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President Bush Signs $70 Billion Tax Cut Bill; Congress Briefed on NSA Domestic Surveillance Program; Brush Fires in Oklahoma
Aired May 17, 2006 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KYRA PHILLIPS, CNN ANCHOR: Inflation fears -- we have been talking about it all morning -- prompting a big sell-off on Wall Street. Right now, you can the Dow down more than 200 points, minus- 224 right now.
Susan Lisovicz and Ali Velshi both watching those numbers for us. We will continue to talk about them.
We're also talking about the immigration fight and deploying the troops. The National Guard plans to do it next month. And President Bush is doing it now. He sent Karl Rove to Capitol Hill with orders to sway conservative critics of his immigration reform plans.
Let's get more now from our White House correspondent Ed Henry -- Ed.
ED HENRY, CNN WHITE HOUSE CORRESPONDENT: Good afternoon, Kyra.
You're right, the president trying to crank up that sales pitch that really got going Monday night, with the prime-time address on immigration reform -- the president also tomorrow planning to go to Yuma, Arizona, obviously, a key part of the U.S.-Mexico border, to get a close firsthand look, and, as you mentioned, also sending Karl Rove as top gun up to the Capitol Hill today.
Basic message to conservatives on the Hill at this closed-door meeting is that the president is trying to meet them halfway by showing he's serious about border security, which is what they want. He now wants conservatives on the Hill to meet the president halfway by coming along and supporting his guest-worker program for the nearly 12 million illegal immigrants already here in the United States.
Karl Rove left that meeting feeling optimistic. Here's a readout of the meeting from Tony Snow, the new White House president secretary.
(BEGIN VIDEO CLIP)
TONY SNOW, WHITE HOUSE PRESS SECRETARY: It was respectful. People were obviously having exchanges of views on things.
But I also think, what members of the House appreciate is that the president said, OK, this is where I stand. It gives people a basis from which to proceed, because the House and Senate, provided the Senate does pass a bill, are going to have to sit down and reconcile their differences. The president can play a very important role on that.
(END VIDEO CLIP)
HENRY: But, you know, some House Republican lawmakers left that meeting feeling much less optimistic. They seem to be digging in a bit, saying they just want a border security-only bill. They don't want to deal with the guest-worker provisions -- Kyra.
PHILLIPS: All right. On another note, I don't know why we keep going back to this, but there seems to be a lot of interaction with Tony Snow, seeming he's the new guy on the block here, this time with Jim Axelrod from CBS?
HENRY: Yes, day two of Tony Snow today.
He's clearly bringing humor to the podium. We saw him bring some emotion yesterday, talking about his own personal battle with cancer. Today, you mentioned he had a very interesting exchange with CBS News' Jim Axelrod, where, basically, they were talking about -- Snow was suggesting that maybe some Republican lawmakers are secretly getting ready to come along and support the president's immigration bill.
While he was making the point, he brought up that infamous episode of Connie Chung, where she interviewed Newt Gingrich's mother.
Take a listen to what Tony Snow and Jim Axelrod had to say.
(BEGIN VIDEO CLIP)
SNOW: I don't want to betray confidences, but I -- I think that you're going to find that members of the House -- yes, just between you and me -- that works at that network, doesn't it?
(LAUGHTER)
SNOW: Just between you and me -- it took -- you know, it took Hunt about 20 seconds to figure that one out.
It -- I think Republicans are happy to see the president stepping up and leading on this one. And I think what you're going to see is that they are going to take a good, respectful look at what he has to say.
(END VIDEO CLIP)
HENRY: So, and while he may be mild-mannered, I think Snow is reminding people he also can be a sharp-elbowed conservative when he needs to be.
CBS News has been a top target of conservatives for years. And he has -- he's trying to get that blend there, obviously a little bit lighthearted there. But it's going to be interesting to see how it plays out -- Kyra.
PHILLIPS: All right, Ed, thanks so much. Well, a stroke of the president's pen will have a big impact on taxes. Republicans hope it will have a big impact in November, too. As you saw here on CNN, President Bush signed a $70 billion two-year extension of tax cuts on capital gains and dividends. The measure also protects a lot of middle-class taxpayers from the dreaded alternative minimum tax for another year.
(BEGIN VIDEO CLIP)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The American people have used their money better than the government ever could have. They have used the tax relief to provide for their families and create jobs and help the American economy become the envy of the industrialized world.
Our pro-growth policies stand in stark contrast to those in Washington who believe you grow your economy by raising taxes and centralizing power. They are wrong. Our pro-growth economic policies are working for all Americans.
(END VIDEO CLIP)
PHILLIPS: Well, the package cleared Congress last week, over near unanimous Congress Democratic disapproval.
Well, with President Bush's signature, $70 billion in tax cuts became the law of the land. Even so, critics say they don't add up.
CNN senior national correspondent John Roberts takes a strict accounting of the controversy.
(BEGIN VIDEOTAPE)
JOHN ROBERTS, CNN SENIOR NATIONAL CORRESPONDENT (voice-over): Another giveaway to the rich is how Democrats put it, leaving little for the middle class.
REP. ALCEE HASTINGS (D), FLORIDA: That amounts to just a little bit more than a tank of gas.
ROBERTS: Just the tonic the economy needs, according to Republicans.
REP. DENNIS HASTERT (R), HOUSE SPEAKER: It's something that's important to keep this economy coming.
ROBERTS: So, who is right? According to the moderately liberal Tax Policy Institute, low-income earners, $20,000 to $30,000 a year, will have their taxes reduced by about $9; $50,000 to $75,000, $110; $100,000 to $200,000, just shy of $1,400. But, if you make over $1 million, you'll save a whopping $42,000.
LEN BURNHAM, TAX POLICY INSTITUTE: You would expect, of course, the tax cut to be bigger for higher-income people. But, even as a share of income, it grows the -- the higher the income is, the larger the tax cut is as a share of income. ROBERTS: So, are tax cuts good for the economy? Congress has been slicing tax rates for five years. GDP is humming along. The Dow is flirting with record territory.
BURNHAM: Well, the stock market was last in record territory in the late 1990s, when tax rates on capital gains were higher than they are now.
ROBERTS: But what has even nonpartisan observers really ticked off is what they call a revenue-raising gimmick to keep the cost of the bill below $70 billion, a price tag Republicans could pass with a simple majority.
It would allow investors to convert traditional IRAs, funded with pre-tax dollars, into so-called Roth IRAs by paying taxes on the account's investment gains. The bill's supporters say it will raise almost $6.5 billion over the next 10 years, but because Roth IRAs grow tax-free, in the decades after that, critics say, it will cost the government some $35 billion.
STEVE ELLIS, TAXPAYERS FOR COMMON SENSE: This is all about taking care of the now and forgetting the future. This is denying future generations some of the tax revenue that they were anticipating to help pay for the cost of government then.
ROBERTS (on camera): So, how does that tax cut break down across the country? The liberal National Women's law Center says just two- tenths of one percent of all American households will get back that $42,000. The vast majority, more than 77 percent, 113 million households, will get back an average of 30 bucks.
John Roberts, CNN, Washington.
(END VIDEOTAPE)
PHILLIPS: And we're seeing a major sell-off on Wall Street.
Susan Lisovicz continues to watch those numbers take a dive. We are going to continue to talk about it and what's going on -- Susan.
SUSAN LISOVICZ, CNN CORRESPONDENT: Kyra, we're seeing one of the worst sell-offs of the year, without question. And we know why, without question.
There's been a lot of fears in the marketplace for one week, since the Federal Reserve raised interest rates and indicated it might do so again, depending on what the data showed us about inflation. Well, the government's key gauge of inflation at the consumer level came out one hour before the opening bell today. It came in higher than expected. And you're seeing a wave of selling -- the Dow industrials actually off their lows for the session, but still down 1.75 percent.
The Nasdaq is in the red for the year -- decliners here at the New York Stock Exchange beating advancers by a 5-1 margin. Twenty- nine out of the Dow 30 stocks are in the red. And we have big volume, 1.6 billion shares traded. And we still have a little bit less than an hour to go in the session, so a pronounced sell-off by whichever measure you look at -- Kyra.
PHILLIPS: All right, do we want to go there now? I just need clarification if I'm leaving Susan and moving on.
Could someone let me know?
OK, Susan, I apologize. We will continue to follow the numbers with you.
(CROSSTALK)
PHILLIPS: I am getting a number of different directions to go.
It looks like we are going to talk about the five months that have -- they have had to depend on the media or their more senior colleagues, but, today, all members of the Senate and House Intelligence Committees are getting firsthand briefings on NSA wiretapping.
Congressional correspondent Andrea Koppel has more for us now.
I'm being told they just got under way. Is that right?
ANDREA KOPPEL, CNN CONGRESSIONAL CORRESPONDENT: That's right, Kyra.
In fact, they got away -- they got under way just a short time ago. Now they're on a brief break, so that members of the Intelligence Committee could go over and vote on the floor of the Senate.
This is a briefing with the current director of the NSA, General Alexander. It's a briefing the Democrats have been asking for, for the last five months. The White House and committee chairmen have been saying that a limited number -- it had to be kept to a limited number of committee members.
And, now, suddenly, we're on the eve of the confirmation hearing of General Michael Hayden, President Bush's choice to head up the CIA, and the briefings are happening -- happening, both on the Senate side and on the House side, all committee members -- some Democrats, as you might imagine, raising questions, wondering if this isn't a way to kind of blunt some of those sharp questions that General Hayden is expected to get during tomorrow's confirmation hearing.
But the chairman of this committee, Pat Roberts, told CNN, in an interview just a short time ago, that, in fact, that is not the reason. It has more to do with the fact that these leaks that they had hoped to avoid had been happening anyway.
(BEGIN VIDEO CLIP)
SEN. PAT ROBERTS (R-KS), SENATE INTELLIGENCE COMMITTEE CHAIRMAN: Basically, I think the worry was about leaks. Well, now we have a -- a situation where many in the media have -- or have -- we have leakers who talk to many in the media. And then there's been a cascade of misinformation.
So, I think part of the administration's concern -- part of my concern is that we need to brief the full committee, so everybody is aware this is legal. It's highly scrutinized, and we are conducting oversight, like we did with the subcommittee. That just made sense to me.
(END VIDEO CLIP)
KOPPEL: Now, Chairman Roberts, in that same interview, told me that he wants to ask General Hayden specifically about how he intends, if he becomes the next head of the CIA, to continue the transformation that's been under way in the CIA.
But many senators, Kyra, are going to be asking those tough questions about this terrorist surveillance program, what the White House calls it, what others say is a warrantless wiretap surveillance wireless tap, that General Hayden himself developed while he was heading up the NSA.
They also want to ask about that report that came out last week that said that the administration was taking millions of Americans' phone records and -- and reviewing these records. Nevertheless, these are questions General Hayden is expecting. And he went through a series of closed-door meetings with senators last week. And he's pretty set for -- for some sharp questions -- Kyra.
PHILLIPS: Yes, Andrea, you mentioned that "USA" -- "USA Today" article. And, of course, it got all of us talking. And the timing was interesting.
And now some of these phone companies are speaking out, saying, look, we had nothing to do with this. And, so, now "USA Today" is saying, OK, we will investigate these claims, etcetera, but they are sticking by their story.
Nevertheless, Hayden did come forward briefly, right, one or two times, saying: We did nothing wrong. We did everything ethically.
You wonder how much of an impact this is going to play on the confirmation hearings.
KOPPEL: Well, most senators, both Democrats and Republicans, have come out saying that they are going to ask tough questions, but have indicated that they see General Hayden as an eminently qualified, perhaps the best qualified, person within the intelligence community to head up the CIA, irrespective of his military connections.
Democratic and Republican leadership officials have told us that they expect this nomination to go through. They do not expect this nomination to be stalled as a result of those questions. And we could get a vote in the Senate Intelligence Committee as soon as late tomorrow -- Kyra.
PHILLIPS: All right, Andrea Koppel, thanks so much.
Let's get straight to Carol Lin now. She's watching a developing story for us in the newsroom.
Carol, what you got?
CAROL LIN, CNN ANCHOR: Kyra, fascinating pictures out of San Francisco, if we can show the audience what we're looking at.
You wouldn't believe it, but that's actually a piece of the Titanic that is making its way through the streets of San Francisco. Some 300 different artifacts are going to be on display in that city from the ship that sank back in 1912 off the coast of Newfoundland.
Now, the piece that you're looking at here is probably one of the largest pieces on exhibit. It's a 13-by-30-foot section of that great ship. It's making its way through those closed streets. It's going to be hoisted up four different stories to a place called the Metreon, which is like a theater complex, where people, starting on June 10, will be able to see parts of this ship.
Now, Kyra, it's fascinating to see this piece of history. But, for the survivors and families of the people who sailed on the Titanic, it's a bit traumatic, because when the salvage company got permission more than 10 years ago to bring up the -- the wreckage -- they have the exclusive contract for it -- many of the families said that they're going to be disturbing essentially a graveyard.
But this is a really interesting opportunity for so many people who maybe they're not history buffs, but they saw the movie, and they want to take a look at a piece of history right there in San Francisco.
PHILLIPS: Yes. That was the same concern when they wanted to do a documentary, when they wanted to dive down in the Titanic or allow other people to come and dive in that area. That's always been the big concern, is, just let them rest. And, even though it's a piece of history, it is. It is a grave site underwater.
LIN: You bet.
Now, this is not the hull that you're looking at. But they actually managed to salvage the hull, which I believe is also going to be part of this exhibition, 20 tons that they're going to be hoisting into that exhibition hall -- Kyra.
PHILLIPS: Wow. Carol Lin, thanks.
Well, when the Guard goes to the border, he will be one of the go-to guys. Adjutant General David Rataczak, the man in charge of the Arizona National Guard, joins me in our next hour of LIVE FROM.
Stay with us.
(COMMERCIAL BREAK) PHILLIPS: Deploying the Guard to the Mexican border -- the questions begin with, what if? And what if another hurricane hits? What if there's another conflict overseas? The answers are clear, says Defense Secretary Donald Rumsfeld. Before a Senate panel today, Rumsfeld downplayed fears that the Guard is being stretched too thin.
(BEGIN VIDEO CLIP)
DONALD RUMSFELD, SECRETARY OF DEFENSE: The up to 6,000 Guardsmen and women proposed for this effort represent less than 2 percent of the total National Guard force of some 400-plus-thousand.
And, for the most part, they will be deployed during their two- or three-week active duty for training period. As such, this will not only adversely affect America's ability to conduct the war on terror or respond to other domestic emergencies. It will actually provide useful real-life training for the members of the National Guard.
(END VIDEO CLIP)
PHILLIPS: Well, Arizona is one of four states where National Guard troops will back up the Border Patrol.
And Major General David Rataczak heads up the Air National -- or the Arizona National Guard. He joins me now live from Phoenix.
Sir, nice to have you with us.
ADJUTANT GENERAL DAVID RATACZAK, ARIZONA NATIONAL GUARD: Thank you. It's nice to be here.
PHILLIPS: Tell me how you're training your men and women for this mission.
RATACZAK: Well, we -- the training is ongoing.
We are -- we're anticipating doing some missions. And we don't have specific requirements yet from the Department of Homeland Security. But some of the missions we anticipate doing are things that our soldiers and airmen have been trained to do throughout their careers. So, we're not into specific training for this mission, but we have been doing some of this stuff as part of their normal training.
PHILLIPS: What is it that your men and women have that the Border Patrol agents do not? What will those agents learn from your troops?
RATACZAK: Well, what we do is provide -- our overarching strategy is, we always are in support of law enforcement agencies. So, we will do things that are, in some cases, behind the scenes, where we won't be too visible, working in offices, doing intelligence analysis.
We may be doing some things on the border with vehicle and cargo inspections. We may be assisting the Arizona Department of Public Safety with vehicle inspections, vehicles going from Arizona into Mexico, these kind of things that we have been doing now for quite some time. So, they really aren't new missions to us. We anticipate enhancing that mission that we have been doing for several years, and just adding more people to it.
PHILLIPS: There have been a lot of questions about the rules of engagement, will these men and women be armed, and what will happen if they're confronted with a high-threat situation.
On "THE SITUATION ROOM" yesterday, Attorney General Alberto Gonzales was asked that same question. This is what he had to say.
(BEGIN VIDEO CLIP, "THE SITUATION ROOM")
ALBERTO GONZALES, ATTORNEY GENERAL: Clearly, though, these folks will have the opportunity and the authority to defend themselves, to protect themselves. But as to the specific rules of engagement, that'll be something that'll have to be worked out.
WOLF BLITZER, HOST, "THE SITUATION ROOM": Will they carry weapons?
GONZALES: Again, that'll be something that'll have to be worked out. But I'm quite confident they certainly will have the authority to protect themselves.
(END VIDEO CLIP)
PHILLIPS: Now, when I interviewed Lieutenant General Steven Blum, the head of the National Guard Bureau, today, he said That they would have weapons and They would have to defend themselves. That's interesting to hear what the attorney general had to say. There seems to be, you know, what exactly is going to happen, a little bit of a -- a gray area. Do you know your rules of engagement right now for your men and women?
RATACZAK: Right now, we do not.
These mission sets, as I mentioned, are still being worked to give them more fidelity. So, we don't know exactly what we will be doing. As I mentioned, we do anticipate several of the things that we will -- we will be doing.
We have been coordinating with law enforcement, Border Patrol specifically, to talk about some of these missions. We will develop rules of engagement for our soldiers and airmen. And we will make sure that they are able to adequately defend themselves.
However, I don't anticipate them being put in those kinds of situations, because, as I said, we usually work in support of law enforcement agencies. And if we're in that kind of an environment, we usually have some of those people with us who have...
PHILLIPS: What are the -- I'm curious what the biggest challenges at your border, right there in Arizona, are. How dangerous is it? RATACZAK: Well, I guess it depends on who you ask.
But that -- the danger varies from different parts of the border. But it's -- it can be, on any given night, very dangerous, depending on who is coming across, what their intentions are. Border Patrol could obviously answer this better than we could. But there are -- people who have ranches down there are very concerned about their safety, although, for the most part, these people are -- you know, they don't come across looking to get into trouble. They look to avoid trouble, obviously.
And, so, it's -- it depends on the situation and those kind of things.
PHILLIPS: What do you say to the governors and the critics that say, look, this -- this is a disaster waiting to happen; it's simply militarizing the borders; it's just not a good idea?
RATACZAK: Well, it's our governor's intention not to militarize the border. We are not going to do that. We're not going down with infantry, you know, heavy equipment or tanks and that kind of thing. We're not doing that.
We're working in support. And as I said earlier, we will be doing some things in the office, actually, and vehicle inspections, sort of more benign kinds of operations. So, really, we really are not militarizing the border.
We're there to enhance, provide a bridge to Border Patrol, until they can ramp up and hire more people.
PHILLIPS: Are they going to be deployed as units or individual soldiers?
RATACZAK: We will deploy primarily as individual soldiers and airmen, our Air National Guard folks, also, to do...
PHILLIPS: Do you think that will hurt the organization of the mission?
RATACZAK: No, not a bit.
The way we work this is, when these -- an individual goes to do this kind of mission, and then they're -- they come up for their weekend -- their monthly drill, their training periods, or their annual training periods, we release them from this mission, so they can go with their unit to do their training. So, they will go right along with their unit, doing the training they would have done anyways had they not done this.
PHILLIPS: Major General David Rataczak, appreciate your time today, sir.
RATACZAK: Thank you. It's my pleasure.
PHILLIPS: Now a personal take on immigration from America's top lawyer -- we actually talked about him in that interview. But, within the same interview, General Alberto Gonzales -- the attorney general, rather, Alberto Gonzales, told our Wolf Blitzer something else besides his feelings on the immigration issue.
(BEGIN VIDEO CLIP, "THE SITUATION ROOM")
BLITZER: Tell our viewers who aren't familiar your personal story, how you got to where you are, your grandparents, your parents. They struggled. They came here. I don't know if they came here legally or illegally. But give us the story.
GONZALES: Well, three of my grandparents were born in Mexico. They came to Texas. My parents -- both my parents were born in Texas extremely poor. My mother...
BLITZER: When they came to Texas, were they legally documented? Were they un-legally documented?
GONZALES: You know what? It's unclear. It's unclear.
And I've looked at this issue. I've talked to my parents about it, and it's just not clear.
But, in any event, my mother had a 2nd grade education -- my father had a 2nd grade education. My mother had a 6th grade education. And my father worked construction.
And so, for me, my life has -- represents the American dream. There are so many wonderful opportunities in this country. And that's why you have such a pull for people to come into this country who simply want a better life for themselves and for their children.
(END VIDEO CLIP)
PHILLIPS: You can join Wolf Blitzer in THE SITUATION ROOM this afternoon at 4:00 p.m. Eastern and for the live prime-time edition at 7:00 Eastern.
Well, we are seeing a major sell-off on Wall Street. The Dow is down about 200 points -- live coverage from the New York Stock Exchange straight ahead.
(COMMERCIAL BREAK)
PHILLIPS: Well, the end game has started in the Enron trial. After three months of testimony, arguments, motions, objections, jurors in Houston are deliberating the case against Enron founder Ken Lay, who is accused of lying to investors about Enron's finances, and former CEO Jeff Skilling, who also faces insider-trading charges. Skilling resigned from the energy-trading campaign five months before it collapsed. Fifty-six hundred workers lost their jobs. Thousands of investors lost their life savings.
We have been watching the markets all afternoon, the Dow down as much as 245 points.
Our Ali Velshi on the case.
What are the numbers saying right now? It looks like 193.
ALI VELSHI, CNN CORRESPONDENT: One-ninety-three. So, it's coming back a little bit, but it has been doing this, actually, all afternoon.
It -- it went down as low as 240 points lower, then came back into the 100s, the mid-100s, 192.
But here's the thing, Kyra. Inflation numbers came in this morning. And that has people concerned that, if there is inflation -- that, of course, we have discussed, is the main job of the Fed, to -- to fight inflation. That means they may raise interest rates again. And that makes everything more expensive. And that slows business down.
So, that's why people sell stocks. And that is what's going on today.
But the interesting part is that inflation, when you take out food and energy, which are -- which are volatile normally, even without food and energy, which we know has been going up, you have got inflation. And that has people worried that the cost of energy, the increase that we have seen, is now spanning out into other areas, Kyra.
So, you know, we have discussed before that, when -- when gas goes up, sure, you pay for it, but the -- the person who makes your coffee pays for it, too, in their extra heating costs or their shipping costs. So, you know, maybe your coffee price is going to go up. That's what this is. It's prices everywhere else, not obviously related to energy, also increasing, plus, as Susan said, commodity prices.
We have seen surging interest in commodity prices. There's more demand all over the world for commodities, particularly with China and India. So, everything is getting more expensive. And it is starting to make its way through to our prices. That's a problem. And that's why these markets are selling off.
PHILLIPS: But if consumer prices rose six-tenths of one percent last month, does that really justify a sell-off of this magnitude?
VELSHI: It's never clear.
And you know what happens sometimes? People get panicky and -- and then -- I was just talking to -- to your producer, Jen Marnowski (ph). And I said, some people say this is a buying opportunity. This is an opportunity to say, all right, well, the weak-kneed have left the market for the day. Get in and buy, because, you know, these are major companies.
I am just looking at the 30 stocks on the Dow right now. Every single one of them except Hewlett -- you know, now a few more of them are up just marginally, Johnson & Johnson and McDonalds. But these are not companies that are going anywhere. They are not disappearing, so as a result, you know, people maybe panic a little more on these things than they should.
When you take a long view of business, Kyra, it is not about today's interest rate move or tomorrow's inflation or this week's housing report. The Dow is high. It is inflated. It has done pretty well. The thing to think about though is the Nasdaq right now is lower than it was when we started the year. So as of today it has given up all of its gain for the year.
PHILLIPS: All right, my dear. We'll check those numbers throughout the last half hour.
VELSHI: See you in half an hour.
PHILLIPS: You got it. Thanks, Ali.
After the deluge in New England.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: This is terrible. This is unbelievable. There's stuff floating all over the place.
(END VIDEO CLIP)
PHILLIPS: A Massachusetts couple goes home. We go with them when LIVE FROM continues.
(COMMERCIAL BREAK)
A welcome sight in New England, sunshine and plenty of it. They'll need it to dry out. In some cities rivers have taken over the streets, not to mention homes and businesses. And most rivers have crested but are still well over their banks and putting a lot of pressure on a lot of old dams.
Folks in Amesbury, Massachusetts, would like to reinforce the one dam protecting their town, but they can't until the water level drops about a foot. Another town is working to repair a sewage pipe that busted, dumping millions of gallons of muck into the Merrimack River.
Now rains have eased, rivers crested and today the really hard part starts. New Englanders are going back to their homes and businesses to see what the floods did to them.
CNN's Dan Lothian has the story now.
(BEGIN VIDEOTAPE)
DAN LOTHIAN, CNN CORRESPONDENT (voice over): The storm that fueled this raging river and pushed an aging dam to its breaking point, also took a swing at Phillip and Donna Silverio and didn't miss.
(on-camera): This is hard to believe.
DONNA SILVERIO, METHUEN RESIDENT: Yes, it is. I would never think that this water would overtake our property like this. But water you cannot fight. It's going to do its thing and that's it. There is nothing you can do about it.
LOTHIAN (voice-over): The Silverios live and work along the Merrimack River in Methuen. They bought this engraving and silk screening business seven years ago and finished building their new home next door late last year.
PHILLIP SILVERIO, METHUEN RESIDENT: We love it here.
LOTHIAN: But the storm has changed the landscape.
(on-camera): You were just watching things float by?
D. SILVERIO: Oh yes, doors, gates. I actually lost a wooden bench that my son had made for me.
LOTHIAN: It just floated away.
D. SILVERIO: It just floated away.
LOTHIAN (voice over): Water has become the centerpiece, outside and in.
P. SILVERIO: The water was up to here.
LOTHIAN: Down in the basement, where the couple's expensive silk screening machines and materials are kept...
P. SILVERIO: Like see the screens in the water, some of them are no good.
LOTHIAN: Water is still pouring in. It's about two feet deep.
P. SILVERIO: This is terrible. This is unbelievable. There's stuff floating all over the place.
LOTHIAN: His initial effort to hold off the river with a dirt barrier and a small pump failed.
P. SILVERIO: Yes, tried to pump it as we were taking stuff out. It just came too fast.
LOTHIAN (on-camera): It didn't take long for this neighborhood along the river to be swallowed by water. The rain came so hard and so fast that it all happened within a few hours.
(voice over): Now the Silverios are using two large pumps to dry out their business, so they can reopen. And two smaller units are running in the lower level of their home.
P. SILVERIO: All I can do is just keep pumping and hope for the best. Hope my pumps outlast the river. LOTHIAN: His wife tries to do a little business on the phone.
D. SILVERIO: Well, I'm on a generator right now so I'm lucky I've even got a computer.
LOTHIAN: They're taking care of each other, and for the time being ignoring the potential price tag of the damage.
D. SILVERIO: We're not even thinking of that right now.
LOTHIAN: One thing they do know...
D. SILVERIO: We're not going anywhere. We'll just have to take a little more precautions.
P. SILVERIO: No, we're not going to move. What are you going to do? If you live on the water, you have to accept it.
LOTHIAN: Even in the midst of the storm.
Dan Lothian, CNN, Methuen, Massachusetts.
(END VIDEOTAPE)
PHILLIPS: You can catch more stories like Dan's on "ANDERSON COOPER 360" weeknights at 10:00 Eastern.
Insurance rates are expected to jump in Florida again, but lawmakers are trying to make it easier for insurance companies to come back to the state. Many insurers stopped offering homeowner's coverage in Florida. Devastating hurricanes caused $30 billion in damages over the past two years.
The new law signed yesterday by Governor Jeb Bush allows private insurance companies to raise rates with less state regulation and makes it simpler for small insurers to tap into the state hurricane backup fund.
Well, they've come to the end of the long and winding road. OK, maybe four years of marriage isn't all that long, but Paul McCartney's split with Heather Mills is making plenty of news. We have got the details when LIVE FROM returns.
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PHILLIPS: Well, they've got to be good for something, right? A new technique uses dreams to work out the problems the dreamer faces when he or she is awake. Dr. Sanjay Gupta has the details.
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SANJAY GUPTA, CNN SR. MEDICAL CORRESPONDENT: Do you dream in color?
BOB STICKGOLD, HARVARD DREAM RESEARCHER: I do.
GUPTA: Do you dream with sound?
STICKGOLD: Yes.
GUPTA: Can you dream your own death?
STICKGOLD: Yes.
GUPTA (voice over): Harvard dream researcher Bob Stickgold believes dreams are important and can be educational. But...
STICKGOLD: A lot of our dreams are probably just goofy dreams. And to read too much into that is probably a waste of time.
GUPTA: Yet, for many of us, dreams hold a key to a deeper understanding of ourselves. Even the goofy ones.
JUSTINA LASLEY, DREAM GROUP LEADER: A dream is multifaceted. You can look at it from different viewpoints.
GUPTA: Author and dream analyst Justina Lasley is a dream group leader.
UNIDENTIFIED FEMALE: The title of my dream is...
UNIDENTIFIED FEMALE: Misplaced items.
UNIDENTIFIED FEMALE: All the cabins looked the same.
UNIDENTIFIED FEMALE: My dream that I want to share was...
UNIDENTIFIED FEMALE: Taking pictures of the fog.
UNIDENTIFIED FEMALE: When I first recorded the dream, I didn't see all this.
LASLEY: The dream group just multiplies the amount of impact that one dream can have on one individual.
GUPTA: This group has met for more than 10 years. They say they've gained confidence, insight, and new ways of using their dreams in their waking lives.
CORINNE ADAMS, DREAM GROUP PARTICIPANT: I kind of float out with some kind of wisdom, some -- some little extra bit of wisdom.
EMILY WOOD, DREAM GROUP PARTICIPANT: The whole idea that I would take the job that I have now, I don't know that I would have had -- had an idea that I would do that.
PAULA MCINERNY, DREAM GROUP PARTICIPANT: Someone will say something that touches a nerve, something that I haven't been able to share or even think about. And it just opens the floodgates.
TALLULAH LYONS, DREAM GROUP PARTICIPANT: The important thing has been the recognition of patterns and themes. I want to go to sleep so that I can dream. And I think that makes a big difference. GUPTA: A difference that she and others work on seeing when they're awake.
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PHILLIPS: Well, for more on how you sleep, tune in to Dr. Sanjay Gupta's special report this Sunday, 10:00 p.m. Eastern.
Cruising for another bruising. Well, Tom Cruise gets another smackdown from a showbiz mom. Just ahead, Marie Osmond's opinion of Cruise's opinions on postpartum depression. I wonder if she'd like to offer him a nice Hawaiian punch.
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PHILLIPS: Well, I guess we now know the answer to that question. When Sir Paul McCartney turns 64 next month, he may be feeding birthday cake to himself. He's splitting with second wife Heather Mills. They wed in 2002, and have a 2-year-old daughter. But there's been a fair amount of friction between Mills and McCartney's older children, especially designing daughter Stella. Amid snide comments that Mills married him for money, billionaire McCartney went to his Web site to denounce such vicious rumors. Others think Sir Paul grew weary of Mills' constant activism against landmines and fur.
(BEGIN VIDEO CLIP)
HEATHER MILLS, SPLIT WITH PAUL MCCARTNEY: We are just trying to be mediators. We're not coming here to dictate things. It's just -- we'd rather an at home watching the telly with our little baby. You know, we don't need to come over here and stand on the ice for five hours in minus-20 degrees with the windchill factor even worse. You know, we don't need to do this. We're not going around dictating stuff. We don't make money from this. We don't make anything from this.
(END VIDEO CLIP)
PHILLIPS: You can catch the stars on CNN's "LARRY KING LIVE," weeknights at 9:00 Eastern.
Oy, get the Aussie posse on the phone box, mates. Sorry, I didn't have the Aussie accent there. Nicole Kidman and Keith Urban say they are engaged. In addition to growing up in Australia, both are 38 years old and met last year at an awards dinner, and their love bloomed like an onion. No word yet on a wedding date. We'll let you know as soon as we get it.
Well, first Brooke Shields, Now Marie Osmond. We call them mothers against Tom Cruise. Cruise's depression diatribes are spurring more postmortem from Osmond, who has her own well-known battles with that condition. Last night, she told CNN's Larry King that it would be a mission impossible for Cruise to even understand what women go through.
(BEGIN VIDEO CLIP) MARIE OSMOND, ENTERTAINER: I know that Tom Cruise does his own stunt work and things like that. If he had postpartum, believe me, he would call in a body double, because it is intense. And I think I have made the comment before that unless you've been through something like that, you can't even go there.
DONNY OSMOND, ENTERTAINER: You can't judge anybody by it.
M. OSMOND: I mean, he has no clue. When he becomes a female and has a child and postpartum, then I'll listen to his comments.
(END VIDEO CLIP)
PHILLIPS: It's no exaggeration to say Larry King is always seeing stars, and so can you. Catch his show weeknights at 9:00 Eastern.
Well, if you grew up in the 1950s, you probably new Clarabell. He was the clown on "Howdy Doody," one of the first network television shows for children. The part was played by several actors, including the man we know as Captain Kangaroo. And today we learn that the final Clarabell, Lew Anderson, has died at 84. Anderson was the only Clarabell to speak during the show's 13 year run. Turning tearfully to the camera on the last "Howdy Doody" in 1960, he said the program's final words, "Good-bye, kids."
More LIVE FROM straight ahead.
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PHILLIPS: Pictures from our affiliate KWTV out of Cleveland County, Oklahoma. Brush fires happening in the area there. We don't know how they started or how far the damage has taken place.
There we go, we've got a live picture now via that same affiliate. Looks like it's getting better. We're not seeing as many flames as previously, but as soon as we get more information on these brush fires near Norman, Oklahoma, I'm told in Cleveland County, we'll let you know.
Conventional wisdom holds that if you're not part of the solution, well you're part of the problem. But what happens if your solution that causes the problem? A mother load of irony in California yesterday as Governor Schwarzenegger signed a transportation bill aimed at busting traffic jams. In hindsight, maybe it wasn't such a bright idea to hold the ceremony outside San Francisco's Caldecott Tunnel where all the media hoopla and rubber necking caused a colossal backup.
Well we've all got stories about rude drivers or maybe we are those rude drivers. But the auto club Autovantage says that some drivers are actually nice. They surveyed commuters and named Minneapolis as the city with the most courteous drivers followed by Nashville, St. Louis, Seattle and in a shock to many here at CNN, Atlanta. Autovantage also asked about the rudest cities. Well Miami tops that list, Phoenix is next. The largest city New York, also known for its touchy drivers. Los Angeles makes the list as does Boston, Mass. Slow graphics, sorry.
Well everything is bigger in Texas, right? Including maybe the numbers on the speed limit signs? Well we're talking 80 miles an hour on parts of interstates 10 and 20 in west Texas, where drivers are generally going that fast or almost already. There hasn't been a speed limit that high in the U.S. for 30 years.
Sky-high gas prices mean boom times for gas station owners, right? Wrong. Owners say they're being squeezed, too and some are getting out of the business. CNN's Allan Chernoff gauged the effects for "AMERICAN MORNING."
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ALLAN CHERNOFF, CNN CORRESPONDENT, (voice over): Don Keiser now jacks up cars rather than jacking up prices at the pump. He recently walked away from a Shell station he had leased for 10 years to open a repair shop across town in Hawthorne, New Jersey, where the only gas pump is a decorative one.
DON KEISER, FORMER GAS STATION OWNER: The profit margin's not there.
CHERNOFF: You can't survive owning one station?
KEISER: Nope.
CHERNOFF: No profit in it?
KEISER: No profit in gasoline.
CHERNOFF: Don says expenses and credit card fees eat up the few pennies of profit on regular grade gasoline.
KEISER: You will not make money on gas. You have to make something else in your facility, location, to make it profitable for you.
CHERNOFF: For Don that something else was repairs. Working 70 hours a week, Don says he used to earn about $50,000 a year. Now, without selling gas, he says his earnings have nearly doubled and his hours are shortly.
Sounds like selling gas is just a pain in the neck.
KEISER: Yes, you're getting the picture. It was. It's a big burden.
CHERNOFF: At Don's old location, Shell has approved digging up the gas tanks.
Gas retailing may not have been all that profitable for Don Keiser, but it certainly does pay for the major oil companies. There are 13,000 Shell stations around the nation. The company doesn't reveal exactly how much they contribute to earnings, but they certainly did add to profit last year of $26 billion. In contrast, station owner haves to pay oil companies more for their supplies when the cost of gas rises. And when a fill-up runs $60 or more, many drivers buy fewer snacks and less coffee.
DON GILLIGAN, PETROLEUM MARKETERS ASSOCIATION OF AMERICA: You're going to see an ongoing decline of what we call the mom and pop gasoline stations in America. The small, independent operator.
CHERNOFF: Gilligan says the number of retailers quitting the gas business is on the rise, about 1,000 last year. Small business people like Don Keiser who is happier paying up for gasoline like the rest of us than charging those sky high prices at the pump.
Allan Chernoff, CNN, Hawthorne, New Jersey.
(END VIDEOTAPE)
PHILLIPS: Time to check with Wolf Blitzer standing by in "THE SITUATION ROOM." What's coming up at the top of the hour, Wolf?
WOLF BLITZER, CNN ANCHOR: Thanks, Kyra. Happening now, domestic spying and your phone records. The Bush administration talking to members of Congress behind closed doors about what the NSA is up to.
Also, the latest tax cut. President Bush signs off on a political victory. But what does it mean for your pocketbook in the long run?
And he calls himself a recovering politician. Al Gore back in the spotlight. Is he considering a run for the White House again? And "Da Vinci Code" strategy. Religious groups capitalizing from the controversial movie by trying to spread the gospel instead of boycotting the film. All that, Kyra, coming up right at the top of the hour.
PHILLIPS: Sounds good. Thanks, Wolf.
Good news for alligator hunters in Florida, bad news for the gators. We're going to explain, straight ahead.
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PHILLIPS: Well, it's not payback, but the state of Florida is extending hunting season on alligators. A spokesman says the gator population is stable enough at roughly 1.5 million to extend this year's season from five-to-10 weeks. He also says the decision was made in February, long before last week's series of deadly attacks. Alligator season now runs from August 15th through November 1st. And by the way, that's gator wrangler Todd Hardwick. You might have seen him on our show yesterday. He's a very busy man this season.
A day down on Wall Street. Ali Velshi takes us to the closing bell. How is it looking?
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