell you to go.

So that's where we are in Galveston. But seems pretty organized here and the mayor and core group of her people are going to be riding out the hurricane at the St. Louise Hotel, which is built over a World War II bunker. It's about 37 feet up above the tide. So they think they're going to be okay riding the storm out there. Kyra?

PHILLIPS: All right. Deb Feyerick, keep checking with us, let us know as you find out new information. Thanks, Deb. Meanwhile, Texas Governor Rick Perry has already issued a disaster declaration for his state. On CNN's AMERICAN MORNING today, the governor talked about Texas storm preparations.

(BEGIN VIDEOTAPE)

GOV. RICK PERRY, TEXAS: We're looking at this storm that's facing us and being prepared for it and evacuation is going on as we speak in Galveston. We'll be making decisions as rest of the day goes forward. If there are other areas, we're pre-positioning a substantial amount of asset whether it's 5,000 National Guard troop 1,000 Department of Public Safety Troopers, and aviation assets. I think Thursday morning is when we will see the first impact relative to tropical storm-type of winds hitting. If you're not out by then, you have problems.

(END VIDEOTAPE)

CNN meteorologist Jacqui Jeras is tracking possible problem and tracking Hurricane Rita. Joins us live now. On latest on where that storm is and where it's headed. Jacqui?

JACQUI JERAS, CNN METEOROLOGIST: Well, it's heading through the Gulf of Mexico right now, it's on a westerly track. And showing signs that this is an extremely strong, impressive storm on satellite imagery. And it's been showing signs that it's been getting stronger. Based on the satellite. And I just got off the phone with the National Hurricane Center. They don't anticipate any changes in the strength for the rest of the afternoon.

So the 5:00 advisory, we think, will be next time we'll have any new information on the track or the intensity of Rita. Right now, 140 miles per hour. That puts it right in the middle of a Category 4 storm. Category 4 has wind of 131 to 155 miles per hour. So right in the middle of that category, holding very strong at this time.

The location at the 11:00 Eastern Time advisory, 10:00 Central, 755 miles east-southeast of Corpus Christi. The water temperatures are very warm and that will allow the storm to continue to strengthen. We'll probably see fluctuations in intensity in this storm. It could very easily go up to a 5. We could even see that, I think, at the 5:00 advisory. But we could also see that weaken back down to a 4 and then maybe go back up again. So there are going to be a lot of changes and a lot of updates here with Rita, as it continues to move through the Gulf of Mexico.

Also take note on these warm water temperatures, along the Texas coast here. Water temperatures in the middle 80s. You get on up towards New Orleans, on over towards Mobile and Pensacola, we're talking middle to upper 80s. So the water temperatures a little warmer here. So that's good news, but they're not quite as warm, but certainly warm enough to sustain a hurricane. Only have to have about 80 degrees.

Eighty four and a half there, you can see, right in the Middle of the Gulf. And then across Key West, the water temperature cooler, down to 82.9 because as Rita moved through it kind of cooled things down, it churns up the water a little bit.

Here's your forecast track. Sustain powerful Category 3 or better storm, we think, through the ride through the Gulf of Mexico. We are expecting a gradual turn on up to the north and west. And that's why our sights are set on Texas at this time. Still can't rule out Galveston, still can't rule out western parts of Louisiana or northern Mexico. But right now, we really think it's going to be somewhere between Galveston and Corpus Christi, Friday night, probably Saturday morning.

Kyra?

PHILLIPS: All right, Jacqui, busy, busy day. I guess we could say busy, busy next couple of days, for sure.

All right. With Hurricane Rita raging in the Gulf, officials in New Orleans are taking absolutely no chances. So far, a possible hit on Louisiana is not being ruled out. CNN's Mary Snow, standing by the New Orleans Convention Center with the latest developments from there. Hi, Mary.

MARY SNOW, CNN CORRESPONDENT: Hi there Kyra. And you just heard, General Honore say that even though there may not be a direct hit on New Orleans, any kind of rain that comes here is being watched very, very closely. Some engineers have said that as little as -- excuse me -- three inches of rain could trigger flooding in this city.

The mayor has ordered a mandatory evacuation here on the East Bank. Now, right across the street from me, this is a staging area across the street from the Convention Center. And the mayor has asked anyone who needs transportation out of the city to come here and he says that he has about 500 buses ready if needed, to take people from the Convention Center and out of New Orleans. Now, so far today, we've only seen a handful of people coming to this center.

We also ran into some relief workers who have been here for about 2 1/2 weeks who say that it is now time to go, that they do not want to take any chances. We ran into one man earlier today, Herbert Eagleton, who had just returned to New Orleans earlier this week. And now is heading back once again. And clearly expressing frustration about that. Here is what he had to say.

(BEGIN VIDEO CLIP)

HERBERT EAGLETON, EVACUEE: I just came back from Tennessee and now we have to relocate again. And I don't know where I'm going to end up this time. So I'm hoping I end up close to like in Baton Rouge, New Orleans or Atlanta somewhere. But I don't think I'm going to relocate and come back to New Orleans no more.

(END VIDEO CLIP)

SNOW: And as you know, Kyra, thousands of military personnel here in New Orleans. They are also being watched, to see about repositioning plans, possible evacuation plans if need be. And the USS Iwo Jima and the USS Shreveport have been ordered to sail out of here today.

Kyra?

PHILLIPS: Mary, thank you so much. And Mary, as you look around the Convention Center, such a better sight to see what it looks like right now, compared to a few weeks ago, wouldn't you agree?

SNOW: Absolutely, Kyra. And as you mentioned - we were talking about earlier, that the inside of the Convention Center, still being cleared up. There's another side to it where the military has a staging area. The military plans to use that part of the Convention Center as a hospital. But clearly this was the scene -- and symbol -- of such desperation just a few weeks ago. So stark contrast. And it's really unclear, Kyra, also, just how many people are here in New Orleans at this point.

PHILLIPS: Mary Snow, right outside Convention Center there, thanks, Mary. Well, right now the surf is calm in Galveston, Texas as these live pictures show. But Hurricane Rita could soon change that. Stay tuned to CNN, your hurricane headquarters.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: How are we going to pay for Katrina?

UNIDENTIFIED MALE: I don't know, we just had a big debate about it.

(END VIDEO CLIP)

PHILLIPS: That's our Joe Johns, he's chasing them down and getting those politicians to answer the multibillion dollar question on Capitol Hill -- Joe Johns is investigating it. Paying for Hurricane Katrina. Who is going to pay for it? That's next on LIVE FROM.

(COMMERCIAL BREAK)

PHILLIPS: We sure don't need a Rita. But even as Rita storms across the Gulf, there are still a lot of questions about how to pay for damage from the last hurricane. The federal government's share of rebuilding after Katrina could reach $200 billion or more. Our congressional correspondent Joe Johns tried to find out what lawmakers are ready to do to raise that money and he went after this.

(BEGIN VIDEOTAPE)

JOE JOHNS, CNN CORRESPONDENT (voice-over): Everybody wants to rebuild the Gulf States, but where's the money.

How are we going to pay for Katrina?

SEN. PETE DOMENICI, (R) ARIZONA: I don't know, we just had a big debate about it.

JOHNS: We looked for answers in the crowded hallways of the U.S. Capitol and found the "Don't touch" list was much longer than the list of solution.

Are we talking about scaling back tax cuts as one of the options to pay for Katrina?

SEN. JOHN CORNYN, (R) TX: No. I don't - I mean, the tax relief we passed in 2003 has been responsible for the creation of millions of new jobs.

JOHNS: Democrats want to put the tax cuts on hold, but they're not willing to cut social programs.

SEN. HARRY REID, (D) NV: It's not the tax time for cutting Medicaid. It's not the time for cutting student aid.

REP. MIKE PENCE, (R) IN: Hey, Joe.

JOHNS (on camera): How you doing? Good to see you. Doing well?

(voice-over): Indiana Congressman Mike Pence and his House conservative allies have a plan.

PENCE: To delay the implementation of the prescription drug entitlement for just one year. That would put $40 billion back in the budget.

JOHNS: But what about cutting spending on the Iraq War, an idea with popular support?

PENCE: Now is not the time for us to reduce the commitment to our soldiers.

JOHNS: Senate Democratic Leader Harry Reid wants to roll back the Bush tax cut. But when it comes to big government programs, it's hands off.

REID: We want to stop the Republican-controlled House and Senate from cutting Medicaid by another $10 billion.

JOHNS: House Democratic Leader Nancy Pelosi also wants the tax cuts rolled back. I asked if she'd give up tens of millions of dollars in highway funds for her district. She said yes.

For San Francisco?

REP. NANCY PELOSI, (D) CA: For San Francisco. And the people of San Francisco would be very proud of that, thank you.

UNIDENTIFIED MALE: Amen.

UNIDENTIFIED MALE: Thank you.

JOHNS: But Pelosi's office called soon after just to clarify she would only give up the money if others do too. One more try.

(on camera): How are y'all going to pay for this?

SEN. BILL FRIST, (R) TN: Right now, at least in the short term, where we are responding and we're responding aggressively it does mean our children ultimately are going to have to pay for it.

JOHNS: The clearest answer of the day, also the one option everybody says they want to avoid, just borrow the money. Joe Johns, CNN, Capitol Hill.

(END VIDEOTAPE)

PHILLIPS: And as Joe just reported on the willingness of House Minority Leader Nancy Pelosi to give up pet project in the highway bill to help pay for the Katrina relief if others members would, too. House Speaker Dennis Hastert was asked whether he'd do the same.

(BEGIN VIDEO CLIP)

QUESTION: Mr. Speaker, the majority leader indicated she would volunteer to give back some of her projects in the highway bill in order to help pay for Katrina relief. Would you be willing to make that same pledge, sir?

REP. DENNIS HASTERT, (R) SPEAKER: I'd say that would be very gracious of the minority leader.

(END VIDEO CLIP)

PHILLIPS: "Very gracious." Well, the effects of Hurricane Rita are reaching out to outer space. Houston has a problem so NASA is calling on Russia for help. We've got details just ahead on LIVE FROM.

SUSAN LISOVICZ, CNN CORRESPONDENT: I'm Susan Lisovicz at the New York Stock Exchange. One U.S. carmaker is thinking green. I'll tell you about one company's plans to up its hybrid production.

LIVE FROM continues right after this. (COMMERCIAL BREAK)

LISOVICZ: I'm Susan Lisovicz at the New York Stock Exchange. Fear is in the marketplace again today. Investors are worried about Hurricane Rita's track toward Texas and its refineries. Those fears predictably pushing crude oil prices sharply higher and stocks lower. Right now, the Dow Industrials off 84 points. Nearly one percent.

The NASDAQ, meanwhile, down 19 points or about one percent as well. Oil prices, higher at about $67 a barrel. They're up about a buck a barrel. Hurricane Rita may disrupt an already battered oil infrastructure along the Gulf Coast. The projected path of the storm takes it through an area that produces much of the nation's natural gas. And to the Texas coast, which is home to some of the nation's biggest refineries, Exxon, Royal Dutch Shell and BP among the names that have major facilities in the Galveston-Houston, area.

And while we're talking about oil, Ford plan to unleash a quarter million fuel efficient cars into the market each year by 2010. The carmaker says gas electric hybrid engines will be available in half of the Ford, Lincoln and Mercury lineup. Ford will also release four vehicles that can run on fuel efficient ethanol next year. The F-150 truck and Crown Victoria, Grand Marquis and Lincoln Town Car sedans. This comes of course amid lagging sales of gas-guzzling SUVs and those high, high gas prices.

And that's the latest from Wall Street. Coming up, a fierce battle between the State of Mississippi and insurance companies. Why one insurance giant says it will not pay for flood damage caused by Hurricane Katrina.

VERONICA DE LA CRUZ, CNN CORRESPONDENT: Cnnmoney.com invited you to speak out on the high cost of gas price. Some people are look at it another way. Like Edwin Storey from Boston. "Living in Boston, driving and parking were both stressful and expensive. Now I walk to the "T" station and ride the subway, which provides me with one hour a day of reading."

Others say it's influencing their next car purchase. Like John Huang in Florida, he says "I've always wanted a Saab 9-3 convertible. However with the high gas prices, I am now thinking of a Toyota Prius. It may not be as stylish, now can I have the wind in my hair, but I've made up my mind to be more realistic about cost when it comes to my next car."

To share your gas price stories you can log on to cnnmoney.com/gas and send us an email. For the .com news desk, I'm Veronica De La Cruz.

(COMMERCIAL BREAK)

PHILLIPS: Our top story, dangerous Hurricane Rita. It's a Category 4 hurricane, packing sustained wind of 140 miles an hour with gusts even higher. And as Rita pushes through the Gulf of Mexico, it's expected to grow even stronger and bigger. Right now, Rita is expected to slam into the Texas coast near Galveston late Friday or early Saturday and residents already are packing up and clearing out. But nothing is certain right now.

The National Hurricane Center is not ruling out a possible hit on the already devastated Louisiana coast. Officials in New Orleans are taking no chances with the city's levee system, crippled by Hurricane Katrina. Officials warn more flooding is possible. The few residents still there are being evacuated.

And our meteorologist Jacqui Jeras is getting updated information on Hurricane Rita by the second. Jacqui, what's the latest?

JERAS: Just in from the hurricane hunters of the National Hurricane Center that this is packing winds now of 150 miles per hour. That's getting close to category 5 status. We're still at a 4 now. 150 miles per hour. It has to be 156 or better for this to be a Category 5. So this is just another sign the storm is continuing to strengthen. Also, the central pressure in the storm has dropped significantly by more than 20 millibars, which is a big drop. So this storm is showing all signs that it's continuing to get stronger, and we may see Category 5 strength as early as that 5:00 advisory.

Fluctuations in strength like this are very common. The National Hurricane Center's only issuing advisories every six hours or so, 11:00 a.m. Eastern, then 5:00 p.m. Eastern, then 11:00 p.m. Eastern, 5:00 a.m. You get the idea. But the hurricane hunters go in and fly into the storm and they fly this jig jagged kind of pattern to get test levels, at all different quadrants of the storm to see what the winds are doing everywhere. And what they do, they fly, obviously they can't fly in at the surface so the fly into the upper levels of the atmosphere and then they translate from the speeds up there and take off maybe 20 percent and they estimate what the current wind speed.

And their calculations right now, estimating about 150 miles per hour. So the news certainly ominous. It is a very powerful hurricane as it moves throughout the Gulf. Staying at over a 3, we think, through its entire ride through the Gulf of Mexico. We may see changes in the forecast track. But right now, the models in very good agreement. All of them are just really close together to bringing to the Texas coastline, probably between Corpus Christi and the Galveston area. We think that is going to happen probably early Saturday morning, overnight Friday and into Saturday morning. So, Kyra, continuing to get stronger with Rita.

PHILLIPS: All right. Jacqui, thank you so much.

And as you were giving us that update on Hurricane Rita, this just coming in to CNN. The House passing tax break for Hurricane Katrina victim. We talked about this actually on LIVE FROM about two weeks ago, wondering if indeed this was going to happen. Here is what I can tell you. The House did approve a $6.1 billion package of tax breaks to help families recover of course from Hurricane Katrina and encourage Gulf Coast businesses, we're being told, to reopen its doors, or at least keep employees on the payroll.

Here's some specifics right here, as we look at a live picture from the floor. The tax breaks passed waive penalties for hurricane victims who need cash for expenses and recovery and want to use money stashed in protected retirement accounts like IRAs. And of course, you can check with your financial planner, with a tax consultant, on exactly what type of IRAs you have and if you're able to do this.

Also under the bill, we're told, families that rely on the child tax credit and the earned income tax credit could protect those benefits throughout job losses, residency changes and family separations caused by Hurricane Katrina. Another point, we are being told, other assistance, lets taxpayers recoup more of their un- reimbursed and uninsured losses and waives taxes imposed when debts such as mortgages are forgiven.

So there's a lot more details on this. You can check in -- I would call your financial planner and try and find out more about what the House has approved with regard to $6.1 billion now, a package of tax breaks. Of course, we'll be bringing you more information on this from the Hill once we get it.

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