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American Morning
FAA Loses Funding as Congress Breaks; Ground Turkey Causing Salmonella Outbreak; Heat Wave Hits Texas and Oklahoma; After the Debt Deal; Mubarak on Trial in Cairo; Another Arrest in U.K. Hacking Scandal; Debt Deal Triggers Global Selloff; Rhode Island City Files for Bankruptcy
Aired August 03, 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: Grounded budget gridlock costing jobs. How unfinished work in Washington putting thousands of FAA employees out of work?
CAROL COSTELLO, CNN ANCHOR: Sarah Palin going all 2008 on President Obama. How she defended the tea party from comparison to terrorists?
CHRISTINE ROMANS, CNN ANCHOR: One dead, dozens hospitalized in a salmonella outbreak likely linked to ground turkey, but where's the government on this one?
VELSHI: And part cop, part terminator. An officer chases down a suspect who ran him down with a stolen car on this AMERICAN MORNING.
COSTELLO: Good morning. It is Wednesday, August 3rd. Welcome to AMERICAN MORNING. There's a lot going on this morning so let's get right to it, shall we?
ROMANS: All right. The debt deal, it gets the president's signature, passed through the Senate with ease. You're looking at new pictures just released from the White House of the closed door negotiations that eventually led to the compromised bill on the debt ceiling. Before signing that bill into law, President Obama called it a first step, and he argued more must be done.
(BEGIN VIDEO CLIP)
BARACK OBAMA, (D) PRESIDENT OF THE UNITED STATES: This is, however, just the first step. This compromise requires that both parties work together on a larger plan to cut the deficit, which is important for the long-term health of our economy.
(END VIDEO CLIP)
ALI VELSHI, CNN ANCHOR: Now, it's up to this so-called super committee, a bipartisan group of six Republicans and six Democrats, three from the Senate, three from the House. Their sole responsibility is to decide on another $1.5 trillion either in spending cuts or tax increases. That's something Congress and the White House couldn't get done.
As Mohamed El-Erian, who is the CEO of the investment management firm Pimco, big, big bond dealers, told our Piers Morgan last night, the debt deal's done little to soothe economic jitters.
(BEGIN VIDEO CLIP)
MOHAMED EL-ERIAN, CEO, PIMCO: Both the deal and the run up to the deal are such that we are worse off today than we were before. Everybody knows that at the end of the day we actually haven't improved things but we've made them worse.
(LAUGHTER)
ROMANS: That's so depressing.
COSTELLO: I know. Like, oh, my gosh. I know what you're wondering now. What will be cut by this so-called super committee and the answer is -- we don't know yet. Likely one of the first places they're going to look is the government's pay roll. We could see thousands of federal workers cut, as it is they are operating under a two-year pay freeze. The defense department is also not safe. Right now it's bracing for its budget to potentially to be slashed by $350 billion over the next 10 years.
VELSHI: People have to remember that while we talk about smaller government and some people like the concept of smaller government, it ultimately means fewer government employees. So in an economy where 15 mill reason out of work, there's going to be more people out of work.
ROMANS: It means fewer government services, and the part of the budget they're cutting is the part where the services you are more likely to feel are in the little part of the budget, the discretionary spending part. It's also likely a number of government services will be scaled back, things like food inspections, highway construction, hurricane tracking, border security, grants for education. We've already seen that in higher education there's going to be some changes and special credit would be cut for students who make 12 months of on time loan payments. Also graduate students may have to pay interest on loans while they are still in school. Right now the interest doesn't start to accrue until you graduate, government picks up the tab while in school.
COSTELLO: Graduate students usually have jobs and maybe more able to pay.
ROMANS: It was to save Pell grants.
COSTELLO: Pell grants.
ROMANS: It's to save Pell grants for everyone else.
COSTELLO: Which is a good thing because that's how I got through college, Pell grants. I couldn't have gone.
ROMANS: We can't afford the life we live in this country. We can't afford it. So now you have to figure out where you are going to pull it. VELSHI: Until you get government cutbacks you don't realize how much government you actually use. After Congress enacted this debt ceiling they left town without ending a stalemate over how to fund the Federal Aviation Administration. Apparently this wasn't one of their priorities.
Now, we've been talking about this. It means thousands of workers currently are not being paid. Construction projects are on hold and the government is losing millions of dollars in tax revenue. Ted Rowlands is live at Chicago's O'Hare International Airport. He's been looking into this. Ted, what does this mean, this FAA budget not being passed, the funding not being authorized?
TED ROWLANDS, CNN CORRESPONDENT: Well, basically you said it. It means that there are revenues that the federal government is not getting during this impasse, during this time where the FAA has basically been destabilized. And 4,000 jobs right now are furloughed until there's a change.
And then there's the construction projects. There are work stoppages put on hundreds of projects going on at airports around the country, meaning an estimated 70,000 construction workers are not at work.
We should point out that according to the FAA, safety is not an issue. Air traffic controllers are paid with a different pot of money, and passengers will not feel the impact at airports. TSA also not involved in this. Randy Babbitt is the head of the FAA. He is very upset by it, all of this. Take a listen to an interview he did with CNN yesterday.
(BEGIN VIDEO CLIP)
RANDY BABBITT, FAA ADMINISTRATOR: This can't go on a day longer, much less six weeks longer. We're going to suffer a lot of long-term damage. We have billions of dollars in construction money that should be going out the door that's not. This is money that's available. It's simply we can't spend it.
(END VIDEO CLIP)
ROWLANDS: Now, of course, the big question is, well, how do you solve a problem like this? Well, we just happen to run into a passenger this morning at O'Hare who has a wonderful idea. Take a listen.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: Cut your vacation short, get your ass back to Washington and figure something out quick.
(END VIDEO CLIP)
ROWLANDS: Well, there you have it. I don't know that Congress is going to cut their vacation short or not. That seems to be one thing they do agree on is they deserve an August recess. At this point, though, Ali, a lot of people very frustrated with the fact that they left town without dealing with this issue, which really has been simmering since 2007.
VELSHI: OK. And in fairness to some of these members of congress, a lot of them don't call it vacation. A lot are going on fact finding missions which actually are important, spending time with their constituents. I just don't understand why this wasn't crucial for them to get done.
COSTELLO: They're going on fact-finding missions?
VELSHI: They are. This is when they go to Afghanistan or Iraq. It is the time that they can do that. It's important, Carol. That's how they actually learn about these things.
Later on, I'll be talking to Michael Goldfarb who a former FAA chief of staff, and he talks about possible safety issues that are coming up. Let me ask you this, Ted. You told us earlier about people who check the runways and the tarmac having to do this without still getting paid? Can we have Ted back on this? We were talking about this question.
ROMANS: Our satellite window ran out.
(CROSSTALK)
VELSHI: Anyway, Ted had a story about the guys who go out and check the tarmac to make sure it's safe. And they have -- they're not being paid, so they're going out and working and hoping they get paid at some point.
COSTELLO: So when lawmakers go on their fact-finding mission they should go to a tarmac --
VELSHI: We have to stop calling it vacation. Some might take vacation. Some might go to the Caribbean or shopping. But there are many who do real work in this time. I don't want to get carried away with saying they're on vacation.
COSTELLO: They have to be in their districts.
VELSHI: But this is a priority. Why would you leave without passing this?
COSTELLO: Tell that to all of those people who aren't collecting a paycheck and see how they feel about the fact-finding mission.
VELSHI: I disagree with that, Carol. I think that they have a lot of job to do. They may not be living up to it, but Congress people have to get information and this is how they do it. They're congressional delegations. I don't think it's fair to call it vacation.
COSTELLO: Let's change our focus and focus on another kind of argument that some people might call silly. This morning Tea Party Republicans up in arms over allegations Vice President Biden called Tea Party lawmakers "terrorists" during the debt ceiling negotiations.
Now Biden's people tell CNN the word was used by several members of Congress, Democrats, and that the vice president does not believe it's an appropriate term in political discourse. But that has not stopped Sarah Palin from jumping into the fray. She appeared on FOX suggesting if they were real terrorists, President Obama would not have a problem with them. He would actually meet with them. Michele Bachmann is also raising money off this "terrorist" comment. You'll remember back during the 2008 election, Sarah Palin at least, accused the president of palling around with terrorists, that's what I was mentioning earlier.
Earlier I spoke to John Avalon, CNN contributor, about why both sides are guilty of this incivility.
(BEGIN VIDEO CLIP)
JOHN AVALON, CNN CONTRIBUTOR: Hate is a cheap and easy recruiting tool. But ultimately I think the extremes on each side is each side's worst enemy. Before Obama derangement syndrome there was Bush derangement syndrome. This stuff does not happen in a vacuum. But it's becoming a real problem in our politics.
Terrorists are terrorists. We're on the 10th anniversary of 9/11 coming up. That's clearly unacceptable and should be condemned. The problem is both sides sort of treat their own extremes as well. They may be crazy, but they're our crazies.
(END VIDEO CLIP)
COSTELLO: Congresswoman Michele Bachmann, as I said, trying to cash in on the alleged dig by the vice president. In an e-mail to supporters Bachmann says the attack is proof she's the top target by Democrats and needs immediate financial support.
ROMANS: A health alert to tell you about this morning. An outbreak of salmonella poisoning has spread to more than half of the country. It's been linked to ground turkey. But government investigators are still trying to pinpoint the source of the contamination and there's been no recall yet. And 26 states are affected, the outbreak blamed for at least one death and 77 illnesses.
Senior medical correspondent Elizabeth Cohen is on the phone from Atlanta. Elizabeth, the big question this morning, why no recall?
ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT: Isn't that strange? Usually at this point five months into an outbreak, you do have some kind of a recall, but apparently they haven't directly linked these illnesses to a specific product or company. They seem to know it's turkey, but they can't seem to be able to say it's this company or, you know, it's this product. And so it's sort of surprising after five months that they don't have that link.
ROMANS: Five months of still a mystery of what it is where it came from. Since there's no recall then for consumers, what can we do to make sure what we're buying is safe?
COHEN: First of all, as a consumer you have to think about your particular situation. If you're like most people and you're healthy you can say, look, if I get turkey and get sick I will feel sick for a while, but it's not going to threaten my life. If you choose to keep eating turkey you need to cook it thoroughly, you don't want to -- if it's frozen you don't want to thaw it on your counter. Thaw it in the refrigerator. You want to use separate cutting boards for turkey and things like a salad which you're not going to cook.
And, you know, for people who are immune compromised, and those people, you know, know who they are, you might want to consider not eating turkey. I mean that is a possibility. You might want to say, you know what, this is not a risk worth taking. I'm just going to avoid ground turkey altogether.
ROMANS: Elizabeth Cohen on the phone, thank you so much. All this comes at a time when we're talking about budget cuts for the discretionary budget, which includes food inspection and food safety. And we have a hard time going back to the source of so many things in our globalized food system. So it's interesting. It's interesting to see how it pans out.
VELSHI: Across the country right now unrelenting heat still hanging over the nation's midsection. It doesn't look like it's moving in parts of the south. Let's look at the live weather map. Temperatures could break records in several states today. You can see that sort of purple area in the middle. Oklahoma City, Dallas is in there, Memphis is in there. Dallas, Ft. Worth could break its all-time high temperature of 113 degrees. That's not the heat index. That's not the sun. That's the temperature -- 100 degree or more in Dallas for 32 straight days. They got a bit of a break. It was 99 degrees at midnight. Last night.
COSTELLO: You can't water your grass at 99 degrees. It burns up.
VELSHI: Ed Lavandera is there for us in Dallas. Ed, you're used to this kind of heat. You've been there for a long time. This is even hot for Dallas.
ED LAVANDERA, CNN CORRESPONDENT: Welcome to the most miserable place on earth, Ali.
(LAUGHTER)
LAVANDERA: It is over 90 degrees already. It's just around early morning time. We're in a popular urban walking trail, jogging trail. I've seen a few people out here. But, you know, it is just a miserable time and there are real concerns today that energy use will be so high that there could be rolling blackouts and people losing their air conditioning.
(BEGIN VIDEOTAPE)
LAVANDERA: In Texas, swarms of grasshoppers are invading dried out grass fields. In Oklahoma, there's barely enough hay to feed herds of cattle. Across these crusty plains, lakes are evaporating, children hibernating, playgrounds are silent. Triple-digit temperatures have baked Texas and Oklahoma for more than a month. The summer of 2011 is a beat down of epic proportions. If that sounds dramatic, CNN iReporter Susan Newkirk knows these are desperate times.
SUSAN NEWKIRK, CNN IREPORTER: We are sweltering and we're just asking for some relief here.
LAVANDERA: This week, Dallas, Ft. Worth could break its all-time high temperature of 113 degrees. In Dallas, the heat has killed 12 people so far. In Oklahoma, there have been 11 heat-related deaths. All but six of Texas's 254 counties are under a burn ban. The heat and dryness continues spawning wild first like this large blaze in Tulsa, Oklahoma. In San Angelo, Texas, bacteria that thrives in dry, hot conditions have turned this lake red. Even strong decade's old trees are withering under the scorching heat. Leaves are turning brown.
MIKE FOREST, : If it loses all its leaves and it goes totally brown, it's done.
LAVANDERA: Texas electricity regulators are issuing emergency warnings urging people to conserve power. But who needs to power an oven when you have a sizzling car. These Tyler, Texas, TV reporters baked chocolate chip cookies in just over three hours.
UNIDENTIFIED FEMALE: Oh, my god. They're pretty hard.
LAVANDERA: Apparently good enough to eat.
But in miserable times like these, you need to be able to call a timeless superhero.
UNIDENTIFIED MALE: Anything cold?
LAVANDERA: The ice cream man. Mustapha Kiop says the calls for his truck are urgent.
MUSTAPHA KIOP, TM ICE CREAM: They used to say, I don't know, in a week or two weeks. But today and the day before yesterday, they say, I want it today.
LAVANDERA: Much cooler with this.
UNIDENTIFIED MALE: I'm not ashamed, not at all. When it's this hot, be it's not a problem. The more colorful the better.
LAVANDERA: The manager of this Dallas trucking company said the ice cream man saved the day.
BRIAN SHAFFER, SOUTHWEST INTERNATIONAL TRUCKS: With the heat the way it's been, our president called and said maybe we ought to try to do something for some employees. Why don't you all get ahold of an ice cream truck, have them take an hour off and feed them as much ice cream as they want.
(END VIDEOTAPE)
LAVANDERA: All right, now that -- not that this is any consolation, but this isn't the worst this north Texas area has seen in terms of heat. Back in 1980, the infamous heat wave of 1980, we saw 42 straight days of high temperatures over 100 degrees. If this continues, we'll reach that mark next Friday. Guys, back to you.
COSTELLO: Wow.
VELSHI: Unbelievable. All right, Ed, you don't look that hot. You're doing well at looking cool. So keep that up.
COSTELLO: The sun's not out yet.
(LAUGHTER)
VELSHI: It's already over 100 degrees.
LAVANDERA: One more hour and this facade is over.
COSTELLO: Oh well. Right back in the satellite truck and crank up the AC.
VELSHI: All right, Ed, we're thinking of all of you in that section of the country right now.
ROMANS: All right. Still to come this morning, Israel likes screening at major airports in the U.S. as screeners try to spot terrorists by asking some simple questions. Details of the latest layer in airport security next.
VELSHI: And we're going to introduce you to a British cop who cannot be stopped even with a speeding car that rams into his cruiser. How this incredible chase and crash turned out.
COSTELLO: It's pretty amazing. And he threw a pie in Rupert Murdoch's general direction. Now, a British comedian is paying the price.
You're watching AMERICAN MORNING. It's 15 minutes past the hour.
(COMMERCIAL BREAK)
ROMANS: All right. Welcome back to AMERICAN MORNING.
You know, we've got the deal done, right? So everything is hunky dory, right? No. After months of skull-crashing bickering and a brush with global economic disaster the debt ceiling crisis is - is over for now. The president signed that compromised deal into law yesterday leaving a lot of Americans wondering what is next.
Let's ask our guests. We're joined this morning by Margaret Hoover, the great granddaughter of President Hoover. She served on two presidential campaigns and is the author of "American Individualism, How a New Generation of Conservatives Can Save the Republican Party" and Democratic strategist, Kiki McLean, is joining us live from Washington this morning. Nice to see both of you.
KIKI MCLEAN, DEMOCRATIC STRATEGIST: Good morning.
ROMANS: I want to talk first - I guess, Kiki, let's start with you. I want to talk first with how people feel about Congress after all of this. I guess - I believe that people always say they think Congress are spoiled brats and children, you know? And then they continue to go out and vote over and over again.
But two new polls out of CNN ORC Polls says 77 percent believe Congress has act like spoiled - acted like spoiled children, only 17 percent think that they are responsible adults. Is this a surprise here and is this a problem as we go forward with what could be more very difficult discussions and choices to be made about how to get our debt under control?
MCLEAN: I don't think it's surprising at all. But I think the other thing that's added to this is the sheer exhaustion from it, right? I mean, aren't you tired, because I'm tired from the whole thing.
But I do think that what has to happen now is that to waste more energy on deconstruction on what happened in the past we've got to focus on the execution of this plan, as unhappy as some of us may be with some elements of it and frankly it's time to get focused on jobs. We've got to balance what these cuts are doing with job creation. I think that's the best thing that Congress can do, not only to actually do the job that they were asked to do, but in fact earn the respect back of the people that have voted for them in the past.
Because, you know, one of the worst things we can do is to get into more finger pointing -
ROMANS: Right.
MCLEAN: -- and then looking only at each person's reelection and we just keep throwing the buns out, but we don't get solutions. That's the point.
ROMANS: So, Kiki, I'll take your point. We wouldn't talk about -
MCLEAN: Yes.
ROMANS: -- the other poll that shows the 72 percent describing the negotiations as ridiculous, disgusting, stupid, and frustrating.
MCLEAN: And all of the above. All of the above, right?
MARGARET HOOVER, POLITICAL COMMENTATOR AND STRATEGIST: You know - and that - and that may be true and I certainly appreciate where the American people are coming from. But let's also remember that consistently for the last five years, Congress' approval rating has hovered around 25 percent.
ROMANS: Right around lawyers and journalists I think.
HOOVER: So this is the inverse of that. I mean, it shouldn't actually be a surprise to us that 75 percent of the American people think the whole process is nuts.
ROMANS: OK.
MCLEAN: It's not, but the fact that it's gone on for five years doesn't make it OK.
ROMANS: So -
MCLEAN: It means we haven't been delivering the kinds of solutions that country needs and that's why they're doing it.
ROMANS: So that's why -
HOOVER: I would argue we finally did.
ROMANS: Let's go forward then. Because we've got this big super committee, Margaret, that's got to make some decisions. And there are - I mean, debt experts I talk to who are very concerned that they wouldn't be able to do, it will trigger across-the-board cuts that could be very painful for the Medicare program and also for - for the military.
I mean, do you think that now, with an up and down vote, these people can make this decision, the House and the - I mean, we could just vote for it and they can say, look, it's not our fault. And maybe will there be tax increases in there?
HOOVER: Well, there - I mean, there's the joke that the camel is the horse made by committee. That committees never got things done, right? And the committees have also worked in our recent history.
Bowles-Simpson was a committee and they were laughed off in the beginning. Absolutely laughed off, not taken seriously at all and came back to the table with a very serious proposal. Unfortunately, the president didn't embrace that proposal. I think it might have gotten a vote, an up and down vote or it could have had.
You know, here's the problem. They've built in incentives to not to do their job. If Democrats don't do their job on this, they're going to have serious cuts in entitlements. If Republicans don't do their jobs, they're going to have Bob McCain (ph) coming to them and saying we are not going to afford these kinds of severe cuts in defense spending. And so they have built in a mechanism for their own failure, which I think neither party can stomach.
ROMANS: Kiki?
MCLEAN: Yes. Well, here's the deal. What has to happen on this super committee is they have to put their own personal political gain to the side and focus on the public solutions. And, in fact, in the makeup - makeup of this committee it would be wise of leadership to think about people who maybe don't have a re-election to worry about. Maybe mix that up just a little bit.
ROMANS: Are there tax hikes in there, you think? Do you think they got tax hikes in there?
MCLEAN: I - I think that they have to look - I have always been for a balanced approach, everything has to be on the table, everyone has to be at the table. That's what's disappointing about what's happened before. ROMANS: Right.
MCLEAN: No doubt we needed a deal because we did have to avert disaster on what was happening. But at this point in the game, this is about solutions and not political wins and that's what it needs to be.
ROMANS: At this point in the game, guys, I think it's like the bottom of the third on the debt talk really. Honestly, the bottom of the third inning. I think we've got a lot that's going to be going on, especially if we go to -
MCLEAN: But you know what? We've got - we've got to deal with that because here's the deal, think about all the hours that we've lost, all the days we've lost, not focusing on job creation and these two are linked. They have to be done right and well together.
But here we are languishing in this recession and not focused on jobs and that's what this committee has to do. They've got to remove the road block.
ROMANS: All right. We've got to go. Margaret Hoover and Kiki McLean, thanks so much to have you both back very, very soon. Sorry I could give you last words, Margaret. We'll talk again very, very soon. We love the book. Thanks so much.
Carol, back to you.
COSTELLO: All right. Still to come this morning on AMERICAN MORNING, an 11th hour arrest in the U.K. phone hacking scandal and is reportedly another former high-ranking executive with one of Rupert Murdoch's tabloids.
We'll be back.
(COMMERCIAL BREAK)
VELSHI: Twenty-six minutes after the hour. "Minding Your Business" this morning.
U.S. markets took a nose dive yesterday. The Dow, NASDAQ, S&P 500, all dropped more than two percent to close out the day. A weak report on consumer spending pushed stocks lower across the board even after President Obama signed the bill to raise the nation's debt ceiling.
Credit rating agency Fitch confirmed America's AAA rating yesterday after the debt ceiling bill was signed. Moody's did, too, but also lowered its outlook on U.S. debt to negative. Investors holding their breath for the third major player, Standard & Poor's to pipe in. The agency said this morning they are not commenting yet on the U.S. debt deal.
Right now, U.S. stock futures are trading a higher that's because America has officially avoided default with the new bill, at least for now, and retained its AAA credit rating. Investors also getting a boost from corporate earnings that have come out this morning. Comcast just reported its earnings, beat Wall Street's expectations. Dunkin' brand just released its first quarterly earnings report since its knockout IPO last week saying net profits were flat for the quarter. Clorox, MasterCard and CNN's parent company Time Warner all expected to release earnings before the markets open.
Investors will be sorting through more economic reports today. New data on the number of jobs created in July. Factory orders in June and information on the services sector, all come out later this morning. But Wall Street still nervous about the big jobs report. That comes out on Friday.
AMERICAN MORNING will be right back after the break.
(COMMERCIAL BREAK)
COSTELLO: A failure to act, congress leaves Washington for the summer without funding the FAA, thousands without a paycheck. We'll break down the gridlock on this AMERICAN MORNING.
Good morning to you. It is Wednesday, August 3rd. Welcome to AMERICAN MORNING.
ROMANS: Yes, a lot going on this morning. I mean, the debt deal is done, but it is not done. Here are your top stories.
After months of backdoor meetings and partisan bickering, President Obama signed the debt ceiling deal into law. There are new behind- the-scenes pictures this morning of negotiations just into CNN.
Now a Super Committee of 12 lawmakers will be appointed, their task, slashing $1.5 trillion from the federal budget deficit.
Former Egyptian President Hosni Mubarak and his two sons on trial this morning, pleading not guilty to corruption and murder charges. They could get the death penalty.
Another arrest in the U.K. phone hacking scandal. Stewart Cutner, the 71-year-old former managing editor of "The News of the World" tabloid reportedly booked and interrogated by police yesterday. It's the 11th arrest by police in this case.
President Obama ending the debt ceiling crisis for now by signing a compromised bill into law yesterday. It's a deal no one seems to like. After a big sell-off on Wall Street yesterday, global markets sinking too.
CNN's Andrew Stevens live in Hongkong this morning. Andrew, stock futures in the U.S. are up, but what you're seeing overseas is an extension of that ugly day here yesterday, isn't it?
ANDREW STEVENS, CNN CORRESPONDENT: Yes, absolutely, Christine. I mean, it's nothing to do anymore really, about the debt crisis and debt ceiling in the U.S.
Here in Asia and Europe at the moment, they're focusing right back on the real economy, the fundamentals and there's a daunting realization if you like that things really are much sicker globally than many investors have been thinking. You only have to look at the U.S. numbers which you've been talking about and that consumer spending number out didn't help things.
Here in Asia, there's always been China as the bright star. China is the growth engine. The Chinese economy is slowing. Your viewers don't know china really is starting to slow down. Still sort of 7 percent, 8 percent, which is stellar by U.S. levels.
But still actually not looking so strong in China and then, of course, you've got what's going on in Europe as well. Italy, perhaps being dragged into the debt story, Italy is the third biggest economy in Europe so that is a real issue as well.
So you add all that together and you're getting this negativity. Hongkong, Tokyo, down 2 percent today. The European markets down around 1 percent. Certainly continues, a lot of eyes watching those futures to see whether they'll hold that to positive ground in the U.S. for the open.
ROMANS: Yes, I argue it's going to be an unpredictable week because Friday is the jobs report and we don't think it's going to show a lot of jobs growth. You're right. The debt deal is done and now the focus on a weak U.S. economy. Andrew Stevens, thanks so much, Andrew. Ali --
VELSHI: All right, they're freshest casualty of political fighting in Washington. Some 4,000 aviation workers who are being furloughed because the House left for its summer vacation before resolving a spending standoff over the funds the funding for the FAA.
At a time when government cutbacks on spending and debt talk are dominating the headlines, the feds are bleeding money at a rate of $25 million a day from lost airline passenger tax revenue.
There are 70,000 construction workers who are out of work as new construction has been halted and all of this is making FAA Administrator Randy Babbitt a very unhappy man.
(BEGIN VIDEO CLIP)
RANDY BABBITT, FAA ADMINISTRATOR: This is peak building season right now. This is when you don't pour concrete in January. You build runways in the summer. You do all your big outdoor construction work now.
This is peak season and we're losing that. We have literally 70,000 construction workers that will be put out of work. We've got 200 stop work orders and that list will grow.
(END VIDEO CLIP)
VELSHI: Want to talk more about the stalemate over the funding for the FAA. Joining me now live from Washington is former FAA chief of staff Michael Goldfabb.
Michael, good to see you again. Thank you for joining us.
MICHAEL GOLDFARB, FORMER FAA CHIEF OF STAFF: My pleasure, Ali.
VELSHI: I've seen some of the stuff you've been saying in the media in the last couple of days and I know that the Secretary of Transportation, Ray LaHood, is burning mad at Congress. But only have I heard from you there might be a safety issue. We're hearing everything else is safe. Tell me what you're thinking.
GOLDFARB: Certainly it's safe today, the safest it's been and that's due to the hard work of thousands of FAA people many of whom are going without paychecks to keep it safe.
The danger is what cliff are we approaching? It's one thing with the debt ceiling knowing August 2nd is a deadline understanding the implications, but I think your earlier reporter mentioned that FAA is destabilized.
Who wants a destabilized FAA, who wants an aviation inspector worried about a paycheck so as we go forward where's the end of this resolution and as it begins to affect safety I think that becomes a more dangerous time.
VELSHI: Tell me what the complicated part of this is. Most people I think would have thought this is a fairly routine thing and that there have been extensions to the funding in the past. Why did this get bogged down in this?
GOLDFARB: Basically over ideology. On some issues, which in the grand scheme of things not only are they minor, but they very small fiscal impact. There's a subsidy for rural areas and when aviation was deregulated in 1978, the deal was that the big carriers would not go into small rural communities so that we'd have a subsidy.
We're fighting now over several small rural communities subsidies of about $16 million. So we're losing $25 million to $30 million a day of uncollected tax revenues, $200 million a week, $1.2 billion by the time Congress comes back over a $16 million subsidy difference.
VELSHI: Wow, so that's where ideology has come into play. We were just talking to Ted Rowlands at O'Hare this morning and he was saying that some of the inspectors who deal with safety on the runway and tarmac at the air traffic control towers some of these people are not being paid, but they're still showing up for work.
GOLDFARB: Right, you know, I mean, when you say is it safe? It is safe absolutely, but it's a relative concept. We talk about margins of safety. So let me give you an example, when we used to find a frayed seat belts on an airline, you'd find an airline if the seatbelt was frayed and people would say what does that have to do with the safety of flight?
Well, if that frayed seat belt reflects the pattern of failed or poor maintenance it has everything to do with it. So these safety inspectors at the airfield, they're looking at radars, they're looking at runway incursion problems in the past.
The technicians are adjusting and fine tuning the navigational aids throughout the system. So that's how you begin to erode those safety margins and that's where the concern is. Not getting on a plane today is it safe, absolutely. But going forward, where's the resolution to this.
VELSHI: But it's sort of the way that our food inspection, regulation was sort of whittled away over time and all of a sudden now we wonder why we have so many instances of salmonella and food poisoning. Over years it wasn't unsafe in the moment, but it got unsafe over time.
GOLDFARB: Ali, that's the great point. You know, with aviation, accidents are so rare, thankfully, but it's always a series of things that come together. And this is the problem when all these things -- we don't want the agency worried about its paycheck. We want the agency worried about its mission.
VELSHI: Have you heard of this business about people, you know, paying for things on their own and hoping they will be reimbursed when the funding comes through.
GOLDFARB: About 40 of the airport safety inspectors have been asked by the FAA to voluntarily make their own travel arrangements on velocity.com, get their own tickets and pay their salaries.
That's a temporary thing. What do you do in September and October when mortgages are due and you're not getting paid? We don't want the attention on their finances. In this country you would think that a well-funded FAA is what everybody would want regardless of what side of the aisles they're on.
VELSHI: Absolutely, right. Michael Goldfarb, thanks. Good to talk to you as always. Michael Goldfarb is the former chief of staff of the FAA.
GOLDFARB: My pleasure.
COSTELLO: Tough times this morning for people living in Central Falls, Rhode Island. The city of 19,000, which is just north of Providence was forced to file for bankruptcy after failing to get police and firefighter retirees to give up half their pensions.
And we first told you about this story yesterday. The town may sound familiar to you. This is the same town where the school system had to fire its entire staff of teachers. Mary Snow is in Central Falls. Is there any possible resolution to this?
MARY SNOW, CNN CORRESPONDENT: It's pretty grim, Carol. The one thing that is being talked about right now is whether the city can merge with other cities to kind of merge their services.
People here are so worried, but they're not surprised. You mentioned the school systems. The school system was taken over by the state. Libraries in the city are only open because volunteers are operating them. And now, the police force, for instance, faces potential cuts of 40 percent. People are worried about the crime rate, particularly small business owners, one of whom said he was recently robbed.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Somebody break in and steal, you know, cell phones, about three or four computers. I don't know what happened. The police is not on the streets. Who takes, you know, care about us?
UNIDENTIFIED FEMALE: They won't be here in time. I will have to wait a while before they get here.
(END VIDEO CLIP)
SNOW: Carol, Central Falls is the smallest city in Rhode Island, but it has an $80 million pension liability and there's a lot of concern that other cities and towns in Rhode Island may follow suit because their pension systems are so deep in the red.
It's also a worry on the state level. The treasurer has been tasked with pension reform, found $7 billion in the small state, and unfunded pension liability and she says that Central Falls should be a warning sign.
(BEGIN VIDEO CLIP)
GINA RAIMONDO, RHODE ISLAND GENERAL TREASURER: Nobody wants to make the tough choices. Central Falls proves that. These choices will be made for you. If you don't act quickly enough, consequences will be devastating.
And so as hard as this is now for me, for the governor, for union leaders to come to the table to fix it, it is much easier to fix it now than when you are on the brink of bankruptcy.
(END VIDEO CLIP)
SNOW: This battle over pensions in the state is only heating up. This fall, there's expected to be legislative action calling for reform statewide. Carol?
COSTELLO: Such a familiar frame all across the country. Mary Snow from Rhode Island this morning. Thanks so much.
ROMANS: All right, still to come this morning, a warning to expecting moms, stay away from microwaves. A study warning they could increase the chances their babies develop a major disease.
VELSHI: And looking for terrorist tells. Screeners asking simple questions that could raise red flags at airports. Details of the latest layer of security coming to one major airport today.
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COSTELLO: And welcome back to AMERICAN MORNING. Six months ago, he was living in a palace, this morning former Egyptian President Hosni Mubarak is lying on a stretcher with oxygen inside a steel cage in a Cairo courtroom.
VELSHI: Unbelievable. Zain Verjee is live in London. She's part of our team that's covering this. A remarkable and historic moment, Zain, a stunning fall from grace.
Tell us what's been happening so far.
ZAIN VERJEE, CNN INTERNATIONAL ANCHOR: It was absolutely unbelievable, unthinkable, to see these images today from a man that so many thought was untouchable. I mean, he ruled Egypt with an iron fist for about 30 years and today we saw him behind those iron bars lying in a stretcher wearing a white prison suit with two of his sons standing next to him, Alaa and Gamal.
He's basically being charged with the corruption and the murder of about 800 protesters during the uprising that happened a little bit earlier this year. So the court was in session. Now it's going to be kind of hard, many analysts say, to prove some of the charges against him. Basically what they need to look for is to figure out who gave the orders to kill these people. Does Hosni Mubarak assume command responsibility?
He says he's not guilty. He's facing the death penalty, but many experts say that he won't -- that probably won't go down. But this is so dramatic, all of Egypt is gripped by this and the rest of the Arab world too, because they're not used to seeing their strong man, their war heroes, their presidents like that.
COSTELLO: But Zain, some people think he's faking it.
ROMANS: Yes.
VERJEE: Yes. There is a lot of question about his health. I mean, there were rumors that his cancer was resurgent, that he was in a coma, he's been depressed, he doesn't want to eat. But the health minister actually ruled that he was just fine enough to stand trial and so they just wheeled him in, they got him on a plane from Sharm el Sheikh, which is where he was being detained at a hospital. Then they took him by helicopter to Cairo, and then drove him up, escorted by a heavy military security to this trial. So they think it's -- he's fine enough to stand.
And for Egypt, too, guys, I mean, a lot of people see this as retribution for a man who ran Egypt in a corrupt way, who tortured his opponents. There was no freedom of speech under him. But there is a division because there are also others in the country that say, well, you know what, we had a great period of stability under Hosni Mubarak. He kept the peace with Israel. He kept good relations with the west.
So, there's a big divide on this trial. Some think it's gone too far, some think it's not gone far enough.
VELSHI: You bring up Israel. There's been what seems to be a shift or a softening in Prime Minister Benjamin Netanyahu's stance on what they'll negotiate to get -- to get peace with Palestine and the establishment of a Palestinian state.
What's the latest on that?
VERJEE: Yes. Remember when President Obama said look, you know, let's use pre-1967 borders as a starting point and Netanyahu said, no way. It seems like there's a U-turn now. He's saying OK, well let's talk about it and the U.S. and Israel, according to reports, have been trying to put forward a strategy to move forward with the peace process.
But Palestinians are saying this is a publicity stunt. This whole idea is totally valueless, one official said and just a ploy and a maneuver by Israel. What the Palestinians want here, guys, is to go to the U.N. General Assembly in September and ask for a unilateral Palestinian state to be recognized.
So that's the situation. Don't know where it will go.
VELSHI: And that's part of the deal to recognize Palestinian state with those borders would be that they don't do that. That's one of the things Netanyahu's been saying, don't go to the U.N., don't ask for unilateral recognition.
VERJEE: Right.
VELSHI: Zain, thanks very much.
VERJEE: Exactly.
VELSHI: All right. Still to come this morning, could be hottest day of the year, the hottest day of any year in some places today. We're going live to Dallas, next hour. Thirty-two days in a row of temperatures above 100 degrees. Deadly heat wave hanging over Texas in the south.
COSTELLO: And how to save money in these tough economic times. The popular personal finance guy from HLN, Clark Howard, will be here live with tips you do not want to miss.
You're watching AMERICAN MORNING. It's 48 minutes past the hour.
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ROMANS: A lot going on this morning. Here's what you need to know start your day.
Unfinished business in Washington costing jobs. The Senate went on summer recess yesterday without taking action to fully fund the FAA. That means 4,000 furloughed workers will remain jobless for the next five weeks.
A new layer of security being tried out today at Boston's Logan's Airport. It's a behavior detection program. Screeners will strike up casual conversations with passengers, asking simple questions like, where are you headed? This is to spot suspicious behavior. Moody's says the U.S. will keep its topnotch AAA credit rating after lawmakers struck a deal to raise the debt ceiling, but the firm is warning that downgrades are possible if Washington doesn't do more to get its spending under control.
A warning this morning to pregnant women. Stay away from microwave ovens. "TIME" magazine reports on a new study that says pregnant women who are most exposed to microwaves and other devices with electromagnetic fields were more than three times as likely to have a child with asthma.
Stretching over a half mile in the sky Saudi Arabia planning to build the world's tallest tower, 3,281 feet tall. The Saudi prince signed a deal with the bin Laden family to build it. The family, which, of course, disowned Osama bin Laden years ago owns one of the largest construction companies in the world.
Leo DiCaprio is the highest paid actor in Hollywood. Forbes says he made $77 million on one year. He knocked Johnny Depp out of the top spot. He made only a cool $50 million.
And it was 20 years ago today when rock went to plaid. The Lollapalooza Music Festival celebrates its 20th anniversary in Chicago this weekend. Is that even possible? Oh, my gosh. It had nine bands back in 1991. There are more than 130 featured this year.
You're caught up on the day's headlines. AMERICAN MORNING back in 60 seconds.
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VELSHI: Welcome back to AMERICAN MORNING. Here's what is happening this Wednesday.
Eight years after the space shuttle Columbia disaster, part of the shuttle turned up in a drought-stricken lake in Nacogdoches, Texas. The object, which you're looking at, is about four feet in diameter. It was discovered as this lakebed dried up. NASA said it's a tank that was used to provide water and power for shuttle missions. Columbia broke apart on reentry back in 2003, killing all seven astronauts onboard.
COSTELLO: A security breach triggered a lockdown at the White House last night and it all unfolded live, during CNN's "JOHN KING USA" show. The Secret Service agents say a homeless man jumped the White House fence with a backpack. As you can see he was quickly apprehended at gunpoint.
ROMANS: The man who threw a shaving foam pie at Rupert Murdoch, well, he's getting jail time. Jonathan May-Bowles was sentenced to six weeks for that incident, three of which will be served behind bars. He pleaded guilty last week to assaulting Murdoch as the media mogul testified before lawmakers in that UK hacking scandal.
VELSHI: And he was moving on up to the East Side but now a peacock who flew from New York's Central Park Zoo is back home again. The three-foot-tall bird spent about 24 hours perched on the window ledge of a 5th Avenue high-rise. Suddenly this morning he apparently decided he'd had enough and he flew back across the road to his real home.
COSTELLO: I'm telling you, local stations went live all day because that peacock was sitting up on that window. Bizarre. I love that story.
And Dan Pascoe is a cop you don't want to cross. The British police officer nearly got killed last month when a man in a stolen car smashed into his cruiser. Look at that.
VELSHI: Wow.
COSTELLO: It sent him flying 10 feet into the air. Then Officer Pascoe bounced to his feet, chased down the fleeing car thief and tasered him before he collapsed from his injuries. He's OK now and the suspect is behind bars.
VELSHI: All right. Your top stories coming your way after a quick break. You are watching AMERICAN MORNING. Fifty-six minutes after the hour.
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