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American Morning

Another Federal Rate Cut Possible Today; Obama and Clinton Talk About Gas Tax; Grand Auto Theft IV Game in Demand

Aired April 30, 2008 - 06:00   ET


KYRA PHILLIPS, CNN ANCHOR: Around the world.
JOHN ROBERTS, CNN ANCHOR: An important mental health study about the troops to pass along too as well.

But first of all, the most important issue to voters is all over the news this morning. We are watching the Federal Reserve today, waiting to see if another interest rate cut is in the offing. The Fed will weigh in one day after President Bush called on Congress to do more to make energy more affordable.

The president said he just might be open to the idea of suspending the 18-cent per gallon gas tax. Two candidates gunning for his job, Hillary Clinton and John McCain, have already laid out their plans to do so. Meanwhile, you're stuck paying more, a lot more for the 16th day in a row gas prices set a record. Now $3.62 a gallon on average for regular, according to AAA.

Our senior business correspondent Ali Velshi has what all of this means for your money, and what do we expect in the Fed to do today?

ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: Good morning. Happy Fed Day to both of you. Every six weeks or so, the Fed meets. We are expecting for the same thing that's happened the last seven times the Fed has met and that is for the Fed to cut rates again today. Probably not as much. We're probably expecting a quarter of a percentage point cut in rates.

The issue here, of course, is what the Fed says. It issues a statement, and a lot of people think the Fed may be done cutting interest rates. Will it hint that it's actually done cutting interest rates? That's the important thing.

Let me tell you what happens when the Fed cuts rates. The first thing that happens is that it generally makes money cheaper to borrow for businesses and for individuals. And the idea then is that businesses spend more so they expand. They hire more people. Those are people who have jobs and pay taxes and are able to spend money, and people save because their rates are lower. It doesn't directly impact mortgage rates, but a lot of consumer loan rates get cheaper because the prime rate gets lower.

And as a result, that stimulates the economy. The problem is when you make it easier to borrow money and spend money, that stokes inflation, and we all know we've got a lot of inflation. So the Fed might come out and say inflation is a bigger concern right now than the slowdown in the economy.

I'm going to come back and talk to you more about the Fed cutting rates. We're also going to find out about GDP, and I'll tell you about why that matters to you. That's the growth of the economy in the beginning of this year, and, of course, those gas prices up for the 16th day in a row.

ROBERTS: Perhaps lack thereof...


ROBERTS: ... when you're talking about growth. Right, Ali. Thanks. We'll see you again soon.

PHILLIPS: Well, a plan to eliminate tax on gas this summer is heating up on the campaign trail. Both Hillary Clinton and John McCain are for it. Barack Obama calls it a political gimmick that would save drivers "half a tank of gas." Clinton says it will spell relief for millions of Americans.


SEN. HILLARY CLINTON (D-NY), PRESIDENTIAL CANDIDATE: I would immediately lower gas prices by temporarily suspending the gas tax for consumers and businesses, and we will pay for it by imposing a windfall profits tax on the big oil companies. They sure can afford it.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: Well, let me tell you something. This isn't an idea designed to get you through the summer. It's an idea designed to get them through an election.


PHILLIPS: Both candidates are talking to voters today in Indiana six days before the pivotal primary.

Biofuels under fire this morning amid the growing global food crisis. A group of international food scientists says that if countries stop turning corn into ethanol, it would cut the price of corn by 20 percent. President Bush addressed the need for so-called green fuels.


GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: It's in our national interests that our farmers grow energy as opposed to us purchasing energy from parts of the world that are unstable or may not like us.


PHILLIPS: Scientists want the U.S. and other countries to use nonfood crops like switchgrass to produce biofuels saying, "We need to feed the stomach before we feed the car." Record oil prices are adding up to record profits for oil companies. We're going to talk with the president of Shell Oil in our next hour and ask him whether oil companies could help the struggling consumer.

ROBERTS: It's popular among shareholders but not necessarily the general public these days.

Republican John McCain making his health care pitch in Pennsylvania today. He's proposing a tax credit that people can use to buy health insurance. Families would get $5,000, individuals a $2,500 tax credit. His campaign estimates that the cost of the plan would be $3.6 trillion over 10 years, but they say it would be paid for by eliminating tax breaks for employer-based health plans. So the whole thing would be awash according to the campaign.

McCain thinks the government mandated health insurance plans offered by Barack Obama and Hillary Clinton just won't work.


SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: We will replace the inefficiency, irrationality, and uncontrolled costs of the current system with the inefficiency, irrationality and uncontrolled costs of a government monopoly. Watch your diet, watch your diet. Walk 30 or so minutes every day. Take a few other simple precautions, and you won't have to worry about these afflictions.


ROBERTS: Critics say that McCain's plan will not help senior citizens and people in poor health who have trouble getting health insurance now.

The United States is adding firepower to the Persian Gulf and sending a message to Iran. The Pentagon is moving in the U.S. aircraft carrier Abraham Lincoln to replace the Harry S. Truman on patrol in the gulf. Defense Secretary Robert Gates says the U.S. is not preparing for a strike on Iran, but the carrier can be seen as a "reminder." The U.S. accuses Iran of supporting the Taliban in Afghanistan and supporting insurgency in Iraq.

The Pentagon cutting $171 million from its budget, money that was earmarked for Iraq reconstruction. The decision comes after reports Iraq is expected to make $70 billion in oil revenue. The Bush administration says it will continue to provide substantial financial aid to smaller local projects as well as rebuilding efforts aimed at improving security.

PHILLIPS: Northern California was a bit rattled overnight from a 5.2 earthquake. It hit just after 8:00 p.m. local time near Willow Creek. That's about 200 miles northwest of Sacramento. The U.S. Geological Survey says that it was felt near the Oregon border. No reports of injuries or damage thus far.

And high winds spreading a wildfire and blinding smoke near Reno, Nevada. Firefighters there say winds in the area are gusting up to nearly 70 miles an hour, and crews are having a hard time just holding on to their gear. Close to 1,200 acres have burned so far.

And in Arizona, high winds also making it difficult for crews on a 2,000 acre wildfire near the Grand Canyon. Forecast doesn't offer much hope for relief there either.

But in southern California, cooler weather is helping crews in the San Gabriel Mountains. Right now, that wildfire is about 57 percent contained. It's been burning since this weekend.

ROBERTS: A teenager removed from that polygamist compound in Texas gave birth to a baby boy. Child Welfare officials say she is doing well, and they also say she is younger than 18. But a spokesperson for the church insists the new mom is 18 and in a monogamous marriage to a 22-year-old. The teen also has a 16-month- old child. Four hundred sixty-three children in state custody after a raid earlier this month on that YFZ Ranch.

The army is now inspecting all of its barracks around the world. It comes after the father of a soldier showed this video of filthy bathrooms and other deplorable conditions in a barracks at Fort Bragg, North Carolina. Edward Frawley told us that he just wanted a congressman to put pressure on the army to get things cleaned up.

Well, he got a whole lot more than that. We'll ask what's being done now when we talk with the army's vice chief of staff, General Richard Cody. That's coming up at 7:25 Eastern here on AMERICAN MORNING.

PHILLIPS: Some of those barracks 60 years old. So the question is will they demolish them, rework them, because they have done a lot of rebuilding in those bases.

ROBERTS: Old buildings are fine as long as they're in good condition and not backed up in ankle-deep in sewage, right?

PHILLIPS: First, they had to deal with Walter Reed. Now, they're dealing with the same thing in these barracks.

ROBERTS: More problems.

PHILLIPS: So we'll address it with the general.

Well, as we told you at the top of the show, the Fed is expected to cut key interest rates again today. Ahead, why it might be the last cut for a while.

Plus, it could be the biggest thing to hit the world of entertainment ever. See what's driving millions of people to get that game Grand Theft Auto. That's straight ahead on AMERICAN MORNING.


ROBERTS: Nine minutes after the hour. The Fed out with another decision today on interest rates. What kind of cut can we expect, Ali Velshi?

VELSHI: Probably about a quarter percentage point. I got to say it's very exciting for those of us who cover business, but why does this matter to you? Why do you care if the Fed cuts rates?

Well, because it generally speaking makes money a little cheaper for you to borrow. Let me tell you what happens when the Fed actually cuts rates.

The prime rate drops along with the Fed. So if the Fed cuts rates by a quarter of a percentage point, the prime rate drops by a quarter of a percentage point. That means adjustable loans that are tied to the primary, you might have credit cards or loan tied to prime, they get a little cheaper today.

And what typically happens is the U.S. dollar has been weakening. However if the Fed says that it's not going to keep cutting rates, you might see the dollar start to strengthen which is what we've seen, by the way, for the last few days. It has been strengthening and as a result, oil prices have actually -- are you sitting down for this -- gone down. Oil is like -- it's a big sale. It's about 116 bucks a barrel.

Now, let me just tell you about the prime rate and the Fed rate. Right now, the Fed rate is 2.25 percent, 2.25 percent, which means the prime rate is 5.25 percent. If it moves down by 25 basis points, that's a quarter of a percentage point, your prime rate will also drop today. That happens at about 2:15 p.m.

The issue here is what the Fed says after it cuts the rate. Does it sort of indicate that it's done cutting rates for a while because it's been cutting rates since September? And what effect is that going to have on you? I should remind you the Fed rate and the prime rate do not have a direct impact on mortgage rates.

ROBERTS: So in terms of the value of the dollar, since the Fed has been cutting interest rates, is there more pressure on European governments now to come up with their own interest rate cut, which then would strengthen the dollar?

VELSHI: If everybody cut interest rates at the same time, by the way, everything would stay even, right? But the fact is that everybody wants to wait to see that somebody else does it. So if the Fed cuts rates again, the Europeans will probably have the freedom to cut rates again.

But their euro is very strong. While we think that's a good thing for them, it's really not because nobody travels there. Nobody wants to buy their stuff.

ROBERTS: It's a good thing if they want to come to Miami or Key West or California.

VELSHI: But tourism is not the biggest part of anybody's economy, so it's one of those things that the Fed -- the Europeans might have the freedom to cut some rates. ROBERTS: Or buy property in New York as well.

VELSHI: That's the other thing.

ROBERTS: Ali, thanks. We'll see you again soon.


PHILLIPS: The tip of the iceberg won't be there for long. See what happens as the seas get pretty angry and the temperatures rise in today's "Hot Shot." Rob Marciano tracking extreme weather today. Hey, Rob.

ROB MARCIANO, AMS METEOROLOGIST: Hi, guys. We've got fires out west. We've got severe weather moving off the East Coast, and that Mississippi River just continues to cause problems. Check out this video out of Davenport, Iowa.

This minor league ballpark surrounded by water, and they had to play elsewhere. Headaches in Davenport, and complete weather coming up when AMERICAN MORNING comes right back.


MARCIANO: Dry weather expected today across the Quad cities in Iowa, but the Quad City river bend has got some problems there with their stadium there. Modern Woodmen Park surrounded by water as the Mississippi just doesn't want to go away there. The sandbagging efforts managed to keep the water out of the outfield, but the folks had to move their games elsewhere. In an ironic twist of fate, they continue to water the outfield.

Welcome back to AMERICAN MORNING everybody. We still have flooding issues across the Mississippi. In some cases, flood warnings "remain in effect until further notice." Here's a look at them near the Quad cities and the Davenport area.

Darker green meaning that they are at flood warning. And in some cases, the river is receding slowly and good news today is we don't have a whole lot of rain coming this way. So the only batch of rain is across parts of the northern plains, and the other issue today is going to be the threat for extreme fire danger in parts of the southwest again.

Relative humidity is very low. That prolonged drought continues and winds could gust an excess of 60 miles an hour. Check out this video yesterday from Reno, Nevada, where winds were gusting to 70 miles an hour.

Boy, these firefighters just had their hands full trying to beat back those flames working against mother nature. With those winds gusting like that and that dry weather there in Nevada, that causes some big-time problems. Wind shouldn't be quite as bad today in Nevada, but folks in New Mexico and Arizona may very well have to deal with that. And as you guys said in the first block, there's fires burning near the Grand Canyon. So we're getting an early jump again to fire season and mother nature not really cooperating. John, back up to you.

ROBERTS: Rob, thanks very much.

PHILLIPS: From hot to cold. Rob, check out this picture. Actually this is right up your alley. You're the one from Canada.

Take a look at this iceberg. It's just rolling over and making a splash. Now, if we were in Antarctica seeing this we could talk about the whole effects of global warming but that might be a little much, huh, Rob?

MARCIANO: Yes, I think we can say it's spring.

PHILLIPS: You don't need the Coast Guard cutters to come in and break this up.


PHILLIPS: It's just doing things naturally. This actually comes from one of our I-reporters. We love stuff like this. Bob Strong (ph), thanks so much.

MARCIANO: Yes, that's great.

PHILLIPS: Temperatures have been as high as 45 degrees there. That's high.

ROBERTS: That's a balmy summer day in Newfoundland.

PHILLIPS: Exactly.

MARCIANO: Bring your sunblock.

PHILLIPS: Well, if you've got a "Hot Shot," just send them to us straight ahead on our Web site or head to our Web site rather, Follow the "Hot Shot" link. We'll take your pictures and the video.

ROBERTS: Well, we saw the iceberg there. This is the titanic of the video game world, possibly even bigger than "Titanic" the movie. A look at why Grand Theft Auto IV is in such hot demand, next on AMERICAN MORNING.


PHILLIPS: The long awaited release of the new Grand Theft Auto Game is causing a bit of a frenzy around the world. Police in San Diego already arrested a man for attacking two employees at a video shop with mace then stealing two copies of the game. In London, a stabbing and a violent mugging reported minutes after the game was purchased.

Veronica de la Cruz in Atlanta this morning. Veronica, what makes this notoriously violent game so popular?

VERONICA DE LA CRUZ, CNN INTERNET CORRESPONDENT: Hey, good morning to you, Kyra. You know, most video game publishers would be happy selling 100,000 copies. 100,000 copies. That's pretty much the benchmark when it comes to success, and this video game is expected to sell six to 12 million copies.

Now, to give you a little bit more perspective, here are the top three grossing movies of all time. "Titanic" has grossed $600 million worldwide since it came out 11 years ago. It's followed by "Star Wars," "Shrek 2."

Now, this is a video game which is predicted to bring in $400 million in one week alone. So why is this game so popular? Apparently gaming experts are saying the technological advances in the game are like nothing else they've seen so far.

The game is -- it's highly interactive. It lets you live in this virtual world. There you're free to drive whichever car you choose, you pick a girlfriend, you play against other players all around the world. And gaming experts so far are giving this the highest scores possible.


SCOTT STEINBERG, PUBLISHER, DIGITALTRENDS.COM: You are going to have a living, breathing 3D cityscape full of thousands of people who walk, talk, eat, go about their own daily routine as you can interact with. The storyline is much more cinematic. The characters are much deeper. You've got a beautiful world in which to play and in many new ways.


DE LA CRUZ: But as in the past, Kyra, the violence, of course, is of concern. This time there is a fair deal of sexual content as well. The publishers say that's why it is rated "M" for mature, which does mean 17 and up.


SCOTT STEINBERG, PUBLISHER, DIGITALTRENDS.COM: Grand Theft Auto IV isn't necessarily any more violent or spectacular or sensational than what we've seen today. It's got incredible storytelling, incredible depth, incredible characterization. But just like "Scarface" or "Carlito's Way," it should not be consumed by children.


DE LA CRUZ: So just like Scott was saying there, it shouldn't be consumed by children. This is rated "M" for mature audiences only. That does mean 17 and up. And so far, one of our affiliates in Arizona said majority of people standing in line to purchase that game were over the age of 30 and they were purchasing the game for themselves, not for kids. We are going to put some helpful tips for parents over on our Web site at -- Kyra. PHILLIPS: So the average gamer, 26, 27, 28 years old. I never realized that.

DE LA CRUZ: Yes, yes. You're absolutely right, 26, 27, 28. Like I said, the majority of people standing in line for the game over the age of 30. So this is not a game for your kids.

There is a great Web site out there, however. We're going to put all of those Web sites for parents when it comes to violent video games, sexual content online. Something that you probably want to read about, keep away from your kids. All those tips available on our Web site at

PHILLIPS: That's great news you can use. Veronica de la Cruz, thanks.

ROBERTS: You know, you don't realize it, but this could be the entertainment story of the year.

PHILLIPS: We were saying yesterday $400 million. This is expected to --

ROBERTS: In its first week.

PHILLIPS: That's incredible.

ROBERTS: Unbelievable.

PHILLIPS: And that's triple what movies will bring in.

ROBERTS: We were talking about when "Star Wars" grossed, you know, in the United States --

PHILLIPS: That's something about our society. That's a whole another discussion.

ROBERTS: There you go.

Well, the big news in politics today. Barack Obama publicly denounced his former pastor, all over comments the Reverend Jeremiah Wright made on Monday at the National Press Club in Washington.


SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: I am outraged by the comments that were made and saddened over the spectacle that we saw yesterday.


ROBERTS: Now, many in the black community are saying that Reverend Wright is hurting Senator Obama. And that brings us to this morning's "Quick Vote" question. We want to know from you. Has the Reverend Wright controversy hurt Barack Obama's chance at winning the Democratic nomination for president?

Cast your vote at We'll have the first tally of votes coming up later on this hour.

We also want to hear from you as well. Go to Follow the link that says "contact us." Give us your thoughts via an e-mail, and we'll start reading some of those next hour here on AMERICAN MORNING.

PHILLIPS: You're watching the "Most News in the Morning." The hidden costs of war. A new study says the wars in Iraq and Afghanistan taking a mental toll on members of the military. Many of them though reluctant to request counseling. We're going to talk about it straight ahead.

And new video overnight of the Olympic flame arriving in Hong Kong. It's now 100 days until the Beijing Games, but has China lived up to its pre-game promises with the environment and human rights. A live report from Beijing straight ahead on AMERICAN MORNING.


ROBERTS: Twenty-five minutes after the hour. An alarming and important study to be released later on this morning says American military personnel are avoiding treatment for possible mental health problems. The American Psychiatric Association says more than half may be too embarrassed to reveal that they are having psychiatric problems. And just as disturbing, they may not even know that they should get treatment.

The American Psychiatric Association's president, Dr. Carolyn Robinowitz, joins us now from Washington. Dr. Robinowitz, thanks for being with us early this morning. What did the study find in terms of this stigma associated with mental health problems and seeking treatment?

DR. CAROLYN ROBINOWITZ, PRES., AMERICAN PSYCHIATRIC ASSOCIATION: The study found that many soldiers were quite concerned about the possible adverse effect of seeking treatment on their careers, and that stigma really interfered with their opportunity to get help.

ROBERTS: Now, let's take a look at that figure. Sixty-one percent, your study found, think that seeking help will negatively impact their career. Why is that? Is the military to blame for that? Is the culture to blame for that, and how do you address that problem?

ROBINOWITZ: Well, blame is a difficult thing, but I think that the military has worked very hard to try to convince the troops on the ground that care is available, that care will be helpful, that treatment works. But I think the prevailing culture, particularly among the military themselves, is that it doesn't really work that way.

ROBERTS: Your study also looked at the side effects of returning home from combat service, not just among military personnel, but their spouses as well. Let's take a look at some of the figures here.

Forty-two percent of military members had trouble sleeping. Their spouses, 52 percent. Anxiety was experienced by 38 percent of service members, 39 percent of spouses.

Lack of interest in just general activities or activities that they previously enjoyed; 37 percent for military members, 32 percent for spouses. And a sense of feeling depressed, 40 percent for military members, spouses 33 percent. You talk about this idea of combat to cul-de-sac. What does that mean?

ROBINOWITZ: Well, what it means is that military very rapidly, particularly those who were from the reserve or from National Guard, go home fairly quickly. They're not part of the military base. They return to their families, their loved ones, but they haven't necessarily really adapted rapidly to the change in culture from the battlefield to the hometown.

And if they're away from the military base or a center that provides care, they may not be able to access care so easily, and they may feel isolated. Plus, they come home after having been gone 12 months, 15 months to a different environment, where their spouse and children have been used to living without them. There's a whole period of readjustment.

ROBERTS: So almost more quickly they come back, the more difficult the re-entry is, and some of them might not even know that what they're experiencing are subtle signs of perhaps mental problems?

ROBINOWITZ: They may recognize that something isn't quite right as they try to reacclimate, but they may not know that these are signs of -- early signs often of mental problems that can be treated and treated effectively.

ROBERTS: The study also found an alarming number of people, and I think that the figure was 67 percent, never talk about these problems with either their spouse, their friends, or family.

ROBINOWITZ: And that is quite a contrast to a culture that's often described as being very therapy-oriented.


ROBINOWITZ: But it's clear in particularly young people who go off to combat who are healthy, feel there's no need to talk about mental problems. They haven't had mental problems. They haven't had physical problems, and they may feel there's something weak or shameful. Even though we know that mental illnesses are not disorders or weakness as well, they may feel there's something shameful or weak in talking about mental concerns.

ROBERTS: So what's the constructive application of this? You've got the data now. What do you do with it? Do you go to the military and say hey, you've got a problem here that you might not know about. Let's work together on some sort of solution?

ROBINOWITZ: I think you do two things. First off, just bringing this to public attention helps people understand that it really is OK to seek help. I think, secondly, we need to tell the military that in spite of some very good efforts, they need to do more work in helping the service men and women understand that treatment is available, treatment is effective, and that it will not hinder their careers.

ROBERTS: Well, it's a very important study. The public release coming a little bit later on this morning at the National Press Club. Dr. Carolyn Robinowitz from the American Psychiatric Association, thanks for being with us early this morning for a little curtain raise on all of that.

ROBINOWITZ: Thank you.

ROBERTS: All right. And for more information about mental illness, by the way, associated with serving in a war zone, you can visit You'll find fact sheets and information on depression and anxiety disorders. That's (ph) -- Kyra.

PHILLIPS: We're also watching the Federal Reserve today. Another key rate cut could come this afternoon, and it could have a big impact on oil. With the value of the dollar and the price of oil going in different directions, some experts are saying it may be best for your money if the central bank decides to stand pat on interest rates for the first time since September.

And also breaking news this morning, actually we probably all expected this, right? Gas prices hit another record. This is the 16th straight increase. It's now up to $3.62 a gallon for regular. That's according to AAA. That's a 33 cent jump in just a month.

Did you ever think $2.97 would feel like a steal? That's what it was one year ago.

Now, less than a week until the crucial primaries in North Carolina and Indiana, Barack Obama is breaking sharply with his former pastor, the Reverend Jeremiah Wright. As the Illinois senator tries to minimize the damage that Wright's comments have done to his presidential campaign.

CNN's Dan Lothian is following it all, live, from Indianapolis.

Hi, Dan.

DAN LOTHIAN, CNN CORRESPONDENT: Hello. You know, this is something that Senator Barack Obama really hoped to put behind him. You know, he had that race speech in Pennsylvania where he really laid out his case, and essentially separated himself from his former pastor.

But then again Reverend Wright came forward and went on this media tour and initially Senator Barack Obama had somewhat of a low- key response, but then he decided that he had to make a stronger point, a stronger force in separating himself from his controversial former pastor.


SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: His comments were not only divisive and destructive, but I believe that they end up giving comfort to those who prey on hate and I believe that they do not portray accurately the perspective of the black church. They certainly don't portray accurately my values and beliefs.


LOTHIAN: Senator Obama obviously spent a lot of time dealing with this yesterday. Today, he really hopes to focus on the core issues that he believes are important to voters such as the economy, health care, and education. Really trying to appeal to all voters, but in particular to those white working class voters that he really needs to win over, particularly here in Indiana.


PHILLIPS: As we've watched Obama struggle with this Wright controversy, Senator Clinton, she's basically been able to connect with some voters there by just pushing her plan to suspend the Federal Gas Tax and not really getting involved with this whole controversy.

LOTHIAN: That's right. She has pretty much been staying away from it for now and focusing on an issue that she says is very important to voters because they're really feeling the pain at the pumps.

And this is an issue, this gas tax suspension for the summer months, is something that Senator McCain first brought up, but what Senator Clinton is saying is that he comes up with this proposal but doesn't have a way to pay for it. And what she's talking about is introducing legislation which would impose a windfall tax on the oil companies and that's how she says that she would pay for it.

Senator Barack Obama really does not support this because he doesn't think it will really help at all. And to kind of highlight all of this, Senator Clinton this morning will be in South Bend, Indiana. She'll be commuting to a sheet metal plant with a worker and along the way they will stop to fill up with gas.

Again, she is trying to focus on some of these issues that she believes are important to voters here like gas and like the economy.

PHILLIPS: Dan Lothian, live, from Indianapolis. Dan, thanks.

And Republican John McCain taking his health care message to Pennsylvania today. McCain says that health care costs can be driven down by competition, and he proposes moving away from employer-based insurance plans and offering a tax credit so that people can choose their coverage.

Critics say that wouldn't help seniors and people with existing conditions who have trouble getting coverage right now. McCain says the Democrats' universal health care, those plans just wouldn't work.

ROBERTS: Drug maker Baxter International says its blood thinner Heparin link to 81 deaths appears to have been deliberately tainted with an additive. The firm's CEO testified before House Sub-Committee about the drug which was made in China. The panel heard emotional testimony from those who lost loved ones to the tainted drug.


LEROY HUBLEY, LOST WIFE AND SON: My wife, Bonnie, died in December after receiving Heparin that was later recalled by Baxter. My son, Randy, died a month later under the same circumstances.


ROBERTS: Tainted Heparin made by other drug makers has been found in more than a dozen countries since Baxter recalled it back in January. And regulators say they do not know how it happened.

Coming up to 35 minutes after the hour now. China marking an Olympic milestone today. 100 days now until the Beijing Games. Overnight, the torch arrived in Hong Kong. At least seven pro-Tibet demonstrators were deported.

China is celebrating the countdown with a mini-marathon around two Olympic arenas today. But worldwide the focus is on issues such as human rights, press freedom and the environment. Has China made any progress in those areas?

CNN's John Vause is live for us this morning in Beijing.

Good morning, John.

JOHN VAUSE, CNN BEIJING CORRESPONDENT: Good morning, John. Critics say not only has China failed to live up to the commitments on those issues that it made to win the Olympic games, but in some cases the Olympics may have actually made things worse.


VAUSE (voice-over): 100 days to go and Beijing is getting ready to party. The China human rights record has gate crashed triggering global protests and potentially making these Olympics the most controversial since the boycotts of the 1980s.

Part of Beijing's winning bid was a promise the Olympics would benefit the further development of our human rights cause. If anything, critics say, there's been a pre-Olympic sweep of dissidents. Thousands have been detained according to Amnesty International, and one land rights activist, Yang Chunlin, was sentenced to five years jail for in sighting subversion.

His crime, starting a petition titled, we don't want the Olympics, we want human rights.

IRENE KHAN, AMNESTY INTERNATIONAL: We are still hopeful that China will listen to world public opinion. That China will look around and see that it needs to take some quite rapid action.

VAUSE: Then there's the promise of greater press freedom in keeping with the Olympic charter. This year foreign journalists have been free to travel most of the country, but Tibet remains off limits. Overall, activists say, Beijing has been cracking down, not letting up.

VINCENT BROSSEL, REPORTERS WITHOUT BORDERS: They said they will improve, but we noticed is deterioration. And the number of (INAUDIBLE) is growing.

VAUSE: As part of the 100-day celebrations, thousands of Beijing residents ran a marathon. The air thick with pollution. Many athletes remain concerned about what they'll be breathing come August costing doubt on another Olympic promise to make these the green games. When specifically asked if China has kept all three Olympic commitments, this government official replied -

JIANG YU, CHINESE GOVERNMENT SPOKESPERSON (through translator): I have noticed that when you are asking the question, you have linked some issues which are irrelevant to the Olympic Games.


VAUSE: Now, we tried to put those same questions to games' organizers as well earlier this week. They agreed to a sit-down interview, but today almost at the last minute, they abruptly canceled. Apparently, there was a scheduling problem.


ROBERTS: John, looks like a fairly clear day behind you today. What steps do the Beijing organizers plan to take to reduce the pollution around the games?

VAUSE: Yes, this is a little misleading. It's been horrible here for most of the day. We had a stiff breeze about an hour or so ago and it swept it all over to Korea or somewhere.

But what they're going to do they're going to take all the cars off the road. I mean, closing down industry. And that's one thing which the Beijing games organizers say they're very confident of delivering will be clean air to the games.

The question, though, is will there be an environmental legacy after the Olympic Games and the jury is very much out on that, John.

ROBERTS: And pity the poor Koreans this morning. John Vause for us in Beijing. John, thanks very much.

PHILLIPS: Ali Velshi is going to tell us why we need to care about the GDP.

ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: GDP, by the way, GDP numbers for the first quarter January to March come out in two hours. 8:30 a.m. Eastern. And it is the broadest measure of the economy. It's the one we use to determine whether we're going to a recession or not.

Now given this tough economy, people like to know how to do things themselves. So when we come back from a break, I am going to show you how to calculate your very own GDP. AMERICAN MORNING is coming right back. Stay with us.


VELSHI: Good morning. Welcome back to AMERICAN MORNING. I'm Ali Velshi. Get your pen, calculator and paper out. I'm going to help with you a little GDP exercise this morning. GDP is the Gross Domestic Product. It is the broadest measure of the economy and it's the one that we typically use to measure whether or not we're going into recession or what the economic growth is like.

We're going to get that number for the first three months of this year at 8:30 this morning. Now, John and Kiran, I'm going to show you and everybody at home how you calculate GDP. Please put the calculation up on TV. OK. There you go.



VELSHI: Kyra, Kiran is on the phone. She's working it out, too.

PHILLIPS: OK. She's teaching her new baby.

VELSHI: Yes, exactly.

PHILLIPS: The GDP. You know, I didn't make it past geometry. At 6:41, there's no way I will be able to calculate anything besides the lack of sleep.

VELSHI: It's easy. I'll show you. Anybody can make this one. GDP is consumption plus gross investment plus government spending plus exports minus imports. Let me just change that. Let's put something else a little easier up on the screen to explain what GDP actually is.

It's a total market value of all goods and services produced within a given country in a given period of time. That's the way we measure the economy. You thought I was really going to go with that first one, right? Don't try and calculate that.

PHILLIPS: Tell me what it means to me. Tell me right now.

VELSHI: The bottom line is it's going to come in probably. What we expected to come in is at four-tenths of a percent. Generally speaking, if it's negative, that's really bad. If it's going down, it's really bad. If it's up and strong, it's really good.

To give you an example. Some of these high-growth countries we talk about in Asia are at 8 or 10 percent GDP. That's very strong. We're at less than a percentage point in GDP. It historically was thought that if you were in negative GDP for a few months that would be a recession.

I'm going to talk to you a little later about how that definition has changed, too. But we don't want it to be awfully low. That's the broadest measure of everything we create in this country. That's why we're looking at it. Today at 8:30, it's going to give fuel to either one side that says we're going to a recession or we're in a recession or the other side that says we're not, we're fine. And I'll bring ...

ROBERTS: Just for folks who would be interested in hanging around to listen to it, but maybe off to work just kind of give us an idea. It's no longer negative growth? It's just a contraction?

VELSHI: It's a contraction in the economy over a period of several months felt across the economy broad.

ROBERTS: But not necessarily two quarters of negative growth.

VELSHI: It doesn't mean -- we often say two quarters of negative growth. Forget it. That hasn't been the definition for a long time. Forget that. That's not what you want to be looking at. But I will tell you more about this through the morning.

ROBERTS: Didn't mean to ruin the surprise.

VELSHI: No, no, that's good. That shouldn't be a surprise, right?

PHILLIPS: Thanks for the math equation.

VELSHI: Not a problem.

ROBERTS: The rising Mississippi River and more rain may be on the way. Our Rob Marciano tracking extreme weather for us this morning.

Rob, what's going on out there?

ROB MARCIANO, CNN METEOROLOGIST: You know, we're just trying to cover all of our bases, including this. Check out this picture -- I- report coming to us from Key West, Florida. You heard about ring around the rosy, ring around the collar, how about a ring around the sun.

We'll talk about this phenomenon and how you can figure it out on your own. Even your kids can do this one. Stick around. AMERICAN MORNING will be right back.


MARCIANO: I-report coming at you from Key West, Florida. Avis Tasna (ph) took this picture at 1:30 yesterday afternoon. The sun and a ring around the sun. That is a halo, my friends, and it's caused by high thin cirrus clouds, ice crystals way up there in the upper levels of the atmosphere and refraction that's caused by light going through that.

You want to know if you're looking at a halo? Well, you just put -- kind of re-put your thumb on the sun and your pinky will go right around the ring. That's it. Be about 22 degrees. It's how you measure that puppy. And sometimes, it can mean that rain is on the way or at least thickening clouds. Didn't rain across the Keys but there's certainly some rain heading towards the Bahamas this morning.


PHILLIPS: Well, with the dollar slumping and airfares soaring, a European vacation may seem out of the question. But guess what? It's not. Coming up - how to do Europe without breaking the bank.

ROBERTS: Oh, looking forward to that.

And Barack Obama trying to repair the political damage done by the Reverend Jeremiah Wright. Was denouncing him the right thing to do? That's ahead on AMERICAN MORNING.


ROBERTS: It's coming up to nine minutes to the top of the hour. The dollar is up a little against the Euro today. The Euro worth $1.55 U.S. Still pretty expensive though. You might think that the split between the dollar and the Euro would put a trip to Paris or Rome out of reach this year.

But CNN's Alfonso Van Marsh found some ways that you can save and still travel abroad.


SONG PLAYING: The hills are alive --

ALFONSO VAN MARSH, CNN CORRESPONDENT (voice-over): The European holiday Chevy Chase is Griswold Family dream of in national lampoons European vacation is increasingly harder for Americans to afford. A weak U.S. dollar is driving up holiday costs priced in Euros and British pounds.

SIMON HEATH, WORLDHOTELS: Unfortunately, there's been a downturn in the U.S. market for travelers coming back over to Europe.

VAN MARSH: So Simon Heath's World Hotel's group is luring exchange rate weary Americans by getting rid of the exchange rate altogether. Book a room at this property in Madrid advertised for, say, 200 Euros a night and Americans who reserve through World Hotels in the states pay just $200.

HEATH: In the past the U.S. tourists have been very loyal to us and helped us get into a position that we're in now. And therefore, we have to repay some of this loyalty and offer them cheaper rates.

VAN MARSH: And there are other ways for American tourists to protect themselves against a fluctuating dollar. Tour operator say smart travelers choose all inclusive vacations like beach resorts where prices are often set months in advance.

FRANCES TUKE, ASSOCIATION OF OPERATOR TRAVEL AGENTS: We package holidays and tour operators. They contract with hoteliers and often pay up front for the beds as well, so you know that you're locked into that price and that won't change.

VAN MARSH: Same thing with cruise ships. One reason why despite U.S. economic woes the head of Britain's cruise industry trade says more than a million Americans cruised in Europe last year.

WILLIAM GIBBONS, DIRECTOR, PASSENGER SHIPPING ASSOCIATION: They didn't have to worry about the exchange rate because you can pre-book your cruise in North America in dollars. Pay through excursions in dollars as well. Credibly good value for money.

VAN MARSH (on camera): And here is another tip to stretch the vacation dollar. Foreign exchange company Travelex will soon have a new currency card that is purchased in U.S. dollars, but then loaded in Euros or Great British pounds. Currency used here in London.

And here's the thing. The currency exchange rate is locked at the time of purchase. So if the value of the dollar goes down, well, no worries. But if the value of the dollar goes up, you're stuck. Alfonso Van Marsh, CNN, in London.


ROBERTS: And as Ali Velshi was saying today. The value of the dollar is going up a little against the Euro, so might want to wait a day or two before you lock something in.

PHILLIPS: Well, and you talk about being stuck. I wouldn't mind being stuck somewhere in Europe, somewhere on a cruise ship. As he was talking about vacation.

ROBERTS: I was stuck in Tuscany once for a couple weeks, but that was years ago.

PHILLIPS: Pass the time with good wine and beautiful sunflowers.

ROBERTS: Yes. Great.

PHILLIPS: All right. Well, still to come, cleanup act. The new mission to scrub down barracks after a soldier's dad exposes filth at Fort Bragg. We're going to talk with the general in charge. See what he's doing about it. That's straight ahead on AMERICAN MORNING.


PHILLIPS: Six days now until the Indiana and North Carolina primaries and Barack Obama is trying to stop the political damage caused by the Reverend Jeremiah Wright. Obama held a news conference in North Carolina yesterday to denounce remarks by his former pastor.


SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: I am outraged by the comments that were made and saddened over the spectacle that we saw yesterday. I have known Reverend Wright for almost 20 years. The person I saw yesterday was not the person that I met 20 years ago.


PHILLIPS: John Dickerson, a political analyst for CNN, and chief political correspondent for, joining us now from Washington. John, good to see you.


PHILLIPS: You know what I think overall here -- what is so sad is your relationship with your pastor is supposed to be personal. It's supposed to be private. And this is someone who married Barack Obama, baptized his children, and now he's become a bit of an egomaniac and it's just sad to see from a personal and spiritual level how much though will that really effect with what we're seeing right now, the dynamic of what voters think about Barack Obama?

DICKERSON: Well, it's already affected the campaign and that Barack Obama has had to deal with this over the last three or four days as Jeremiah Wright has been on this interesting little public tour to clear his name in a way.

It's caused some problems for Obama. He gets in the way of the message Obama is trying to put forward. And Obama is in a tight race in Indiana and it's getting tighter in North Carolina. So we'll have to see in the days after Obama's remark yesterday distancing himself from his pastor whether it worked.

Those remarks were quite strong. He really left no room for doubt about his feelings about Jeremiah Wright. And so now we'll just have to see in the polls and ultimately in the most important polls on the Election Day whether it really had any effect.

PHILLIPS: It's interesting to see the reaction from the black community, the white community. Could you really sit back and look at what is happening here and say, wow, this will affect black voters more than white voters or the opposite?

DICKERSON: Well, to the extent it affects black voters, it will be if they see Barack Obama as abandoning one of their own. Jeremiah Wright presented himself as a representative of the black church in its entirety. And Obama in his remarks yesterday said this isn't the black church I belong to or associate myself with.

So to the extent that that becomes an identity question perhaps it will hurt him with black voters. But you know, we really won't know until we get to Election Day. And there maybe quite a number of voters who are irritated and sick of this whole business and take Obama's original point which is, look, our lives -- we have bigger problems in our lives and this is just a distraction from them.

PHILLIPS: And the senator, of course, came forward and said, look, he contradicts everything I believe. Let's take a listen.

(BEGIN VIDEO CLIP) OBAMA: It is antithetical to our campaign. It is antithetical to what I'm about. It's not what I think America stands for, and I want to be very clear that moving forward Reverend Wright does not speak for me. He does not speak for our campaign.


PHILLIPS: Is this enough to impact superdelegates, voters? Could this be the end of Barack Obama's run for the presidency?

DICKERSON: Well, that's going a little too far, that Barack Obama is still ahead in the pledged delegates. This isn't going to change that. And it's not going to change the outcome of several of the races to come where he's in strong states and doing well.

It's a problem for his campaign at the moment, but there are lots of other things for people to care about and that affect their daily lives. And Jeremiah Wright on the list of people's concerns is maybe at around 29 or 40. People are worried about their jobs, you know, their health care, the fact that we're engaged in two wars.