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American Morning

Slumdog Kids' Rousing Welcome; Breaking Down Obama's Budget; Rise in Hate Groups; Pakistan Political Protests; Obama's $634B Healthcare Overhaul

Aired February 26, 2009 - 07:57   ET


JOHN ROBERTS, CNN ANCHOR: Welcome back to the Most News in the Morning.

President Obama is sending Congress more than $3 trillion budget today. We're hearing that there is going to be a $1.75 trillion dollar deficit attached to it. Critics say that he's running a lot of check that the government will not be able to cash.

Joining us now live from Washington is Bill Adair. He is the founder of and keeper of the truth-o-meter. Bill, it's good to see you. Thanks for being with us.

BILL ADAIR, FOUNDER, POLITIFACT.COM: You bet. Thanks for having me.

ROBERTS: You got the truth-o-meter all revved up and ready to go. Let's run some of the grease through the mill here. John McCain, the other day, was talking about seeing a contradiction in the president's attitude toward spending boasting about no earmarks in the stimulus package, all this omnibus bill, spending bill is up for a vote this week. He says it's loaded with pork. Let's listen to what he told us the other day on AMERICAN MORNING.


SEN. JOHN MCCAIN (R), ARIZONA: On the floor tomorrow and the next day of the senate will be a bill with 9,427 pork barrel items, $2 million to promote astronomy in Hawaii. I mean spending has gone completely nuts here.


ROBERTS: You know, he was pretty accurate there - he didn't - pretty precise at least in his numbers, not saying some 9,000 or so. He said precisely 9,427 pork barrel items. What did the truth-o- meter say?

ADAIR: We gave that one a true on the truth-o-meter, on politifact. Other organizations have slightly different numbers. A McCain staff told us they came up with that number just by counting them. They called it a preliminary number but it's definitely in the range of what other groups have found, Taxpayers for Common Sense came up with about 9,300 so a true for that one.

ROBERTS: All right. I was in New Orleans over the weekend for the pre-Mardi Gras celebrations. Everybody was talking about was Louisiana Governor Bobby Jindal resisting some of the stimulus money particularly as it related to the unemployment benefits in Louisiana. Here is what he said about it, "Louisiana is turning down $100 million that would require us to change our unemployment law that would have actually raise taxes on Louisiana businesses. He claims that the stimulus would hurt his state. Where did that one rank in the truth- o-meter?

ADAIR: We gave it a mostly true on the truth-o-meter. And he is correct that there is some cost to the state of Louisiana for doing this. It potentially could get up to a $100 million but to get that, it would have to pay roughly, I think it's 12 million to administer the program and he is right that they would have to come up with that money after changing state law. It's not clear for sure, though, that they would have to raise taxes. They could decide to find that money other places. We gave that one a mostly true.

ROBERTS: All right. Another Republican governor resisting stimulus money is Mark Sanford of South Carolina. In an op-ed in "the Washington Post" he wrote that the bill would not only fail to boost the economy but would actually make things worse. Here's the exact quote, he says "the Congressional Budget Office has found that stimulus bill lead to a real 0.1 to 0.3 percent reduction in -

JOHN ROBERTS, CNN ANCHOR: All right. Another Republican governor resisting stimulus money is Mark Sanford of South Carolina. In an op-ed in the "Washington Post," he wrote that it would not only fail to boost the economy, but would actually make things worse. Here's the exact quote. He said, quote, "The Congressional Budget Office has found that the stimulus bill will lead to a real 0.1 to 0.3 percent reduction in gross domestic product by 2019. That translates into our economy losing tens of billions of dollars."

A pretty bold claim. What did the truth-o-meter say?

ADAIR: Truth-o-meter gave that one a false. That one -- that's really an extreme case of cherry-picking. The Congressional Budget Office does the definitive analysis of legislation. They did -- they came up with a lot of numbers projecting what the stimulus would do, found, in most cases, it would boost employment, it would boost gross domestic product, but down the road, by 2019, there would be a reduction in the growth of GDP because of the cost of all that debt.

That's the only negative we could find in that report. So we gave it a false. We thought it was misleading to say that because the report, otherwise, said the stimulus would indeed stimulate.

ROBERTS: Bill Adair, rolling out the truth-o-meter for us this morning. Bill, it's always great to see you. Thanks for coming in.

ADAIR: Thanks, John.

ANNOUNCER: This is CNN Breaking News.

CHRISTINE ROMANS, CNN ANCHOR: It's about 1 1/2 minute after the top of the hour. A breaking news this morning from General Motors. GM says it lost close to $10 billion in the fourth quarter. That's billion dollars with a "b," and burn through more than 6 billion in cash. This comes on the day GM executives return to Washington to ask for more bailout money.

We're about half an hour away from the government releasing its latest jobless numbers. This is the weekly number that we get a real pulse for how many people are lining up for the first time to file for unemployment benefits. It's expected to reach 625,000. Think of that. 625,000 people every week lining up for the very first time, newly out of a job. They'll be down to just a couple of thousands from last week, but still a very big number.

And more proof this morning that the economic meltdown knows no borders. The Royal Bank of Scotland is reporting the biggest corporate loss in British history, 34 billion. That's going to cost as many as 20,000 people their jobs. RBS is one of three major British banks that received $63 billion from the UK Treasury.

And a rousing welcome for the kids of the Academy Award-winning movie "Slumdog Millionaire." Hundreds lined up at the Mumbai airport to see the young stars return from Los Angeles. And this morning, we know at least two of the kids may very well be moving out of the slums. The Indian government rewarding the poor actors with new homes for their families.

Now to breaking political developments and right now, CNN's White House unit learning new details for the President Obama's first budget. It comes out within just a few hours really and we now know it includes $634 billion to expand health coverage paid for by taxing the wealthy and trimming payments to insurance companies, hospitals and doctors.

And also in the budget, $75 billion to cover the wars in Iraq and Afghanistan and a so-called $750 billion placeholder just in case the president needs more bailout money for the banks.

So, how will it work and how much more money will cost you? CNN is on it. Suzanne Malveaux is live at the White House, dialed into her Washington sources. Chief business correspondent Ali Velshi and the CNN Money Team are also ready to go. Here in our studio, we also have some of the best economic minds around here to give us some perspective.

So, let's jump in, first, with Suzanne at the White House. Suzanne, you actually got your hands on a copy of this budget plan just a short time ago or at least the first kind of -- the first chunk of it, because, I think, together, isn't it like something like the New York, Washington, Houston and LA phone books combined or something when you look at the budget. It's a big document.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Christine, what we have, we got our hands on this. Obviously, this is going to be public in about an hour or so, but this is what's called the blueprint of the budget. The details, many of those details to come in April. But this is 136 pages. It is called "A New Era of Responsibility" Renewing America's Promise."

Many of the details inside are embargoed until about an hour or so when the president delivers his remarks. But I can speak generally about what we're reading inside of this. It's very much going to echo what we hear -- what we expect to hear from the president just about 90 minutes or so.

There's a message inside, and he talks about the sense that this is a new era of responsibility and there are about some pages or so that go through -- 11 pages or so -- that go through how did we get into this economic mess in the first place. And he does squarely lay the blame on many different policy initiatives, failed policy initiatives for the last eight years. He talks about the irresponsibility of the lobbyists, who had too much influence when it comes to the government, and some of those banks, those type of things.

And then there is a prescription that for solving all of this. You talked about some of the details there, the billions of dollars. Each one of the agencies outlined some of the cuts that they're going to make, as well as the investments.

Also, the talks about the need for energy renewal, for expanding education, for health care reform. It goes into a look of hard work, saying this is just the beginning of hard work and that there is going to need to be a new sense of honesty and transparency in this government and that that is what the president is promising.

All of that is part of his blueprint of the budget. You've got those numbers. I know you're crunching those numbers, but you also really have kind of a philosophical difference, if you will, this administration saying, with the previous administration. They say that they're going to be more transparent, more open and that this is going to be a really tough road ahead, Christine. Make no mistake. Talking about this is going to be a difficult, if not worse than the Great Depression, this recession that we're going through and that potentially this is the way, at least at the very beginning, the blueprint, the beginning of tackling it - Christine.

ROMANS: All right. Suzanne Malveaux at the White House. Thanks, Suzanne.

ROBERTS: Our Ali Velshi is here watching all of this for us this morning. And "Washington Post" crunching a number and saying the deficit this year will be $1.75 trillion...


ROBERTS:...which is 12.5 percent of gross domestic product.

VELSHI: In other words, 12.5 percent of the value of everything we produce in this country. Every bit of work that you do.

ROBERTS: Staggering.

ROMANS: That's got to be the highest since the World War II when we were at war.

VELSHI: Right.

ROMANS: And what that means...

VELSHI: But arguably we are at a couple of wars.

ROMANS: That's true.

VELSHI: And we've got -- and we've got this financial war on us.

ROMANS: So, what this means is we are borrowing so much more money than we earn and make.

VELSHI: I think the budget is something a lot of people don't think about but all of these stimuli, all of these bailouts, it all has to be accounted for just like it does in your own life. So, let's take a look at the challenge that the president is working with right now.

As Suzanne said, in a couple of hours, we'll get more details, but we won't get the full thing as she said. We'll just get a blueprint. So, I'm going to show you the current budget. This is the 2009 budget. It's the money that we spend until September 30th of 2009. The budget we're going to hear about that Suzanne had in her hand is the 2010 budget. But let me show you.

This was 3.66 trillion. And, John, this is $1.3 trillion more than we took in. Now, we're talking about possibly 1.7 trillion more than we take in. Of the 3.66 trillion, about two-thirds, the part in blue, is mandatory spending. That's spending we can't get out of. That's the equivalent of your utility bill at home or things like that or your mortgage -- things that you have to actually pay.

About one-third of it is made up of things like discretionary spending -- things that you can -- the government may be able to cut back on, but about half of that is taken up by defense, which we can't do anything about right now, although the president has said he wants to end the war in Iraq, wants to pull some troops back. So, he'll have some of that. So, he's got one-sixth of the pie to work with in terms of trimming and changing priorities, except that what he has is all of this extra stimulus that keeps being committed to our economy.

So, he doesn't really have a lot of space. So, in order to get back into budget, get back under budget, he's got to trim so much, but we're not looking at getting back under budget. These deficits that you're talking about -- 1.3 last year, 1.7 coming up, they are aiming at end of the first term of the Obama administration to only be over by $533 billion. And every time we're over, every year that we're over, it adds to the national debt, and that is the problem there.

ROMANS: Right. And, look, when we talk about cutting the national -- the deficit in half over the next four years...

VELSHI: That's not the debt.

ROMANS:...that still means that every year the debt is growing and growing and growing.

VELSHI: Close to $11 trillion of national debt right now. Again, we are not -- just so we really understand, the world is not falling apart. We can handle it at the moment. We pay interest on it, but at some point like your credit line, you're going to keep on asking for more money and someone's going to say, I think you've borrowed enough.


ROMANS: Right. It's incredibly -- before now to fix some of these problems and get things going on the right track so that this big economy that is resilient and always has been can get back.

VELSHI: Continues to be healthy.

ROBERTS: Remember the doomsayers were saying that we could have a national debt in, you know, a few decades of $20 or $30 trillion, and people say, oh, that's crazy.

VELSHI: That's double where we are now.


VELSHI: That's why it's important to actually keep on this. We don't have to worry everybody that it's the end of the world, but the bottom line is we can very easily get carried away and we can have a $20, $30 trillion national debt. And that's not all, would you think, we'll have higher taxes.

ROBERTS: That's just nuts.


ROMANS: Right. Well, then, you'll be looking at paying the interest on your debt that's bigger -- that has to be paid first to keep your credit rating so people keep -- to keep lending you money. You pay that money first before you can pay for your military, for your education...

VELSHI: For your health care.

ROMANS: ...for your health care. So, incredibly important to be able to invest in your country and not paying off your debt the whole time.

ROBERTS: The whole thing is just staggering. Ali, thanks.

President Obama unveils his first budget proposal this morning. It will be at 9:30 Eastern. You can catch his remarks live, of course, right here on CNN. But if you can't make it to a television set, but you got a computer, you can also watch it on

ROMANS: New insight on race relations in the U.S. The report you'll see first here on AMERICAN MORNING that has got a lot of people concerned. It's 9 minutes after the hour. (COMMERCIAL BREAK)


BLAIN DAPPER, CNN IREPORTER: Yet, individual families do not make up the gap between what they have to pay out and what they are earning, and increase that to the point where they have discretionary spending to buy a product off the shelf, it's going to be a long, hard haul. And I don't see this administration doing any of those things necessary so I'm a little bit worried about it.


ROMANS: Just one opinion. Keeping those iReports coming. We want to hear your concerns about money, what you need out of the stimulus plan, the budget, and what you're personally willing to do and what you're personally willing to give up to help this economy back on track. Send us an iReport by going to

You know, trillion is the new billion, and the president's spending blueprint for 2010 is a Washington red ink. Let's bring in our panel of experts now to talk about it and what it means for us.

Financial adviser Jill Schlesinger, investment adviser Ryan Mack and Jacki Zehner, founding partner of the Circle Financial Group.

Everyone welcome. Jacki, you know, the president laying out some very big ideas here, but now sort of the rubber meets the road. He has to show how he is going to pay for it, and what here -- what are we really looking for in this budget here today?

JILL SCHLESINGER, FINANCIAL ADVISER: Well, I think what's interesting is that when you look at the budget, we saw what Ali just said. He said one-sixth is discretionary spending. One-sixth. So, obviously, so much of this is going to be in on the revenue side, and that's where the dirty secrets are going to be found, right?

And what we are clearly been told by the president is, you know what? The two percent of the country that makes the most money is going to really foot the bill for this. I think the part that is really disingenuous is that the president needs to say that's for these couple of years, taxes for everyone are going up in the long run, and that is what is not being said right now.

ROMANS: I see nods here. Do you think taxes for everyone are going up in the next few years, Jacki?

JACKI ZEHNER, FOUNDING PARTNER, CIRCLE FINANCIAL GROUP: Absolutely. Absolutely, just have to. I mean, I looked at his program. Health care is incredibly expensive, retirement incredibly expensive. And to say that government is the solution to this, I don't think it's going to happen. People are going to have to start saving more money for both.

RYAN MACK, INVESTMENT ADVISOR: There's no way right now we can continue on this pace and spending these dollars without increasing taxes eventually. I understand we have middle-class tax cuts and that's actually great. If it was up to me, I would not have provided the middle-class tax cuts. But over the long run, someone has got to have to foot the bill outside of just the top 3 percent.

ROMANS: Ryan, the budget includes this huge chunk overhaul health care.

MACK: Yes.

ROMANS: Six hundred and thirty-four billion dollars. Most analysts saying the cost of guaranteeing coverage for everyone could easily be like a trillion dollars over the next decade. Is it a smart thing to do right now? Is it an investment right now for the future?

MACK: Well, again, I think Barack Obama ran on the fact that he was not going to actually guarantee coverage. We'll try to get coverage that might...

ROMANS: OK, you're right.

MACK:'s lesser cost per individual. So they're still going to have somewhat to foot the bill somewhat themselves. But I don't think health care over the long run is number one cause of bankruptcy, increased medical bills, medical coverage, individuals are getting laid off. There's some portion of the stimulus package to assist individuals and making sure they can keep their coverage costs somewhat low because COBRA as it is right now is outlandish in terms of individuals continue to pay for themselves. But we have to make sure that we're not -- we have a health care system, not a disease care system. And I think it helps.

ROMANS: There is a theory here that you have this big financial crisis right now so that gives political cover to make some very big choices. You know, does it?

SCHLESINGER: Well, you know, I think it's interesting. The administration is taking that attack, but I would suggest that I think the American public would actually be happier if they just said, you know what, we're going to (INAUDIBLE), we can ensure right now this particular issue, the economic crisis is as much as we could stomach.

I know that there is a whole political side. I'm not politically minded. I am capitalist minded. I want to save the system. And if we can save our system without making these vast cuts at the same time taxing, people -- you know, $250,000 a year is a lot of money to some people. You live in a big metropolitan area, it is not as much money as you think. And I think the line is being drawn at a place where there is a lot of people that is going to be huge backlash.

ROMANS: There's a lot of people who are hurt and you have no sympathy for people making $250,000 a year or more. But as Ali Velshi earlier pointed out that's a lot of small business owners in some cases who are filing with their personal income taxes.

I mean, do you think that the tax going back to the higher taxes from the Clinton years to the higher earning people, do you think it's a good idea?

ZEHNER: Look, I'm willing to -- I'm one of those people, you know. And I'm very blessed to be that. But, you know, I also think, you know, there are a lot of good wealthy people doing good and wonderful things in this world. And I think we have to be really be careful about language.

Rich is not bad. I thought rich was the American dream. I'm Canadian. I grew up. I didn't have a lot. I have great parents, great lifestyle. I wanted to be rich. I wanted to work on Wall Street, and I worked really hard to get there. And it really -- it's bothersome. I understand I have a lot of empathy. I want to, you know, help the world, but this rich is evil, money evil thing has just got to end. We have to embrace money as a resource and a tool. And I really think that the administration is doing disservice about the whole conversation about money and it has to change.

ROMANS: A lot of fascinating conversation. We really hit on something here. Thanks so much, Jacki, Ryan and Jill. Thanks a lot. I think it's over.

John, back to you.

ROBERTS: Yes. You know, it's funny. I just got an e-mail from somebody who recently became an American citizen saying that the way that things are going now, they may have to go back up to Canada where at least the banks still stand and you can still get help there. That's where they're going to retire.


ROBERTS: Jacki will be leading the charge there.

A new report on hate groups in the United States about to be released. But this morning we've got the results. We'll tell you why they are raising concerns. It's 17-1/2 minutes after the hour.


ROBERTS: Coming up now on 20 minutes after the hour. And happening today, a troubling new report on hate groups in the United States will be released. It's from the Southern Poverty Law Center, which tracks racism including what's on the Internet.

CNN's Jason Carroll got his hands on some of the details, and he joins us now live. And then this information is troubling particularly when you consider where we are as a nation in terms of race relations.

JASON CARROLL, CNN NATIONAL CORRESPONDENT: Or where we think we are. Here's the headline, John. These groups are increasing. The new report outlines how many hate groups are here, the factors that are driving them, and who they are.

The groups include white nationalist, black separatists, clansmen, and neo-Nazi. They encourage violence and one of their goals is to reach people outside their organizations.


OBAMA: I, Barack Hussein Obama do solemnly swear.

CARROLL (voice-over): It was an historic moment, but for one Massachusetts man it may have triggered a violence racist reaction. Police say Keith Luke allegedly targeted minorities after President Obama's inauguration. They say he raped a woman, killed her sister, and another man, this after several months of researching white supremacist groups on the Internet. Luke pled not guilty. Now a new report says hate groups are on the rise.

MARK POTOK, DIRECTOR, SPLC INTELLIGENCE PROJECT: We have seen continued growth from around the year 2000 and it's been quite remarkable. When you look at that stretch, we see a very near 54 percent rise in the number of hate groups out there.

CARROLL: The Southern Poverty Law Center identified 926 hate groups in 2008. What is driving them? According to the center, the election of President Obama and the declining economy which hate groups blame on increasing numbers of Latino immigrants.

UNIDENTIFIED MALE: No. I'm not really surprised. I know, it could be getting worse.

CARROLL (on camera): You think it might get worse?


CARROLL: Joselo Lucero (ph) says his brother Marcelo (ph) was the victim of a hate grime. Marcelo was stabbed to death, attacked by a group of teenagers last November. Prosecutors allege Marcelo was targeted because his attackers were on the hunt for a, quote, "Mexican." The defendants have pleaded not guilty. Marcelo was an Ecuadorian immigrant, came to Long Island, New York 16 years ago following his dream of a better life. His brother now says --

They changed my life in a so badly way. And I'm -- I'm getting stuck on my dreams. My brother is not anymore with me, and no matter what to do, no matter the justices coming or not justice, it's nothing. He is not coming back.

CARROLL: Investigators say that teenagers accused of killing Marcelo were not part of a hate group. Even though so, the Southern Poverty Law Center says hate propaganda spreads and it is dangerous.

POTOK: Be aware that this is out there. There really are groups out there. They are certainly not taking over the society, but they present something of a threat.


CARROLL: Another note, in a separate incident involving the murder of a Latino man in December, last night, New York police announced they finally made an arrest. They called the brutal beating a hate crime. Some argue it's another example of how rhetoric from these organizations filter out and encourage people not affiliated with these groups to commit these types of crimes.

ROBERTS: So does this Southern Poverty Law Center expect we're going to continue to see a rise here?

CARROLL: It's hard to predict. You know? Based on what they've been looking at over the past, you know, decade or so, if the trend continues, then yes. They see an increase in these numbers. And again, because of what they are seeing with the influence of illegal immigrations, you know, these hate groups use them as a scapegoat to get out this type of -- this type of hurtful rhetoric.

ROBERTS: Troubling. Just many think the country is going in a new direction. All right.

Jason, thanks.

CARROLL: Well, for some of us.

ROBERTS: Yes, for some of us, yes - Christine.

ROMANS: Families looking to make end's meet, skipping out on vital medical care with premiums on the rise. Will a $634 billion overhaul heal our health care system? We're looking at the White House's plan just ahead.

Even the famous get fired. Legendary gossip columnist Liz Smith let go after 33 years in the business. But she is getting the last word here, live. It's about 24 minutes half after the hour.


CNN ANNOUNCER: This is CNN Breaking News.

ROMANS: Breaking news coming out of Pakistan this morning. This new video showing the country's political turmoil filling into the streets. Supporters of opposition leader Nawaz Sharif violently rallying, burning cars and breaking store windows. The protest broke out after Pakistan's president impose rule over the state of Punjab, suspending the local parliament. Many feel the move was politically motivated since the state is the opposition party's power base.

New developments this morning. A drug-fueled civil war expanding just beyond our border. Right now, Mexico says it's sending close to 2500 more troops and federal police to the City of Juarez, Mexico. It's only a two-mile drive from El Paso, Texas, and it's considered by some to be the most dangerous place on this earth right now.

American Airlines could force another 400 flight attendants to take unpaid lead. The airline's hometown paper, "The Dallas Morning News" first broke this story. American reportedly says the moves are necessary because it didn't get enough volunteers for early retirement packages.

And gas prices creeping lower again this morning. AAA reporting the national average for unleaded regular now $1.88 a gallon, down a penny from Wednesday. In the past 11 days, the price of gas has dropped by nearly a dime - John.

ROBERTS: Thanks, Christine.

Senior White House officials tell CNN that President Obama's budget plan will include a reserve fund to overhaul our health care system, and the cost said to be $634 billion. Officials say they'll pay for the plan with a tax hike on wealthy Americans and higher Medicare premiums for wealth seniors.

I'm joined now by "U.S. News and World Report" health editor, Dr. Bernadine Healy and Dr. Christina Johns from the Children's National Medical Center in Washington to talk more about this.

Great to see you. So, the president wants universal access to health care. National electronic record system, an increase in preventive case, finding a cure for cancer. The $634 billion reserve fund.

Dr. Healy, start us off. Good idea or bad idea?

DR. BERNADINE HEALY, FMR. DEAN AT OHIO STATE UNIVERSITY COLLEGE OF MEDICINE: Well, I mean, those are all good ideas, but in terms of are they physically sound, they are overwhelming. And in fact, if you add the $150 billion in the stimulus plan, we're talking about $800 billion that he's going to direct towards a massive restructuring of the health care system, but there are no details.

ROBERTS: Dr. Johns, apparently, the cost may eventually reach as much as a trillion dollars. What does it suggest to you that we're spending that much money to reform health care?

DR. CHRISTINA JOHNS, PEDIATRIC EMERGENCY MEDICINE SPECIALIST: Well, it means that we've got a major problem which we do. And that I think we've got to put our -- he is putting his money where his mouth is saying we've got to fix this. It has to be a priority. We need to understand -- I agree with Dr. Healey. We need to understand what the details of this are going to be. How it's going to roll out? But it is important, it needs to be fixed, and it needs to happen now.

ROBERTS: But Dr. Healy you suggest that spending that much money on, it gives us an indication of how involved government is going to be in the health care system.

HEALY: No doubt. I mean, if you look at how much we spend, we spend $2.4 trillion on health care suddenly putting in almost another $1 trillion by the government while you're paying for it by taxes and half of it will become from squeezing down Medicare. That means you are going to have a transfer of government power. I mean, you're going to go from the public to the private sector.

John, you know, there is one key issue that has never been addressed. We are driven by the 48 million uninsured. In 1999, it was 43 million uninsured. It has to be addressed, but no one is doing a diagnostic. What is the composition there? A lot of those problems can be solved very quickly and it won't take $800 billion to do it.

ROBERTS: All right. So one of the big issues here is achieving universal coverage, getting some of those people who are uninsured on the rolls of the insured.

Dr. Johns, what do you think the best way is of doing that?

JOHNS: Well, I think you need to start with a low hanging fruit. You need to look at programs that are already starting to roll out, S- CHIP for children. Look at where can we target populations where it's going to matter where we can see some direct impact and things are already starting to happen. I think that's the way to start. Incrementally learning lessons as we go to make sure it works right.

ROBERTS: And Dr. Healy, what about this idea of a national electronic database for patient records. Is that necessary?

JOHNS: Well I think there's no question we need to have I.T.. We need to have electronic medical records. But originally, the concept was that the electronic medical records will be under the control of the patient and the hospital. It would be shared with the direction of the patient but President Obama is using a new word, the national health medical record. The national I.T. system.

And I think what is foreseen as having a national interconnecting database. And I think before we go there we better, we better make that very clear and also know how record privacy will be assured. And there is evidence now that the HIPPA is not really working. The IOM came out and said, we need to fix that problem.

ROBERTS: IOM, the Institute of Medicine. Dr. Johns, how would electronic record keeping help you there? I mean, you're right in the front lines. You're an emergency room physician. How would it help you?

JOHNS: Well, I'll tell you. It can be a matter of life and death. If a patient rolls in my door unconscious who has specific medical conditions, allergies, taking certain medications, that can be huge in helping me and my diagnostic and treatment pathway. I agree, there need to be standards for this to be in good effect and there needs to be a clear interconnection of various electronic health records to make it work well.

ROBERTS: Dr. Healy, you got a lot of experience in this. You used to head up the National Institute of Health, the Red Cross and you know the politics of all of these. We know what happened in 1993 where the Clinton administration crafted this health care reform program, in private and secret it came out, people said oh my god, what is this, how much does it cost?

But President Obama is taking a reverse course here. He's finding a way to pay for it first before he comes up with the plan. Is that the politically astute way to do it?

DR. BERNARDINE HEALY: It may be politically astute. I speak only as a doctor with the experience of having gone through and watched the Clinton health plan. I think that the public is going to lose trust if, in fact, a lot of this is done behind the scenes and suddenly it's described in broad, broad terms and with vast, vast amounts of money.

Remember, health care is a third rail. It is a deeply personal. There was one report today about the federal government saying patients, hospitals and doctors will be penalized if a patient is re- admitted to the hospital on Medicare within 30 days. Well, often, that's a waste but sometimes that is life saving. And the public is going to say wait a minute I want my doctor to make that decision, I don't want the federal government to do it.

ROBERTS: We have an awful lot to chew over in the days and weeks to come. Thanks for getting us going on this. Dr. Bernardine Healey, Dr. Christina Johns. It's good to see you this morning.

JOHNS: Thank you.

ROMANS: OK. Just in to CNN. We bring this to you on a Thursday. It's about this time, new numbers on the state of the economy. It's a weekly report on how many people line up for the first time ever to file for unemployment benefits. We knew it was going to be a big number.

ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: I would just like to be surprise one week on the downside. Unfortunately, it is a much higher number than we expected. Here is what we got. Last week, 667,000 Americans lined up for unemployment benefits for the first time. 667,000, that was an increase of 36,000 from the previous week.

ROMANS: They were looking for a little decline.

VELSHI: They were looking for a decline. We expected it to be in the 625,000 range. 667,000. And here's the thing every week at this time we also get the report of the number of people on continuing unemployment claims. In other words, the number of people who continue to receive unemployment claims. 5.112 million Americans are receiving unemployment claims.

That is a record for the time that we have kept records on these things. There are also several million more people who are receiving - who are not receiving unemployment claims. They are unemployed but their unemployment benefits have run out. So we are topping 11 million people in total who are not working. But this number of more than five million people receiving unemployment claims is very big and the weekly number is bigger than we expected.

ROMANS: And we know that people in financial services are people that are continuing to draw their severance. They have it -

VELSHI: Right.

ROMANS: File employee benefits yet but there could be a lag from that. You know, so Ali gives you this headline, the 667,000 number. Ali, last year, at this time about 300 to 400,000 people a week have filed for unemployment benefits. It's starting to get worse. VELSHI: And remember, we were warned that when it crosses 400,000 a week. That's a recessionary number. That means things are much more serious. 400,000. Then we cross 500,000 and then 600,000. And now we're closer to 700,000 a week, new people a week getting unemployment benefits. So these are harbingers of what happens once a month. We want to see some things turning. We want to see some companies not laying off as many people and that is why where you start to see the turnaround. Unfortunately we didn't get it today.

ROMANS: When times are good we do not agonize over these numbers.

VELSHI: We really don't. You're right.

ROMANS: When times were bad we want to look at every single little change so we can get some kind of indication where things are going and what this tells us is it's more of the same thing. Ali Velshi, thanks.

ROMANS: You know, right now, more Americans are spending less and saving more. That report is the big reason why. An important first step to getting your financial house in order but there are still some important things you need to know when it comes to getting the most out of your savings. God love you if you've got them. We'll tell you what they are.


ROMANS: Welcome back to the most news in the morning. This growing concern about your money, your job, your future. You know, it's forcing Americans to think about saving for the first time in a long time no matter what their income is. So what are the best strategies for saving at any age and any salary? CNN's personal finance editor Gerri Willis is here. Gerri, I was looking at a bus shelter the other day and it said - it had a great saying, it said there no such thing as saver's remorse. I thought we're in a different world.

GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: I saw it yesterday and I thought it was really cute.

ROMANS: I know. I know. It's interesting. It's a new line of thinking in this country.

WILLIS: Right. You know, everybody is talking about the national budget today. But we're thinking about your budget today and how to save. Look. When you're in your 20s, you have big demands on a very small paycheck and now more than ever you need to get started saving. First step, put together an emergency savings by having money direct deposited into a savings account or money market mutual fund. You can find rates of interest on these products at or by setting aside three to six months worth of savings you'll set yourself up to weather almost any storm.

Let's just take a look at how much you can build up. If you invest just $100 a month for 10 years, assuming a rate of return of about four percent, you'll get over $32,000. Thanks to compound interest.

And don't forget about saving for the long term. Look, at this age, even if you take a lot of risks in your retirement savings, your asset allocation, the 401(k) or IRA can be aggressive, as much as 70 to 80 percent in stocks and the remainder in bonds. As you start to save for big ticket items like a house. Check out the savings goal calculator at There you can see how it will take you to meet your savings goals, given investment returns and how much money you can put in.

In your 30s your obligations are growing. You may have house, children, now is the time to start salting away money for your child's education. A 529 college savings plan is a great vehicle for doing just that. Go to Now for details, put aside four to five percent of your monthly gross income to get started. And now that your income is growing you can afford to put some savings away and not touch it. CDs, certificates of deposit, will offer you higher yields in a passbook savings account. You can ladder their maturity so they don't come due in a rolling way and you don't suffer from fluctuating interest rates. Now is the time to ratchet back you stock investment and your 401K or IRA. A better level might be 70 percent stocks, 30 percent bonds.

ROMANS: All right. So stocking away four to five percent of your monthly gross income. What about in your 40s?

WILLIS: Now is the time to take advantage of the progress you've already made, step it up a notch. If you haven't been contributing the max to your 401(k), for goodness sake, now is the time to do it! You may even want to set up an additional investment brokerage account to supplement your savings. No kidding. You need to save outside of the 401(k), too.

Also, now that your income is rising you probably hit a higher tax bracket. Seek our tax advantage investments like municipal bonds to make the most of your savings. Now muni bonds are simply IOUs issued by state and local governments to raise money for public projects. Their interest is typically tax free. You can opt into a minibond mutual fund to get your money working right away. Drop your 401K stock allocation to 60 percent and raise bonds to 40 percent. So it changes over your life and you do different things at different ages.

ROMANS: Don't let the financial crisis take your eye off the ball for what you need to do in your age group. All right. Great stuff. Gerri Willis. John.

ROBERTS: Famous and suddenly let go. Even a big Apple legend isn't immune from this economy. Gossip columnist Liz Smith is here next to tell us what's next for her. It's 42 minutes after the hour.



LIZ SMITH, COLUMNIST: Friday will be the first time in 33 years that there hasn't been a Liz Smith column in a New York paper. That hurts my heart.


ROBERTS: That's famous gossip columnist Liz Smith talking about the pain of losing her job. She was just let go from the "New York Post" after 33 years in the business. So is she through dishing dirt on celebrities? Hardly. Liz Smith joins us now. Good morning, Liz. It's great to see you.

SMITH: How are you, my friend?

ROBERTS: I'm doing fine. Thanks for coming in this morning.

SMITH: Thank you.

ROBERTS: It's such a shame that after 33 years in the business your column is gone. And according to the "New York Post," Col Allan, the editor in chief, you're a victim of the bad economy. He wrote in a letter, "I'm sorry to be the bearer of bad tidings but I must inform you the "New York Post" will not renew your contract when it expires at the end of this month. Like so many other newspapers around the nation we are buffeted by unprecedented economic gales."

You know ,33 years and it comes down to a letter. And a letter you didn't receive until 10 days after it was written.

SMITH: That's right. I don't know what happened to that letter en route to me. Well, I wasn't in very good communication with my boss anyway. So he is entitled to replace me but I don't think they'll save enough money to put "The Post" back in the black.

ROBERTS: You don't think that laying you off is going to put them in a profitable position?

SMITH: No. I maybe I'm just a start.

ROBERTS: But you know, you're in the position that so many other people find themselves in this country. We just got the jobless claims from last week.

SMITH: Right.

ROBERTS: In more than 600,000 people out there on the unemployment line. It's tough times.

SMITH: Well, I'm just part of the great American experiment and you know, second big depression. I already lived through the first one. I was a child in the '30s. So I'm prepared for this. Other things will happen and I have a lot of alternatives, you know I have the website that I started with all these famous women, much more famous than me. And we are hitting - we're getting almost a million visitors a month now. We've been here to visit you before.

ROBERTS: Yes, of course. A couple of times. You'll be syndicating your column and you also write for "Variety."

SMITH: It will go on every day and people will find it. You know, it's on wow and it's on the drudge report.

ROBERTS: You came up here to New York in 1949, right out of journalism school in Texas and got into newspapers. You worked for seven newspapers in this town. But it's a business now that's in tough times and four of the biggest publishers are in bankruptcy. Can you see that in maybe the next decade there won't be any newspapers or at least not as many as there were?

SMITH: Well, the newspapers were already being decimated by the internet, but so many people, particularly young people, using the internet. And then this economic thing happened. So that advertising fled everywhere. It's even hurting the internet. You're going to see lots of things besides me disappear.

You're going to see a lot of - there will be windowed out by this, I fear. But I think newspapers will come back. They'll always be somebody - there will be people who want to hold something in their hand, want to get their hands dirty.

ROBERTS: It's impolite to tell a lady's age. But let's just say you have continued with your career for a moderate period of time past which most people would be retired. What keeps you going, Liz?

SMITH: Well, writing entertainment and gossip has been a lot of fun. I don't know. Maybe it's a drug. I don't take any credit. But I'm in very good health with someone on the verge of extinction can be said to be in very good health.

ROBERTS: Well, we're sorry to see you joining the ranks of the laid off, Liz. But I know you'll find something else to do.

SMITH: I'll be back!

ROBERTS: It's great to see you this morning. Thanks for dropping by. Christine.

ROMANS: Thanks, John.

Moving White House tribute to Stevie Wonder. Why his music has always meant so much to the president and the First Lady. It's 48 minutes after the hour.



JON STEWART, HOST: The president's first speech to a joint session of Congress after being sworn in is not technically the state of the union address, which is nice because this is probably one that you didn't want to complete the sentence, the state of the union is -


STEWART: But other times, it's tough and it's still important to make an entrance.

UNIDENTIFIED MALE: The president of the United States!

UNIDENTIFIED MALE: Oh, yes! Here he comes! How are you doing there, brother? Nice to see you.


ROMANS: That is Jon Stewart on "The Daily Show." We can bring in Rob, and Rob I don't have such any great intro for you. I don't have any great music. I don't have a sergeant at arms saying Rob Marciano with the weather! I'm just filling in and I'm just filling in even and I'm the one introducing you.

ROB MARCIANO, CNN, METEOROLOGIST: Well, next time you fill in, a little hail to the chief would be nice.

ROMANS: Clash of the cymbals?

MARCIANO: I like President Obama kind of rolling in like, you know, arriving at a club. Kind of a nice little touch in these tough times.

All right. Christine, listen, a couple of showers across parts of the northeast. Not a whole lot of this is hitting the ground, to be quite honest with you. Some flurries, maybe light snow across western mass. That's about it. The (inaudible) reporting some light snow shower as well.

Heavier amounts of snow across parts of the midwest and the plains. We have a winter storm warning in effect here five to 10 inches of snow, potentially today. And as this storm gathers and it's doing a good job of doing that, it's going to impose a threat for severe weather across the south, not only today but tomorrow as well.

A threat of a different sort across parts of south America. We've been talking about this volcano that has been erupting for the past couple of weeks after starting to get going in May. After 9,000 years of relative tranquility. Chaiten, down there in Chile, about 150 people were evacuated last week. Now the mayor is saying we're going to relocated the entire town which is covered in ash flow and mud in May when this thing got going and it doesn't look like it wants to stop. About 3,000 feet tall and very active. For those folks, they got to be on the move. That would make quite an entrance too, I supposed, if you were making your way into South America.

Christine, back up to you.

ROMANS: Quite a way to 9,000 years of relative tranquility.

Rob Marciano. Thanks, Rob. John.

MARCIANO: You got it.

ROBERTS: You got to start up with a bang, right.

ROMANS: Yes. ROBERTS: Inside a magical night at the White House. Celebrating Stevie Wonder. The first couple's special connection to Stevie Wonder and his music. It's coming up on 54 minutes after the hour.



ROBERTS: President Obama there singing along with Stevie Wonder's "Sign, Sealed, Delivered." All part of a concert honoring wonder and presenting him with a Library of Congress second annual Gershwin prize. Alina Cho joins us now with more on this very special and personal White House event.

ALINA CHO, CNN, CORRESPONDENT: Yes. It was something. Really. It would have been great to be there. You know, guys. But I'm just going to report on it. Good morning, guys. Good morning, everybody. You know getting an honor from the president of the United States is of course, really something but last night, it appeared that President Obama was just as honored to be in the presence of Stevie Wonder.

A mutual adoration society, of course. Wonder really needs no introduction but in case you didn't know the legendary singer has won more than 20 Grammys, sold more than a 100 million records and was actually given his first recording contract by Motown Records at age 12.

Last night, he was personally saluted by the president himself and the First Lady. The president spoke about his personal connection to Wonder's music. Take a listen.


PRES. BARACK OBAMA, UNITED STATES: When I was first discovering music, just like Michelle, it was Stevie's albums that I found and his songs became the soundtrack of my youth and through them, I found peace and inspiration, especially in difficult times. And I think it's fair to say that had I not been a Stevie Wonder fan, Michelle might not have dated me. We might not have married. So the fact that we agreed on Stevie was part of the essence of our courtship.


CHO: Imagine that. The president went on to say that Wonder created a style that is uniquely American, uniquely his own and yet somehow universal. Some of his music of course was played at the inaugural. The First Lady said she grew up listening to Wonder with her grandfather and added that Wonder even made an appearance at her wedding.


MICHELLE OBAM, U.S. FIRST LADY: When I discovered what Stevie meant when he sang about love, Barack and I chose the song "You and I" as our wedding song.


CHO: Wonder wasn't early and constant supporter of President Obama on the trail last night. Just look at that. You know he said he was thrilled that his music could be a part of so many, well intimate moments with the first couple.


STEVIE WONDER, MUSICIAN: I'm so excited to know that I was a part of - I need not say no more.


CHO: You can fill in the blanks, right, guys? Also on hand last night, take a look, what the president called the most accomplished Stevie Wonder cover band ever assembled. You saw Will.I.Am there, gospel duo Mary Mary and a legend in his own right Tony Bennett but it was Wonder's four-song mini set that really brought down the house or should we say brought down the White House.

The tribute we should mention will air tonight on PBS. And you know, Stevie Wonder in his acceptance talked about world peace as well. He said he hopes in the future he'll be able to write more songs about love and more songs about passion and maybe he'll be a part of making more babies, he said.


ROBERTS: You just filled in the blank for us!

CHO: That's right. That's right, I did.

ROBERTS: Well, some favorite songs.

CHO: Well, what a great night, though.


CHO: Another way the White House has changed just a little.

ROBERTS: Stevie is a great guy.

CHO: Yes.

ROBERTS: Alina, thanks so much for that. Terrific.

ROMANS: President and Mrs. Obama promised their daughters Malia and Sasha a pooch after the presidential race as we all know. And Mrs. Obama tells people she thinks she'll try -- to rescue a Portuguese water dog who is, quote, "old enough" and a match for the White House.

ROBERTS: Yes, exactly.

UNIDENTIFIED FEMALE: Now the race is on for the name.

ROMANS: Exactly.

ROBERTS: First scoop of many to come.

ROMANS: I know. Yes. Many, many scoops.

Thanks so much for joining us on this AMERICAN MORNING. We'll see you back here tomorrow.

ROBERTS: Right now, here's "CNN NEWSROOM" with Heidi Collins.