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American Morning
Rick Perry to Enter GOP Presidential Race; GOP Presidential Hopefuls Square Off in Debate; Congressman Calls for House to Reconvene; PGA Championship Round Two; Gay Characters on Children's TV?; Slugfest in Iowa; Overseas Markets Mostly Up; Perry Getting In; GOP Debate; Iowa Face-Off; What America Makes and Spends; China's Push to be a Superpower
Aired August 12, 2011 - 06:59 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(BEGIN VIDEO CLIP)
ALI VELSHI, CNN ANCHOR: He's getting in. A potential game- changer. Texas governor, Rick Perry, is joining the 2012 presidential race. Many conservatives saying he is the right man for the job.
CAROL COSTELLO, CNN ANCHOR: And I don't mean to bring you down with this question. Are you better off than you were yesterday? The markets take another wild swing, but what goes up has gone down this week. What can we expect today?
CHRISTINE ROMANS, CNN ANCHOR: Tomorrow is another day. When will China become a world super power? Did we just miss it? Why the U.S. downgrade may have been the moment or a moment on China's attention and America's downgrade on this AMERICAN MORNING.
(END VIDEO CLIP)
VELSHI: Good morning. It is Friday, August 12th. Welcome to AMERICAN MORNING. All we know is Friday we don't trade stocks on Saturday and Sunday.
(LAUGHTER)
COSTELLO: Yes, that's the one sure thing we can say. There will be no trades coming up in the next two days.
Up first, let's talk politics. A potential game changer in the Republican presidential race, Texas Governor Rick Perry says he is running. He plans to make an official announcement tomorrow at an event in South Carolina. So what could it mean for the GOP field? Jim Acosta live in Washington to tell us. Who loses most by Perry's entrance into the race?
JIM ACOSTA, CNN POLITICAL CORRESPONDENT: Well, you know, a lot of them do lose, carol. He's not quite the lone star in this GOP field yet, but he is going to making it interesting. He's throwing his hat or his cowboy hat into the ring, if you'll excuse me, this weekend with his big speech down in South Carolina. And he's really making all of the moves of a presidential candidate at this point. He is going to South Carolina to make the speech at the RedState.com conference. He is not going to the straw poll in Iowa which is where all the other GOP candidates are right now. So he is really trying to steal the spotlight.
And then after this speech he's going up to New Hampshire, which is, of course, another crucial early voting state, then on to Iowa. And he is already starting to do the things that a presidential candidate does. Last night he taped an interview with one of our affiliates up in New Hampshire, WMUR, where he previewed his speech. He's going to focus heavily on the economy.
(BEGIN VIDEO CLIP)
GOV. RICK PERRY, (R) TEXAS: I think when you look at the record, the last 10 years of my leadership in Texas, you see what's occurred in the state. And, again, I'm going to go back to this time after time. The issue that Americans really care about right now is jobs. It's about how do we get America working again? And I'm going to lay out a positive, a bright future tied to the vision that I have for going to Washington, D.C., making a difference.
(END VIDEO CLIP)
ACOSTA: And the main argument that the Republicans for Perry will make is that if you look at Texas in the last two years, half of the jobs created in the United States over the last two years were in Texas. So that's going to be a big part of rick Perry's pitch to the American people.
In the meantime, you can see that he's already gotten the attention of his GOP rivals in that debate last night, and there were some veiled parting shots is of the Texas governor.
(BEGIN VIDEO CLIP)
RON PAUL, (R) PRESIDENTIAL CANDIDATE: I'm very pleased that he's coming in because he represents the status quo, and I feel like I'm sort of separated from the other candidates with my strong belief in liberty and limited government and different foreign policy and the way to deal with the Fed. So he'll just take all their votes.
(APPLAUSE)
HERMAN CAIN, (R) PRESIDENTIAL CANDIDATE: Welcome to the contest. From my perspective, it doesn't bother us or my campaign. That's just one more politician, and that makes this business problem solver stand out that much more.
JON HUNTSMAN, (R) PRESIDENTIAL CANDIDATE: We all need prayers, and I hope he offers a whole lot for everybody here on this stage.
(END VIDEO CLIP)
ACOSTA: That was a reference to rick Perry's prayer event in Houston last weekend. And Carol, you guys were asking which candidate does this hurt the most? It could be Michele Bachmann. If you look at the latest CNN/ORC poll, Perry is nipping a Mitt Romney's heels. He's right behind the GOP frontrunner. Michele Bachmann has fallen back into the pack. That might explain why last night Bachmann's staff after the debate in Ames was saying where is Rick Perry? Why wasn't he here tonight? Carol.
COSTELLO: Because he hasn't declared yet. That's easy to answer that question.
(LAUGHTER)
ACOSTA: That's right. But they're chomping at the bit. They want this fight.
COSTELLO: They sure are. Jim Acosta, thanks so much.
ACOSTA: You bet.
ROMANS: So the eighth declared GOP candidate took the stage last night trying to impress Iowa voters ahead of tomorrow's straw poll. But two of them stole the show, Michele Bachmann and Tim Pawlenty. Setting aside the tradition of Minnesota nice, verbally attacking each other.
CNN deputy political director Paul Steinhauser live in Des Moines this morning. We learned the reason why it's called the straw poll is you literally put the straw in the wind to see which way the wind is blowing. That's what the Republicans are going to be doing. Did this debate give any more indication of the straw and its leaning in whose direction?
PAUL STEINHAUSER, CNN DEPUTY POLITICAL DIRECTOR: It did, in a way, or at least it showed, as you said, there is no more Minnesota nice between these two candidates. They have a lot on the line at the straw poll tomorrow, which is a big test of a campaigns organization an strength.
Listen, since our debate, Christine, two months ago in New Hampshire, which was the last presidential debate, Michele Bachmann has been on the rise here in the polls here in Iowa, Tim Pawlenty, not so much. They've been sniping on the campaign trail since then, and it really blew up on that presidential debate stage, Tim Pawlenty questioning her accomplishments. She may be in a way almost comparing him to Barack Obama. Take a listen.
(BEGIN VIDEO CLIP)
TIM PAWLENTY, (R) PRESIDENTIAL CANDIDATE: She's done wonderful things in her life, absolutely wonderful things. But it's an undisputable fact that in Congress her record of accomplishment and results is nonexistent.
REP. MICHELE BACHMANN, (R) PRESIDENTIAL CANDIDATE: When you were governor in Minnesota you implemented cap and trade in our state and you praised the unconstitutional mandate and you called for requiring all people in our state to purchase health insurance that the government would mandate. Third, you said the era of small government was over. That sounds a lot more like Barack Obama if you ask me.
(END VIDEO CLIP)
STEINHAUSER: There wasn't a lot of love last night. There were also fights between Rick Santorum and Congressman Ron Paul. Mitt Romney, the frontrunner right now in the polls got left off unscathed. It really wasn't that much of a debate. He didn't come under that many attacks.
As you mentioned, the straw poll tomorrow a crucial test. And guess who may show up? Sarah Palin, the former Alaskan governor, who says she'll decide whether she's going to run by next month.
VELSHI: Paul, you're a skinny guy. Do you eat a lot of the deep fried stuff at the state fair?
STEINHAUSER: Listen, you've about got the Twinkie logs and fried Twinkies. I'm going to send a bunch of that to you guys. You'll have it by Monday morning. Enjoy.
(LAUGHTER)
VELSHI: Carol doesn't approve of my dieting habits.
COSTELLO: No, I don't.
VELSHI: Thanks, Paul.
Remember the words, actually, "corporations are people." Mitt Romney may regret them. The frontrunner for the Republican presidential nomination was at the Iowa state fair yesterday, fielded questions from voters and was asking about the questions of raising taxes. There was somebody there who makes a business out of being a heckler, and listen to their interaction.
(BEGIN VIDEO CLIP)
MITT ROMNEY, (R) PRESIDENTIAL CANDIDATE: -- and not just this year but over the coming decades going to be able to balance our budget and not spend more than we take in, we have to make sure that the promises we make in Social Security, Medicaid, and Medicare are promises we can keep. And there are various ways of doing that. One is we can raise taxes on people.
UNIDENTIFIED MALE: Corporations.
ROMNEY: Corporations are people. We can raise taxes -- of course, they are. Everything corporations earn ultimately goes to people.
(LAUGHTER)
ROMNEY: Where do you think it goes?
(CROSSTALK)
(END VIDEO CLIP)
VELSHI: So Democrats are jumping on Romney's "Corporations are people" line. DNC chair Debbie Wasserman-Schultz called it "a shocking admission and shameless." We should say there's some grounding in fact to what he says. The way U.S. law looks at corporations, they've been deemed to have the --
ROMANS: That's what the U.S. Supreme Court ruled, right?
VELSHI: That's right.
ROMANS: By corporations -- he says what's good for corporations are good for people. But are corporations hiring people with their profits and money? No. But what's good for corporations is good for shareholders, who are people, but I don't think that's what the heckler though.
VELSHI: It probably wasn't the best idea to say it the way he did.
ROMANS: And it's three little words that will end up --
COSTELLO: But look at the people he's appealing to. Certainly Democrats don't like what he said. We'll just have to see.
Wall Street bouncing back big time as investors snatched up stocks that have been beaten down in the past week. The Dow jumped 423 points or nearly four percent yesterday. The NASDAQ and S&P 500 were also up more than four percent.
What we've seen this week was unprecedented. Never before in history has the Dow bounced 400 points either up or down four days in a row. Overseas now, Hong Kong's Hang Seng also closed up, Japan's Nikkei was down slightly, and in London, where trading is now underway, stocks are in positive territory.
ROMANS: All right, the new Congressional super-committee is set. Twelve lucky lawmakers, six Democrats, six Republicans, they now have less than three months to agree on $1.5 trillion in cuts or new revenue. Here are the final three Democratic selections made by House Minority Leader Nancy Pelosi -- Representatives James Clyburn of South Carolina, Chris Van Hollen of Maryland, and Xavier Becerra of California.
Here is the entire gang of 12. Some are calling them 12 angry men even though there is one woman on the panel. But this is basically judge and jury, folks, for how we're going to get this debt situation going.
VELSHI: All right, still to come this morning, President Obama reluctant to call Congress back to Washington, but up next we'll talk to one Democratic congressman who disagrees. Find out why he's urging lawmakers to get back to work. COSTELLO: And Tiger Woods showing flashes of brilliance at the PGA yesterday before he absolutely tanked. You're watching AMERICAN MORNING. It's nine minutes past the hour.
(COMMERCIAL BREAK)
COSTELLO: President Obama says he's not going to call Congress back to session despite the ailing economy. He says lawmakers should be at home listening to their constituents.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: There's been a lot of talk in Washington right now that I should call Congress back early. The last thing we need is Congress spending more time arguing in D.C.
(APPLAUSE)
What I figure is they need to spend more time out here listening to you.
(END VIDEO CLIP)
COSTELLO: All right. But my next guest is one of four Democratic lawmakers urging House leaders to end their recess and call Congress back to work. Congressman Jim Cooper joining me now live from Nashville, Tennessee. Nice to see you again, congressman.
REP. JIM COOPER (D), TENNESSEE: Good to see you again, Christine.
ROMANS: You want them to come home. Tell me why you think that this is something is an urgent moment for America.
COOPER: Well, I like vacation and time off as much as anybody else but we need to get back to work. Our nation has serious problems. We've already had a couple of weeks off. Why don't we get back to the job, because every day that we wait to solve our deficit problems is probably costing us another 14 or so billion dollars a day. So I think it's time to get back to work.
ROMANS: You sent a letter to the leadership, saying "Our fiscal and job situation is dire. Both deserve the full and immediate attention of congress. We ask that you reconvene the House immediately, show the American people and financial markets that Congress can solve these big problems in a bipartisan fashion." Have you heard anything back?
COOPER: I haven't heard anything back, and predictably it's not going to be popular to call people back in with the congressman. But I think it would be popular with the American people.
The president is right. We shouldn't come back to town to argue and bicker. We should come back to do real work. And it's really the job of the speaker to call the House back into session. It's not the job of the president. We're a co-equal branch of government.
ROMANS: You mentioned the financial markets. The financial markets putting pressure on Washington, on Congress, putting them on notice that whether or not you want to agree with the downgrade of S&P, the market is telling us that the U.S. has to get the house in order. How much pressure are the markets putting on that group of 12 lawmakers who have to agree on $1.5 trillion in revenue or spending cuts?
COOPER: You've already pointed out there's never been a rollercoaster stock market like we've seen this week. We need to do our job in Washington to give security to the markets. It's not just the committee of 12 that's going to have to decide on this. All of Congress is going to have to vote by Christmastime on this package. Many Congressman haven't done their homework yet to decide exactly what cuts should be made. So I'm thinking it's time to get back to work and put our nose to the grindstone.
ROMANS: Who's most likely? Of the six Republicans and the six Democrats, you need one -- you need one from each side to cross over so that you can -- that there can be a package to move forward. When you look at these 12, who do you think is the most likely to be the compromiser or the person who can leave re-election hopes, fund- raising and ideology behind to get something done?
COOPER: I'll have to tell you, Christine, I don't see a single one, because they're all pre-selected to be hardcore Democrats or Republicans. And that doesn't mean they're bad people. They're all fine people. But they're unlikely to be able to compromise. And that means a six-six deadlock.
And that means automatic across the board spending cuts, it could be devastating, for example, to areas like Defense where most people think they shouldn't be treated like every other area of government.
ROMANS: Well, I mean, what you're telling me is really troubling, because what we're really hoping is this is not going to be a shrunken down version of a dysfunctional Congress. You see the same -- the same levers and ideologies that play in this group of 12 that we have to cause the U.S. to be downgraded and all these -- all the problems we're having in the markets.
COOPER: You're right. It's like a mini me, a tiny, little version of the dysfunctional Congress unless there's a sudden -- a miracle and each one of them has a change of heart or something. But, remember how they're selected? They're pre-selected by their party leaders --
ROMANS: Right.
COOPER: -- to be absolutely true Democrats or Republicans.
ROMANS: Now, you are what they call, you know, a blue dog Democrat. You have long been, quote-unquote, "fiscally conservative." You've been talking about debt -- debt and deficits to deaf ears, I will say, in Washington for a very, very long time. Could you tell me from your perspective -- from your perspective why is it that this was ignored, the problem was ignored forever and then now all of a sudden it has insighted all of this ultimatums and grandstanding in Washington from -- when it was -- when nobody ever paid attention to it before?
COOPER: Well, nobody likes to listen to bad news. You know, Standard & Poor's started warning us about this six years ago. I got a book out on it six years ago, but nobody paid any attention. You know, it's really been since Ross Perot ran for president in the 1990s since America has paid serious attention to this.
Remember, under Bill Clinton, we have three years of balanced budget, the first since the 1920s. Then we fell under the ditch again. So this is not easy for Americans to handle. There's a lot of denial here, a lot of programs that folks don't even think are part of government like Medicare that are part of government. We need to reform them.
ROMANS: In your perfect world, you have reforms to the entitlements, you have tax increases for -- for people, for companies, for companies who are people if you're Mitt Romney from this weekend.
I mean do you have everything on the table. You have tax reform. Just quickly, I mean, in your perfect world what should this people do?
COOPER: Not only should everything be on the table. I think the Bowles-Simpson Commission did --
ROMANS: Right.
COOPER: -- by far the best job of putting the other package. It's bipartisan that's fair and it had attracted support from Dick Durbin to Tom Coburn.
ROMANS: All right. Jim Cooper, Congressman Jim Cooper from Tennessee, really nice to see you. And I'll tell you --
COOPER: Thanks, Christine.
ROMANS: -- Carol and Ali, he -- he's been talking about this for so long.
VELSHI: Yes, yes.
ROMANS: He did put out a book many years ago called, you know, "The Financial Statement of the United States Government." It was just basically the U.S. government's financials. But he said, this is -- this is what it looks like. It isn't good. It can't go on like this. That was years ago.
COSTELLO: Instead of writing the book, he should have gone to like these meetings and like gotten some congressman's face. That would have put the issue to the front burner. ROMANS: He's been -- I mean, some of his critics said he's a -- what do they call it -- a one-note Johnny. And he always talks about is debt and deficits. Always talks about debt and deficits, but it works in his district because people in Tennessee are like, he's right.
VELSHI: Yes.
ROMANS: You can't just spend beyond your means forever. Now, that same tone has taken hold in Washington, but now with people like Jim Cooper who are saying compromise and people who are saying no compromise.
COSTELLO: Well, let's hope he's super on that super committee.
They're getting ready to tee up for Round Two of the PGA Championship today. Rob Marciano is joining us again from Johns Creek, Georgia. And Tiger Woods tanked, baby.
ROB MARCIANO, AMS METEOROLOGIST: Well, you know, he started off strong, guys. He was looking really sharp. We saw him on the range. He went out on the course and got it to two or three under really quickly. And then he told the media after that round that he started relying on his feel, just go out there and forget about mechanics. And that's when things begin to go awry and he said maybe he's just not at that point yet. We'll see what he does today.
The other big news is Rory McIlroy injured his wrist earlier in this round and toughed it out through the rest of the day and managed to come in, and even he'll be on the practice range here in the next few minutes. His tee-off time is at 8:30. We'll see if that wrist will be affected and even if he'll go out and play.
Speaking of play, the greens, we talked about those yesterday. There was some slight damage to 14 and 17. And Ken Mangum spoke with the media yesterday and addressed that issue.
(BEGIN VIDEO CLIP)
KEN MANGUM, DIRECTOR OF GOLF COURSE AND GROUND: Everything's fixed, everything is fine. It will not bother the play of the tournament this week. It's a little bit like cutting yourself with a razor on your wedding day. That's kind of what we felt.
(END VIDEO CLIP)
MARCIANO: And, boy, their hearts were in it as well. You can hear they're emotionally upset about that. The fact is it's going to be played this ground and the repair which does affect play. If your ball is near or in, you can -- in that area you can actually move it somewhere else on the green so that may affect the play.
As far as the weather is concerned, yesterday was warm. But certainly it could have been hotter. Today will be toasty as well. Temperatures will get into the 90s and there's a slight chance of seeing some showers on Saturday and Sunday with cooler weather expected on -- on Sunday.
Speaking of cooler weather, the list of records across the country is beginning to shrink, and Dallas for one did not hit 100 yesterday. And I tell you what, folks were disappointed. Because basically -- if they suffered through 40 days of record-breaking heat, they at least wanted to break the streak of 100 days plus and that would have been done on Saturday and on Sunday. That did not happen. But the good news is, it's slightly cooler and slightly wetter weather has moved into the Texas area.
Round two of the PGA Championship here at the Atlanta Athletic Club about to get under way and it promises to be a dramatic show. TNT, by the way, if you're not going to mention this I will, 1:00 P.M., six hours of HD coverage on our sister network, TNT and PGA.com is where you can go for the latest live coverage of the marquee groups this morning.
Guys, back up to you.
VELSHI: I was going to mention it but, you know, you did it better than I would have. Rob, good to see you, my friend. We'll check in with you a little later, Rob Marciano.
MARCIANO: All right, then.
COSTELLO: Okay. You've all been looking forward to this question.
VELSHI: I -- I love this question.
COSTELLO: Now's your chance to talk back on one of the stories of the day. The question this morning, should there be gay characters on children's television?
You know where I'm going with this because I am sure you have heard there are calls for "Sesame Street's" Bert and Ernie to get married. An online petition has been flying around the Internet, 6,000-plus signatures so far. It's the brainchild of a Chicago man who says we're not asking that "Sesame Street" do anything crude or disrespectful. Only that they allow Bert and Ernie to marry or even have a transgendered character to the show.
Even at the time same sex marriage is allowed in six states, that's controversial. I mean, who can forget the Tinky Winky controversy. Evangelist Jerry Falwell accusing "The Teletubbies" of being a closeted homosexual because he carried a purse. Quote, "immoral lesson for little boys."
Spongebob Square Pants and Patrick also targeted because they hold hands a lot. They, too, accused of sending the wrong message.
But according to the creator of the Bert and Ernie get married petition, a same-sex marriage or even a gay character on children's television will teach tolerance to those who are different. As for what "Sesame Street" says, it says "Bert and Ernie are best friends and they remain puppets and do not have a sexual orientation. They have no lower bodies, guys."
So the Talk Back question this morning, should there be gay characters on children's television? Facebook.com/AMERICANMORNING, Facebook.com/AMERICANMORNING.
We'll be right back.
(COMMERCIAL BREAK)
VELSHI: Twenty-six minutes after the hour. "Minding Your Business" this morning.
Another big jump in U.S. markets. Yesterday, the Dow gained back about four percent. NASDAQ and S&P 500 gained more than 4.5 percent. The stocks were still down overall for the week going into today's session.
As we've seen all week, a lot of volatility in pre-market trading ahead of the opening bell this morning. Right now, U.S. futures for the big three all trading slightly higher. Potential market movers this morning, retail sales numbers for July, that report comes out in an hour.
Investors are also closely watching the European markets today in an effort to calm down the markets there. Italy, France, Belgium and Spain announced a temporary ban on short-selling or making bets that investments will go down in value, which the government there hopes is going to take a lot of speculation out of the markets.
The U.S. did this, by the way, back in 2008 during the financial crisis. Experts are mixed on the results.
And here stateside, mortgage rates are still falling. The average rate for a 30-year fixed mortgage dropped to 4.3 percent in the past week. That's getting close to record lows according to a survey by Freddie Mac.
AMERICAN MORNING back right after the break.
(COMMERCIAL BREAK)
COSTELLO: Slugfest in Iowa as GOP candidates pick apart each other not just at President Obama. We'll pick the winner through the power of social media on this AMERICAN MORNING.
Happy Friday to you. Good morning. It is August 12th. Welcome back to AMERICAN MORNING.
VELSHI: Wow. It's been like two weeks.
ROMANS: He heard Friday.
VELSHI: Yes, I needed to be convinced it was Friday. I thought it was Friday on Wednesday.
ROMANS: All right, you've about got a long time to the closing bell, opening bell and closing bell.
Top stories this morning, stock futures are up after a nice rebound on Wall Street yesterday, nice, of course, a relative term. The Dow shot up 423 points. The Nasdaq, the S&P 500 were up more than 4 percent.
So if you look at the past week, the Dow is still down by more than 300 points and down by more than a thousand or 1,500 points since July.
Overseas Japan's Nikkei was down slightly. Hongkong's Hang Seng closed up and in London where trading is now happening stocks are higher.
Rick Perry is getting in it to win it. The Texas governor announcing his plans to run for the Republican presidential nomination. Perry will make it official at an event tomorrow in South Carolina. He'll be in Iowa on Sunday.
Meantime the gang of eight GOP candidates who already declared, they shared the stage last night in Iowa. The debate was dominated by two Minnesotans, Michele Bachmann and Tim Pawlenty who didn't play nice.
(BEGIN VIDEO CLIP)
TIM PAWLENTY (R), PRESIDENTIAL CANDIDATE: Her record of accomplishments and results is nonexistent.
MICHELE BACHMANN (R), PRESIDENTIAL CANDIDATE: You said the era of small government was over. That sounds a lot more like Barack Obama if you ask me.
PAWLENTY: It's not her spine we're worried about. It's her record of results. Please stop because you're killing us.
(END VIDEO CLIP)
ROMANS: All of the candidates are trying to impress Iowa voters ahead of the key test vote tomorrow, Carol.
COSTELLO: Of course, that would the key test vote, the Ames straw poll, which is arguably the first major vote of the 2012 presidential campaign. It's often described as a cross between a county fair and a political convention with candidates making their case directly to the voters.
It's been around since 1979. The poll is not binding, but three out of five times the winner has gone on to win the Iowa caucus and the nomination. But just one candidate George W. Bush won the poll and the presidency.
But the process is just as likely to break a presidential campaign as it is to make one. So joining us now is Al DiGuido, CEO of Zeta International. He's been monitoring all of this online, all of this buzz online and I can't wait to talk to you.
Also in Des Moines, Iowa, independent pollster, Ann Selzer. Ann, thanks for joining us.
UNIDENTIFIED FEMALE: Great to be here.
COSTELLO: OK, Ann, let's start with you because Pawlenty and Bachmann really tore into each other last night. I mean, they were almost obsessed with each other. Let's hear a little more about what Pawlenty said about Bachmann.
(BEGIN VIDEO CLIP)
PAWLENTY: She's fighting for these things. She fought for less government spending. We got a lot more. She led the effort against Obamacare. We got Obamacare. She led the effort against TARP, we got TARP.
She said she's got a titanium spine. It's not her spine were worried about. It's her record of results. If that's your view of effective leadership with results, please stop because you're killing us.
(END VIDEO CLIP)
COSTELLO: So, Ann, a lot of political observers out there say no one came out the winner of this because they were fighting over, you know, what many consider were local issues and why weren't they fighting against Mitt Romney who leads the pack right now?
J. ANN SELZER, INDEPENDENT POLLSTER: Well, they were all fighting against Barack Obama and then you saw them trying to separate themselves a little bit from the pack.
Romney just wanted to come out unscathed. That was his job to do. Michele Bachmann came out of the previous debate with a big target on her back. So it was not terribly surprising that Pawlenty who had the most to gain was the most aggressive in going after her.
COSTELLO: Al, before we sat down, you said, this was a great debate. People online love this stuff. So what's the buzz online?
AL DIGUIDO, CEO, ZETA INTERACTIVE, A DIGITAL MARKETING COMPANY: You know, this story, the Iowa straw poll, is actually the third most buzz story in news over the last three days behind only the debt ceiling and the Dow Jones dropping 600 points.
So people are really, really animated about this. The big winner we think coming out of this -- - they're actually the battle between Mitt Romney and Michele Bachmann. Both of them were garnering a tremendous amount of the volume of buzz that's out there in the market place today.
Their positive rankings on both candidates are very, very strong. So it's really, I think, going to be a two horse race between Michele Bachmann and Mitt Romney. Tim Pawlenty was kind of swinging for a major home run, a grand slam.
And I think we'll see what happens here in the next day or so as to whether he actually connected or whether it actually get him more harm.
COSTELLO: Yes, it will be interesting. Let's talk about Newt Gingrich for just a second because he punched back at the lame stream media last night when he asked about this mass exodus of his staff and campaign spending. Listen to what he said.
(BEGIN VIDEO CLIP)
NEWT GINGRICH (R), PRESIDENTIAL CANDIDATE: I took seriously Brett's injunction to put aside the talking points and I wish you would put aside the gotcha questions. I would love to see the rest of tonight's debate asking us about what we would do to lead America whose president has failed to lead instead of playing Mickey Mouse games.
(END VIDEO CLIP)
COSTELLO: Well, Ann, the first question that comes to mind is can a Fox news person ask a gotcha question to a Republican candidate?
SELZER: Well, I think Newt Gingrich is doing his best to take a shot at separating himself from the pack. And he's taking on anybody who wants this to be about the small things, the campaign tactics.
He wants this to be about the big things, the big ideas, how to fix government, how to get legislation through Congress. That's where he shines.
COSTELLO: Newt Gingrich is good at debates. I mean, let's face it. The man has had experience, but he's absolutely nowhere in polling. What about online?
DIGUIDO: Online, he's a very, very strong base. He has a tremendous number of Twitter followers and his Facebook likes are very, very high. This is a must-win situation for Newt Gingrich in Iowa.
As a matter of fact, the cluster words of people are mentioning most often in their blogs are crucial, critical, must win. So he came out swinging because he knows maybe this is his best shot of gaining some momentum going into the next couple of primaries.
COSTELLO: And I want to ask you about Mitt Romney because he's not campaigned in Iowa and he's not taking part in the straw poll. Yet there he was at the Iowa state fair talking to people out there and some might say it didn't go well for him. Let's listen.
(BEGIN VIDEO CLIP)
MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: We have to make sure that the promises we make in Social Security, Medicaid and Medicare are promises we can keep and there are various ways of doing that. One is we can raise taxes on people.
UNIDENTIFIED MALE: Corporations.
UNIDENTIFIED FEMALE: Corporations.
ROMNEY: Corporations are people, my friend.
UNIDENTIFIED MALE: No, they're not.
ROMNEY: Of course, they are. Everything corporations' earned ultimately goes to people. Where do you think it goes?
(END VIDEO CLIP)
COSTELLO: OK, maybe there were a few Democratic plants there, I don't know, but it was an uncomfortable moment. What I want to ask you, Ann, is will this really hurt him with the Republican base?
SELZER: You know, what Mitt Romney's advantage is -- he actually has two. Number one, he's been in Iowa before. He won the straw poll last time around. He invested a lot. He didn't feel like he got enough of a bounce, so decided not to play here now.
But he's got a base here. I think what he wants to do is let the other candidates slug it out against each other and then he stands above that looking more presidential, more looking for the long term.
That can help him because there are plenty of Iowan Republicans who are disenchanted with the nastiness among the rest of the candidates.
COSTELLO: OK, Al, I'll ask you. How many hits do you think that video clip will get online?
DIGUIDO: I think it will be a lot of hits. I think that Mitt Romney as we've watched on a day to day basis was the clear leader going into Iowa.
The words that we're hearing in the last couple of days are mistake, no-show. His base has actually dropped four points in the last couple of days in terms of positive ranking.
So although he is pulling out -- - although he will not be in Iowa, the impact of him not being there is having an impact in terms of his overall ranking.
COSTELLO: Great conversation. Thank you to you both, Al DiGuido and Ann Selzer. Thank you for being with us this morning.
VELSHI: Great conversation. No matter who wins the White House in 2012, they are sure to inherit a staggering debt and a stumbling economy and raising taxes will likely be a defining issue in the race.
I had a chance to interview Christina Romer yesterday. She's the former chair of the President's Council on Economic Advisors. Now back in 2007 before she joined the administration, she co-wrote a paper on the effects that tax changes have on economic growth.
That paper has been used to make the case for raising taxes to lower the deficit and against raising taxes because of the harmful effects that could it have on the economy and jobs. So I asked her to set the record straight.
(BEGIN VIDEO CLIP)
CHRISTINA ROMER, FORMER CHAIRMAN, PRESIDENT'S COUNCIL OF ECONOMIC ADVISORS: Even though I very much support racing taxes for dealing with the deficit gradually over time, now is not the time to do it.
Because either raising taxes or cutting spending now would absolutely with very hard on the economy, but that doesn't mean you can't legislate it to kick in when the economy is closer back to normal. Then that's when an economy would be much more able to deal with it.
(END VIDEO CLIP)
VELSHI: You can see my entire interview with Christina Romer on "YOUR MONEY" airing Saturday and Sunday at 3:00 p.m. Eastern right here on CNN. Christine --
ROMANS: All right, Ali, how the government manages its books is affecting how you are saving for retirement. As long as world markets worry about America's debt deficits and the political will to fix them, every little news headline about weak growth, Europe's debt crisis, everything, yanking stocks around.
So we wanted to give you some perspective this morning. We wanted to show you the Treasury Department's official checkbook register for the month. What comes in and what goes out. In case you're wondering, 9 cents of every dollar the Treasury Department spent last month went to pay interest on the money that we borrowed.
Now last month, the government took in about $159 billion. It spent $288 billion. That means we had a deficit of $129 billion. This is the difference of the money that's coming in to the government and the money that's going out to pay the bills.
Here's one way to think of it. It's like a family earning, say, $4,200 a month, but spending $7,500 a month. That means the rest of this is put on a credit card to cover the difference. The difference, think of a family spending in that kind of a difference, that's what the American government is doing.
But it's a good thing that America's credit card, by the way, has super low interest rates, much lower, I'm sure, than yours. That's one month. This is the whole year. The Treasury over the past fiscal year breaks down how much we're spending as a nation and how much we're bringing in.
This is how much we're spending as a nation. This is how much we're bringing in. You see here, the difference is this gap that we have to borrow money to cover up. If you want to see where all the money is going, the Treasury Department every month bring this out.
This is where the money is going. Look, you're paying interest on your debt. You're paying national defense. You're paying other nondefense, Social Security and Medicare, that is the biggest chunk of all of the total outgoing money.
So there you go. That's the Treasury Department's checkbook for the month and where it stands. And that credit card that we have, it's right up against the limit as you know. They raised the debt limit. So all of that borrowing just moves you right back up to the credit amount on America's credit card. So how does America cover the difference?
It borrows it, of course, and who's America's biggest foreign banker, China? So is that country on the verge of becoming the world's next economic super power or did it already happen? It's 41 minutes after the hour.
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ROMANS: China's second largest train maker is recalling 54 bullet trains. The decision comes three weeks after a stalled bullet train was hit by another train, killing at least 40 people.
The Chinese government is also ordering these trains to slow down by about 30 miles per hour. Currently their top speed is 217 miles per hour. And, quite frankly, many people in social media and China were outraged by the government's response to that disaster, much like many responses to natural disasters in China when the news is clamped down.
China's bullet train, an example of the country's rise and its growing might. But after the downgrade of America, is it time to stop calling China as an emerging superpower and simply refer to it what it is, a superpower, maybe rivaling and eclipsing the United States.
Joining me now live Forbes.com columnist Gordon Chang.
And, Gordon, after the downgrade of the United States credit rating and many folks watching China's 8 percent to 10 percent economic growth as the U.S. lumbers along with maybe 1 percent, there's this nagging feeling in this country that China has ascended and the United States, its best days behind it.
Is that too extreme? Is that too pessimistic?
GORDON CHANG, FORBES.COM: Certainly too pessimistic. What we have is an infliction point and I believe that we're going to go into the second part of a double-dip downturn. And in this, America, with the world's largest internal market, will do just well. China, which is especially dependent on international commerce, will be the biggest loser.
We've got to remember that it was the current account surplus countries, the exporters that suffered the most in the Great Depression. So, you know, America, which is a deficit country, an importer, will be just fine.
ROMANS: Well, we know this week we saw numbers from China that show that China has pushed record surpluses. That means China is exporting more than ever before and the United States is importing those goods. The United States borrows the money from China to buy Chinese goods. Then China takes the money and invests it in its military, in its bullet trains and nuclear power and scouring the world for energy.
When you look at that relationship, it's incredibly tilted in China's favor, isn't it?
GORDON: Well, I think that it is. You know, but we have to remember that last year, 149.2 percent of China's overall trade surplus related to sales to the United States. And American consumers are just about tapped out. And although China had really good July export and import numbers, the problem for China is that orders, manufacturing orders, have been tailing off precipitously since June, and that really means that China's export boom is just about over.
And that's why the factories in the Guangdong province in the export sector are now starting to go quite. Chinese leaders are starting to freak out about this.
ROMANS: Well, you know, look, we're talking about 8 percent to 10 percent growth in China. We're talking about -- let me talk to you about this aircraft carrier, for example, this week that they're doing, sea test of an aircraft carrier. The Pentagon, as our Barbara Starr has reported, is concerned about the modernization and buildup, the military modernization of China, which, by the way, which comes with the U.S. dollars. It comes from the profits of its trading relationship with the U.S. dollars.
Even if there is some sort of inflation bubble that pops or China slows down, hasn't it already been 20 years in the making? Don't they already have the American dollars in the bank to continue to move forward while the U.S. languishes?
GORDON: Well, I actually don't think so because, you know, you look at China's economic boom. It was powered by sort of reform, you know, a very good external environmental and growing work force. But all those conditions no longer exist now or are disappearing fast.
So, we're going to see a new super cycle in China, but this time, the super cycle will be down. If this coming downturn is around the world is as bad as I think, then China is going to have real problems trying to weather this because, right now, you see growth slowing, inflation accelerating. Not a good combination.
ROMANS: When the S&P downgraded the U.S., China had sharp words, strong words in Xinhua commentary and elsewhere, condemning the U.S. for our debt addiction, saying that the good old days of borrowing were over, calling the political wrangling shortsighted, using it as a way to sort of embarrass America, an embarrassing moment. But some people have said that's hypocrisy because China's entire business model and its ascension to -- trying to be a modern economy is built on the very things that it's telling us we shouldn't be doing.
GORDON: Yes. You know, China has said at the end of last year, it's debt to GDP ratio was 17 percent, but almost every analyst says, it was at least 89 percent, which means, you know, it's very close to ours, which was 93 percent.
But many people now are starting to say that China's ratio is really 150 percent to 160 percent. That makes it worse than Greece.
ROMANS: All right. Thanks so much. Gordon Chang, columnist at Forbes.com.
You know, the question is what does this mean for American factory workers, for factory workers, for, you know, people who might want -- companies who might want to move their factories back on shore here.
But, quite frankly, so much investment has happened in China. It's moving so quickly. When you talk to CEO, and I know you do, too -- they all talk about what the next move is in China. They don't say what the next move is in Canton, Ohio -- and that's the honest-to-God truth.
COSTELLO: I know. And I'm sad about that.
VELSHI: Well, Fareed is speaking to a CEO this weekend from Starwood who took the entire leadership staff of the company over to Shanghai for six weeks to just run the company out of there, just to get familiar with their biggest client.
COSTELLO: Actually, I just thought it's interesting to us, cities like Toledo, Ohio, its mayor is actively recruiting China to help out with the economy in his city and China has invested in real estate in Toledo, Ohio.
ROMANS: And there could be a tourism angle on this, too. But will a boom in tourism from new middle class Chinese citizens offset the loss of whole manufacturing towns because -- and --
VELSHI: We've argued about this. I know you don't believe this.
ROMANS: You know, we actually argue a lot. I know. I'm worried that the relationship with China means that American families can't keep up with the pace of economic change that this relationship has brought. That's a problem for governments and cities and towns and good Americans.
VELSHI: Still ahead, computers are getting under your skin. Take a look at this. Futuristic electronic skin tattoo that can monitor your health and link you to the web.
Fifty-one minutes after the hour.
(COMMERCIAL BREAK)
COSTELLO: I miss Atlanta. Good morning, Atlanta. Sunny and 74 degrees right now. But later, hot again, but then it's August, right? Mostly sunny and 92.
ROMANS: All right. An A.M. house call for you this Friday morning. It's dubbed an electronic tattoo. A new device may replace the bulky monitoring machines.
This is amazing. This is a device that's also ultrathin and flexible. It acts as a second skin. It's applied to your own skin like a temporary tattoo. The patch is filled with tiny sensors that can actually sense and monitor medical conditions, like you can check your heart rate, your brain activity, your other vitals. The scientists hope to release the device early next year.
VELSHI: That's very cool.
COSTELLO: That would make me paranoid. Like constantly monitoring your vital signs?
VELSHI: As opposed to being plugged into a machine
(CROSSTALK)
COSTELLO: You can't do it at home and get the results, right?
VELSHI: This is much more detail. This is like big machinery.
COSTELLO: Gotcha.
VELSHI: It equals a big machinery. It's not like one of those little things that you plug into.
All right. Call it designer DNA. Researchers say they have created the first animal with artificial information built into its genetic code. Yes, I know.
Cambridge scientists used a nematode worm for this experiment. They altered its DNA so that the worm produced a brand new type of amino acid never before seen in nature. Now, apparently, this could be a huge leap in science because researchers say the technology could give them atom-by-atom control over human beings.
ROMANS: It's too early in the morning for this.
(CROSSTALK)
VELSHI: I think we tried but that is definitely --
COSTELLO: What kind of worm?
ROMANS: A nematode.
COSTELLO: It stopped me right there.
VELSHI: You lost me with worm!
ROMANS: You had me in nematode.
COSTELLO: OK. Now is your chance to talk back on one of the stories of the day. For years, a pair of famous friends have shared a home and a bedroom, although they do sleep in separate beds and talking about Bert and Ernie. I'm sure you heard this.
A petition out there asking the show to allow the two to get married. So, we asked the question this morning, should there be gay characters --
ROMANS: They're already tied like married people, look at that.
COSTELLO: -- should there be gay characters on children's television shows?
This from Katie. "It's about fostering acceptance and tolerance of all people -- which from the looks of this thread," she's talking about our Facebook thread -- "is something that is sorely lacking among grown adults in this country. From the start, one of the fundamental goals of Sesame Street has been to celebrate diversity, not quash it. Open your eyes and realize no everyone in the world has to be like you for them to be a good person, start teaching your children the same thing."
This from Tomas: "I don't believe that children's television shows should be implicating any type of sexual behavior. The fact is that shows these days are heading in a risky direction. Whatever happened to the ABC's and 1, 2, 3's? The content has changed into marriage, fashion and being famous. Throwing sexuality into our children's minds at such a young age is uncalled for whether it's straight or gay."
And this from Oisin: "No, there should be no gay characters on children's TV because in the eyes of young children there is no gay or straight. You don't see programs like Teletubbies or Sesame Street teaching kids about being straight, do you?"
VELSHI: Well, some people thought Teletubbies was teaching kids about being day.
COSTELLO: Right, exactly. That would be Jerry Falwell, you know, back in the day.
Keep the comments coming. Facebook.com/AmericanMorning. And thanks for writing in.
ROMANS: I just don't want any controversy with my fuzzy animals.
VELSHI: Christine still thinks that they were siblings, Ernie and Bert.
ROMANS: Aren't they?
VELSHI: Nematode worm, and Ernie and Bernie are siblings.
COSTELLO: Sesame Street says they are friends.
VELSHI: And that they have no lower bodies.
COSTELLO: Correct. They are puppets.
ROMANS: Top stories right after the break.
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