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American Morning
"News of the World" Shuts Down Amid Scandal; Panetta Warns of Increasing Attacks on Americans; Mullen Visits China; Heat Wave to Hit Central and Southern U.S.; Casinos Invading Your Strip Mall?; NASA: Space Junk Not a Threat; Deadline to Default; How to Raise the Debt Ceiling
Aired July 11, 2011 - 07:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ALI VELSHI, CNN ANCHOR: And just hours after the final edition of the "News of the World" rolled off the presses, stunning new charges against the tabloid. "The Daily Mirror" of London reporting staffers with the now defunct newspaper actually tried to hack into the phones of 9/11 victims.
Meanwhile, Rupert Murdoch arrived in London yesterday, meeting with the chief executive of his newspaper divisions Rebekah Brooks. She headed up "News of the World," and Murdoch is publicly backing her, insisting she didn't know what was happening at the time that the hacking was taking place.
The final edition of the paper was published yesterday. Five million copies were printed, nearly twice the usual run. And the paper issued a full-page apology. Dan Rivers is live for us in London this morning. Good morning, Dan.
DAN RIVERS, CNN CORRESPONDENT: Yes, good morning. And I want to get straight to my guest, Martin Lewis, who's a lawyer for Milly Dowler, the 13-year-old school girl who was murdered and then her phone was hacked into. This case kind of made this whole issue blow up massively. You've just had a meeting with the deputy prime minister. How did that go?
MARK LEWIS, DOWLER FAMILY LAWYER: It was a very constructive meeting. He seems to be taking it on board. This was always dressed up about a story about celebrities and sports people, not important. But it's the victims of crimes, the victims' family and the Dowler family in particular which has captured the public's imagination.
RIVERS: And here we're hearing that 9/11 families may also similarly have had their phones hacked into.
LEWIS: Well, so far we've been told that some of the English almost equivalent 9/11 families, people -- they didn't stop listening in to people's phones. They were just heaping tragedy upon tragedy.
RIVERS: And in terms of what happens next, I mean, Rupert Murdoch you're saying, has not apologized for this to the family.
LEWIS: On the level there's been no letter of apology, no apology from Murdoch. Yesterday the "News of the World" newspaper ended after 168 years. It was an edition that said "Aren't we Good" rather saying "Sorry." The front headline should have been "Sorry to the Dowler family and sorry to all the other victims who we've broken the law listening to."
RIVERS: And how big is this? How far could it go? How many victims?
LEWIS: Well, I don't know how far this is going. In terms of the phone hacking, I've been given evidence that there were 6,000 victims of this particular phone hacking, but it seems to be getting bigger all the time. It's going to take more newspapers. It's going to take in probably more countries as well.
LEWIS: OK. There you go, strong words after 6,000 victims, perhaps, that have been involved with this, including, inevitably, some victims in the U.S. as well. This is not just a U.K. story now. It's really truly internationally.
VELSHI: Dan Rivers, we'll continue to follow it. Thank you so much.
KIRAN CHETRY, CNN ANCHOR: Tensions growing now between the U.S. and Pakistan in the wake of the raid on the bin Laden compound. Now the Obama administration is withholding $800 million in military aid to Pakistan. It's intended to pressure the country to crack down on insurgents there. But Pakistani officials are defiant, insisting that they don't need the financial aid from the U.S.
America's top military officer says that China has arrived as a bona fide world power. Joint Chiefs Chairman Admiral Mike Mullen on a visit to China urged its leaders to use the power as a force for global good. Meantime after meeting with Mullen in Beijing, China's top general criticized the timing of American military exercises in the South China Sea as, quote, "inappropriate."
And the president's newly appointed defense secretary Leon Panetta is in Baghdad this morning. It is his first trip to the warzones of Afghanistan and Iraq in his new role. Panetta telling U.S. troops that Iraq needs to crack down on insurgent groups that have been targeting American forces with weapons supplied by Iran. CNN's Chris Lawrence is live at the Pentagon with more. How was that received, Chris?
CHRIS LAWRENCE, CNN PENTAGON CORRESPONDENT: Well, Kiran, it had to be put very diplomatically because the U.S. definitely, Secretary Panetta put out the message -- a tough message on one hand, look, the U.S. reserves the right to go after some of these militias on its own. That's because June was the worst month, the most dangerous and deadly month for American troops in Iraq in about two years. We haven't seen this sort of violence directed at American troops since about 2009.
So, he is very concerned. And the reason for the spike in violence is because American officials say you have weapons that are being provided from Iran coming over the border and giving these militias and these insurgents more fire power. Secretary Panetta made it clear that he wants the Iraqis to do more to go after some of these groups.
(BEGIN VIDEO CLIP) LEON PANETTA, DEFENSE SECRETARY: I would like for Iraq to exert more of an effort to go after those that -- those extremists that are making use of these weapons. That if we are going to be partners they have a responsibility to be able to protect against that kind of attack occurring.
(END VIDEO CLIP)
LAWRENCE: Why it's sensitive is because if the U.S. just takes unilateral missions in Iraq, it could spark some sort of public backlash, so in some ways they have to tread carefully.
Secretary Panetta also pushed the Iraqis to make a decision on whether they want to ask U.S. troops to stay past December. It was interesting because his predecessor, Secretary Gates, you know, was very, very open about saying, look, we want to stay. If the Iraqis would ask us to stay, we would be willing to stay. We think it's a good idea. Secretary Panetta was a lot more reserved. He didn't really commit one way or the other. But he did say Iraq has to make up its mind soon. Kiran?
CHETRY: All right, Chris Lawrence for us, thanks so much.
VELSHI: The women's world cup quarter finals, arguably one of the most riveting and thrilling matchups ever, Kiran.
CHETRY: It was.
VELSHI: In a shoot-out yesterday, the U.S. stunned Brazil. The score was tied, two to two, both sides. Then the U.S. edged Brazil five to three in penalty kicks. And check out what has to be one of the most amazing goals ever. Check this out. Not that one. This one.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Goal! Can you believe this!
(END VIDEO CLIP)
VELSHI: Megan Rapinoe blasted it from 30 yards away and Abby Wambach with the header into the back of the net. The U.S. advances to the semifinals, which take place against France on Wednesday.
CHETRY: Speaking of France, the Tour de France, known for its spectacular crashes. This one, though, is just bizarre. During the race's ninth stage yesterday, a car that was covering the event for French TV sideswiped a rider, sending him flying into another rider. One hit the pavement. The other soared off road right into a barbed wire fence.
Like true athletes they got back on their bikes and they finished the stage. The two cyclists were given the price for most combative riders. One of them did have to get 30 stitches, and the team says it's unclear whether he'll be able to ride today.
VELSHI: Is that the guy who --
CHETRY: Hit the barbed wire, I think so, yes.
VELSHI: Told you. Didn't I tell you last hour?
CHETRY: That barbed wire hurts.
VELSHI: Yes. And you seemed to doubt me.
CHETRY: No. I said did you have personal experience with barbed wire.
VELSHI: Some things you know. I don't -- I've seen barbed wire. It feels like it hurts.
CHETRY: You're right.
VELSHI: It's going to be a tense show.
(LAUGHTER)
VELSHI: All right, he did it. Yankee's star Derek Jeter has joined one of baseball's most exclusive clubs, the 3,000 hit club. Were you bored by this too?
CHETRY: Bored? We were standing four deep at the only TV at the only TV at the pool.
VELSHI: All right. He's just the 28th player, the only Yankee to ever do it, the only person to ever do it in Yankee stadium old or new.
CHETRY: Also didn't he break a record by having five hits in one game?
VELSHI: He did. It was a good game for him. Jeter smashed the homer in the third inning of Tampa Bay's David Price on Saturday. The ball flew into the first row bleachers in left field.
CHETRY: His 3,000th hit was also a home run. I mean it wasn't just a random single.
VELSHI: Yes. So somebody got it. You know what he did?
CHETRY: He did the right thing.
VELSHI: He did the right thing. Life-long Yankees fan Christian Lopez showed a lot of class. He returned the historic ball.
CHETRY: Look at him. He had to duck. People tried to rip it out of his hands.
VELSHI: Yes. He got a standing ovation, didn't ask for a thing in return. But you know, the Yankees did a nice thing back to him. They gave him tickets in the luxury box for the rest of the season.
CHETRY: And he gets to pose with Derek Jeter.
VELSHI: It's all good.
CHETRY: Good for him.
Coming up on AMERICAN MORNING, we're talking about a heat wave that could be stretching out to, I think Reynolds said about at least more than be a third of the country, or he said it was going to be looking at triple digits and it feels hotter than that. And there's no sign of it breaking anytime soon. It could be deadly. Reynolds Wolf has your forecast and tips as it gets hot out there today.
VELSHI: Also, a great day in space. An early wake-up call for the crew on the space shuttle Atlantis, the last space shuttle to ever go up. We're going to tell you what's on their agenda and how they woke up.
CHETRY: Also, from the red carpet to skid row, Prince William and Catherine, the duke and duchess of Cambridge, made the most of their quick visit to Tinseltown. You're watching AMERICAN MORNING. It's nine minutes past the hour.
(COMMERCIAL BREAK)
VELSHI: Welcome back to AMERICAN MORNING. NASA is tracking space debris floating near the International Space Station and near space shuttle Atlantis, which is docked with it. Right now they say there's no immediate danger.
This morning at exactly 3:02 a.m. eastern time, the crew woke up to the sounds of Chumba Wumba's "Tub Thumping."
(BEGIN VIDEO CLIP)
(MUSIC)
(END VIDEO CLIP)
VELSHI: I'm thinking that is a great wakeup tune. Atlantis' crew members transferred equipment and supplies to the space station. On Sunday Atlantis flawlessly docked by executing -- check this move out. It is called a backflip. The shuttle rolls over so its underbelly is up. I don't know what up is in space, but it's up. And this allows the crew members to check for any problems.
At the space station the astronauts will research the potential for space refueling system. And this mission, as you know, is the last one of the 30-year space shuttle program. Are you satisfied that you got an answer to your question as to why they got up at 3:02 in the morning?
CHETRY: Yes. They get their eight hours of sleep.
VELSHI: Doesn't matter because they're in space.
CHETRY: Right. VELSHI: All right.
CHETRY: That's the answer we're going with right now.
VELSHI: I'm good with that.
CHETRY: This is not the most comforting sight if you're going for a swim off the waters of Cape Cod. Three great whites spotted there. Officials are warning swimmers -- this is the warning I don't get. We always get odd warnings. Stay away from seals because they're a favorite snack for sharks.
VELSHI: Right. And you said what I was thinking, is, why would -- I don't know where the seals would be.
CHETRY: Why would I hang with seals in the first place? Somebody used to tell me -- I don't know if this is an old tale -- don't act like a seal. Flopping around, trying to kick on your boogie board, sometimes you may look like a seal, and then you would be more interesting to the shark.
The sightings are attracting tourists. The local venders are cashing in, stores are offering plenty of shark-themed gifts and souvenirs, and they actually haven't closed any beaches yet.
VELSHI: And it's easy enough to stay away from the beaches, but it is hot in so many parties of the country right now. There's a heat wave sweeping through the central and southern plain states this week, temperatures reaching triple digits. Fifteen states are under heat advisories, which means temperatures are expected to exceed 105 degrees. The warnings remain in effect through tomorrow. Officials suggest staying indoors as much as possible.
CHETRY: It's 15 minutes past the hour. Reynolds Wolf following all of that for us. How long is it going to stay this hot, Reynolds?
REYNOLDS WOLF, AMS METEOROLOGIST: I would say it's going to be basically hold for the next several days before we finally see it breaking in as we get closer to next weekend. So again, next 72 hours or so it will be brutal in many places, including spots like Wichita, back into Dive City, Tulsa, Joplin, even Oklahoma City. These are the highs we had yesterday. Record heat and all those places, in Joplin, in fact, got up to 106. That's the warmest it's been recorded there in the past 25 years.
And today, we expect the heat to basically be pretty much in the same spot, right in the nation's midsection, also beginning to merge into parts of the Southeast.
Every place you see on this particular map shaded in the orange or the pink, that's where you have your watches, your advisories or your warnings. Heat indices when you have the temperature combined with the high humidity, it's going to feel like it's anywhere from 100 to 115.
To be a bit more specific, in Little Rock, 111, that's how it's going to feel today. St. Louis, 112, 106 in Nashville.
As we wrap things up, expect it to continue into Tuesday, 88 for Des Moines, 106 in St. Louis, 109 in Memphis, and even as we fast forward into Wednesday, still, the intense heat in spots like Little Rock with 101, Jackson, Mississippi, with 107, and 104 in Montgomery.
Guys, that's a snapshot of the forecast. Again, try to cool down the best you can. It will be brutal for the next several days.
VELSHI: No kidding. All right. Reynolds, thanks. We'll check in with you in a little while.
CHETRY: That's another excuse for you not to work out as well. You would have, sans the head phones.
VELSHI: I got a little workout outfit with a vest and all that.
CHETRY: Right. But it's way too hot.
VELSHI: Too hot, can't use your iPod.
CHETRY: A whirlwind weekend in California for William and Catherine, the duke and duchess of Cambridge. They ended their North American tour.
VELSHI: Yes.
CHETRY: Did everything from played polo to -- did some art projects.
VELSHI: You know, I've been watching polo over the last few years, it's a hard game.
CHETRY: Well, you have to be coordinated.
VELSHI: Very.
CHETRY: Do more than one thing well at once.
VELSHI: Once again, Prince William showing some of his finesse. From the glamour of the red carpet, however, they got to the grittier side of Los Angeles. The royal couple made the most of their quick visit checking out L.A.'s Skid Row.
CNN's Max Foster joins us live from Los Angeles with a wrap-up of their L.A. days -- Max.
MAX FOSTER, CNN ROYAL CORRESPONDENT: Yes. Like you say, it really was a whirlwind, very intensive. It's exhausting following them. Like to think what it's like making these events and showing up like they do.
But it has been a huge success. Canada was a massive success.
Let's have a look at thou things went for them in California.
(BEGIN VIDEOTAPE) FOSTER (voice-over): After taking Canada by storm, it was time to visit California. The duke and duchess invited some friends around to the consul general's house where they were staying.
The next morning, it was off to Santa Barbara for a game of polo. The duke was, in his own words, looking forward to letting loose after a busy few days. His team won and a proud duchess presented her husband with a trophy and a kiss.
On Saturday night, they hit the red carpet.
(on camera): Well, the duchess has arrived and she hasn't disappointed.
(voice-over): The dress by Alexander McQueen wowed the Hollywood A- listers inside.
From the red carpet to Skid Row -- on Sunday, the couple threw themselves into an art class with kids from this very deprived neighborhood. The artistic duchess showing her skills.
And their last engagement was a war veterans job fair.
(on camera): So, this is the final stop on this very successful North American royal tour. But in many ways, this is the most important stop, particularly for the duke.
PRINCE WILLIAM, ENGLAND: This is the last event on our tour of North America, but in my mind it is one of the seriously most important. This is because it is about men and women who, of their own free will, choose to put their life on the line for their country. They are the front line of a remarkable relationship between the United Kingdom, the United States and Canada, which is safeguarded our freedoms for a century.
FOSTER (voice-over): The public would have liked to have gotten closer to the couple in America, but the trip has confirmed them as the biggest stars on the planet right now.
(END VIDEOTAPE)
FOSTER: And I've been speaking to Saint James Palace asking about their plans right now. And they -- I've been told that basically they're going to disappear once they establish their married life, looking forward to going back to North Wales where William is a search and rescue pilot and Catherine now will become a military wife. They're going to be very low profile.
So, after the buzz of sort of media coverage, we're not going to hear much more from them for a while.
VELSHI: You got to live on a base in barracks like other people?
FOSTER: No. They've got a house. They call it a cottage, but it's not what you and I would probably call a cottage.
CHETRY: Their version of a cottage.
VELSHI: Max, you made a good point.
FOSTER: But they don't have the staff yet. Sorry? Carry on.
VELSHI: You were saying it was tough enough following them around on this whirlwind tour, that actually doing it. But, boy, they really looked as if they were enjoying it. They didn't look stressed.
CHETRY: They looked completely at ease.
VELSHI: They looked completely at ease.
FOSTER: Yes, they did. And when you speak to them, you get the sense from William -- he knows it's going well and Catherine sort of wondering if it is going well, but I think they're going to go back and realize it has gone incredibly well. It's been quite frustrating for the photographers because they're looking for these unguarded moments, there haven't been any whatsoever. It's been fantastic for the couple.
CHETRY: Good for them. All right. Max Foster, thanks so much.
VELSHI: The unguarded moment would be, you know, Kate looking at William going --
CHETRY: I know, exactly.
VELSHI: They just looked like they were enjoying it, you know? Having fun with people.
CHETRY: That's right.
VELSHI: All right. Coming up on AMERICAN MORNING: they look like casinos, they sound like casinos and they feel like casinos. And they might be popping up in your local strip mall.
I've never really understood the laws that govern this.
CHETRY: The video gaming versus actually pulling the, you know, the handle on the real slot machine.
VELSHI: We're going to find out right after the break.
(COMMERCIAL BREAK)
VELSHI: Twenty-four minutes after the hour. Minding your business this morning.
Feelings of uncertainty running high on Wall Street. Following that dismal jobs report on Friday, the Dow, S&P and NASDAQ all closed lower to end the week. All three are set to open sharply lower this morning as well.
Alcoa, America's largest aluminum producer, kicks up a full week of second quarter earnings on Wall Street. That report comes out after the closing bell this afternoon. Google, JPMorgan Chase, Yum! Brands, Citigroup, all of them are releasing earnings this week.
Also this week, Federal Reserve Chairman Ben Bernanke will face tough questions about the economy after that weak jobs report. The Fed chief testifies before the White House Financial Services Committee on Wednesday.
Want a free credit score? Then get rejected for a loan. Starting later this month, lenders have to tell you what credit score prevented you from getting a loan or credit card. The new measure goes into effect July 21st.
AMERICAN MORNING right back after the break.
(COMMERCIAL BREAK)
CHETRY: Let's take a look at New York City this morning -- 7:27 right now in the Big Apple, where it's clear and 74. But a little bit later today, it's going to be partly cloudy, going up to 89. That's going to feel like a cool spot compared to many parts of the country.
VELSHI: It really is. There are going to be places in the 100s in the lot of states across the country.
All right. These casinos -- are they in a strip mall near you? So- called "sweepstakes cafes" are popping up in nearly a dozen states.
CHETRY: And they offer games that look like -- they look like slot machines and shops even have a casino feel in them. Now, it's raising a lot of legal questions and some controversies as well.
Poppy Harlow looked into this for us.
Welcome, Poppy. How are they different?
POPPY HARLOW, CNNMONEY.COM: It is so interesting how they are really operating in this gray area, really on the edge of the law. There have been police raids, arrests and felony charges in these "sweepstakes cafes" that are right next to a dry cleaner or the local massage parlor.
But take a look, we went down to Florida to find out more about these. They're popping up all over the place and they have the sheriff up in arms. Take a look.
(BEGIN VIDEOTAPE)
HARLOW (voice-over): Welcome to Florida? This isn't the Vegas Strip. It's a strip mall.
Between barber shops and massage parlors, so-called sweepstakes cafes are popping up across the country. They've got the markings of a casino, free food, dark rooms, some open 24 hours.
(on camera): Does it feel like gambling to you a little bit?
UNIDENTIFIED FEMALE: Yes, that's what I like about it. HARLOW (voice-over): But are they casinos?
Law enforcement thinks so, and they're shutting them down, because here in Florida, only certain highly regulated operators are allowed to run casinos.
POLICE OFFICER: In our opinion, it's clearly gambling.
HARLOW: Owners say that's not the case.
MEGAN CRISANTE, OWNER, SWEEPSTAKE CAFE: It looks like a duck, talks like a duck, walks like a duck, but it's not a duck. Sweepstakes is a predetermined pool of tickets. It's totally different.
HARLOW: And in every one, you'll find a sign like this.
(on camera): Just to give you a sense of how many of these sweepstakes cafes there are, you've got one right here. You've got two across the streets. They would not let us in. They would not talk to us. Right around the corner here, you've got another.
(voice-over): Here's how they work: you buy a phone card or Internet time and get free sweepstakes points in return. Then log on and play away.
Unlike a slot machine where you pay just to play, sweepstakes players are actually getting a product for their money, which owners say makes this legal.
But you can still lose money just like in a slot machine.
(on camera): I ended up losing 15 bucks.
(voice-over): Don Fiechter runs World Touch Gaming and sells these terminals for 1,500 bucks a pop.
DOC FIECHTER, PRESIDENT, WORLD TOUCH GAMING: I get a fraction of a penny per entry revealed.
HARLOW: Making it a lucrative business for software developers and store owners who can bank up to $40,000 a day.
FIECHTER: It actually says that the total prizes over the next thousand entries will total $39.55.
HARLOW: That's predetermination, which would make this legal. But as we found, not every place operates that way and now many are getting raided by cops. Florida State Representative Peter Nehr actually opened a sweepstakes cafe, only to have it shut down two months later.
PETER NEHR, FLORIDA STATE REPRESENTATIVE: It's not a gambling operation. It is a retail business who uses sweepstakes to promote their business.
HARLOW: But Sheriff Coats isn't buying it and he's ordering them shut left and right. (on camera): What games do you like to play?
UNIDENTIFIED FEMALE: The winning one.
(END VIDEO CLIP)
HARLOW: Just to give you a sense, it was nearly impossible to get into one of these sweepstakes cafes as journalists. I was not exaggerating here, Ali, chased out of one of these cafes. They didn't want anything to do with us.
And one elderly gentleman said to me don't let them take these away from us. We love them. I think bottom line here is you're paying for a product, a phone card or internet times.
No one is using that pretty much no one, they're all going just to play the games and there's that issue of predetermination, not paying to play the game, you're paying for a product and therefore, it's a gray area of the law.
VELSHI: What an interesting distinction. You're going in, you could win something.
HARLOW: They look just like --
CHETRY: Clearly have gone around it so it's not technically.
HARLOW: Right, but they're still getting shut down left and right and it's interesting that Florida representative, a law maker who opened one, his was shut down and two weeks later, a new sweepstakes cafe popped up in the same shop as his was shut down.
VELSHI: All right, well, gives me a little more to think about. I see these things popping up and don't know what they're about. Thanks, Poppy. Good to see you.
All right, top stories now, stunning allegations against the now defunct British tabloid "News of the World." "The Daily Mirror of London" reporting the paper once tried to hack into the phones of 9/11 victims.
The final edition was published yesterday with the "News of the World" printing a full page apology for the hacking tactics that got them shut down.
CHETRY: NASA tracking space debris that's near the International Space Station and space shuttle "Atlantis." NASA is saying it is not a threat and that no adjustments will be needed to avoid the space junk. Officials say the debris is the wreckage of a 1970 satellite. The point of closest approach, by the way, could happen tomorrow.
VELSHI: And the Midwest and southern plains in the grips of a smothering heat wave that is not letting up. Look at the 15 states that are facing heat advisories today. Meaning the temperatures could top 105 degrees. Cities in four states, Missouri, Oklahoma, Tennessee, and Indiana, could see the heat index top out at 115 degrees. Stay safe and stay hydrated today.
CHETRY: Absolutely, well, nine days and counting, that is the deadline set by President Obama to get an agreement on raising the debt ceiling or risking default.
Congressional leaders will meet with the president again today. They met yesterday. They have all week if they have to, but there was not a lot of progress made at yesterday's White House session.
Joining us to talk about the issues still dividing the two sides is Democratic New York Congressman Steve Israel. Welcome. Great to see you this morning, Congressman.
So it looks like they're still pretty far apart and there was actually some confusion it seemed on whether there was an even an agreement on the basic amount of cuts to - that they were going to try to get out here, $2.4 million bandied about.
And then Chris Van Hollen, one of your colleagues said there's no way that we're anywhere near $2.5 trillion, it's more like $1 trillion. So where does this all stand?
REP. STEVE ISRAEL (D), NEW YORK: We unfortunately remain far apart because every time we get close the Republicans move the goal posts further to the right, further and further to the far right.
Look, the recent past does not inspire confidence that we will be able to wrap this up. At the beginning of his speakership Republican John Boehner was asked, what are you going to do about the debt ceiling? He said we need an adult moment.
Since then, Eric Cantor the number two Republican leader walked out on the talks. Two days ago, John Boehner said I'm not going to participate in talks if it means that we're going to have to close corporate tax loopholes.
That is not acting like an adult. That is partisan game playing and the American people and our economy cannot afford that kind of partisan game playing.
CHETRY: Well, he was there yesterday, seated right next to the president. It seems though that there still is a real division among conservatives in the GOP who say no, nothing, that looks like a tax increase and from the liberal wing of your party saying nothing that looks like we're cutting into entitlement reform in any way, shape, or form. So how do you resolve that?
ISRAEL: In fact, we have said consistently that we should do what every small business in America does when faced with a deficit. Tighten your belts, reduce spending. We're willing to do that.
Increase revenues by closing tax loopholes, rethinking the $4 billion in subsidies we give the richest oil companies on earth every year and engaging in common sense tax reform. Those are the things you need to do.
We will not negotiate the end of Medicare and we will not negotiate the end of Medicare particularly when the Republicans want to end it in order to fund more corporate tax loopholes and more subsidies to big oil companies.
This doesn't have to be difficult. What we need to reduce our expenses, which Democrats are willing to do and willing to increase our revenues.
CHETRY: But even the president says that this -- he's going for a big, big thing, a $4 trillion package that would include, he says, some changes to Medicare and Social Security, not ending Medicare but some changes.
And then you have Speaker Pelosi saying that any deal has to protect the entitlement programs and Secretary Geithner, the Treasury secretary saying maybe some of these can be responsibly cut. So it doesn't seem there's even agreement within the Democratic Party on how this should be handled.
ISRAEL: There is absolute unity within the Democratic Party.
CHETRY: How is that unity? We have to cut entitlements and others say they cannot be cut, can't be touched.
ISRAEL: Nobody is talking about cutting entitlement. No Democrat is talking about cutting entitlements, cutting Medicare, asking seniors to pay more.
We're willing to negotiate reforming Medicare, strengthening Medicare, improving Medicare. We will not negotiate the Ryan plan that ends Medicare. We will not negotiate the privatization of Social Security.
CHETRY: When it comes to security though, there are changes that would I guess be considered by some to be cuts and others to be reforms, but one of them is upping the retirement age.
The retirement age established to be 65 when the life expectancy was 63, which obviously is different if you're going by today's standards you technically have to work until you were 75.
And then also some changes in how it's calculated. These are all still recommendations of the Bowles Commission, the Simpson-Bowles Commission. Is that something Democrats are on board with?
ISRAEL: I don't think it's fair to ask a heavy equipment operator to continue working on the job until he's 75 years old.
CHETRY: No, they say there will be exceptions though made for people who work in manual labor.
ISRAEL: We want a deal ultimately that is fair to the middle class, that strengthens the middle class, and that doesn't ask seniors to bear the sacrifice. Republicans have given us every day to the point where they're walking away from us when we tell them we're not willing to do that is, more corporate tax loopholes, subsidies to big oil companies.
Look, there are some people who want to grand bargain. There are some people who want a baby bargain, we just want a fair bargain. I'm hopeful that we can get there by the end of the day.
CHETRY: The flip side, Republicans will say that by refusing to touch entitlement programs we're never going to get anything. We're never going to be able to reduce the deficit and also that this is a tough time, business environment with 9.2 percent unemployment to raise taxes on anyone.
ISRAEL: Well, first of all the Republicans haven't talked about reducing entitlement programs, they have talked about ending Medicare.
There's a big difference between making some reforms and simply saying to seniors you're going to pay an extra $6,200 because we're going to privatize it give you a voucher and you're on your own, huge difference between the two.
Secondly, if the Republicans would act responsibly as John Boehner promised and talk to us about how you're going to eliminate some of the corporate tax holes we'll listen.
But it is unfair to say seniors you bear the burden, middle class you bear the burden and we will protect the corporate tax loopholes every single day.
CHETRY: OK, it was great to get your perspective. Congressman Steve Israel from New York. Thanks so much for joining us. Now we're going to hear the other side.
VELSHI: Yes, what's it going to take to get Republicans and Democrats on the same page when it comes to deficit reduction and the debt ceiling?
Here to give us the GOP perspective is Congressman Tom Price of Georgia, member of the House Ways and Means Committee, joins us live from CNN Center in Atlanta.
Congressman Price, good to see you again. Thank you for joining us.
REP. TOM PRICE (R), GEORGIA: Thank you.
VELSHI: What is your sense, what have you heard about where these discussions are? It didn't seem to be an awfully productive weekend, but we know they're going back at it today. It does seem, though that when Republicans and Democrats go into these meetings, there's not a lot of movement.
PRICE: Well, they're going to meet again today at the white house, as you mentioned and clearly we've got to move forward on this.
VELSHI: Yes. PRICE: And what we believe strongly is that no tax increase is ever created a job. Ultimately this is about job creation. We've got to do some short-term things, decrease spending in the short-term, midterm things, spending cap so the government doesn't continue to increase its size and then hopefully long-term fundamental reform which for many of us means a balanced budget amendment.
VELSHI: OK. Senate Minority Leader Mitch McConnell said this weekend and I'm, quoting him, "Nobody is talking about not raising the debt ceiling." He says that he has a contingency plan that he'd reveal later this week if needed. Do you agree with that that nobody is talking about not raising the debt ceiling?
PRICE: Well, clearly, with the demographic changes in our society, 10,000 individuals reaching retirement age every single day. They dictate that the debt ceiling has to be increased.
The question is, we're not going to -- we're not going to agree to increase it without any fundamental changes so we decrease the spending of the federal level. That's what the president wanted initially.
Remember he wanted a clean debt ceiling increase. We said no. The House said no as a matter of fact. So what we need are the fundamental changes so we get our budget in balance and able to pay off the debt.
It's only through those kind of fundamental reforms will we result in job creation in the private sector.
VELSHI: And I know you believe it which is why you signed it, you signed the Grover-Norquist pledge, the pledge from Americans for tax reform, saying that you would oppose any and all efforts to increase the marginal income tax rates on individuals and businesses.
And oppose any net reduction or elimination of deductions and credits unless they're match dollar for dollar. Again, I know that you believe that, but do these kinds of things come in the way of negotiation that might have other components to it that you might find unacceptable?
PRICE: I don't think so, because I think what the American people appreciate is that you don't reinvigorate the economy by raising taxes. We're not in this boat because America taxes too little.
We're in this boat because America spends too much, Washington spends too much. That's why we've got to concentrate on decreasing spending at the federal level, putting a cap on it and then putting in place those fundamental reforms.
VELSHI: Let me just ask you, Representative Price, while I understand that you fall into the camp of people who believe economically that lower tax cuts will ultimately create or tax cuts will ultimately create more jobs. These job numbers that came out on Friday were very disappointing across the board.
PRICE: Sure.
VELSHI: There is some danger, some danger that if you impose big spending cuts - there it is, by the way, the private sector gained 57,000 jobs in June, the public sector lost 39,000 for a net gain of 18,000 jobs, probably less than 10 percent of what we really need, Representative Price, the danger is, cuts coming immediately could hurt.
Does it give you pause when you say, see numbers like that, to say immediate further job -- government spending cuts could hurt more than they help?
PRICE: Well, I tell you, Ali, you know, we somehow think that we don't know how to create jobs in this country.
VELSHI: Right.
PRICE: We know how to create jobs in this country is to provide certainty to the private sector and that's where the job creation occurs and it's to get the government out of the way so that you don't have this regulatory oppression that's occurring.
VELSHI: I'm not sure, I certainly talk to a lot of CEOs and a lot of businesses, those are not two reasons that people cite for not creating jobs. You know what the reason most people say to me for not creating jobs is, I think you know the answer to this.
PRICE: It's uncertainty in the market.
VELSHI: No, it's the demand. It's the lack of demand. I f people want to buy things, companies will build them and hire people.
PRICE: But how do you get the demand out there. You create jobs so individuals have disposable income.
VELSHI: It's a good argument, but you and your colleagues continue to say it is uncertainty in government regulation.
PRICE: Sure it is.
VELSHI: When in fact -- I haven't seen a study that bears that out. I haven't seen somebody saying it's uncertainly and government regulation. If there were buyers, you know, businesses would hire people, right?
PRICE: Ali, I'll tell you. Take your microphone out to the streets of America, Main Street America and ask the businesses out there why they're not expanding, why they're not creating jobs.
It's because they don't know what their taxes are going to be, they don't know what the result of the Obama care, the health care reform is going to be, they don't know what their energy costs are going to be. All these kind of things result in --
VELSHI: What about those hiring? We've seen a number of companies hiring? They're over it? They don't mind that there are going to be -- uncertainty in taxation. There's uncertainty in health care.
They're hiring because people are buying their stuff. You can't disagree with me there, right? If somebody is buying your stuff and you need more of it built and produced and sold, you'll hire people, right?
PRICE: Absolutely, but 18,000 jobs produced last month, 29 straight months of unemployment above 8 percent, under this administration. The longest time since the great depression.
We need to get back to the private sector creating jobs, not the public sector creating jobs. The way to do that is to decrease spending, certainty in the market.
VELSHI: Over the last year, the only jobs created in this country have been from the public sector. In fact, we've seen jobs lost in the private sector every single month.
PRICE: I'm sorry?
VELSHI: The only jobs that have been created in the last year have been in the private sector. We've seen jobs lost in the public sector every single month.
PRICE: That's after a huge increase in the public sector over a period of time. This is the choice, Ali. Here's the president's plan. That -- the increase in debt is the red line right there.
VELSHI: Right.
PRICE: The green line is ours, which brings us into balance which decreases the deficit and brings us into ability to pay off the debt. That's the way we create jobs in this country is to decrease the reach of the federal government, no tax increase ever created a job.
VELSHI: Representative Tom Price, good to talk to you. Thanks very much for joining me today.
PRICE: Thanks, Ali.
VELSHI: Representative Tom Price of Georgia, a member of the House Ways and Means Committee and a member, by the way, of the House Tea Party caucus.
CHETRY: It gives you an example. Those two discussions about how far apart they are.
VELSHI: Right. These are two men who believe what they believe.
CHETRY: Right.
VELSHI: And they believe they've got a direction and they're not in the same place.
CHETRY: And they've also believe that's what their constituents want from them. VELSHI: Yes. All right, President Obama is going to be addressing the nation about the debt ceiling and deficit reduction at 11:00 A.M. Eastern this morning. You can see it live right here on CNN.
CHETRY: Up next, she you was kidnapped at the age of 11. She was held captive for 18 years, now Jaycee Dugard is speaking publicly for the first time. How did she keep it together, all of those years? It's 45 minutes past the hour.
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VELSHI: Jaycee Dugard who spent 18 years in the clutches of a sex offender is speaking publicly for the first time about the ordeal. Dugard was 11-years-old when she was kidnapped by Philip Garrido in 1991.
CHETRY: She later gave birth to two of his children. In an interview with ABC's Diane Sawyer, Dugard tried to describe the near two decades of terror.
(BEGIN VIDEO CLIP)
JAYCEE DUGARD, ABDUCTED JUNE 10, 1991: There was not a day that I didn't cry. I felt like there would never ever be a day I wouldn't cry again. And then after a while, I told myself I can't cry anymore.
DIANE SAWYER, ABC NEWS: What's the most haunting memory?
DUGARD: That lock. Hearing the lock. I know I said that earlier, but for some reason, that and the bed, it was a squeaky bed, squeaky pullout bed. I guess the noise, the sounds. It's weird what sticks in your head but, sounds.
SAWYER: How did you stay sane?
DUGARD: I don't know. I was still alive. I was still -- there was still hope. Still hope.
SAWYER: I'm trying to imagine how you are coping? I'm trying to imagine --
DUGARD: I don't know. I can't imagine being beaten to death, you know? But -- and you can't imagine being kidnapped and raped, you know? It's just -- you just do what you have to do to survive.
(END VIDEO CLIP)
CHETRY: And she certainly did. She was able to raise her two children. I mean she gave birth for the first time when she was just 14-years-old and made it through until she was finally discovered and told people who she was. She's now written a book -- she's 31-years- old -- called "A Stolen Life" and it's being released tomorrow.
VELSHI: Wow.
All right. Morning headlines are next. It is 49 minutes after the hour.
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CHETRY: Fifty-one minutes past the hour right now. Here's a look at your headlines.
The British tabloid "News of the World," forever silenced. The final edition rolled off the presses today -- yesterday. And now a former competitor, "The Daily Mirror" is accusing the paper of once trying to hack the phones of 9/11 victims.
Defense Secretary Leon Panetta in Baghdad, this morning, for talks with Iraqi leaders. On a trip to Afghanistan over the weekend, Panetta committed his first gaffe, saying 70,000 troops would remain in Afghanistan until 2014. The White House is on record saying the number would be far less on the path toward the turnover date.
President Obama and congressional leaders will meet again today to try to cut a deal on the debt ceiling and deficit reduction. They met for over an hour last night at the White House. The president says an agreement has to be hammered out within nine days in order to keep America from defaulting on its debt.
A check in on the markets now. The Dow, Nasdaq, S&P 500 all headed for a lower opening this morning. Feeling of uncertainty running high on Wall Street, following that dismal jobs report out on Friday.
The Midwest in the grips of a suffocating heat wave. Fifteen states facing heat advisories today and that means temperatures could top 105 degrees. Cities in four states, Missouri, Oklahoma, Tennessee and Indiana could see the heat index top out at 115 degrees. A 22-year-old singer and aspiring actor charged with burglarizing Manhattan's famed Ed Sullivan Theater. It's where the "Late Show with Dave Letterman" is taped. Police say James Whitmore (ph) appeared to be intoxicated when he kicked in one of the glass of one of the front windows early Sunday morning and then trashed the building's lobby.
And we're an announcement of some kind of announcement from Tiger Woods this morning. It'll be made on the Golf Channel at 11:00 a.m. Eastern. The golfer just announced that injuries would keep him from playing in season's the third major this week, the British Open.
And now you're caught up on the day's headlines. AMERICAN MORNING is back after the break.
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VELSHI: Beautiful Atlanta, Georgia is fair and 76 right now. It's going to be partly cloudy and 95. Spare me.
CHETRY: It's just not so great, but not terribly bad.
VELSHI: All right. Fair.
CHETRY: It's fair. That's fair. Smoking can be hazardous to your pocketbook. Now, companies are penalizing employees who smoke. They want them to actually pay higher insurance premiums than their nonsmoking office colleagues.
VELSHI: We want to know what you think about that.
Is it fair to ask employees who smoke to pay more for their health insurance?
Here are some of your responses.
On Facebook, Adonis says, "Before we raise premiums on smokers, we should treat smoking as a legal addiction and give the smoker the option to seek treatment through their insurance policy. It would be a win/win situation for all parties involved. If they choose not to seek treatment, then the question is fair game."
Also, Andrew on our blog, "No, it would only be fair if all lifestyle choices are accounted for and charged accordingly. How about everyone paying for sports injuries, obesity, being sedentary, old age. The list can go on and on until most everyone is included. Insurance is about pooling risk. What health care providers charge needs to be regulated like a utility."
VELSHI: That's called punting the question. That's another reason why I'm not going to start working out -- potential sports injuries.
CHETRY: That's right. That's another good --
VELSHI: I have three good reasons this morning not to workout.
CHETRY: Too hot, can't wear your ear phones, and now you could potentially hurt yourself.
VELSHI: Yes.
CHETRY: OK.
VELSHI: All right. Top stories coming up right after the break. It's 56 minutes after the hour.
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