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CNN Sunday Morning

Palin Attacks Obama; Bailout Plan; Simpson Jury; Smokers Shock; National Debt Clock

Aired October 05, 2008 - 09:00   ET

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

ALINA CHO, CNN NEWS ANCHOR: Sarah Palin takes the gloves off and goes after Barack Obama for his relationship with a former anti-war radical.
(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Do you know what that is? Do you? Do you? Do you know what that clock is?

(END VIDEO CLIP)

TJ HOLMES, CNN NEWS ANCHOR: Well, that clock it is ticking, the national debt. We'll show you just how fast it is going.

CHO: And shock tactics to get smokers to quit -- effective or just offensive? We'll explain. From the CNN center in Atlanta, bringing you news from around the world this morning, I'm Alina Cho. Thanks so much for joining us, Betty has the morning off.

HOLMES: And good morning to you. Thank you for being here with us from New York on loan from New York.

CHO: Thank you.

HOLMES: We will send you back there, I promise everybody in New York. And hello to you. I'm T.J. Holmes. Thank you for being with us the SUNDAY MORNING.

CHO: We want to begin with the point counterpoint verbal punch that has everyone talking.

HOLMES: Yeah, it has us talking in the newsroom a lot. Now, we'll show you here, we'll do a little timeline here for you. But, this is how it all started.

(BEGIN VIDEO CLIP)

SARAH PALIN (R), VICE PRESIDENTIAL CANDIDATE: I was reading today a copy of the "New York Times."

(BOOING)

And I was really interested to read in there about Barack Obama's friends from Chicago.

(END VIDEO CLIP) HOLMES: "Friends from Chicago," is how she says it there. Now she went a little bit further from there. Governor Palin, as you see there, she heated up the campaign trail accusing Barack Obama of being pals with terrorists. Here it is now what he said later. Listen.

(BEGIN VIDEO CLIP)

PALIN: Our opponent is someone who sees America as imperfect enough to pal around with terrorists who targeted their own country.

(BOOING)

(END VIDEO CLIP)

HOLMES: "Pal around with terrorists who target their own country" are the words and it's getting a lot of talk on the campaign trail. The back story, Palin is talking about Obama's relationsnship with a man by the name of Bill Ayers. His name may sound familiar to you because it has come up a lot on the campaign trail before, not so much in the general election, but certainly during the primary. We're going to get more on that and what the Obama camp is now saying from our political producer, Sasha Johnson.

Sasha, good morning to you. Thank you for being with us, always good to see you. Bill Ayers, are we about to see this name again? A lot of people, kind of sounds familiar, but what was it really about?

SASHA JOHNSON, CNN SR POLITICAL PRODUCER: Well, he founded group in the eight '60s called the Weathermen which was an anti-Vietnam War militant group that was responsible for several bombings around the United States that did result in a loss of life and property damage. Fast forward 20 years or so. Bill Ayers is a professor in Chicago, which he still is, an he and Barack Obama served on a board together that dealt with education in and around Chicago, money for schools and different education projects.

Ayers did host a coffee for Barack Obama's first political run. And the two serve order another board together later on. Bottom line, you know, the campaign says that the men have not had that much contact since he went into the Senate and even the contact they did have when they were on the boards together was pretty, you know, run of the mill. Conservatives say, though, Bill Ayers has influenced Barack Obama's thinking and the campaign says that's not true.

HOLMES: Yeah, and really no indication here that these two were boys or anything, so Obama, he certainly had to deal with it a little bit in the primary season. Are we going to see him respond the same way and handle it now in the general election cycle in the same way?

JOHNSON: Well, it's unclear at this point whether he's going to come out today and response to it. You saw the campaign yesterday put out a statement saying this was ridiculous and disgusting and these kinds of personal attacks aren't surprising given the fact the McCain campaign came out and said that they were going to take the gloves off, as you heard Sarah Palin say. They've got an ad coming out tomorrow saying that the McCain campaign is trying to turn the page on the economic crisis and go personal. So, the Obama campaign is definitely aware of this. They're definitely concerned about it, taking it very seriously. They want to see if these -- if Sarah Palin is able to move this Bill Ayers connection, if you will, past just base voters and swing voters, which is something they'd be concerned about. But at this point, they're going to wait and see how it plays out because, as you said, Hillary Clinton's folks pushed this hard during the primary season and it didn't resonate.

HOLMES: It didn't then and again, like you said, they will take it seriously. We're talking to our Paul Steinhauser a little earlier, he's out in there Nashville where the presidential debate is going happen on Tuesday and he said this is a calculated move, this is certainly a strategy now that the side is about to take on the Republican side. But, that was going to be my next question and you answered it -- didn't resonate back then, we'll have to wait and see if it resonates now in the general election cycle.

Sasha Johnson, our senior political producer. So good to have you with us this morning, thank you.

JOHNSON: Thanks.

HOLMES: Well, on to the candidates. What are they up to today? Barack Obama hosting a rally in Asheville, North Carolina. His running mate, Joe Biden, is off the trail, canceled his weekend events for family emergency. We are told that his mother-in-law is seriously ill.

Meanwhile, Republican John McCain home in Arizona prepping for Tuesday night's presidential debate. His running mate, Sarah Palin, hosts a rally tonight in Omaha, Nebraska. And Tuesday night, Nashville, the place to be. The candidates will be there to battle in their second of three debates. You can catch it right here, your No. 1 source for politics.

CHO: Issue No. 1, more uncertainty in the nation's financial market. The big merger between Wachovia and Wells Fargo may be in jeopardy. The news: A judge in New York has temporarily blocked the merger, that's according to CitiGroup which has been trying to buy Wachovia for $2.2 billion. This unsettled matter may not be good for Wall Street. Heading into a new workweek and everyone paying attention to the markets and they're asking what effect will the financial bailout plan to the tune of $700 billion have on Wall Street. After the House approves the bill Friday, the Dow Jones Industrials dropped 157 points. All in all in all it was an ugly week. The Dow lost a staggering 818 points or more than seven percent.

Well, the world markets start opening late tonight, U.S. Time. That's the first indication of how Wall Street might react. Watching it all for us, CNN's senior correspondent, Allan Chernoff, he's in New York this morning. So Allan, what specifically should we be looking at to see if this bailout plan is going to have a positive effect? Because on Friday, as you know, the bill passed, the president signed it, Dow closed down 157 points.

ALLAN CHERNOFF, CNN NEWS SR CORRESPONDENT: Boy, not very encouraging, Alina. What we would like to see, of course, would be to see the stock market bounce back up. But really, the key indicate you to watch is what is the interest rate, what is the situation in the credit market?

Now, Monday morning at 6:00, we are going to be getting -- 6:00 Eastern Time, we will see what banks are charging each other to borrow and that will really be the first critical indicator of whether or not this bailout is having any impact at all. This is the bank-to-bank lending rate and it has been soaring for the past several weeks. You see, rising all the way from 2.8 to 4.3 percent. That's for three month money. And this very important, it affects all of us, a lot of us, because adjustable rate mortgages are tied to this rate known as LIBOR, the London Interbank Offered Rate. Also some business loans are tied to it, as well.

So, this is absolutely critical. You see it has been soaring. That reflect it is credit freeze that's in place. Banks don't want to lend to each other, 4.3 percent is a very, very expensive rate for a bank to be borrowing at what we want to see is for that rate to start to come down -- Alina.

CHO: Yes, because, obviously, if that rate starts to come down for bank-to-bank lending, maybe we'll see our rates start to come down. Right? So, obviously, Allan, a lot of people looking at their investments right now in these shaky financial times are wondering what to do -- should we dip into the 401(k), that kind of thing. I know you talked to some of the best business minds in the business -- what are they saying about that?

CHERNOFF: Well, if you don't need cash, let's not panic. Don't instantly sell, it's very late to sell. But it is a good time, first of all, for a gut check. After this huge move that we have seen, you might say, well, gosh, you know, are my investments too aggressive? Do I have too much exposure to the stock market for my own risk tolerance? So, gradually over the next year maybe you want to be shifting, perhaps, if that's the case, maybe shifting more of your assets into bonds.

Now, here is one move that you can really make, this is a smart tax move. Take advantage of a bad situation. What you can do here is take some losses, OK, you're going to use those losses to offset future gains. And the way you can do this, maybe sell some of your mutual funds, sell some of your stocks, but right away what you can do is just turn around and take that money and invest it in a similar mutual fund or a similar stock so that you're still poised for a rebound if we do have one, hopefully, but at least you get the tax advantage. Now, a very important point here, you cannot turn around and buy the exact same mutual fund or the exact same stock. That would disallow this tax advantage move. You can't buy the same stock with the same mutual fund for 30 days in order to take advantage of this tax move. But, it really can help you out come tax time.

CHO: Allan, especially when you consider that 50 percent of Americans are invested in the stock market. This is certainly news you can use. Senior correspondent, Allan Chernoff, live for us in New York. Allan, thanks.

HOLMES: All right, that's $700 billion bailout bill got a little bigger than that. Did lawmakers add pork or did they just add a little sweetener? However you want to call it, it's a lot bigger than it originally was. In five minutes, though, we'll have our Josh Levs with a bit of a real check for us on that bill.

Turning to O.J. Simpson, now. A lot of people out there -- and you probably had these discussions with some friends and family. Many people still believe O.J. Simpson got away with double murder back in 1995. Among some of those that believe it, some members of the jury that just convicted him of robbery and kidnapping Friday. Jury questionnaires released Saturday show five of the 12 jurors disagreed with that not guilty verdict back in 1995. Four of those jurors said they were unsure and another said had no feelings about it. Eleven of the jurors are white, one identified herself as Hispanic. Friday, of course, as we've been talking about, Simpson was found guilty of robbing two sports memorabilia dealers at gunpoint in a Las Vegas hotel room.

CHO: Interesting perspective considering they were not supposed to take into consideration the 1995 double-murder trial. But, interesting bit of insight, there.

Well, it's been a stormy weekend for some people. Reynolds Wolf watching it for us, as alwas.

Hey Reynolds, good morning.

(WEATHER REPORT)

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HOLMES: All right, hearing from a lot of people all over the country about this bailout package. A lot of people upset anyway that we need it in and the $700 billion, but some are even more upset because they think pork was added to it.

CHO: Yeah, that's right. But were all these add-ones really pork or sweeteners as some of them are calling this, new details are putting all of that spending in a different light. And Josh is with us now to explain.

So, you're saying that this is stuff, the pork, that was going to pass anyway.

JOSH LEVS, CNN NEWS CORRESPONDENT: Yeah, I mean it did look like that, in a lot of ways, when you look at what happened. When you guys hear pork, don't you picture liker people getting to one of these backrooms and congressmen saying if you give me $800 million for my constituents and I'll vote for your bill? CHO: Yes. Old-school way, right?

HOLMES: Yes.

LEVS: Well, apparently that's how it's worked forever, right? Well, what we had here, was there was already a package, a separate bill in the Senate, full of tax extension. And we have a little graphic there to summarize it for you. This is the basic idea. The Senate already put forward this package full of tax extensions. The Senate wanted it and passed it overwhelmingly, but in the House, you had fiscally conservative Democrats who were called the "Blue Dogs" who agreed the tax breaks can be extended, but wanted them paid for, meaning you make other changes in the nation's fiscal policy, basically, to make up the money that you give through that tax extension.

So, let's go to the next graphic, now. Here's what happened. When the bailout bill came along, the Senate saw an opportunity. They said, I know what we can do, we can take this package extension and attach it to the bailout bill, that way, when the House gets it, they're not going to hold a bailout bill over this, which is a side point, they don't want the Dow to plunge again, they will just pass the tax extensions, we won't have to fight about it anymore, we won't have to worry about paying for it. In the end, the strategy worked, it played off. So, that's how this cam about. Those sweeteners, they're still sweeteners, and they could have helped some people decide now to vote for it. But some people also voted for the bailout bill despite these sweeteners. So, you see how that happened, it's not the traditional view you have of what pork is.

CHO: Yeah, and we keep hearing about that, something else that's sweet, rum. And a big $200 million tax break. So, but there's a little more to the story. Right?

LEVS: There is. That's another good example of what's going on. This is something that's existed for decades, actually. Here's what happened. In fact, we have a pretty little picture, here. Let me show you this picture because I want you to understand what's going on and I will explain what it means.

Rum makers in Puerto Rico, when they send rum to the United States, they have to pay a tax, so they send Monday with that. That's about $13.50 for 100 proof gallon, if you care about the number. So, they pay a tax when they export rum into the United States, just like anybody does.

Our government takes virtually all of that money and sends it back to the government of Puerto Rico and Virgin Islands for development projects. It's this development system that has existed for years and years and years. And what they were doing here is extending that. So, still today, based on the extension, when Puerto Rican rum makers send rum to the United States, they still pay that tax, the United States then takes that money and gives it to the government of Puerto Rico or the Virgin Islands to assist in development project there. So, it's definitely not pork project for the rum makers, but everyone still has every right to see any of these tax breaks as pork, that's, you know, subjective, and if you look at how many tax breaks exist, a lot of people feel like, look, these things are totally pork no matter how they got there. And that's one totally legitimate view. It's just not the traditional kind of pork.

HOLMES: Rum and pork.

LEVS: Rum and pork.

HOLMES: I Have to cook later, you're giving me some ideas.

LEVS: We've been up long enough we could actually eat some of that.

HOLMES: You know, a lot of people have been talking about that, because you and I were going kind of going back and forth and getting into it about this, what is pork, what's the traditional way. What's right? A lot of people just think this -- we need this package so bad, why attach anything to it? It should be a clean bill.

LEVS: That's why they got away with it.

CHO: Yeah, exactly.

HOLMES: Thank you.

You can also get up-to-the-minute political highlight analysis from your home or your office computer. Go to CNNpolitics.com, that is your site for all things political.

CHO: All things weather, Reynolds Wolf will take a look at that, so hey Reynolds. Hey, pay attention.

REYNOLDS WOLF, CNN METEOROLOGIST: Thank you. Someone finally says that to T.J. and rightfully so. We need to get the ruler out and smack him on the knuckles.

HOLMES: Reynolds, I'm always paying attention, but it's not a hurricane on the map. I'm tuning out.

WOLF: We do have a welcomed break. I don't think anyone is complaining about that. I mean, keep in mind, there's still a lot of people in Texas, now, that even after Ike is long gone, they're still dealing with all kinds of damage.

(WEATHER REPORT)

CHO: Reynolds, thank you.

WOLF: You bet.

CHO: Graphic pictures on cigarette packs leaves British smokers gasping.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: (INAUDIBLE) and I don't want to look like that.

UNIDENTIFIED MALE: I'm feeling kind of guilty now, actually.

(END VIDEO CLIP)

CHO: Would images like these make you think twice about lighting up? We'll explain.

(COMMERCIAL BREAK)

HOLMES: Health officials in Britain hope seeing is believing. CNN's Atika Shubert explains how they're trying to shock smokers into quitting by wrapping cigarettes in graphic images.

(BEGIN VIDEO CLIP)

ATIKA SHUBERT, CNN REPORTER: Most people know that smoking is bad for your health. But it's not easy to quit. Well, here's some motivation. It's called the "Grim Reality" campaign. These pictures will now be featured on the packaging of tobacco products sold in the UK, photos designed to shock and horrify.

LIAM DONALDSON, UK CHIEF MEDICAL OFFICER: Seeing the mouth cancer, seeing the lung cancer, seeing the diseases of the arteries and the legs leading to gangrenous feet. Those sorts of things bring it home to people that they're not just dicing with death but with very serious illness whenever they continue to smoke.

SHUBERT: Judging by the reaction of some London smokers, it might be working.

UNIDENTIFIED FEMALE: It's quite nasty, that's my reaction.

UNIDENTIFIED MALE: (INAUDIBLE) I don't want to look like that.

UNIDENTIFIED MALE: I'm feeling kind of guilty now, actually.

SHUBERT: Despite a ban on lighting up in enclosed public areas, smoking-related disease is still the U.K.'s top killer. Twenty-two percent, about 10 million people, continue to smoke. So, will this campaign reduce the numbers?

(on camera): Well, it might. Canada was the first country to introduce this photo campaign, and a Canadian survey showed more than 30 percent of smokers who quit said these photos were their motivation.

(voice over): But some smokers insist it won't work, and the photos are simply offensive.

SIMON CLARKE FOREST, PRO-SMOKING CAMPAIGNER: It's designed to embarrass and humiliate smokers. Now, if you don't smoke, but you drink alcohol, how would you feel if pictures of diseased livers were put on the side of bottles of wine? Or diseased hearts were put on fatty foods and dairy products?

SHUBERT: Anti-smoking advocates say cigarettes are an addictive product that requires a tough warning.

SARAH WOOLNOUGH, CANCER RESEARCH UK: It's the only product that if used as intended, will kill half of its users, so it requires a unique approach.

SHUBERT: Not all the images are so graphic. But the message is the same, and some smokers support it.

PERSON ON THE STREET: There's nothing really too graphic about it. It just really shows you what it's doing to you, really. It's good. SHUBERT: A picture may be worth a thousand words, but can it kick a habit?

Atika Shubert, CNN, London.

(END VIDEO CLIP)

CHO: Well, it's green and red and blinks. We can tell you it's in Manhattan. We can also tell you it's not the Christmas tree at Rockefeller Center.

HOLMES: It would have been a good guess.

CHO: A bit early for that.

HOLMES: It's actually a sobering reminder of our national debt. It is sounding the alarm.

(COMMERCIAL BREAK)

HOLMES: Good morning, welcome back on this CNN SUNDAY MORNING at 9:30 on the east coast. I'm T.J. Holmes.

CHO: Good morning everybody, I'm Alina Cho, Betty has the morning off.

Republican vice presidential candidate, Sarah Palin, going on the attack. She told a crowd in California that Barack Obama, "pals around with terrorists." She is referring to a past relationship he had with a former anti-war radical named Bill Ayers.

HOLMES: We're going to turn to gas prices now -- down a bit. It's now at $3.52 a gallon, that's down two cents from yesterday and we will take it. But last year this time gallon of regular would have cost you $2.76.

CHO: Wow, that's a comparison, there.

A judge in New York has temporarily blocked the merger of Wachovia Bank and Wells Fargo, that's according to CitiGroup which has been trying to buy Wachovia for $2.2 billion.

But first, Sarah Palin takes it to a new level, the gloves off. A blistering attack on Barak Obama saying he's, "palling around with terrorists." Well, let me go straight to Washington, now, Ed Henry just back from California where Palin made that comment, yesterday.

Ed, I know you were at that rally. Is this an example of the ultimate surrogate, Sarah Palin, being able to say something the candidate cannot?

ED HENRY, CNN NEWS CORRESPONDENT: Absolutely, you're absolutely right, Alina, because look, this is a negative attack, this is a very sharp attack, going after Barack Obama, trying to tie him to Bill Ayers, this former 1660s radical. It's the kind of thing John McCain doesn't necessarily want coming out of his mouth, but having his VP candidate do it, somebody who's very effective on the stump. I saw her yesterday, it was a huge crowd, much larger crowd in California than John McCain gets out on the stump.

I was with McCain in Colorado the day before, much smaller crowd. She draws the people in, even in a state like California where the republicans are not really competing. She gets the grassroots people out there. She delivers the attack, sort of the attack dog role that vice presidential candidates often do. We haven't seen her do too much of that, now she is really turning it up a notch. And what I think we're seeing on the Democratic side is Barack Obama forcefully came out with a statement yesterday saying, look, that he doesn't really know this guy, Bill Ayers that well and that when Bill Ayers was involved in the radical activity in the '60s, Barack Obama was eight years old. And they realize what's going on there is that John Kerry didn't respond forcefully to these personal attacks that come in the final months of the campaign back in 2004. Democrats learned their lesson and Barack Obama is going to push back this time -- Alina.

CHO: Well Ed, as you know, we're 30 days until the election, hard to believe, right? It's been a long campaign. I don't know that this necessarily qualifies as an October surprise, but certainly it was surprising that she said that. So why now? Why is the McCain campaign doing this now?

HENRY: I think there's a very clear reason. If you look at the polls in key battleground states from states, like Ohio to Pennsylvania, even Michigan, where John McCain this week essentially said he's going to be pulling out because he's not really competing there, the financial crises as really hurt the McCain camp. It's given the momentum to Barack Obama. This race is not over by any stretch of the imagination, but momentum is now on the Democratic side in a large part, because of the economy, we've known a long time, it's issue No. 1 on the campaign trail. But, it's just gone up a couple more notches because of this financial crisis, obviously.

And I think that clearly in part the McCain camp is trying to change the subject a little but. But also, they say privately, Republican aides, don't think Barack Obama is fit to be commander in chief because of these personal ties to various people like Bill Ayers. So, they want to go on the attack. The question though is, in the end, will Independent voters be repelled by this, turned off by this and say look, why aren't you talking more about the financial crisis? Why are you talking about something going back to the 1960s? CHO: Interesting point. CNN's Ed Henry literally just off the red eye from California. Thanks so much for coming in. And thank you.

HENRY: No problem.

HOLMES: And CNN Tuesday night, Nashville, place to be, that's the battleground where the presidential candidates face off in the second of three debates. Don't want to miss a minute of this one. CNN, tune in to us, your home for politics.

Well, if you have ever been to New York City, you may have seen it. It is the national debt clock and it's around Times Square. It keeps track of the second-by-second, really, growth in the U.S. debt, but there seems to be a bit of a problem. CNN's Don Lemon explains that problem.

(BEGIN VIDEOTAPE)

DON LEMON, CNN NEWS CORRESPONDENT (voice over): As of right now, the U.S. Government, your government, has racked up more than $10 trillion in red ink. You can't even see it on the national debt clock in Manhattan because there aren't enough spaces.

DOUGLAS DURST, KEEPER OF THE NATL DEBT CLOCK: Ten trillion is the number that would be beyond my father's imagination back in 1980 and now it is coming to fruition. Now we are there.

LEMON: Real estate developer, Douglas Durst, is the keeper of the clock. His father, Seymour Durst, first conceived of it during the 1980s when the national debt then, $1 trillion, began to grow under President Reagan. Since then, the debt has grown so rapidly, the clock has been overhauled three times and now needs to be overhauled again.

Helena Durst is Seymour Durst's grand daughter.

HELENA DURST, SEYMOUR DURST GRANDDAUGHTER: We're in the crunch to change that debt clock as fast as we can and add an extra digit and it do what we can. What we wanted to -- what we've been looking at, making the debt clock flashier, getting people's attention and really being able to display the problem a little bit more than what it was limited to when we first built the clock.

LEMON: The Durst family takes little joy in shoving all this red ink in the faces of New Yorkers each day. The intention, decades ago, was only to prod the country to deal with the problem before it got out of hand, not as the countdown to a possible economic doomsday.

D DURST: It started in the '80s with the Reagan administration and as the first George Bush called it, voodoo economics, allowed us to borrow against the future wealth of the country.

LEMON: What most alarms Durst today is how rapidly the national debt is now growing. D DURST: 2002, we started running large deficits again. The debt started growing dramatically, slowly at first but then in ever and ever increasing amounts. It absolutely is a sign of where this country has been going for the last five or six years living off of ever increasing debt.

LEMON (on camera): It is a sobering reminder for tourists and especially New Yorkers who have to walk by this every single day. And by the time it takes me to walk from there to the camera, which is 20 feet, our national debt has risen some 12, 13, $14,000, 15 and counting.

UNIDENTIFIED FEMALE: I try not to look at it. Sometimes I try to come to the other side, but it is one of those like car crash things, you can look away. It's just so awful that you have to look.

UNIDENTIFIED FEMALE: I see an empire falling. And it is sad because this is my country, this is my home and I love it. And I don't want it to go down. I really don't.

LEMON (voice over): But, for now, the clock is ticking.

Don Lemon, CNN, New York.

(END VIDEOTAPE)

CHO: I want to turn to the weather now, Reynolds Wolf watching some the snow in the Rockies.

Hey Reynolds, good morning.

WOLF: Hey guys, good morning.

(WEATHER REPORT)

(COMMERCIAL BREAK)

CHO: Thirty-nine minutes after the hour. Two U.S. helicopters collide in Iraq. An Iraqi soldier is killed an two Iraqi and two U.S. soldiers are injured. A U.S. military spokesman says it happened last night in northern Baghdad when the U.S. Blackhawk helicopters were trying to land. Enemy fire is not suspected.

An American member of al Qaeda has apparently released a rambling video that focuses mostly on Pakistan. His name is Adam Godahn, he's wanted by the FBI, and charged with treason in offering support for terrorism. His 32-minute video refers to Pakistan leadership, the U.S. Financial crisis, and fighting in Kashmir.

(BEGIN VIDEO CLIP)

ADAM GADAHN, AMERICAN AL QAEDA MEMBER: It's time for you to put aside tribal, ethnic and territorial differences and peddling -- petty worldly disputes not just for now but forever and unite to restore the glories of your forefathers and hasten, Allah willing, the defeat of the Zionist (ph)-crusader enemy and the establishment of the Islamic state...

(END VIDEO CLIP)

CHO: The video was released by a Web site that analyzes terrorists.

HOLMES: All right, here we are now three weeks since Hurricane Ike hit Texas and two more bodies have been recovered off Galveston. That brings the number of dead to 70. Ike roared ashore on September 13 as a Category 2 hurricane, hit Galveston hard. Three hundred people are still unaccounted for.

On an uplifting note after that hurricane, last night high school football returned to Galveston Island. It is the first football game since Hurricane Ike hit on the 13th.

And it's a sign here that things are slowly getting back to normal, fans certainly happy to see it.

(BEGIN VIDEO CLIP)

It's time to play, time to get some R&R, rest and relaxation. Been a long time coming. Time to play some ball, now. High school football is in the air once again.

UNIDENTIFIED FEMALE: We still got a long ways to go, but we happy to see them back out there.

(END VIDEO CLIP)

HOLMES: And of course, many of the players and students, just about everybody, affected by the hurricane. A lot of people lost homes while family members -- so, certainly nice to see a sense of normalcy, as Reynolds ways saying earlier. Things are getting there. They'll get there.

CHO: That's right, Reynolds, you were saying that sometimes it is the little things. Right?

WOLF: Oh, absolutely.

CHO: Fall is one of those little things that, it's nice to see the cheerleaders and band out to do some great stuff.

WOLF: Oh yeah, you got moms, dads, kids of all ages out there. You know, people who, you know, run stores and whatnot, and gas station owners, everybody out there, all getting together and just enjoying the great weather that they have this, there. Finally, they are getting a nice break. But again, can't say enough, there's still plenty of work, there. It's going to be a long time for them to clean up things and get things back in ship shape order but, hey, they can do it. Texans are great people, awfully tough.

(WEATHER REPORT)

CHO: That's great. So, I won't have any weather problems hopefully, Reynolds, when I fly back this afternoon.

WOLF: It's always going to be peaches and cream for you.

CHO: That's why I love you. Thank you, Reynolds.

Happy birthday, Pittsburgh. Take a look at this. The Steel City celebrating the 250th birthday in grand style with spectacular fireworks. They were actually launched from barges on the city's three rivers and lasted nearly 36 minutes. Good weather for it, too.

Up next, we're talking with a media coached who counseled politicians. So, what does she think about the VP debate? Sarah Palin's winking? Joe Biden states that he loves John McCain? What worked and what didn't? We're going to have some analysis.

(COMMERCIAL BREAK)

CHO: Welcome back. 47 minutes after the hour. No matter how blistering, how serious the headlines get in politics, the cast of "Saturday Night Live" always seems to find a way to go in the opposite direction. We mean, to find the humor in all of it. And after last week's vice presidential debate, well, they certainly had plenty to work with. Take a listen.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Next question is for you, Senator Biden. Do you support, as they do in Alaska, granting same-sex benefits to couples?

UNIDENTIFIED MALE: I do. In an Obama/Biden administration, same-sex couples would be guaranteed the same property rights, right to insurance and right to ownership as heterosexual couples. There will be no distinction, I repeat, no distinction.

UNIDENTIFIED FEMALE: To clarify, do you support guy marriage, Senator Biden?

UNIDENTIFIED MALE: Absolutely not. But I do think they should be allowed to visit one another in the hospital and in a lot of ways, that's just as good, if not better.

(END VIDEO CLIP)

CHO: And then Tina Fey, who was back playing Sarah Palin. That was Queen Latifah, by the way, playing the moderator, Gwen Ifill. Tina Fey said, "I believe marriage is a sacred [right] between two unwilling teenagers."

HOLMES: Everybody got that.

CHO: Everybody got that joke, yes. Nobody likes "Saturday Night Live," cast members, to put it all into perspective.

And I want to take a look at the real Joe Biden and Sarah Palin. There's content and then of course, there's style. So, how did they do in the VP debate on the style front? We're bringing in media consultant Heidi Berenson to join us this morning. She makes a living coaching people eon style, including some politicians. So, it's time to find out what you thought about last week's VP debate.

Hey, Heidi, good morning to you. I want to get right to the video of Biden and Palin walking out. Just before the debate, they greeted each other very warmly, as you know. And there you see Palin in slow-mo it looks like at first. They give each other a handshake and Palin clearly knowing she is miked, says, as you heard there, "do you mind if I call you Joe?" should she -- a lot has been made of her folksy manner, you know the you betch's, the, you got it, Main Streeters like me. We actually put a clip of the best of the best of Palin during the VP debate. Take a listen, we will talk on the other side.

(BEGIN VIDEO CLIP)

SARAH PALIN (R), VICE PRESIDENTIAL CANDIDATE: Can I call you Joe?

Go to a kid's soccer game on Saturday and turn to any parent there on the sideline and ask them how are you feeling about the economy and I will betcha, darn right it was the predator lenders.

I'll say it ain't so, Joe, there you go again pointing backwards again, thought, you prefaced your comment with President Bush now dog gone it.

And here's a shout-out to all those 3rd graders at Gladys Wood Elementary School, you get extra credit for watching this debate.

(END VIDEO CLIP)

CHO: All right. This is clearly playing to her strength, but how did it play with voters, do you think?

HEIDI BERENSON, MEDIA TRAINER: Well, Alina, there clearly were a heaping helping of smiles out there. But, really what this was a great contrast in style. You had exactly what you said, you had Governor Palin who was folksy, who was passionate, who frankly was right up the straight talk express. And then you had Senator Biden who how was seasoned, who was emotional, and who was sophisticated.

And what the two of them really learned through this and what we -- we know from what people see was -- as an audience member is they respond to emotional versus factual. And, see right there, they were bounding out of the gate, they were likable, energetic, confident and it really was almost like the Kentucky Derby, they were both ready to go and both brought their A-game. It was -- you know, it really was great study in contrast.

And what as interesting was you notice they were both wearing black and that was the one thing they were similar because that sort of shows that they wanted to be taken seriously, have some gravitas, it was much more formal, much more conservative. So, that was something where they both decided instead of wearing bright colors, which they normally do on the campaign trail, they decided to go ahead and this time, you know, wear black to be taken seriously.

CHO: And you take a close look at the video and they use the always popular two-handed handshake. Always a bit warmer, right?

BERENSON: Absolutely.

CHO: Well, we want to talk a little bit more about that in a minimum. But I want to talk more specifically now about Joe Biden. As you know, he said during the debate, which was parodied on "Saturday Night Live," I love John McCain, you know, but he will take this country in the wrong direction if elected. He also used a McCain campaign's own words, "maverick," in particular. Take a listen.

(BEGIN VIDEO CLIP)

JOE BIDEN (D), VICE PRESIDENTIAL CANDIDATE: The maverick, let's talk about the maverick, John McCain is. And again, I love him, he's been a maverick on some issues, but he has been no maverick on the things that matter in people's lives. He has not been a maverick in providing healthcare for people. He is not a maverick when it comes to education. He's not been a maverick on the war. He's not been a maverick on anything that genuinely affects the things that people really talk about around the kitchen table.

(END VIDEO CLIP)

BERENSON: Well Alina, you know, Alina, that's a classic example of repetion and people rember things best in a rhythmic pattern. So, what he did was just keep repeating it and hammering it home. People remember things in a rhythmic pattern, so that was one technique that he held on to. And in addition to he also counted off on threes. He would say No. 1 this, No. 2 this, No. 3 this and he actually used those tools several times to great effect.

CHO: Hey, Heidi, that's a classic legal strategy. One, two, three points, always. But, let's talk a little bit about the difference between VP debate and last week's presidential debate or Friday -- week ago Friday. You know, there was a difference in the body language. Don't you think? I mean, you take a look at Palin and Biden. There Biden is smiling, even as Palin goes on the attack. Not a lot of eye contact, not a lot of warmth between Obama and McCain. So heading forward to Tuesday's debate between presidential candidates, what's your advice for them?

BERENSON: Well, actually they really should take their cues from -- take their cues from their VP running mates and in fact, the VP running mates set the bar extremely high because they had great energy, likability, confidence, they had a lot of passion. And actually, what the candidates need is to remember people respond to emotional versus factual. So, if they can tell stories about sitting around the kitchen table, or going to Home Depot, or sitting around the kitchen table or actually the shout-out to Governor Palin's brother's 3rd grade class, you know, they should really try to be much more human, much more emotional because that's what people respond to. And people are going to look at this and say, you know what, I'm just wondering is it -- like what's in it for me? And they should really make it into what's in it for me? So, to take their facts and make them emotional, amp up the passion, if they could, smile and I guess, take Jim Lehrer (ph) advice which is have great eye contact with each other and the viewer.

CHO: Yeah, they are just not going after the hockey moms, they are going after the Independents at large, Right? Heidi Berenson, media consultant. Heidi, thank you.

BERENSON: My pleasure. Thank you, Alina.

HOLMES: I wonder if that was a first-time shout-out was ever used in a VP debate? That had to be a piece of history, there.

Well, politics and money on a list of hot topics this morning for a lot of people. Who do we turn to when we have hot topics like this? How's going to breaking it down for us? There he is, Howard Kurtz, he's our guy this morning with CNN's RELIABLE SOURCES.

Good morning to you, sir. What's coming up?

HOWARD KURTZ, RELIABLE SOURCES: Good morning T.J. thanks very much. Coming up, pundits were sure she would flop, but Sarah Palin showed them or did she? How did the Alaska governor charm her way to good media reviews while ducking many of the questions? And why is she annoyed with Katie? As the spotlight shifts back to Obama and McCain, we will ask Bob Schaeffer about his role of the debates coming up next week.

Bill O'Reilly goes off on Barney Frank on the mortgage meltdown. Did he bully the congressman? That plus the conservative columnist who's gotten hate mail for opposing Sarah Palin, ahead on RELIABLE SOURCES.

HOLMES: Yes, that O'Reilly. I thought O'Reilly was going to jump through my television screen when I saw that, Howie. OK. We're going to make sure we tune in to see how you break that down. Good to see you. We'll see you here shortly.

Yes, you know what I'm talking about.

CHO: I know exactly what you are talking about. I saw it.

HOLMES: All right, well, we're going to have tales from the night shift coming up next.

CHO: A big, hairy, hungry stalker. A bear in a convenience store. We're going to tell you what happened and show you the pictures.

(COMMERCIAL BREAK)

CHO: Take a look at this. What would you do if you were working the night shift, making sandwiches? Well, exactly what that worker did. Bear walks in and the worker locks herself in the bathroom, just what this subway restaurant worker in British Columbia. The young bear wandered around the shop for awhile. She was pretty calm. But the worker wasn't calm. Then the bear let itself out the same way it came in, through the door.

HOLMES: The video of the worker making a break for it is classic.

CHO: That's not how I order a sandwich. But, you know, bears do it a little differently.

HOLMES: We We'll turn to some other interesting videos. Beginning to look a lot like Halloween. Look at this picture, here. Pumpkins, part of an effort to beat the Guinness record for most lit -- they have a Guinness record for everything.

CHO: Yeah, they certainly do.

HOLMES: But, this one is for jack-o'-lanterns. Volunteers at the Camp Sunshine, Maine, Pumpkin Festival managed to light just over 23,000, that's about 7,000 shy, though, of the record, so the record is around 30,000, apparently.

CHO: That's something else. Nothing like New England in the fall, too. Pumpkins are part of that. Hard to believe, didn't we just get out of summer?

HOLMES: We did, but we have an election coming up, finally.

CHO: Just a few days away. Coming up next on RELIABLE SOURCES, are reporters playing gotcha with Sarah Palin, as she says? Howie Kurtz takes a look at what's fair and what's not for journalists.

HOLMES: Also, at Noon Eastern Time, the bailout plan and candidates' responses, how the economy will affect the election. Don't miss LATE EDITION with Wolf Blitzer, that all coming up. But first we got a check of the headlines for you.

From the campaign trail first, Sarah Palin accuses Barack Obama of palling around with terrorists. Palin is referring to Obama's association with former 1960s radical William Ayers. Obama and Ayers once served on the same charity board in Chicago. CNN's "Truth Squad" checked it out and finds the Palin claim is false.

Well, the Wachovia Bank merger with Wells Fargo is on hold. A Judge has stopped the sale temporarily. The judge is actually -- gives CitiGroup time to argue it already had a deal with Wachovia that should be honored.

Gas prices now getting a little cheaper. Two cents and we'll take it. AAA says the average price of regular fell more than two cents today to $3.52. That's the 18th consecutive drop.

And the national death toll from Hurricane Ike is now up to 70 after a search team found two bodies on a Texas island right near where the storm made landfall last month.

Also Recovery efforts around the wreckage of Steve Fossett's downed team may not resume until the summer. Snow in Sierra Nevada on Friday. Officials don't expect conditions will improve enough for crews to return there this year.

We'll have more top stories coming your way in 30 minutes. But now we want to get you to RELIABLE SOURCES.