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American Morning
New "Occupy" Clashes; Police Arrest Occupy Atlanta Protesters; Obama to Offer Student Loan Relief; Obama on "The Tonight Show"; Woman Rescued in Turkey After Quake; Why the U.S. Should Care About Europe; Can Rich Politicians Relate to Ordinary Americans?; Gadhafi's U.S. Victims Demand Justice; New Occupy Oakland Clashes; Paul Ryan To Slam Obama In Speech
Aired October 26, 2011 - 06:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CHRISTINE ROMANS, CNN ANCHOR: I'm Christine Romans. "Occupy Wall Street" protesters getting tear gassed by police in Oakland, California, after trying to retake their camp at City Hall Plaza. We're live in Oakland just ahead.
ALI VELSHI, CNN ANCHOR: I'm Ali Velshi. A moment of joy in Turkey after the devastating earthquake. A 27-year-old woman is pulled to freedom 66 hours after the ground first shook. We're live in Turkey with the latest.
CAROL COSTELLO, CNN ANCHOR: And I'm Carol Costello. President Obama about to unveil a new plan to help young Americans go to college without going broke. Details on the president's proposal on this AMERICAN MORNING.
ROMANS: All right. Good morning, everybody. It is Wednesday, October 26th, and welcome to AMERICAN MORNING this morning.
VELSHI: Buying a car?
COSTELLO: So sorry for Carter Evans. I'm going to find out what the number one car was.
VELSHI: Give me a favor. We have commercial breaks here. We had e-mail, paper. Do you have any tough questions for me? Write them down before you ask them to me on TV. How's that?
COSTELLO: What's the meaning of life?
ROMANS: We'll get to that one.
VELSHI: All right, we got a busy morning for you. Up first though, new clashes overnight between police in Oakland, California, and "Occupy Wall Street" protester.
Police in riot gear using tear gas on the crowds in Oakland's City Hall Plaza. Take a look at these pictures, pretty fascinating. Some protesters throwing paint at the cop. Dozens have been arrested despite warnings from police.
The protesters returned to city hall last night where they've been camped out a couple of weeks. CNN's Dan Simon for us live in Oakland. Dan, have things settled down behind you now?
DAN SIMON, CNN CORRESPONDENT: A little bit, but you can still see some police in riot gear behind me. This is sort of the line in the sand, a few protesters in front holding a sign. Things really got ugly about 7:00 last night.
This is some hours after police had disbanded this group of protesters who had camped out in front of city hall. They were there for about two weeks. Things were pretty much peaceful during that period, and then police saw the situation deteriorating in terms of a public safety threat.
They saw health conditions getting bad. So they decided to get rid of those protesters, to tell in to disband, and then a few hours later, after they had left, about 500 of them decided to take their space back. They wanted to get back in front of city hall.
And that's when they confronted this group of police who were in riot gear. They unleashed tear gas. It was just a scene of pandemonium for about an hour. Things seemed to calm down and then yet again, more protesters clashing with police overnight.
And now the situation, Ali, has calmed down a bit, but still a bit fragile. There's also sort of this haze of tear gas still in the air. We can feel it. Our crews can feel it, but right now things seem to be calming down a bit, Ali.
VELSHI: All right, Dan. I mean, those are remarkable pictures. I am trying to get some sense of weather the fact that they were done at night, and maybe the lighting or something made that look as dramatic as it did, but it seems like there were some very tense moments there that looked very, very serious for a while?
SIMON: It was very serious. I think it gives you the sense of the anger that these people are feeling, people who have been here for two weeks. Maybe some of them are tired, but anger on both sides.
Police had one of these protesters, asked them to disband several days ago, but they were there. So they came up way plan to send police to disband them. They thought they had basically put an end to it, but these protesters, very determined. You saw last night.
VELSHI: All right, Dan Simon, thanks very much. We'll stay on top of this story with you and across the country where many of these demonstrations continue.
Police and occupied protesters also clashing in Atlanta. Demonstrators were arrested overnight after the city's mayor, Kasim Reed, ordered police to clear them out of Woodruff Park, home of the "Occupy Atlanta" movement.
The beat goes on here in New York City where it all began. In response to complaints from residents about this noise, drumming. "Occupy Wall Street" protesters have agreed to limit drumming to simply four hours a day. So dug-in demonstrators will only be drumming between 12:00 p.m. to 2:00 p.m. and then again from 4:00 to 6:00 p.m.
ROMANS: All right, an education last a lifetime, in some case of you're paying for it. That's why today President Obama will again bypass Congress and announce new executive actions to help ease the burden of student loans.
Our Brianna Keilar is live at the White House. Brianna, this measure is supposed to help with the crushing cost of college education. Something that they attempted in health care reform the Congress actually passed. Now the president wants to move up the day all that was supposed to start. Tell us about it.
BRIANNA KEILAR, CNN WHITE HOUSE CORRESPONDENT: That's right, Christine. What this really does is it speeds up changes to a program, an income-based college loan repayment program that is already in place.
Those changes were supposed to take effect in 2014. This plan that the president will be trumpeting today at the University of Colorado, that will -- those changes will now take effect in 2012. So what does it do?
Well, it would reduce the amount of money, of the monthly payment that a student has to pay, the 10 percent of their income, reducing it to 10 percent from 15 percent. And then after 20 years of repaying a loan, that debt would be forgiven so that this wouldn't go on for decades and decades.
The other part of this plan is that there are some students who have different kinds of federal loans. They have two or more kinds of federal loans, this would allow them to consolidate this for a slightly lower interest rate and, again, this is going to affect students who would be graduating next year, meaning the current class in place.
This would affect the class of 2012. They would see these changes, whereas before, it was supposed to be the class of 2014 that would be seeing these changes. I should mention, say, like, a student is unemployed. They wouldn't then have a monthly payment, which as you can imagine, would help a lot of students who are at risk of default on their student loans.
ROMANS: And your monthly payments would be 10 percent of your pay. You know? And after 20 years now, you would -- if you hadn't paid it of in 20 years it would just go away.
Also, if you work in, like a non-profit or in public service, your loans can be repaid over 10 years. Tell us about the executive authority the president used for this plan because Congress basically passed it a couple years ago. This moves it forward. He needed an executive order to do that.
KEILAR: That's right. What you'll see is this sort of -- this isn't just one effort that we've seen by the White House lately. The president is on his three-day western swing. He's also announced changes for housing. For folks who are underwater on their loans. The theme of the president's push here is, we can't wait. The idea is that Congress is stymied. They aren't able to do things to help the economy. So there's no doubt a political message here that he's stepping in.
He's taking executive authority, and he's doing what he says Congress cannot do. You're going to hear him say this today as he has throughout the trip. This idea of, we can't wait. Expect to hear it again for sure.
ROMANS: All right, Brianna Keilar, thanks so much. And even this, you know, doesn't put to rest of the question of tuition prices, a report this morning from the College Board, tuition up another 5.4 percent. So the White House wants to help pay for it. It doesn't mean tuition is going down anytime soon.
Coming up at 8:10 Eastern, we're going to talk more about President Obama's student loan relief program with the Education Secretary Arne Duncan.
And we'll ask him about tuition prices. I mean, tuition just keeps going up. It's very difficult for families to afford it. This is to help you repay it, but what's going on with tuition?
COSTELLO: What can the government do?
ROMANS: I mean, well, there are those who think it's a bubble in tuition and that bubble is got a pop like a housing bubble, it has to pop.
COSTELLO: But again, what do you do to bring down the cost of a college education?
ROMANS: They can help you pay for it back, but I don't know. I think people have to do something. I think people have to start going to community colleges, and health care reform, more funding for community colleges, by the way.
Have to go to community colleges, have to go to state schools, I mean, you have to start putting the pressure on with your own wallet. People can't afford this. They really can't. You know, income-based or payment no, it's very expensive to go to college.
COSTELLO: That is true. It will be an interesting conversation with Arne Duncan.
ROMANS: Yes.
COSTELLO: The president has carved out some time, I should say, chat with Jay Leno during his swing through Colorado, Nevada and California. Here's a bit of that.
(BEGIN VIDEO CLIP)
JAY LENO, HOST, "THE TONIGHT SHOW WITH JAY LENO": Please welcome the 44th president of the United States, President Barack Obama. (END VIDEO CLIP)
COSTELLO: President Obama making his fourth appearance on "The Tonight Show" last night and his second as president.
He told Leno he shares the frustration of Americans who are fed up with politicians putting their party ahead of their country.
And when it comes to serving a second term, the president did not seem too concerned about the competition.
(BEGIN VIDEO CLIP)
LENO: Have you been watching the GOP debates?
BARACK OBAMA, PRESIDENT OF THE UNITED STATES OF AMERICA: I'm going to wait until everybody's voted off the island. Before -- once it's down to one or two, I'll start paying attention.
(END VIDEO CLIP)
VELSHI: Maybe the president should start focusing on Herman Cain. He continues to come on strong. Cain has taken a lot of criticism this week for comments about abortion and immigration. It does not seem to be hurting him in his standing with Republican voters.
The Georgia businessman is coming out on top in the latest CBS/"New York Times" poll. Check these numbers out, picking up 25 percent of the vote, four points ahead of Mitt Romney. Newt Gingrich and Ron Paul round out the top.
Check this out, Rick Perry has slipped, not just to fifth place, but a distant fifth place in this new poll. But hard to know, I mean, there's a lot of polls coming out. This one is decidedly unusual.
COSTELLO: Well, he came out with his flat tax plan just yesterday. So maybe the numbers will change for him. We don't know.
VELSHI: Yes.
ROMANS: All right, a dramatic rescue giving new hope to all those praying for their missing loved ones in Turkey this morning. You're looking at video from earlier today, a rescuer saving a 27- year-old woman from the wreckage.
That rescue, 66 hours after Sunday's earthquake that killed more than 450 people now. Rescuers also saved an 18-year-old. He was pulled from a collapsed building after almost 61 hours and taken to a field hospital.
VELSHI: That's amazing. You know, the only things you hope for after an earthquake. ROMANS: The story of the 2-week-old baby, her mother and grandmother all being pulled out alive was just so wonderful in such tragedy.
VELSHI: In a case of tragedy, it's the one thing you can hope for.
All right, coming up next on AMERICAN MORNING, high unemployment, a housing crisis, the U.S. has plenty of challenges to contend with. So why should you care about what is happening an ocean away in Europe? I'll tell you very specifically when we come back.
COSTELLO: Texas Governor Rick Perry is going after Mitt Romney's wealth calling him a fat cat. So we want to know. Can rich politicians relate to ordinary Americans? This is our "Talk Back" question of the morning. It's 11 minutes past the hour.
(COMMERCIAL BREAK)
VELSHI: Welcome back. As we speak, European leaders are trying again to hammer out a plan to fix the region's growing debt problems, but there are doubts that they'll be able to get a deal done in time.
In time for what, is the big question. It's already too late for some of these regions backing up major implications right here in the United States and the state of the U.S. economy.
Joining me now to talk about it is Ian Bremmer. He's the president and founder of the Eurasia Group. Ian, good to see you.
IAN BREMMER, PRESIDENT AND FOUNDER, EURASIA GROUP: Good to be here.
VELSHI: You know, there are meetings going on. There's another big meeting expected to happen today. And every day, every time we have these meetings, there have been four major ones this week, we're hoping to emerge with something that is a solid plan that's going to be adopted by the 17 countries that use the euro, the 22 that are in the eurozone, and every time we do this we fall short a little bit.
BREMMER: That's right. And that is the intentional strategy, right? The Germans, the French, those with money --
VELSHI: The strong countries.
BREMMER: -- they understand that the only way they're ever going to fix the institutions and get the Greeks and the Portuguese and the Spaniards to actually be responsible economically is they have to experience real pain. And so they're muddling through and they're using the market as a stick to beat these guys. You have to create a serious level of crisis to actually change things. In the United States, we don't have that.
VELSHI: We've been watching. And one thing that I think most Americans are familiar with are the scenes in the streets of Athens.
BREMMER: Yes. VELSHI: Every time the government does something that is going to impose that pain, that the French and the Germans say is necessary before Greece gets a bailout, people take to the streets.
BREMMER: Well, in Greece, first of all, demonstrations are a bit of a sport, right? I mean, you've got anarchists (ph) there, communists are about eight percent of the parliament. I've actually been in Athens well before the financial crisis when they were demonstrating for labor issues and the rest.
VELSHI: Right.
BREMMER: In Greece, they go to the streets, in Portugal, they go to the beach. Part of this is actually national and cultural. But, you're asking these countries to suddenly take a lot of pain. The Greeks want to avoid that pain. The Germans want to ensure that pain. And so there is --
VELSHI: I see.
BREMMER: -- some chicken that's being played between the two --
VELSHI: OK.
BREMMER: -- to ensure that the compromise ultimately is somewhere in the middle.
VELSHI: Tell me culturally what the differences are here. Because a lot of people say Europe is going through the same thing America is going through. It's really a different thing.
BREMMER: It's very different. Look, in the United States unless we have a serious and often self imposed crisis, Congress is in gridlock, but that gridlock gets broken through in this debt limit crisis and then we forget it. It's -- you know, when we have a government near shutdown and then we forget. We're about to have the super committee, $1.2 trillion.
VELSHI: Right.
BREMMER: I'm sure we'll work out something at the last minute --
VELSHI: Right.
BREMMER: -- and then we'll forget it. In Europe, the crisis is ongoing.
VELSHI: Right.
BREMMER: It's severe and they are going to change the institutions. But one thing, the institutions need to change, not to create fiscal union and harmony --
VELSHI: Yes. BREMMER: -- but they need to actually stop letting everyone have a vote at the tabl. You know, when I was a kid, you have a kids' table and then you have the adults table.
VELSHI: Right.
BREMMER: In the kids table, you don't have sharp utensils and you don't get to the adult's table until you're allowed, until you've merited it.
Well, in Europe, we've got 17 parliaments and they're all eating with the same thing.
VELSHI: Yes. So you've got Slovakia holding things up because they want particular things for their economy, but they're a tiny economy.
BREMMER: Yes. And you've got Finland. You've got Malta. You have all of these countries --
VELSHI: Right.
BREMMER: You mean to tell me they should have the same voting rights and privileges as the Germans? The Germans aren't going to give up fiscal autonomy, but the Greeks need to.
And so ultimately you need to create different European institutions and to alter them so that the voting rights, the weight of responsibility --
VELSHI: Right.
BREMMER: -- actually is borne by the people with money.
VELSHI: Let me ask you this. Here in America, Europe as a whole is an economy as large as America's.
BREMMER: That's right.
VELSHI: I don't think anybody needs to particularly care about the summit today or the three meetings that came before this week. And next week we're going to have G-20.
BREMMER: Yes.
VELSHI: What should Americans be looking for and worried about in terms of Europe?
BREMMER: Well, I think right now they should be worried about banking crises. So the potential that in France, for example, you'll have insolvency forced by panic and a crisis of confidence that could create contagion. There are a lot of banks out there right now, JP Morgan, Goldman Sachs that are trading down and they're trading down because they've got a lot of exposure to European banks.
VELSHI: Right. BREMMER: So clearly there's a transmission mechanism.
VELSHI: Could it be another Lehman?
BREMMER: Look, in the worst case, of course, it could be another Lehman and that is -- that is what banks are panicking about right now, and it's what our viewers should be worrying about.
Longer term, they should be looking for the Europeans putting the building blocks together to allow the European institutions to function more strongly. Europe as institutions, they're stronger today than they were three years ago. The Germans as leaders are stronger today than they were three years ago. I suspect that's going to continue, but it requires pain to get there.
VELSHI: All right. Ian, good to talk to you. Thanks so much.
BREMMER: You bet.
VELSHI: Ian Bremmer is the president and founder of the Eurasia Group -- Carol.
COSTELLO: Thanks, Ali.
Now is your chance to "Talk Back" on one of the big stories of the day. The question for you this morning -- can rich politicians relate to ordinary Americans?
Rick Perry thinks not. On CNBC, Perry went there to describe Mitt Romney.
(BEGIN VIDEO CLIP)
GOV. RICK PERRY (R-TX), PRESIDENTIAL CANDIDATE: I would say that they ought to go look in the mirror, I guess. I consider him to be a fat cat.
(END VIDEO CLIP)
COSTELLO: Did you hear it? Perry called Romney a fat cat. That term is toxic these days.
A CNN/ORC Poll proves that. The vast majority of Americans think Wall Street bankers are dishonest, greedy and overpaid. And although Romney is not a banker, he's as rich as one, worth up to $250 million.
Something not only Perry points out but liberals, too. Check out the cover of "New York Magazine." That's Romney in his younger days promoting his former company, Bain Capital. You see he's got money bursting from his suit jacket.
But hold on. Just because a guy is rich doesn't mean he's heartless. Romney says his business savvy can create what working Americans need the most.
(BEGIN VIDEO CLIP) MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: For me, one of the key criteria -- criteria in looking at tax policy is to make sure that we help the people that need the help most, and in our country, the people who need the help most are not the poor, who have a safety net. Not the rich, who are doing just fine, but the middle class.
(END VIDEO CLIP)
COSTELLO: Romney's opponents disagree, and the left and the right hope that toxic term you know, "fat cat" will stick on Mitt Romney like glue.
The "Talk Back" question for you this morning -- can rich politicians relate to ordinary Americans? Facebook.com/AmericanMorning, Facebook.com/AmericanMorning. I'll read your responses later this hour.
VELSHI: So my question is, can you -- can you become a politician at that level in this country, a viable one, without being rich?
COSTELLO: Well, here's the difference, and I thought a lot about this. I think that many Americans don't mind wealthy Americans who become wealthy through hard work.
VELSHI: I see.
COSTELLO: You know, one -- it started out with modest means and made themselves --
VELSHI: Right.
COSTELLO: -- like Steve Jobs, right?
VELSHI: Right.
COSTELLO: Mitt Romney, he's had a lot of inherited wealth. And some Americans kind of --
VELSHI: Are suspicious of that.
COSTELLO: -- are suspicious of that. And think how can you possibly know how the other half lives when you have never lived that way.
VELSHI: Right. Interesting. It's going to be interesting to see what the responses are.
ROMANS: Up next, Gadhafi is gone, a reason to celebrate for the Libyan people. But here in America, the battle is just beginning for hundreds of the dictator's victim. Alina Cho with a special in-depth report.
You're watching AMERICAN MORNING.
(COMMERCIAL BREAK) ROMANS: Welcome back. "Minding Your Business" this morning.
Right now, U.S. stock futures are trading higher. But you know markets took a pretty big hit yesterday. The Dow dropped 1.7 percent on, you guessed it, fears about Europe's debt kicking -- kicking up towards the end of the trading session.
Today is the day that investors are waiting for on that front. All 27 leaders of the EU will meet in Brussels to come up with a grand plan to save the European Union and the euro. The big question, how much of the debt burden from faltering countries like Greece will be transferred to Europe's largest banks? Details of that plan are expected to be announced this afternoon.
All right. Former Goldman Sachs Director Raja Gupta is expected to turn himself into the FBI this morning. Sources tell CNN he'll face federal charges relating to that insider trading trial of hedge fund manager -- hedge fund founder Raj Rajaratnam.
And Amazon shares taking a beating after it's announced third quarter earnings and missed estimates. The stock is down, wow, 10 percent in pre-market trading right now. The company says earnings were down because it's investing in expansion including opening warehouses and launching the new Kindle Fire line.
What's the "it" gift this year for Christmas? Hey, a tablet computer. A new study shows, at least that's the top choice for a gadget. And get this. Tablet computers actually beat out peace, happiness and money this year on people's wish lists. Because then you can make peace, happy and money out of a tablet. I don't know.
Apple's next big product maybe a TV -- a TV that can do everything. Steve Jobs talked about it in his just released authorized biography saying, "I finally cracked it." Right now, Apple TV is just a web streaming device, not a standalone television.
AMERICAN MORNING will be right back after this break.
(COMMERCIAL BREAK)
VELSHI: Hey, welcome back to AMERICAN MORNING. We're about to cross the half hour. Let me bring you your top stories.
New clashes in Oakland, California, between police and Occupy Wall Street protestors. Police spraying tear gas on demonstrators after they were hit with paint and other objects. The crowd -- look at this. Look at this. A crowd of about 500 people tried to retake their encampment at Oakland City Hall Plaza after being kicked out earlier yesterday.
COSTELLO: More reports of amazing rescue today at the site of that devastating earthquake in Turkey. Just hours ago, crews reportedly pulled a 27-year-old woman from the ruins of this building. That rescue comes in 66 hours after the 7.2 earthquake demolished the eastern part of the country, killing more than 400 people.
ROMANS: All right. Today, President Obama is expected to announce the plan to help college graduates who are drowning in debt. Among the proposals, encourage students to consolidate their federal loans and reduce interest rates.
VELSHI: And during 42-reign of terror, Moammar Gadhafi was able to reach beyond the borders of Libya to spill the blood of hundreds of Americans. And now that he's gone, they're dancing in the streets of Tripoli. A battle has won there. There's a real hope for a better tomorrow.
COSTELLO: But for victims of Libyan-sponsored terrorism living here in the United States, the fight is just beginning.
CNN's Alina Cho with a special "In-Depth" report this morning.
Good morning.
ALINA CHO, CNN CORRESPONDENT: Good morning.
You remember Lockerbie, you remember the Berlin discotheque bombing? Nine attacks in all that we're talking sponsored by Libya.
You know, back in 2008, the U.S. government under President George W. Bush made a deal with the Libyans. Gadhafi agreed to give up $ 1.5 billion to compensate U.S. victims of Libyans state-sponsored terrorism. In exchange, those victims who filed lawsuits against Libya agreed to drop their claims.
Now, at the time, it seemed like a pretty good deal, but now some are calling this a deal with the devil.
(BEGIN VIDEOTAPE)
CHO (voice-over): These victims came to us with their stories of horror.
JONATHAN POLLACK, TERROR VICTIM: I saw people dying.
ALEX ALIMANESTIANU: My kids ask about him a lot. And --
MARIA DIAZ, TERROR VICTIM: I look at my hand. I have skin and blood.
CHO: Maria Diaz was just 15 when she and her aunt were caught in the crossfire in the 1972 airport attack in Tel Aviv. Diaz was hit with a grenade. Her aunt, just 6 years older, 21, and newly engaged, was killed.
DIAZ: I would have given anything -- for that to happen to me, not to her.
CHO: After all these years, this is Diaz's first TV interview.
DIAZ: Four minutes, and it changed my whole life.
CHO: In the nearly 40 years since, Diaz says she still has pain in her legs, has endured eight surgeries and has not seen a penny of the money the U.S. government promised she would get.
Money that's supposed to be taken from a $1.5 billion fund set up to compensate victims of Libyan-sponsored terrorism. Instead, what Diaz got was this letter from the U.S. Treasury Department saying she would eventually get a prorated payment, 20 percent of what she is due.
(on camera): How much of the money have you seen?
DIAZ: At this point, I haven't seen any.
CHO (voice-over): The problem, say these victims, is that the government miscalculated, and that there's not enough money left in the compensation fund for more than 200 victims, an estimated shortfall of $350 million. But the State Department says it's too early to say there will be any shortfall.
The State Department would not go on camera but told CNN, "It is premature to determine that there will be a shortage of settlement funds. Roughly half the claims are still being processed."
(on camera): Some of the money was distributed to some of the victims.
POLLACK: Lockerbie and La Belle discotheque, which at the time as you probably recall were the attacks that most people knew about.
CHO: The most high-profile.
POLLACK: The most high-profile attacks. There were a lot of attacks people don't recall.
CHO (voice-over): Like the one in which Jonathan Pollack was injured at the Rome airport in 1985.
POLLACK: If you were injured, you were entitled to $3 million. If you were killed, $10 million -- your family, of course, for wrongful death.
CHO (on camera): So you thought, OK. Eventually, I'll get this money.
POLLACK: I did.
CHO (voice-over): Pollack has received $600,000, but it's 20 percent of what he's owed.
SEN. CHUCK SCHUMER (D), NEW YORK: It's insulting to say you'll get a prorated amount now and not guaranteeing that you'll get the whole amount later is insulting.
CHO: Neither Pollack nor Diaz were among those who sued Libya for damages, but they are entitled to claims from the same fund under a law Congress passed to cover victims of state-sponsored terrorism.
ALIMANESTIANU: We did fight in federal court.
CHO: Alex Alimanestianu was a litigant in the historic case that led to the U.S.-Libyan agreement to compensate victims. He lost his father on UTA Flight 772 when it exploded over the African desert in September 1989.
His family has been paid $2 million of the $10 million that was owed to them.
ALIMANESTIANU: I blame the U.S. government. Clearly, they didn't do their homework and were rushing to make a deal with the devil.
The amount of the money is not really the issue. It's really about justice.
(END VIDEOTAPE)
CHO: Now, what is interesting about this case is that the victims say there is actually a very easy solution. Senator Charles Schumer and others told us there's $32 billion in frozen Libyan assets and a small percentage, about 1 percent of that money, should go to these victims. The problem is --
COSTELLO: See, it's not easy. I was just going to say -- he says it's easy?
CHO: Well, the money is there. That's the easy parts. The problem is, who has the rights to it? And right now, as you know, Libya is in transition.
The national -- the Libyan National Transitional Council is, you know, oversees that money. They are transitioning to a democracy. Presumably, they're going to want that money, so do these victims. And they're saying, listen, would it have been smarter in hindsight is to adjudicate all these claims first and then decide this is the amount of money that we need.
VELSHI: Right.
CHO: What these victims say is that they picked this arbitrary number, $1.5 billion, again, it seems like a lot of money. It's not enough when $3 million goes to each person who is injured, $10 million to the families that lost direct loved one.
ROMANS: And there are hundreds of people.
CHO: There are more than 200 people have not yet settled their claims. And so -- you know, the State Department does say it's too early to know, and perhaps this will all get settled.
VELSHI: When they say it's too early to know -- do they think there are more victims who haven't come forward?
CHO: No. They think that -- they say that a lot of these claims have not been adjudicated. And so, there's no way of really knowing. These victims say, listen, it's really more than just the money. Some of these victims have been paid a little bit of money, but they say it's more than the money. This is Gadhafi's money and this is our one way to get back at this guy, and we want it.
VELSHI: Right.
COSTELLO: Interesting.
Alina Cho, thank you.
CHO: You bet.
ROMANS: All right. Also, this morning, following Hurricane Rina. Growing more powerful by the hour.
Our Rob Marciano is in the extreme weather center.
And I guess Cozumel -- they're battening down the hatches in Cozumel, aren't they?
ROB MARCIANO: Yes, absolutely. Cancun, Cozumel, the entire Yucatan Peninsula.
This is what it looks like from outer space. Check out these cool pictures from the International Space Station if Hurricane Rina. You see the outflow, the thin cirrus clouds in the outskirts of the circulation that show a healthy storm, and this, a little closer up than our typical geosynchronous satellites about 22,000 miles up.
All right. This is the infrared satellite picture from the geosynchs.
One hundred ten is the strength right now. So, it's on the cusp of becoming a category 3 storm. Right now, winds of five miles an hour -- heading to the west at five miles an hour. So, the forecast is to bring it towards the Yucatan Peninsula, including Cozumel and Cancun here, during the day tomorrow, likely as a category 3 storm and into the Gulf of Mexico.
We've got strong winds this time of year, the jet stream pushes everything from west to east and from the north. So, it looks like it wants to take the storm and skirt it quickly to the east. But Florida still certainly in play, the Keys as far north at Tampa, potentially, and Cuba after that as we head through the weekend and into the beginning part of next week.
A little bit closer to home, we got a couple of fronts that are going to cause problems today. This one across the northeastern third, some rain. But this one is causing big-time snow problems in Denver proper. We'll see several inches of snow there, maybe as much as a foot in spots, maybe well over a foot across parts of the front range. Winter storm warnings posted and some road closures already.
Remember, just two days ago, we were in the lower 80s. Today's daytime high in Denver, 31 degrees. And some of this cold air making its way towards the East Coast.
And some interior spots across the Northeast will see a little bit of snow with this system as we go through the next couple of days. But New York City will be mild, at least today, 61 degrees, the high temperature.
COSTELLO: I'll take it.
ROMANS: Thank you, Rob.
VELSHI: Rob's like an honorary -- he'll seek out the snow wherever it is. It can be August and Rob will be telling us there's snow. Fantastic, we love it.
MARCIANO: It's clean. It feels good. It's clean, it's cold, it's fresh.
VELSHI: Exactly right.
MARCIANO: One time where New York City looks clean.
VELSHI: You can bundle yourself up and keep warm.
ROMANS: That's true.
VELSHI: I totally agree with you, Rob.
COSTELLO: Only for the -- only after, you know, freshly fallen snow.
VELSHI: For the first few hours, it looks like dirty snow.
All right. Rob, catch up with you later. Thank you.
Coming up ahead on AMERICAN MORNING: The devil is in the details. We're taking a closer look at how Rick Perry's flat tax stacks up. Is it going to fall flat for Republican voters or is it going to be popular?
It's 39 minutes after the hour.
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ROMANS: Welcome back to AMERICAN MORNING. Forty-two minutes after the hour.
You know, not long ago, Texas Governor Rick Perry was the GOP's "it" candidate. Then came the debates and his poll numbers begin to plunge. Now, Perry is trying to turn the page. He unveiled his flat tax plan yesterday, hoping regain traction on the campaign trail.
It includes a 20 percent flat-tax rate, or Americans can opt out and pay their current income tax rate. The plan also preserves mortgage interest deduction, charitable state and local deductions for families earning less than $500,000 a year. It increases the standard deduction to $12,500. It eliminates the inheritance tax and it lowers the corporate tax rate from 35 percent to 20 percent.
Joining us from Washington, CNN senior political analyst, Ron Brownstein, also editorial director for "The National Journal."
So, Ron, you call this the flat tax 2.0. We've been here before. Tell me.
RON BROWNSTEIN, CNN SENIOR POLITICAL ANALYST: Right. Well, look, this is an attempt -- I call it the flat tax 2.0 because this is an attempt and in provisions that you cite, to deal with the political problems the flat tax ran into the first time it was debated in the Republican primary, which was 1996 under publisher Steve Forbes.
Forbes' campaign was launched by the flat tax, but almost as quickly sunk by the flat tax when his opponents, Bob Dole and Lamar Alexander, in particular Pat Buchanan at that point, all raised serious concerns about it. He was unable to sell it, even with the Republican primary. Once you got past the initial concept, which was very popular, into the details.
In particular, Christine, even Republican voters did not like eliminating those deductions that you cited when Forbes proposed to do so in 1996.
ROMANS: And you even dug up the 1996 polling which shows how Republicans felt about it. I want to go through that, because back then, 60 percent of Republicans opposed eliminating the deduction for home mortgages.
BROWNSTEIN: Mortgages, right.
ROMANS: Sixty-six percent opposed limited tax deductions for charitable contributions, 55 percent opposed limiting deductions for state and local taxes. So, Perry is trying to avoid Forbes' pitfall when you look at all of these different polls.
BROWNSTEIN: Yes, absolutely.
ROMANS: And again, these are back from 1996.
So, is this pandering or is this smart tax policy?
BROWNSTEIN: Well, I think it's smart politics in that it is responding to something that was, that could not win support, even with the Republican primary -- much less with the public overall. So, this is an attempt to deal with the problem.
The flat tax has several problems historically. One is, again, these deductions that people don't want to give up. The other, is that if it's going to be revenue neutral, by definition, it has to raise taxes on the middle class, because it cuts taxes so much on the wealthy.
You see that in the analysis, that Herman Cain's plan raises taxes on 84 percent and cuts them substantially on those in the top 15 percent. Perry tries to deal with that problem by basically making this a tax cut for everyone, in part by giving you this choice whether to opt into the system. The cost of that is, it's an enormous revenue loser. The analysis they put out late last night of their own plan says that it will lose $700 billion a year under the current tax law when it's fully phased in.
So, that is going to be another challenge. To balance the federal budget after this flat tax, you would have to reduce federal spending to 18 percent of GDP, the economy. It hasn't been that low, Christine, since 1966, which is not coincidentally the year Medicare went into effect.
ROMANS: So, this flat tax, the reason why people like it, Republicans, too, like it, the people who like the flat tax is because they say it is a game changer that is simple. Everyone can understand it. So, this isn't necessarily -- this is like adding another tax bracket.
You get to pick and choose like going to the cafeteria and choosing your own tax plan. You know, this year, I'll take the 20 percent. I mean, it doesn't necessarily simplify the tax code, which is basically the big, core problem anyway.
BROWNSTEIN: Well, I think this, the appeal of this is more than a tax cut than it's a simple plan (ph), right?
ROMANS: Right.
BROWNSTEIN: I mean, with the republican primary, because as you say, it encourages people to kind of figure out their taxes twice under the existing system and under this new 20 percent with very limited deduction system and choose the one that's best for them. The bigger point is that it's going to cut taxes a lot, and it's going to cut taxes a lot for people at the top.
And one thing that's interesting is that there was a private citizen named Mitt Romney in 1996 took out ads in the "Boston Globe" and papers in New Hampshire and Iowa attacking the Steve Forbes flat tax on one particular ground, because it maintained a tax on wages.
Then 17 percent, 20 percent under Rick Perry, but it completely eliminate taxes on capital gains and investments. And he was arguing in a kind of early echo of what President Obama has argued through the Buffett rule that that was unfair. So, it will be interesting to see if Romney makes this kind of argument against Perry in 2012 that he used 16 years ago as a private citizen against Steve Forbes.
ROMANS: But lately, Romney has said, I love the flat tax.
BROWNSTEIN: Yes. On the other hand, he has said that he's done what Bob Dole did in 1996. He said he likes it in theory, but he wants one that will protect the middle class. And that you played that clip earlier of him talking about tax policy rate. So, the rich are doing fine. I think it is almost inevitable that Romney attacks this as, I think, two expensive and too much of a giveaway.
That's not simple politics to the rich. That's not simple politic in the Republican primary, but the Republican primary electorate is changing. It's more working class and middle class than it used to be. And it may be that it will be fascinating to see whether even in this environment, Rick Perry can sell such a large tax cut when there is a concern about balancing the federal budget.
As I say, to balance the budget after this tax cut, you have to reduce federal spending to a level last achieved in 1966 when seniors were a much smaller share of the population, and Medicare was just getting going. That would require some very big cuts that he hasn't fully, by any means, spelled out in this plan.
ROMANS: Can you imagine? I mean, I like to go back to see the growth of government in 1966, the growth and the tax -- the page of the tax code since 1966.
BROWNSTEIN: Yes.
ROMANS: That's an impressive stat. OK. Ron Brownstein, CNN senior political analyst, thanks so much.
BROWNSTEIN: Good to talk to you.
ROMANS: I mean, I think tax -- there's nothing simple about taxes. And when you hear somebody say, a simple solution for taxes -- it is --
VELSHI: I have to say just the business journalist in me says, ignore them, put ear plugs in, bury your head. It didn't get this way in, you know, simply. It's not going to go away simply.
COSTELLO: Well, I think that, you know, underneath all of this, you know, they come out with these plans, these flat tax plans, but it's not going to help anything right now. Tax reform is great, but that's going to take a long time, right?
VELSHI: Right.
COSTELLO: People need help right now getting jobs. And I'm unclear about how reforming the tax code will change anything in the short-term.
VELSHI: You know, we all say that companies don't invest. They don't hire people because of uncertainty. And the thinking is if you decided to be in a real commitment to a lower tax code for businesses, a bunch of businesses will either commit to it, people will startup businesses and do things.
So, there's some logic to that. The criticism is it can't just be simple. It's very attractive right now. They test (ph) simple answers to things.
COSTELLO: Well, I think Herman Cain found that out, right? 9-9- 9 has become kind of 9-0-9-2.
VELSHI: Right.
(LAUGHTER)
COSTELLO: So, I think Herman Cain's discovered that, too.
VELSHI: I give him credit for bringing it into the discussion and forcing us all to have it, but it's complicated.
COSTELLO: Coming up on AMERICAN MORNING, our "Talk Back" question of the morning, can rich politicians relate to ordinary Americans? Your comments after a break. It's 49 minutes past.
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VELSHI: Fifty-one minutes after the hour. Here's what you need to know to start your day.
(BEGIN VIDEOTAPE)
VELSHI (voice-over): A tense night in Oakland, California. Police and Occupy Wall Street protesters clashing again after the crowd refused to leave city hall plaza. Take a look at these pictures. Police fired tear gas at the protesters after they were hit with paint and other objects. Nearly 100 people have been arrested.
Just hours ago in Turkey, rescuers save the life of a 27-year-old woman and an 18-year-old man who are both trapped beneath the rubble. Their rescue is coming more than 60 hours after the devastating earthquake that killed more than 450 people.
Today, President Obama is expected to launch a new plan to lower the costs of paying back those student loans. Among the proposals, allows millions of students to consolidate their federal loans and reduce their interest rates.
Congressman Paul Ryan is expected to tear into President Obama during a speech today in Washington. In excerpts obtained by CNN, Ryan will argue the president is practicing the, quote, "politics of division" by wanting to raise taxes on the wealthiest Americans.
Boeing 787 Dreamliner took off last night from Tokyo for its first commercial flight in three years. I'm sorry. That was three years later than planned. This was the first commercial flight. The plane being sold as a game changer with wider aisles, bigger windows, and new energy-saving technology.
(END VIDEOTAPE)
VELSHI (on-camera): That's the news you need to start your day. AMERICAN MORNING is back right after this.
(COMMERCIAL BREAK)
COSTELLO: Welcome back to AMERICAN MORNING. It's six minutes until the top of the hour.
We asked you to "Talk Back" on one of the big stories of the day. The question for you this morning, can rich politicians relate to ordinary Americans?
This from Jason, "No, they don't relate. They have been selling us the same bag of goods for what seems like forever, and they never deliver on any of it. The problem is, we keep laughing it up and believing them every time."
This from Laura, "I'm sure some can, but will they? So, many of them are too full of self-interest to bother with anything that the lining of their own overstuffed pockets." Ouch!
This from Patrick, "The true answer is, no. They tell us they do, but I haven't heard of one politician who has lost their job or their home to foreclosure during this rough economy. If they did relate, do you honestly think it would be as difficult as it's been to get unemployed Americans back to work?"
Keep the comments coming. Facebook.com/americanmorning. I'll read some more later in the show.
ROMANS: All right. Everyone is still talking about Herman Cain's new smoking campaign ad. The web video has his campaign manager taking a drag of a cigarette before Cain gives us a slow smile. This inspired Stephen Colbert. Take a look.
(BEGIN VIDEO CLIP)
STEPHEN COLBERT, HOST, "THE COLBERT REPORT": I was so impressed by these ads, folks, that I have made some ads of my own.
UNIDENTIFIED MALE: Hi. Mike Kilpatrick (ph) here, and it's my privilege to be chief strategist for the Cain campaign. I believe Herman Cain is the man to restore America's greatness. Won't you join me?
(END VIDEO CLIP)
COSTELLO: I thought he was going to be smoking a bong or something.
(LAUGHTER)
VELSHI: Right.
(LAUGHTER)
VELSHI: Good ad.
All right. Coming up next hour, from coast-to-coast, occupy chaos. Police and protesters clashing cops, hit with paint, firing back with tear gas, and getting uglier overnight. A live report is coming up. Fifty-six minutes after the hour.
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