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American Morning

America's Credit Rating on Notice; Fighting Continues in Libya; Borders Books Facing Bankruptcy; Debt Talks Turn Tense; U.K. Phone Hacking Arrest; Search For Mumbai Attackers

Aired July 14, 2011 - 06:00   ET

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

KIRAN CHETRY, CNN ANCHOR: And good morning to you.

The gloves are off.

I'm Kiran Chetry.

Debt talks getting fiery, tempers flaring. President Obama abruptly ending a meeting after trading ultimatums with House Majority Leader Eric Cantor.

ALI VELSHI, CNN ANCHOR: Duck and cover.

I'm Ali Velshi.

A CNN crew caught in the middle of an all-out battle between rebel and Gadhafi forces in Libya. Bullets whizzing by their van. And every moment of it caught on tape.

We'll show it to you on this AMERICAN MORNING.

(MUSIC)

CHETRY: Good morning to you.

Six o'clock here in New York on this Thursday. It's July 14th. This is Ali. This is Kiran. Where's Christine?

VELSHI: There is no Christine. Christine is on an extended vacation. Well-deserved. She works hard.

CHETRY: She sure is.

VELSHI: But we do have a lot going on today. Let's get right to it.

A high drama and high stakes over raising America's debt ceiling. We're now just 20 days away from the Treasury deadline. President Obama will meet again today with congressional leaders for the fifth straight day of negotiations that ended abruptly yesterday. Republicans saying the president stormed out of the talks.

But, this morning, a Democratic source is telling CNN President Obama shut down the meeting after House Majority Leader Eric Cantor continued to push for a short-term extension of the debt ceiling -- something that the president categorically opposes. That's when sources say the president got agitated, saying, quote, "This could bring my presidency down, but I will not yield on this," end quote. And then he added, talking to Eric Cantor, "Eric, don't call my bluff. I'm going to the American people with this," end quote.

Let's go live to Dan Lothian at the White House.

Dan, differing accounts of what actually happened. Cantor is saying the president stormed out of the meeting. The White House is saying something else. Nobody disagreeing there was a whole lot of tension to end that meeting yesterday.

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: Oh, boy. Just a whole lot of tension in that meeting yesterday, as you pointed out. There's always two sides to every story, and Democrats, White House in particular saying the president did not storm out of that meeting. Instead, he became agitated because he believes that Republicans are using the talks for political gain.

But the confrontation happened, according to Democratic sources inside that meeting when, as you pointed out, that Cantor started arguing for this -- a series of short-term deals. This is essentially backing off of what he had previously agreed to or talked about. And the president said, according to the officials, that what is going on inside of that room is essentially confirms what most Americans think about Washington.

And so, there is a lot of frustration as these negotiations move forward and so far, no agreement.

VELSHI: Dan, they go back into this, the fifth day. They're going back 4:00 Eastern Time. I'm puzzled as to why they leave it so late in the day and then tensions are already high.

Any sense things that are going to be different? Do they come back to the table today and say, all right, guys let's cool off from yesterday? Or are we further ahead with these two sides digging in?

LOTHIAN: Well, look, first of all, there is this sense that both Republicans and Democrats are digging in. That they are pointing fingers at each other and saying, look, you are unwilling to compromise.

There's still this issue of how you get to the revenue side of it. Democrats saying that you have to have these tax increases on the wealthy. Republicans saying that simply can't be on the table. So, if they continue to dig in like this, it seems unlikely that there's going to be any real progress here.

But some Democrats are saying that they hope when all parties return to the table today, that the tone will be much different than it was yesterday.

CHETRY: Right. So, they are coming back to the White House today to talk. Any idea if we can expect anything different than this impasse they have been dealing with? LOTHIAN: Well, you know, yesterday, we are told by sources inside that meeting, they took a look at, you know, where they found some common ground. So, about $1.5 trillion in cuts, they will start looking at that today. In today's meeting, they'll continue looking at that. Looking at perhaps additional cuts they can find as well.

And they'll come back again to how you get to the revenue side of this. Republicans are saying the best way to do this is make the economy better, create more jobs. That's how you get the revenue. Democrats saying you have to be able to raise these taxes.

So, that's something, again, they are going to take up today when they get to this meeting and, you know, day after day after day, they'll continue meeting until they get a deal.

VELSHI: Dan, good to see you. It is going to be a busy day for you, busy days ahead. Good to see you -- Dan Lothian at the White House.

CHETRY: Also, it's our question of the day. President Obama's outburst, I guess you could say, saying, "Don't call my bluff." Will it help resolve the debt debate? We want to know what you think.

Send us an email, a tweet, or let us know on Facebook and we'll be reading some of your comments a bit later.

Meantime, as we know, there's so much uncertainty going on over this deal before the Treasury's August 2nd deadline. Will they get one in time? Credit rating agency, Moody's, is putting America's AAA rating on notice for a possible downgrade.

So, what exactly does that mean? Well, AAA rating is like having the best credit score you can have. We're able to borrow money at the lowest cost and it also means that there's almost no chance the government will default on its debt. A double A rating is like having pretty good credit, thought to be more expensive to borrow, though. And it means that there is an increased risk of default.

So, let's bring in our business news correspondent Felicia Taylor.

So, when we talk about this AAA rating which we've enjoyed

VELSHI: For forever.

FELICIA TAYLOR, CNN BUSINESS NEWS CORRESPONDENT: Since 1917.

(CROSSTALK)

CHETRY: Is it really threatened by Moody's?

TAYLOR: Yes, it is. I mean, this is -- they put us on a warning a couple of months ago. Now, this is the notice. And this is the normal course of action. It is a serious thing to do because as you can see in the overnight markets in Asia, where -- they are trading on that idea that this idea of a short-term -- which is what the Congress is looking at.

VELSHI: Yes, a short term extension.

TAYLOR: A short-term extension is not enough. I mean, we need to actually lift the limit in time in order for America to meet its payments. If they don't, we then are not able to do that. And we will default.

That makes everything riskier in terms of the government and more expensive for the government to pay. That also makes it more expensive for the rest of us.

So, yields can go up on everything, including credit cards and government debt, whatever it is.

VELSHI: And I guess this is the larger conversation about not -- any kind of default. The fact is that's the ultimate issue for the people watching us at home, other than investors. That your cost of doing business could go up. Your cost of borrowing for your car, your mortgage, all of this could go up.

TAYLOR: You bet. There's no question about it. If we do have that double-A rating dip, which is very serious, and people have to understand why it is so serious, because if we do that, we are no longer considered one of those premier rating governments.

So, therefore, everything gets more expensive. The government is more expensive to pay off its debt. That means it's more expensive for us as well.

So, everything gets just ramped up a little bit more and it's going to take longer to meet those debts.

CHETRY: And so, world markets clearly are reacting to this. A lot of concern over what is going on here. How is it affecting the markets?

TAYLOR: There's no question that the futures are going to continue to be a little bit lower about this idea. Investors don't want to see a short-term solution. They need to be assured that Washington is going to do what it needs to do.

This idea of wrangling going on and on until the 11th hour is not reassuring. Uncertainty is the premier thing that the government -- what the markets do not like.

CHETRY: Right.

TAYLOR: So, we continue have this and it's going to be a problem.

VELSHI: All right. Felicia, we will be watching it closely along with you this morning. Felicia Taylor following this.

I will tell you, it's surprising that the -- futures are not up as much as possible, which leads me to believe the smart money thinks that these guys know they've got to get a deal done.

CHETRY: But it's also interesting because you are saying before, I mean, you guys were talking about how the bond market seemed to be OK. That there is this belief this was going to get resolved.

VELSHI: Yes.

CHETRY: I wonder if that belief is eroding a little bit as we see this drag out.

TAYLOR: That's exactly the problem. I mean, there's this hint of uncertainty, hint of doubt. If that continues, you will see it play out more and more and more.

But you are right. I mean, the smart money believes that there's no question that we will do it. It's just the problem of why do we have to keep it going on and on until August 2nd.

VELSHI: Just do it already.

TAYLOR: Just do it. You know, get it done.

VELSHI: All right. Felicia, thank you.

Five prominent U.S. lawmakers are demanding to know if News Corporation newspapers in Britain violated any laws here in the United States. They're calling on the Justice Department to investigate the tactics used by reporters at Rupert Murdoch's publications, not only for alleged phone hacking and privacy violations, but those that might involve 9/11 victims and also possible violations of America's foreign corrupt practices laws.

One of the lawmakers calling for the investigation is Republican Congressman Peter King of New York. Among the four Democrats: New Jersey Senator Frank Lautenberg.

(BEGIN VIDEO CLIP)

SEN. FRANK LAUTENBERG (D), NEW YORK: They have no right to break the law if they are an American corporation. And it wouldn't matter if they were selling tires or selling news or what have you. Those are the rules. Those are the laws that we have to obey them

(END VIDEO CLIP)

VELSHI: And we are getting reports this morning that Scotland Yard has made an arrest in connection with the News Corporation's phone hacking scandal. London's top cop, by the way, is going to be in the hot seat today.

Let's bring in Dan Rivers. He's got the latest live in London this morning.

Good morning, Dan.

DAN RIVERS, CNN SENIOR INTERNATIONAL CORRESPONDENT: Yes, good morning.

Yes, another arrest this morning in this wide-ranging police inquiry. We understand that may be a former editor of "The News of the World" and a guy who started as a deputy editor, Neil Wallis. That's according to Sky News here. He has been arrested this morning, taken into police custody. No comment from the "News International" themselves.

But the bigger picture here is there's still confusion about this request for the embattled chief executive of "News International," Rebekah Brooks, Rupert Murdoch and James Murdoch. They are all being told to come and report to a committee here on Tuesday. The deadline for them to respond is this morning.

So far, the committee has had no response. This is pretty serious stuff. They can't force Rupert and James Murdoch to appear, but they can force Rebekah Brooks to appear.

And if she continues to refuse to respond, once they've issued a sort of summons to her, theoretically, they could send their kind of security apparatus of the house behind me down to actually force her, you know, arrest her effectively to come along. It'd be a pretty unedifying spectacle if that happen.

CHETRY: All right. Dan Rivers for us -- thanks so much. We'll continue to follow this, of course. Every day, a new development and a more troubling development.

VELSHI: Well, still to come this morning: high and dry. First, they lost their paychecks. Now, there may not be any beer to help pass the time during the government shutdown in Minnesota.

CHETRY: That's the part that folks gone there, there's no beer.

VELSHI: It's a big problem. A lot of beer that isn't going to be on the shelves.

CHETRY: All right. We'll ask about ugly jobs report -- the president's right-hand man on jobs. CEO of G.E., Jeffrey Immelt, talks about how they plan to get America working again.

VELSHI: And under fire in Libya. CNN crew ducks cover and steps on it when they find themselves in the middle of an intense battle.

(BEGIN VIDEO CLIP)

BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Gunfire all around us. We are rushing out of this area.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

VELSHI: Welcome back to AMERICAN MORNING.

All enemies of India possible suspect this morning after three bomb blasts rocked the country's largest city during rush hour yesterday. Eighteen people were killed. That's down from 21 announced yesterday, 131 are wounded. Officials say these attacks were coordinated by terrorists. But there have been no arrests. India is denying that they were -- that they missed any warning signs.

(BEGIN VIDEO CLIP)

PALANIAPPAN CHIDAMBARAM, INDIAN HOME MINISTER: The fact the blasts took place within minutes of each other, separated by perhaps about eight to 10 minutes, shows that it was a coordinated terror attack.

(END VIDEO CLIP)

VELSHI: Today's attack is the first in Mumbai since the city's 2008 terror siege that left 164 people dead.

CHETRY: Now, to a CNN exclusive. A CNN crew caught in the crossfire in Libya. They p ended up in the middle of a battle for a town the rebels lost and then retook in a five-hour fire fight and are lucky they made it out thereof.

Take a look.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: You guys, wait.

UNIDENTIFIED MALE: Get in there.

UNIDENTIFIED FEMALE: Wait! Wait!

UNIDENTIFIED MALE: Get in!

UNIDENTIFIED FEMALE: Wait!

UNIDENTIFIED FEMALE: I'm in.

UNIDENTIFIED MALE: OK. Calm down.

UNIDENTIFIED MALE: We are leaving this area. There's gunfire all around us. And we believe that Gadhafi's forces are doing a roundabout movement. So we are rushing out of this area.

(END VIDEO CLIP)

CHETRY: Wow. They are all OK. Ben Wedeman joins us live now from Libya. We got to witness firsthand that close call for you and your crew. Do you know what exactly was happening?

BEN WEDEMAN, CNN INTERNATIONAL CORRESPONDENT: Well, we had gone to the edge of this town. And let me actually stress one point -- there are no communications in this area, no cell phone system. So you oftentimes will go somewhere and you don't really know what you are getting into.

We got to the edge of the town to a checkpoint which was manned by two boys probably in their late teens. They told us that Gadhafi's forces entered that town. So our drivers went to the top of a hill to go see into the town itself. And when they got to the top of the hill, they saw just about 150 yards from them two carloads of Gadhafi soldiers.

And the shooting started soon there afterwards. They came rushing downing the hill. And of course you saw that panicked scene as we all tried to jump into the car and get away. Later that day the rebels were able to retake the town, and there was a lot of rocket fire and incoming mortars as well. So we did spend a lot of time just sort of hunkering down as that battle went on.

ALI VELSHI, CNN ANCHOR: Ben, who is in control of the town now?

WEDEMAN: At the moment the rebels are in control. They were able to take it by about 6:00, 7:00 p.m. last night. And in fact, they pushed -- they're taken new territory. They've gotten a big closer to this main strategic highway that links the southern part of Libya with the capital Tripoli. And that is their goal in this area, to cut off that important supply line to sort of tighten the noose on Tripoli itself.

CHETRY: I was just going to ask, when you guys were in those situations, obviously have you no idea. But I mean, is it just a crapshoot as to whether or not you are going to find yourself in the middle of that? I know you guys take great pains to cover this and stay safe at the same time, but seems that it is impossible at times.

WEDEMAN: Sometime it is just the roll of the dice. And certainly even though it was hairy moments, we got out. Nobody was injured. Nobody was hurt.

And because of this lack of communication, you don't really have the ability to call ahead and find out what's going on. What you do is every checkpoint you reach, you ask, you try to get as much information as possible. But in that area it appears that the checkpoints were lightly manned at best. Some had been abandoned altogether. So it really is just a question of luck, and fortunately luck was with us yesterday.

VELSHI: Yes, fortunately it was. Ben, we've seen you do a lot of things. You don't normally look concerned. You looked concerned in that video. Ben Wedeman safe and sound with his crew in Libya.

All right, it is 19 minutes after the hour.

(WEATHER BREAK)

CHETRY: All right have you heard about this "car-mageddon."

VELSHI: Oh, yes.

CHETRY: "Car-mageddon" is coming. Drivers all over Los Angeles are beginning to break into a cold sweat. We'll tell you why they may be forced to leave their cars parked in the garage this weekend.

VELSHI: And of course you probably heard by now the tough talk about the president, the alleged tough talks from the president at yesterday's heated debt talks. He warned House Leader -- Majority Leader Eric Cantor "don't call my bluff." And that brings us to the question of the day -- will that tough talk help resolve the debt debate? We want to know what you think. Send us an e-mail, tweet. Let us know on Facebook. We will be reading your comments later. You're watching AMERICAN MORNING. Its 21 minutes after the hour.

(COMMERCIAL BREAK)

VELSHI: It's 24 minutes after the hour. "Minding your Business" this morning -- U.S. stock futures pretty flat in pre-market trading. Surprising, but investors are shifting their focus away from Europe and back to Washington today. That's after Moody's warned that if debt talks fail could it downgrade the U.S. credit rating as the debt ceiling debate continues.

The Dow, NASDAQ, and S&P 500 all snapped three-day losing streak yesterday, but gains were muted after Federal Reserve Chairman Ben Bernanke said the Fed could be open to further stimulus. And that injected more uncertainty into already uncertain markets.

And the Fed chief heads back to Capitol Hill today and speaks in front of the Senate Banking Committee about 30 minutes after the opening bell at 10:00 a.m. eastern time.

A new report says there were about 30 percent fewer foreclosures in the first half of this year than in the first half of last year. But here is the catch -- the Realty Track study says as many as one million foreclosures that should happen this year are being delayed until 2012. So in reality, many more homeowners are dealing with foreclosures or might be soon.

And 11,000 Borders employees could lose their jobs after a $215 million deal with from a private equity firm fell through. Now this increases the chances that the bookstore chain will need to close its nearly 400 stores that remain open.

Thirsty for a Miller Lite? If you live in Minnesota you better stock up. The state government shut down before Miller Coors brewing company could renew its brand label registration in the state, so the company is being forced to pull it's 39 beers brands from all restaurants, bars, and liquor stores as a result.

Now don't forget, for the very latest news about your money, check out the all-new CNNMONEY.com. AMERICAN MORNING will be right back after the break.

(COMMERCIAL BREAK)

VELSHI: The debt talks getting down and dirty. An agitated President Obama getting up and abruptly ending yesterday's negotiations after having it out with House Majority Leader Eric Cantor.

The high-stakes test of wills -- on this AMERICAN MORNING.

(MUSIC)

CHETRY: Thirty minutes past the hour right now. And good morning, New York. It is Thursday, July 14th.

And this is a live look outside of our studios here in New York.

VELSHI: A little chilly this morning as I got into work.

CHETRY: Our version of chilly.

VELSHI: Our version of chilly.

CHETRY: Our version of chilly after much of the country --

VELSHI: I wasn't sweating within three seconds walking out the door is what I meant to say.

CHETRY: All right. Well, welcome back to AMERICAN MORNING.

I'll tell you where they are sweating. That's in the halls of Congress. They are trying to figure this thing out. And the two sides seem just as far apart as ever.

The high stakes debt talks pick up again today following a very tense session yesterday. President Obama apparently abruptly ending that sit-down after House Majority Leader Eric Cantor continued to call for a short-term extension on the debt ceiling. Something the president said he'd veto all along.

Sources say the president told Cantor and other Republicans, quote, "This may bring my presidency down but I will not yield on this."

VELSHI: All right. Another story -- we are going to get back to the debt story for sure. But another story, five U.S. lawmakers want the Justice Department to investigate Rupert Murdoch's News Corp newspapers. They want to know if he broke privacy or corruption laws here in America.

(BEGIN VIDEO CLIP)

SEN. FRANK LAUTENBERG (D), NEW JERSEY: They have no right to break the law if they are an American corporation. And it wouldn't matter if they were selling tires or selling news or what have you. Those are the rules. Those are the laws that we have to obey them

(END VIDEO CLIP)

VELSHI: Meantime, police in London say they arrested a man in connection with their investigation. So far all we know is the guy arrested is 60 years old. He's not been named. We don't know what charge has been laid against him.

CHETRY: The hunt for terrorists going on full force right now in India after three bomb blasts rocked Mumbai. It's the country's largest city. It happened during rush hour yesterday. Eighteen people were killed. And more than 130 others were wounded.

VELSHI: Jaycee Duggard's book shattered records. "A Stolen Life" sold 175,000 copies in its first day. Nearly 100,000 of those were eBooks. Simon & Schuster says a new -- that's a new eBook record for company.

In the book, Jaycee, as you probably have heard, talks about her kidnapping back in 1991 when she was just 11 and her 18 years of terror at the hands of convicted sex offender Philip Garrido. I'm troubled by the book. I mean, it must be very compelling. It's hard.

CHETRY: Yes. A lot of people want to know how she came through that alive and stay sane through it all.

The U.S. women's soccer team is advancing to the World Cup final. Remember Richard Roth yesterday saying, you know what, they got to do it. It's another dramatic victory. They beat France 3-1 in the semifinal game. They will now play Japan Sunday in Frankfurt, Germany, for the World Cup title.

And we are going to be talking to three of the stars from the U.S. women's team coming up in just a few minutes.

VELSHI: All right. Let's talk about jobs. Jeff Immelt, the CEO of G.E., was called in by President Obama to lead a group of business thinkers about how to deal with the jobs issue. He heads what's called the White House Council on Jobs and Competitiveness.

Our Poppy Harlow got a chance to talk to him -- to sit down and talk to him about what to do.

CHETRY: Yes. And also, especially, the poor unemployment numbers we got, the overall unemployment rate climbing up to 9.2 percent. What does he think is the answer?

POPPY HARLOW, CNNMONEY.COM: Right. So, this is the man the president is putting in charge of leading the council to fix that. So, a lot of people are looking at him for answers. We sat down with him yesterday in South Carolina at G.E. plant that employs 3,200 people down there.

But why you care what this man says is because he is a Republican, the president a Democrat. And there's other Republicans on that counsel that are advising the president, that are pushing back on the administration on some fronts, especially regulation when it comes to creating jobs.

First, we talked about the all-important debt ceiling and what happen if Washington can't get it together, come up with a deal to raise the debt ceiling by August 2nd, what happens to jobs? How critical is that?

Here's what he had to say on that front.

(BEGIN VIDEO CLIP)

JEFFREY IMMELT, CHAIRMAN AND CEO, GENERAL ELECTRIC: I would ask people, don't think about G.E. so much. Think about a small businessperson who really do create a lot of jobs in the country. They are petrified right now. HARLOW: Why what do they hear?

IMMELT: Well, look, I mean, you know, what happens if the government doesn't roll over its debt? You know, why would you invest into that? And if the budget deficit means super high tax rates for them, things like that, again, that to me is the piece that is missing. There has been bad new business generations, small businesses have gotten hurt coming out of this recession, guys like us that have a global footprint and global demand, we're going to power through this.

(END VIDEO CLIP)

HARLOW: It's interesting. He said look, where G.E. is, and, actually, G.E. now employs 60 percent of their workers outside the United States. They sort of steadily shed jobs which he has been criticized for, 35,000 jobs they've shed over the last decade in the U.S.

But look, demand is overseas, right? It's not necessarily here in the U.S. But, guys, we also talked about the fact that there was a Chamber of Commerce study that came out this week that said only 19 percent of businesses, 19 percent, planned to hire this year. So, what do you do?

And he talked about small businesses. Small businesses employ more than half of Americans. So, he said, look, we are a wealthy big company, we can get through this. You are freaking out small business if you don't give them the confidence that America can pay its bills.

So, we talked about jobs and his take on what do you do about bringing jobs back to America, not in a year, not in two years, but right now. Take a listen.

(BEGIN VIDEO CLIP)

IMMELT: What we want to do is start with things that can be implemented -- visitor visas, right? We have an eight-week cycle. Our competitors have a one-week cycle. We have lost half our market share and people coming into this country.

That can be changed very quickly and the market share responds very quickly. And we hire more people in the travel and leisure industry. Now, look, you can argue maybe that's not a sexy as one of these factory jobs or engineering jobs but it's a job.

(END VIDEO CLIP)

HARLOW: So, that's one of the things he said -- I asked him, you know, what if you push back on the administration on? What regulations have you said, look, we need to implement this now. That's one. Making it's easier for people to travel to the country and spend more money, our tourism industry is down 50 percent in this whole jobs debacle.

So, that was an interesting point. What really stood out to me is that he said, look, companies, private companies, that are sitting on trillions of dollars in cash have a lot of money overseas and they don't want it taxed coming back into this country. He said, they have no excuse right now not to be hiring.

So, people are going to watch him -- very closely, watch this company, see how much they bring on. But it's obvious that the government initiates -- the government is not going to be hiring. It's going to have to be these companies, big and small.

VELSHI: All right. Poppy, thank you for that.

HARLOW: Sure.

VELSHI: Still to come this morning, they say it's a woman's right to change her mind. First, she accepted the offer. And now there's a buzz that Mila Kunis might be backing out on her acceptance of the invitation to the Marine Corps ball.

CHETRY: What did I tell you yesterday?

VELSHI: You did suspect this was going to happen, Kiran. You are --

CHETRY: But it's not totally her fault.

VELSHI: It's not totally clear that she's not going on.

CHETRY: OK.

VELSHI: There we go.

CHETRY: And tough talk from the president. At yesterday's heated debt talks, he warned House Majority Leader Eric Cantor, "Don't call my bluff." Brings us to our question of the day, will the tougher rhetoric from the president actually help solve the debt debate?

We want to know what you think. Send us an e-mail, a tweet, let us know on Facebook. And we'll be reading some of your comments after the break.

It's 38 minutes past the hour.

(COMMERCIAL BREAK)

VELSHI: Welcome back to AMERICAN MORNING.

A showdown at the White House. President Obama shutting down yesterday's debt talks with House Republicans, warning House Majority Leader Eric Cantor, "Don't call my bluff," he says, after he continued to push for a short-term extension. Cantor continued to push for a short-term extension to the debt limit.

CHETRY: Right, which wouldn't solve the problem, which means they'd have to go back to the bargaining table.

VELSHI: Right. By the way, markets don't like that idea. Investors don't like that idea. They say, guys, you got to settle this one way or the other. CHETRY: So, we want to know what you think. President Obama's outburst, "Don't call my bluff" -- will it help resolve the debate?

Here's what you're saying this morning.

Rahni (ph) on Facebook writes, "Unfortunately, the Republicans aren't negotiating in good faith for the American people. And Obama knows this and decided that he's not playing with these dirty Republicans. I would have an outburst myself dealing with idiots."

VELSHI: Ouch! And Warren says on Facebook, "Negotiations aren't over until the bill or deadline passes. Politics is all about posturing and pseudo chess-like strategy. Whilst in politics, the front is always propaganda." Extra points to Warren for using "whilst." Yes.

Keep your comments coming.

CHETRY: You say whilst?

VELSHI: I say whilst.

CHETRY: OK. Send us an e-mail, a tweet, tell us on Facebook, and we'll read more of your thoughts a bit later in the hour.

So, you remember Marine Sergeant Scott Moore. He's currently serving in Afghanistan. He posted a video on YouTube asking actress Mila Kunis to please attend to Marine Ball with him. Well, she actually did something worse than just saying no -- first, she said yes, and then she took it back. According to Access Hollywood Live, Mila has a scheduling conflict. She'll be filming two movies in November and can't go. But she says she will still hang with him another time.

VELSHI: Do you think that's better or worse, hang with him another time, they can have like more casual time, go to a movie or something like that? You don't think this is happening. You think she is not. Why? Why do you think that?

CHETRY: I just think that, you know, I think that she probably doesn't feel comfortable going on a date with this guy that she's never met before.

VELSHI: Who asked her on YouTube.

CHETRY: Yes. Who asked her on YouTube, and she seemed a little pressured into it by her co-star, Justin Timberlake.

VELSHI: OK. So, Justin Timberlake, asked her to do, her, Mila Kunis do (INAUDIBLE). Now, let's see what J.T. says. Another Marine Corporal Kelsey De Santis posted a video asking Justin Timberlake to be her date to the event. She even has a Facebook page for it.

Here is her proposal.

(BEGIN VIDEO CLIP)

CORPORAL KELSEY DE SANTIS, U.S. MARINE CORPS: So, Justin, you want to call out my girl Mila? Well, I'm going to call you out and ask you to come to the Marine Corps ball with me on November 12th in Washington, D.C. And if you can't go, all I have to say is, cry me a river.

(END VIDEO CLIP)

VELSHI: That was good. So, now, Justin Timberlake is in a tough spot because he kept nudging Mila Kunis to say -- in fact, in this discussion, to say --

CHETRY: Yes to the Marine.

VELSHI: Yes, do it for your country. Right?

CHETRY: Yes. So, he has to say yes. He can't back out now either, right?

VELSHI: There is another reason he has to say yes.

CHETRY: Because she is a black belt. She's a mixed martial artist. Here she is cage fighting.

OK. Operation Octagon event. So, I wouldn't say no, Justin.

VELSHI: And you saw the six Marines standing behind her as she did the YouTube.

All right. We'll keep you posted on this pressing story.

CHETRY: All right. Your top stories just a couple much minutes away. We'll be right back.

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CHETRY: Forty-six minutes past the hour right now. A look at your headlines this morning.

Today, President Obama and Congressional leaders will sit down for a fifth straight day of debt talks. Yesterday's negotiations ended on a tense note with House majority leader, Eric Cantor, saying that the president shut down discussions after he proposed a short-term deal.

Police in London say they arrested a man in connection with their investigation into the phone hacking scandal that involved Rupert Murdoch's media empire. Meanwhile, several members of Congress are calling for a federal investigation over concerns that journalists may have targeted the voice mails of 9/11 victims.

India looking for suspects responsible for a triple bombing that killed 18 people in Mumbai. Yesterday's attack shocked three separate neighborhoods within minutes of each during the busy evening rush hour. More than 130 people are being treated for injuries.

Right now, heat advisory is in effect for parts of Texas, Oklahoma, Georgia, and South Carolina. They still can't get a break there. Forecasters are warning this weekend that there will be new hotspots in sections of Kansas, Missouri, and Arkansas. We're counting down this morning to the primetime Emmy nominations. They take place at 8:40 eastern time, and you can see them live right here on AMERICAN MORNING.

You're caught up on the day's headlines. We'll be back after a short break.

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CHETRY: Beautiful shot this morning of New York Harbor. Lady liberty. It's really a nice day in New York. We're not struggling --

VELSHI: You're judging that on the fact it was comfortable this morning.

CHETRY: Yes, but we're not struggling with these triple digits like a lot of other states still are.

VELSHI: Fortunately, a lot of the country is cooling down. Nothing is cooling down in Washington, though, not temperature wise.

CHETRY: No, no.

VELSHI: Tension.

CHETRY: Yes. A lot of tension. Five U.S. lawmakers are now demanding to know whether Rupert Murdoch's newspapers hacked any phones here in the United States.

VELSHI: And now, some families of 9/11 victims are demanding the truth, too. Here's Brian Todd.

(BEGIN VIDEOTAPE)

BRIAN TODD, CNN CORRESPONDENT (voice-over): As he faces the investigative music in Britain, critical mass builds to look into the actions of Rupert Murdoch's companies in the U.S. Several lawmakers are now calling for investigations into whether Murdoch's tabloids hacked the phones of Americans.

Powerful senator, Jay Rockefeller, is leading that charge. He's especially concerned over reports that 9/11 victims' phones were hacked, and he told CNN his bet is they'll find, quote, "criminal stuff." I caught up with Rockefeller.

SEN. JAY ROCKEFELLER, (D) COMMERCE COMMITTEE CHAIRMAN: You know the Department of Justice and all kinds of other federal agencies are going to be going after this very hard. And, we will, too. I mean, this is a -- it's -- it's really repugnant, you know, that one man can control so many.

TODD: Do you have specific information that Americans that 9/11 victims had their phones hacked?

ROCKEFELLER: We will find out. TODD: At least two relatives of 9/11 victims are joining in this call. Contacted by CNN, the justice department wouldn't comment on whether an investigation has been launched. Rockefeller called for the probe after victims of 9/11 were reported to have been among the targets of British papers.

TODD (on-camera): "The Daily Mirror," a rival of Murdoch's papers, asserted that a New York private investigator said he was asked by "News of the World" journalist to hack victims' phones but that he turned down the job. It's not clear if the tabloid journalist were after the phone records of American or British 9/11 victims or both.

TODD (voice-over): Murdoch's company, the News Corporation, owner of some of the London papers that have been the focus of the outrage is based in the United States. Its outlets include "The Wall Street Journal," "The New York Post," and Fox News Channel. Paul Farhi says it's too early to tell if those operations will suffer legally from an investigation, but --

What kind of public backlash could there be against Rupert Murdoch and his entities in the U.S., do you think, even if this doesn't come to full fruition, these investigations?

PAUL FARHI, WASHINGTON POST: We know him through Fox News, "The Wall Street Journal, "The New York Post," and all the TV stations he owns in this country. So, he has -- plenty of enemies in this country, and this could be, and I stress the could be, the moment when they get a lot more ammunition to use against him.

TODD: We contacted News Corporation to ask if they would respond to the calls for investigations, if they could shed any light on the alleged attempt to hack Americans, and if they've launched their own investigation. A spokesman there wouldn't comment.

Brian Todd, CNN, Washington.

(END VIDEOTAPE)

VELSHI: Fifty-four minutes after the hour. Here's what's new this morning.

Rhode Island cracking down on teen sexting. New law makes it a crime for a minor to create or send a sexually explicit photo of himself. There are tougher penalties for anyone who receives a photo of a minor and sends it on to someone else.

CHETRY: Wow. We'll see how that holds up. We'll see how they enforce it. Bless (ph) you, by the way.

The son of former Washington, D.C., mayor, Marion Barry, is facing drug charges. According to charging documents, Marion Christopher Barry was arrested in late May when police came to his apartment to investigate a domestic incident and a vile (ph) of PCP on a table.

Carmageddon is coming. For 53 painful hours this weekend, Los Angeles will shut down a 10-mile stretch of northbound I-405 to demolish part after bridge. They're predicting gridlock on steroids. Los Angeles County telling drivers stay the heck out.

Jet Blue, by the way, has been quick to cash in on carmageddon. The airline is getting a lot of valuable PR for offering a special deal on flights from Burbank to Long Beach this Saturday. $4 each way. That, of course, doesn't include taxes.

VELSHI: Even with the tax and fees, you still get --

CHETRY: You're looking at 40 bucks or something?

VELSHI: Yes, something like that.

CHETRY: For an extra buck, you can get a seat with extra legroom.

VELSHI: You could. You see the big sold-out sign there?

CHETRY: Yes. The flights are sold out. Now, this is interesting, though. How long did you estimate that this flight would --

VELSHI: It's a 737. It can't even be a five-minute flight.

CHETRY: So, you're going to spend more time taxying --

VELSHI: Right, but you'll spend less time than you would on that dreaded 405.

CHETRY: OK.

VELSHI: All right. Just when it looked like Christian Lopez might have been better off not catching Derek Jeter's 3,000th hit. Two Yankees sponsors are stepping up to the plate --

CHETRY: Happy ending!

VELSHI: No. With a guarantee of at least $50,000 to help --

CHETRY: This is a happy ending to the story.

VELSHI: Oh, that's what you meant, because I said two sponsors are stepping up, but then, you yell happy ending. So, I thought, perhaps, you were on a different story. They're offering up to $50,000 to help with student loans and any taxes on gifts from the Yankees. Lopez also received a 2009 Yankees World Series ring, and, he's getting his own top baseball card.

CHETRY: All that's fine and good until the IRS comes calling the --

VELSHI: I never have said (INAUDIBLE) because that's bunch of guys giving him more money --

CHETRY: Because the point was -- the whole reason that it wasn't great to catch the ball, anyway, is because "The New York Times" just sort of asked around the tax lawyer, and said, if he's got his great awesome box seats, how much would he owe on them? And they said, OK, about 14 grand. He's already $100,000 in debt.

(CROSSTALK)

VELSHI: OK, but you know, if ever I do something like that if I catch one of those balls as a fellow journalist, could you do me a favor not start asking around?

CHETRY: OK. I'm not start asking around about what you owe -- right, exactly. Thanks.

VELSHI: All right. Anyway, happy ending as Kiran says. We'll be right back.

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