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CNN Saturday Morning News

Senate on Brink of Historic Votes; Tax Cut Deal & Your Dollars; Getting Ready for 2011

Aired December 18, 2010 - 09:00   ET

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

(COMMERCIAL BREAK)

T.J. HOLMES, CNN ANCHOR: Well, hello there. Top of the hour on this CNN SATURDAY MORNING. Give you a look at some of the stories making headlines, including tough talk coming from both sides in the demilitarized zone that separates North and South Korea.

Former New Mexico Governor Bill Richardson is there. He's trying to ease things, ease those tensions on the Korean Peninsula. This comes weeks after both sides traded fire over disputed island off the Korean coast. Bad weather has canceled South Korea's planned military exercises for today, which North Korea had threatened to respond to with force.

Richardson, America's unofficial envoy to North Korea met with the nation's chief nuclear negotiator, described the meeting as productive, but the whole situation he also described as a tinderbox. To our Wolf Blitzer who is traveling with Richardson.

(BEGIN VIDEO CLIP)

GOV. BILL RICHARDSON (D), NEW MEXICO (via telephone): I'm concerned because there's a potential for a miscalculation. I've raised with the North Koreans the importance of being extremely restrained, to cool down, to not overreact. We started these discussions yesterday. This morning, we're going to meet with a top adviser to Kim Jong-Il, Kim Kye Gwan, head of the military, tomorrow.

But I am concerned because these routine exercises of the South Koreans could cause a miscalculation. My sense from talking to the North Koreans is they want to tamp things down a bit.

I urged them to be restrained, that they've caused a lot of international damage to themselves with the killing of the civilians on the island, the sinking of the ship, the increased uranium production that is causing enough alarm that the time has come to come back to negotiations and to cool things down. I think we've had a little bit of success. But I'm really concerned about these potential exercises causing a provocation.

(END VIDEO CLIP)

HOLMES: Also, take a look at this. We've seen scenes like this play out around the country this week. We'll see some more next week all before Christmas. They're being greeted, our men and women, the hugs and the handshakes and the tears from family.

Again, these scenes playing out at airports across the country. A lot of them getting leave, getting a chance to come home. A lot of them coming home from theater and will get to stay home. But some of them will have to go back out. But still, so many of them are pleased to be home for the holidays and be with their families.

Also, how would this sit with you? How will this help you sleep? Knowing that 141 inmates escaped from a prison that's near you. Well, they escaped from a prison in Mexico. They are still on the run now. They might have had some help from the guards to get out of this prison. State and federal Mexican officials blaming each other for the security breakdown.

Also among the missing right now, the prison director. Again, this prison is in Mexico, but it's right across the border from Loredo, Texas. Just across the river.

Turn to some weather now. And it is severe. Many parts of this country, but also in much of Europe. Snow plows are among the only vehicles moving right now. Again, this is northern Ireland to Bulgaria. They've had blizzard-like conditions, they've delayed, canceled hundreds of flights. Some parts of Bulgaria recorded almost 40 inches of snow already.

Reynolds Wolf here with more, as always. You want to do weather, though.

(CROSSTALK)

REYNOLDS WOLF, AMS METEOROLOGIST: I can say every time I go to Bulgaria, you know, we often deal with that heavy snowfall. It just happened this time of year.

HOLMES: You go in the wrong season. You should go in the summertime.

WOLF: Absolutely. Bulgaria is always beautiful, especially this time of year. But I will tell you that the snowfall out towards the west is pretty intense, especially in the Sierra Nevada where they could see several feet of snowfall. Some places, especially the highest mountain peaks could get up to eight feet of snow before the weekend is out.

Let's go to the west. That's where the big story happens to be today. As we zoom in on the location, the snow is so easy to see. Right up here, the highs here, Nevada, from Reno southward to say, about devil's post pile, the snow is really going to be piling in. And some of that as I mentioned very heavy but there's another big part of the story, the big component. And that is going to be the wind.

The wind really beginning to pick up, especially into the late afternoon hours. We could have some gusts topping 60 perhaps even 70 miles per hour. So with that and the snow, visibility could be minimal, especially along parts of 80 near Lake Tahoe and back towards (INAUDIBLE). So please be careful out there on the roadways.

You know, we can show you these computer images, but the graphics there are one part of the story. Maybe video does an even better job. Let's show you this footage that we have. This is just from the west of Tahoe area. Looks pretty good there for the skiers. Got a few kids, moms and dads out there. A few snowboarders have been out there too. So it's great for anyone who wants to have any of the winter sports. But if you're just trying to get from one point to the other than the freeway, it's going to be a difficult time for you.

The CHP will be out there in force. Please be careful out there. They're out there to make sure you're safe. And they're going to try to keep those roads as clean as they can. But mother nature will be working against them.

Let's show you what else we've gotten in store, not only the heavy snowfall, but that low that's going to bring in that Pacific moisture is going to remain in place for the rest of the weekend. In fact, as you see now out there on the West Coast, it's going to keep that rain in places like San Francisco where the high is going to be 61.

As you come back to the weather maps, you're going to see it plain as day, 61 degrees, that will be your high in San Francisco. Portland, 44, scattered showers, 68 in Phoenix, 55 in Dallas, 22 in Chicago, 36 in New York, 44 in Atlanta with the rainfall for tomorrow basically the same thing, 15 for Minneapolis, 55 in Denver, and 70 in San Antonio for your Sunday.

All right, T.J., that's the latest for the forecast. Everything rough out towards the west, much better on the East Coast.

HOLMES: Appreciate it. It looks good. Thanks so much. We'll talk to him plenty throughout the morning.

Take a look now at Washington, D.C., a busy place this weekend. This is a live picture of the Senate floor. Yes, they are working on the weekend. They are in session because they have a couple of major things on the plate. It wasn't just that Bush era tax cut deal they had to vote on, that has been done. The president signed that. But still, a couple of major issues.

One of them being "Don't Ask, Don't Tell." They could vote today or at least this weekend and we could have a repeal of that 17-year policy that keeps gays and lesbians from serving openly in the military. They could repeal it this weekend.

Also something else they're taking up is the DREAM Act. Now, that is a legislation that some opponents call amnesty. Others say it has given people a chance who didn't have an option. Those people we're talking about are illegal immigrants who are here, young people who came to this country, who are brought here by their parents as children. The DREAM Act allows them a path to citizenship if they either go to college or join the military.

So the DREAM Act, not - the supporters not too optimistic about it today. But it looks like the votes are there, at least for "Don't Ask, Don't Tell." Both of those votes coming up are scheduled at least within the next hour and a half. We will keep you updated about what's happening there.

Meanwhile, this time, we're in this 9:00 Eastern hour and every Saturday here on "CNN Saturday Morning," we spent a little time in this half hour digging deeper on an issue that directly affects you. We are talking about your taxes today, you money. Also some decisions you can make about that money. 2010 is winding down.

You're going to be thinking about taxes next year, you have to do them. So we've got experts here answering your questions about the tax, the taxes, also about your family finances. All of that coming up. One thing you can plan for now - and everybody was waiting. What are you going to do with these Bush-era tax cuts? You know now your taxes are not going to go up next year because that deal, that compromise was reached. The president has signed off on it.

Our Kate Bolduan standing by for us at the White House though. Kate, there's a lot in this big bill. We're talking about $900 billion. The main part, yes, everybody heard was about the Bush-era tax cuts. But there's more in there for people to know about, as well.

KATE BOLDUAN, CNN CORRESPONDENT: That's absolutely right. And really quickly, let me run through those provisions that really were included in this package. Not only are we talking about extending the Bush-era tax cuts for all Americans and that's for that short period of time, relatively. That's a two-year extension, but also includes an extension of unemployment benefits. Something that Democrats were really pushing for saying that was kind of their marker. They weren't going to go anywhere in those negotiations if they didn't get that included in this deal.

That also included a payroll tax reduction and a reduction in the level - the level of the estate tax. A bit controversial there. But when signing the $858 billion tax deal, T.J., President Obama, he called it a good deal for the American people.

But it was a deal that neither Democrats nor Republicans were entirely happy with. Regardless, both sides are touting victory, albeit with their own spin today.

Listen here.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: This package which is so important for our economy at this pivotal time, was the product of hard negotiations. Like any negotiations, there was give and take on both sides. But I'm heartened by our ability to come together to do what's best for middle class families across this country and for our economy as a whole.

SEN. JOHN CORNYN (R), TEXAS: This bipartisan agreement was made possible because voters gave Republicans much more leverage at the negotiating table. Our leverage forced the White House to abandon its class warfare rhetoric, stop pandering to the president's left wing base, and do the right thing for American taxpayers and job creators.

(END VIDEO CLIP)

BOLDUAN: So not everyone - no one really entirely happy with this deal, T.J. but I guess that is the art of compromise here in Washington. You're not going to be happy with everything included in a compromise.

But beyond the tax deal, President Obama is still delaying his - the start of his holiday vacation where he will be heading to Hawaii. Why? Well, the White House says he is staying in town as long as Congress is staying in town and in session but also the reality is there is always a bit of perception when it comes to this type of thing.

It might not look so good if the president's off on vacation while Congress is still debating some of his top priorities, repealing "Don't Ask, Don't Tell," as well as some of his campaign promises. So that's what's going on today.

HOLMES: Yes. And certainly not a good look of all places he's going for his holiday vacation, Hawaii. You don't want to see Congress working and him in a Hawaiian shirt. That's not a good look, Kate.

BOLDUAN: Holiday vacations are always sensitive with any administration. When they take it and how they take it.

HOLMES: All right. Kate, good to see you, as always. Thanks so much.

And as a reminder, she's there in D.C., the work is going on there today. We're keeping a close eye on the Senate, expected to vote within the next hour and a half on two major initiatives, the DREAM Act and "Don't Ask, Don't Tell," could be repealed this weekend. We're keeping a close eye and we'll continue to monitor and let you know about that.

But also, we are monitoring your money, your taxes. Everybody talking about this landmark tax deal that was signed into law. How does that exactly affect you? Could that really affect your taxes as you file them, actually? Coming up at the beginning of the year, we've got a tax specialist coming in, answering your specific questions.

Eleven minutes past the hour. Quick break. We'll be right back.

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HOLMES: All right, 14 minutes past the hour.

So much action on Capitol Hill regarding taxes. Bound to be some confusion as to what you need to be doing to prepare for 2011. This morning, we've been asking for your questions. So thank you to you all who sent them to us at our e-mail, also on Facebook and Twitter. We did get them, we picked out a few. We couldn't of course get to all of them, but thank you for sending them.

Joining us now from Dallas though to answer some of those tax questions is tax consultant, Eric Amado. He is here with us.

Sir, good morning, we appreciate you and everybody has their mind on Christmas right now. Nobody wants to be thinking about taxes. But you think we should be right now and some things we need to be doing right now to get ready for next year's tax files?

ERIC AMADO, TAX CONSULTANT: Absolutely. Taxes are very, very important. What I'm going to do - I'm going to give you four key things I need you thinking to do right now to prepare for taxes.

First of all, you need to get organized. I want you to get a folder and put 2010 tax information on that folder and any tax information you get in the mail, a W-2, a 1099 or interest and expense report, put it in a folder and get it organized for your preparer.

Next I want to talk about charitable contributions. If you gave to a church, you gave to a Salvation Army or Goodwill, be sure to put that information in the folder, as well, because that will do well for you and your tax preparer.

And also, I want you to look at your 2009 tax return. I want you to do a reconciliation on what kind of documents you got. If you've got two W-2s, you should probably get two W2's for 2010, as well. So look at that 2009 return and do a reconciliation.

And finally what I want you to do is make an appointment with your accountant. What I want you to do is sit down with your accountant say, "you know what? I need to get on your schedule and find out when's a good time to get this tax return done early 2011." Because a lot of accountants are going to be very busy in 2011 because all of the changes in the economy.

HOLMES: OK. That's pretty good. Good stuff. It's stuff we should know, it's almost common sense in some ways, but you don't think to do it. And you're right, if you don't have one place you're putting all that stuff. It gets lost in the mail. Because they come at different times.

AMADO: Exactly.

HOLMES: You've got to have a place to put them all. We talked about, we took questions this morning from viewers. So let's get right to them. Here's one from my Facebook page.

AMADO: All right.

HOLMES: We appreciate it from Benita Gay. And it says "I assume that because the tax cut deal was approved, there'll be no major changes when filing taxes this year. Is this a correct assumption? Or have there been changes implemented that have not made the headlines?" Yes, we're talking about taxes for next year with this new deal. But is that in any way, form or fashion going to affect people's filing for 2010?

AMADO: w ell, right now, the answer is no. There could some adjustments. 2010 is already done. So the tax laws already done. We're already paying what we need to pay. The Bush tax cuts expire December 31st at the end of this year. So what we were doing was trying to get that bill passed so we could have new tax laws for 2011. The big concern is 2011. We got an extension of two more years. You should not see too many changes for 2010.

HOLMES: All right. Let me move on to A.M. Cain who sent one in, and says "I'm a full-time college student. And due to the nature of my studies, I've been unable to work. Will I have to file taxes on the grant money I've received? And will I be able to use the tax credit for college students even though I have not worked this year?" Kind of a complicated one and very specific.

AMADO: Very specific, very good question. Now, as far as the grant money, in most situations you do have to pay taxes on your grant money. But I want you to talk to your accountant about that. But also, there are some tax credits out there. There's the hope tax credit and there's also the lifetime tax credit, as well. So talk to your accountant to see if you qualify for those two tax credits and you will be able to get a credit for your tax return.

HOLMES: Another from Andre in Maryland and says "is there a tax credit for parents who pay college tuition for their kids?"

AMADO: Absolutely. The same credit we talked about. The hope tax credit and the lifetime learning credit. You can take those as a parent if the child is your dependent. Of course, you have to go through the dependency test to make sure you qualify. But if the child is your dependent, you should be able to use those, as well.

HOLMES: Don in Honolulu, "There had been some mention of extra payment to social security recipients, will this be happening?"

AMADO: Well, I think there may be a little confusion on that question. What I really want to talk about is the payroll tax cuts what's happening. And that's where you'll see it more in your paycheck. It's gone from 6.2 percent to 4.2 percent. And you'll probably start seeing that in your paycheck prior to second and third week in January. That's where you'll start seeing more money in your paycheck, and that's where you'll really get the bang for your buck based on these tax cuts.

HOLMES: Eric Amado, good stuff. Everybody's thinking about Santa Claus right now and Christmas and the gifts. But this is something we need to have on our minds. Very simple common sense basic stuff everybody can do. Eric, that's the kind of breakdown we like. Thanks so much, buddy. We appreciate you coming in. Enjoy the rest of your weekend.

AMADO: Thank you very much. Thank you, too. Thank you. HOLMES: Well, coming up, you also need to be thinking about your family budget for next year. Maybe you need to do some things differently than you did this year. Hey, we're talking about some financial tips as well.

Twenty minutes past the hour.

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HOLMES: All right, 22 minutes past the hour now.

We've looked at some of the things you can do to get your taxes in order next year. Something else you need to be paying attention to is that family budget. You need to set one for the new year. You might want to get on that now. Also your medical insurance coverage. Have you thought about that?

Well, joining us with some help, the author of "It's Just Money, So Why Does it Cause So Much Trouble?," Karen J. Lee joins us in studio. Thank you for being here with us. Is this something - can we get past the holidays yet? Or we need to do this before we get past the holidays? Set that family budget?

KAREN J. LEE, CERTIFIED FINANCIAL PLANNER: The thing I see is a lot of people have some down time during the holidays.

HOLMES: That's a good point.

LEE: Number one reason people don't get around to their budgeting and their financial issues is procrastination. I just don't have enough time, I'm so busy. So if you've got a couple of easy weeks, that's a great time to do what I call some financial housekeeping.

HOLMES: OK. Why do we need to do it in the first place? Because we might end up making the same mistakes, I assume, next year. It's important to do it.

LEE: Of course. When my book comes out, you'll see that a lot of times it's behavioral things that are the problem. But yes, what you want to do with our first tip is you want to take a look at the family budget. If you've got some time, I recommend calling as many of your vendors as possible, your cell phone company, your television, satellite. Can I get a different package? The cell phone companies have lower packages, they don't tell us about as an existing customer unless we call them.

So if you'll do some of those things and then lay out the budget and then have a family conversation concerning the parts of the budget that are applicable. If you're the one working and your spouse is the one who does the groceries and you write the budget, you've got to let them know this is how much I plan to spend.

HOLMES: That's a good point if you go take a survey of most people and just ask them how much their cable bill is a month, they probably have no idea exactly what they're spending. LEE: Exactly.

HOLMES: They just pay it and keep going. That's a very good one. Insurance, why is it important to review that?

LEE: Very important. And property and casualty as well as life, disability, health. Let's talk about property/casualty first. I've got a great example. Last week I got an appraisal on my engagement ring, which, by the way, congratulations on yours -

HOLMES: Congratulations to you, as well.

LEE: Thank you. I've been married 21 years. I had this ring appraised. I haven't had it appraised since 23 years ago, it's worth double what it's insured for. If I lost it, I would only get half the value. I wouldn't be able to replace it.

HOLMES: Wow.

LEE: So make sure that you keep up to date on your insurance, including your house. You just assume if you've been in that house every year, usually the insurance company ratchets up the amount it's covered a little bit every year, but it might not be adequate to actually replace your house.

HOLMES: Now that you've told us your ring is worth double, we'll get you an escort out of here.

LEE: Let's talk about health and life and disability. A lot of people assume disability insurance, I can't work because I'm sick. So my company's going to pay some amount of money to me. Check and see if you even have that kind of coverage. You do.

HOLMES: And sometimes it's short-term or long-term.

LEE: Both. And how much is it? It's usually around 60 percent. If you do have it, could you live on 60 percent of your income? If you couldn't, you might want to get a little bit extra. Life insurance, so inexpensive to go out and buy term life. So many people come to me and say, need more, need more. While you're reviewing it, check all your beneficiary designations.

HOLMES: OK. I've got three more. We got to get through these fairly quickly. Retirement savings.

LEE: Just take a look at what level you're at. A lot of people in the past year or so have cut back because of hard times. Make sure you're at least doing up to the company match. Try to go up two or three percent each year.

HOLMES: OK. The retirement investment allocations you're talking about there, as well.

LEE: Check your asset allocation is one of the key things about investment performance. What percentage should you have in stocks? What percentage in bonds? Is it out of whack? If so, rebalance it back to that original allocation. It reduces risk and it kicks up your return a little.

HOLMES: Another one people probably don't think about enough, you need to set some goals. But you said they need to be attainable.

LEE: I worry about people who say "OK, I've got $20,000 in credit card debt, my goal next year is to pay it all off."

HOLMES: OK.

LEE: Can you really attain that? What about paying down $5,000 of it or $7,000 of it? Make an attainable goal, but do make goals, very, very important.

HOLMES: So we shouldn't shoot for the moon necessarily sometimes?

LEE: Make sure it's reasonable.

HOLMES: OK. Karen Lee. You're really helping me out. You and also the guest we had on taxes. Just some common sense stuff that we kind of all know but need to be reminded about and we need to hear it.

LEE: And these are housekeeping things you should do every single year.

HOLMES: Every year.

LEE: Every year.

HOLMES: Thank you so much.

LEE: It's nice to talk with you.

HOLMES: Congratulations on the 21 years.

LEE: Thank you. Yes.

HOLMES: Thank you so much.

All right, 26 past the hour. Quick break. We're right back.

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HOLMES: Taking a look now at some stories making headlines.

Congress working as we speak. And we could see a major vote coming up that could lead to the repeal of "Don't Ask, Don't Tell." They're taking that up as well as the DREAM Act. But yes, the Senate is in session. Both of those votes expected sometime over the next hour or so. We are monitoring that closely.

Also, I don't know how I go from that to marijuana, necessarily, but I'm going to give it a shot here. Anything you want to know about marijuana, you can head on over to the Cannabis Lifestyle Convention in Denver. Runs through tomorrow. Organizers call Colorado, the geographic center of the universe for cannabis industry. If you want to be known as that. It has a booming medical marijuana business. Already has laws in the books to regulate and tax cannabis.

And also a picture to show you here. Several stranded deer stuck on an icy part of the Mississippi River in Illinois. They have now been rescued. Volunteers on some skis got out there and herded these guys to the nearby shore. From there, other volunteers carried them to safety.

Well, I will be back at the top of the hour, CNN's SATURDAY MORNING continues, but "YOUR BOTTOM LINE" starts right now.