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CNN Saturday Morning News

Paying at the Pump; Thousands Fleeing Libya to Escape Fierce Battles; Strengthening Child Seat Laws; The Royal Wedding Tab; Bizarre and Bountiful Tax Deductions: What Are You Missing?

Aired March 05, 2011 - 07:00   ET

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

(MUSIC)

RANDI KAYE, CNN ANCHOR: Good morning.

Take a look there at your television screen, those numbers say it all. The price of gas is rising at an alarming right. You probably have to take out a bank loan just to fill up your tank. We'll tell you who's getting hit worst.

Maybe you can keep more of your money when it comes to paying taxes. We have a list of the most bizarre deductions you can take to the bank.

And it may be the least romantic part of the wedding, the budget. Just how much will Prince William and Kate Middleton pay for their royal affair?

It's early and we're on it. From CNN Center, this is CNN SATURDAY MORNING. It's March 5th. I'm Randi Kaye. So glad you're spending your morning with us.

We start you of this morning with the increasing cost that we are all paying at the pump, gas prices. Filling up that tank is now taking a bigger bite out of family budgets across the country. The average price per gallon of unleaded: $3.49. If you are paying less -- well, you're pretty lucky. One year ago, we were paying $2.70 for that same gallon of gas.

(BEGIN VIDEO CLIP)

REP. ROSA DELAURO (D), CONNECTICUT: We are trying to recover economically in the United States. And if we see gas prices rise the way they are doing now because of the high price of oil per barrel, then we are going to look at more money being spent to put oil in the tank, more money for those of us in the Northeast with home heating oil.

(END VIDEO CLIP)

KAYE: And take a look at this map for you. Those of you in the dark blue states are actually the lucky ones, so to speak. Your gas prices are the lowest on average. But in New York and out west, prices are fast approaching $4 a gallon. In some places, that 4 buck mark has already been topped. One of our iReporters in Malibu, California sent us this. She just paid $4.09 a gallon for gasoline. It's about 75 bucks to fill up. And what's it last you, maybe about a week or so?

And check out this iReport from David Horton. He's a student -- a student on a fixed income, we should say. Like all people on fixed incomes, a hike like this in the price of gas is especially rough.

So, what's driving the price of gasoline higher? The violence in Libya and the increasing uncertainly across the Middle East.

We're hearing about fierce battles today in the streets of Zawiya. That's not far from the capital city of Tripoli. A witness tells us government forces have retreated from the city's center after shooting it out with protesters.

It's a similar story in Tripoli. A U.S. official tells CNN that the protesters are well-armed and could carry on the fight for some time. Well-armed means tanks and anti-aircraft guns.

(BEGIN VIDEO CLIPS)

UNIDENTIFIED MALE: Now, it is surrounded. What for? What for? And then we will die.

UNIDENTIFIED MALE: Everybody using guns waiting for the people to come out. Everybody making a small move, they just kill them.

(END VIDEO CLIPS)

KAYE: The heavy fighting has forced tens of thousands to flee for the relative safety of the border, but that's causing a humanitarian crisis there. Many are huddled into tent cities at the Tunisian border. A couple of American C-130 transport planes filled with relief supplies arrived there yesterday to try and help those people.

Let's move now to the budget battle in Wisconsin. Many states are watching how this plays out as they look to cut their own budgets. Despite more protests from organized labor supporters, Governor Scott Walker sent out warning letters to unions saying massive layoffs are coming in April if no deal is reached on a new budget. Senate Democrats are blocking a vote on the governor's controversial budget which would eliminate collective bargaining rights for public employees.

(BEGIN VIDEO CLIPS)

JON ERPENBACH, STATE SENATOR: I thought we were fairly close yesterday based on what I've heard from colleagues, but here we are today.

STATE SEN. MARK MILLER (D), MINORITY LEADER (via telephone): It looks as though the governor is not serious about negotiating. So, we are -- we will assess the need and the timing of when we return.

(END VIDEO CLIPS)

KAYE: Now, take a look at this bizarre scene at the state capital in Madison. You can see police wrestling a man to the ground. It turns out, he's a Democratic assemblyman. But police say, well, he just didn't show his identification. The legislature was closed to the public after protesters caused a lot of damage.

And look at the budget mess in Washington. Congress is keeping the federal government running for two more weeks while they try to hash out a deal on budget cuts, but the prospects don't look any better than they did last week. There are a couple of votes scheduled next week on the Senate proposals, but both sides say they are dead in the water. They are about $50 billion apart on proposed cuts.

So, what does this really mean to you?

CNN's Sandra Endo takes a look at some of the programs already being cut to save some money.

(BEGIN VIDEOTAPE)

SANDRA ENDO, CNN CORRESPONDENT (voice-over): Carolina Espina enjoys school lunchtime with her two kids. She's part of a language program called Even Start, geared toward low-income immigrants who want to learn English but can't afford to pay for classes.

While she's in class, her daughter gets to play in day care. When Espina first moved here from Honduras six years ago, she didn't speak a word of English.

(on camera): If this program wasn't available, what would you do? Do you feel like you would you be this far along in your English and being able to spend time with your kids?

CAROLINA ESPINA, MOTHER: This program is great because you can stay and learn English. At the same time, we don't have -- I don't have worry about my daughter because my daughter is (INAUDIBLE).

ENDO (voice-over): But maybe not for much longer. While the program helped Espina, federal funding for Even Start just got cut in the recent two-week extension of the budget, after officials deemed the program ineffective.

Other programs cut included in the $4 billion spending reduction include election assistance grants, the Leap Educational Program which helps states give need-based student aid, and highway funding. The cuts also included many earmarks for homeland security, education and housing.

And the budget act is about to fall again as lawmakers wrestle over more cuts as part of a long-term spending plan for the rest of the fiscal year.

RYAN ALEXANDER, PRESIDENT, TAXPAYERS FOR COMMON SENSE: It's going to be a contentious fight. There may be very deep cuts where there's going to be some immediate pain felt on the ground in communities and it may be that they look at their own communities and try to protect those (ph) in their communities.

ENDO: For Even Start, they'll have to find other ways to stay alive.

JENNY LINDENHAUER, EVEN START: We will work very hard to make sure that the program continues to exist.

ENDO: Sandra Endo, CNN, Arlington, Virginia.

(END VIDEOTAPE)

KAYE: Democrats say the Republican proposals are, quote, "reckless," while Republicans are saying Democrats are just giving them the status quo when it comes to cuts. In two weeks, the government runs out of money if there is no deal reached or if there isn't another continuing resolution.

So, what do breast implants, cat food and an Elvis costume have in common? Yes, I know, that is a very strange question. Well, they are all, in some ways, tax deductible. And that's not all. We have more bizarre write-offs for you.

How is that for a lead-in, Reynolds?

REYNOLDS WOLF, AMS METEOROLOGIST: What -- what was that again? OK, let's get this straight --

KAYE: Cat food, breast implants, you got it?

WOLF: Yes, cat food, breast implants and Elvis costumes. It sounds like a party at the Wolf house. Goodness gracious.

Guys, no parties at all in parts of the Ohio Valley. We can expect some scattered showers, storms and flood watches and warnings remain in effect. We're going to give you the full scoop coming up in a few moments.

You are watching CNN SATURDAY MORNING.

(COMMERCIAL BREAK)

KAYE: Old fashioned horsepower comes to the aid of its modern cousin. I want you to check out this video that we found this morning on YouTube. It was shot recently in Pennsylvania's Amish country.

Yes, there's that video. That's where this big-rig got stuck on an snowy embankment -- but not for long. Horses pulled the truck back on the road as you can see there and voila, both beast and machine back in business. That is certainly the old-fashioned way.

Look at that. That's some real horsepower, isn't it, Reynolds Wolf?

WOLF: Yes, I don't know if these are Clydesdales or Percherons. But these are just monster horses. And again they are draft horses, huge. They got a history of being able to pull all kinds of stuff, including huge semi-trucks. Who'd ever thought that? Crazy stuff.

Hey, we got some crazy weather to talk about today, Randi. We have all kinds of showers and storms across parts of the Midwest. But I'll tell you, whenever you have bad weather, you also have the possibility of telling great stories. And this is one of them.

Nearly 200 Lake High School students and teachers helped -- and parents helped Findlay residents clean up after the most recent storm. They also did a little extra help to help them prepare for the next one. See, four busloads from Lake Township and Wood Counties, Wayne and Hancock County, Ohio, in Findlay to assist those who have been affected by recent flooding.

It's got a little bit of a payback situation because after the 175-mile-per-hour tornado that destroyed Lake High School, a nearby town to Lake Township, Moline and Millbury in June 2010, Lake High School Principal Lee Herman said because so many helped them, they wanted to help back. So, the school did that last Friday. It's a beautiful thing to do. And again, with all the flooding they are expecting, they're going to see a lot of those sandbags.

Let's go right to the map and show you all the big issues that we're dealing with across parts of the Ohio Valley. And here it is, you got all these showers, the top half of the system, even a little bit of snowfall across parts of the central Great Lakes, especially northern Michigan, central Michigan. But follow this line all the way down to parts of the Southeast. We've got some strong storms.

And even more in parts of Louisiana, just moments ago, we now had a tornado warning that is in effect near Houma. Now, just keep in mind, this is not a confirmed tornado. This is what meteorologists detected, a bit of rotation in the atmosphere. It's possible that a tornado could form from this, but we're going to watch it for you very carefully.

This is going to be unfortunately a sign of things to come today along the Gulf Coast. We are going to have that possibility of rough storms from Florida into parts of Alabama and Mississippi and even into Louisiana through late afternoon.

That's a quick snapshot of the forecast. Randi, back to you.

KAYE: Thank you, Reynolds.

WOLF: You bet.

KAYE: Child car seat laws are getting tougher. A new bill out of the Georgia legislature would keep little ones in a booster chair until they are 8 years old. But which one is right for your child?

CNN's senior medical correspondent Elizabeth Cohen has more.

(BEGIN VIDEOTAPE) ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT: More and more states are telling parents you've got to have your child in a car seat until that child turns 8. For example, in Georgia, they just passed a law like this.

So, let's take a look. A 6 or 7-year-old would sit in a seat like this. It's called a booster seat because it literally boosts them up and makes them taller. So, when you put the seatbelt on it goes here. If they didn't have this seat, the seatbelt would probably here and you could imagine what would happen in an accident.

So, to go over all the car seats your child needs at various ages, we start over here. This is called an infant car seat. It goes backwards. The child sits in it from approximately birth to one year, depending upon the size of the child.

And then they would move to this toddler car seat. And then at around age 4 or so, they would go to the booster seat.

But since children come in all varieties of heights and weights, check with your doctor about when they should move up to which seat.

Back to you.

(END VIDEOTAPE)

KAYE: The dress, the cakes, the flowers, astronomical may not be enough to describe the cost of the upcoming royal wedding. We are going to crunch the numbers. Now, I'll just give you this little tease, an $80,000 wedding cake. Really? Yes, we will share those numbers with you and we'll let you know who's paying for what.

(COMMERCIAL BREAK)

KAYE: Welcome back.

Do you remember your wedding? Then you probably know marriage is one expensive business. So, imagine the tab for a royal wedding. Let's just say it is a price tag that would make any commoner wince, which is pretty ironic considering that they'll actually be paying for a huge part of the royal wedding bill.

Nadia Bilchik is joining me with our "Morning Passport."

We are talking about the cost of the royal wedding.

NADIA BILCHIK, CNN EDITORIAL PRODUCER: The royal which is being called the wedding of the cyber century. And this week, Kate and William actually launched their own Web site.

But the numbers I'm going to give you don't come from the Web site. They are purely speculation.

But let's imagine security is going to be the biggest cost --

KAYE: Sure. BILCHIK: -- and that British taxpayers are going to be paying for. And they speculate anywhere between around $8 million to $32 million.

KAYE: Just for security.

BILCHIK: Just for security. Think of all the dignitaries, people on the streets.

KAYE: Right.

BILCHIK: There's definitely being a possible terrorist -- you know, we don't know what could happen.

KAYE: The queen will be there.

BILCHIK: Exactly the queen. So, security, and also, because of the 29th of April is going to be a bank holiday or public holiday, the policemen have to get paid double.

KAYE: Oh, that's really driving it up.

BILCHIK: So, that's driving up the expense.

KAYE: But now, Prince Charles and Lady Di, their wedding cost about $48 million. So, those -- I mean, obviously, that was long a time ago.

BILCHIK: That was a lot at the time.

KAYE: Right.

BILCHIK: This is certainly going to be more. But there are going to be consideration on Kate and William's part to keep it somewhat modest.

Now, as you said, who is paying for what? So, the wedding dress itself, which we still don't know --

KAYE: Who is designing it. Right. We're waiting on that.

BILCHIK: Exactly. Will it have the 10,000 pearls that Princess Di's had? But they are saying anywhere between $64,000 to $434,000.

KAYE: Four hundred and thirty-four thousand dollars for a wedding dress? OK.

BILCHIK: Will it have (INAUDIBLE) crystals? Who will it be designed by Bruce Oldfield or --

KAYE: Right.

BILCHIK: Who will the designer be? We still don't know.

KAYE: Let's get through some of the other costs. BILCHIK: Now, the cake they say anywhere between $60,000 and $80,000. And that probably won't be one cake. Di and Charles had 27 official cakes.

KAYE: Oh, just 27. OK. I understand.

BILCHIK: Gold leaf and they'll be the house of Windsor and beautifully decorated. Can you imagine the layers and layers and layers and the photographs. Do you know that a piece of cake from Di and Charles wedding sold for thousands of dollars years later?

KAYE: And I saw the flowers estimated between $300,000 and $500,000?

BILCHIK: Yes, because they have to fill Buckingham and Westminster Abbey.

KAYE: Wow.

BILCHIK: So, huge expense. It will be glorious and it will certainly view by all of us. Six a.m. on the 29th of April.

KAYE: Oh, my. See, I eloped so I can't relate to any of this, me and my husband, we didn't have any of this.

BILCHIK: You saved a lot of money.

KAYE: It certainly did. It would have been certainly not as lavish as this. But that was a -- those are some interesting numbers. Nadia, thanks.

You may not be a drug dealer but if you were, did you know you can legally claim your guns as a tax deduction? Bizarre tax write- offs you don't want to miss.

(COMMERCIAL BREAK)

KAYE: Twenty-two minutes past the hour.

Many of you may be planning to sit down this weekend and work on those dreaded taxes. It's not fun, but it's got to get done, right? Well, if you plan on itemizing, you may want to see what some other people are writing off and why.

CNN's Allan Chernoff takes a look.

(BEGIN VIDEOTAPE)

ALLAN CHERNOFF, CNN SR. CORRESPONDENT: Randi, people of non- traditional jobs can come up with some very unusual tax deductions. The tax code says if you're spending money to earn taxable income, those expenditures can be deductible.

JERRY SPRINGER, TV HOST: Please welcome Chesty Love.

(CHEERS) CHERNOFF (voice-over): Yes. Those are deductible. As exotic dancer Chesty Love told Jerry Springer, she fought the IRS and won.

CHESTY LOVE, EXOTIC DANCER: I was my own attorney. I represented myself.

CHERNOFF: The U.S. Tax Court ruled her breast implants were a stage prop that boosted her income and therefore deductible as a business expense.

LOVE: My breasts are very, very much as a job. My salary as a dancer went up in direct proportion to the size of the chest.

CHERNOFF (on camera): No matter offbeat the profession, the tax code encourages us to earn money so the IRS can collect more. So, for those who earn a living as Elvis impersonators, yes, the costume is deductible.

(voice-over): Business expenses can take many forms. There's the case of the junk yard infested with rats and snakes. The owner deducted the cost of cat food he put out each night to attract felines to take care of the pests.

Criminals are supposed to report their income from illegal activities. IRS Publication 17 says it goes on 1040 line 21. So, criminal enterprises are allowed to deduct the cost of business expenses like buying guns.

EVAN SNAPPER, ACCOUNTANT: A drug dealer should, under the regulations, report the cost of his inventory, the drugs that he's purchasing for resale, the cost of the guns to protect the inventory, the cost of the suitcases to carry it. You would put all that on a tax return.

CHERNOFF (on camera): Odds are you're not engaged in illegal or bizarre activities to earn a living. Even so, the same principle for deductions applies, money spent to earn taxable income can be written off. So, for example, if you have a home office that occupies say 10 percent of your house, 10 percent of the operating expenses, heat, electricity, even outdoor landscaping can be written off.

(voice-over): Some taxpayers, though, have taken it a bit too far. The IRS has disallowed attempts to deduct hot tubs and pools for those claiming a home office deduction.

(on camera): And there are many other cases of taxpayers being a little too aggressive, such as the recent case of the TV anchor woman who tried to deduct the cost of her underwear. Perhaps if she were an underwear model, it might have worked -- Randi.

(END VIDEOTAPE)

KAYE: Got to like her for trying. Thanks, Allan.

All right. So, those may just a little extreme. For better tax tips, be sure to check out the special taxes page at CNNMoney.com. It's up and running to help take a little of the sting out of tax time. That's CNNMoney.com.

Well, I don't know what you're having for breakfast this morning, but if you're even thinking about peanut butter and jelly, just hold a second. Check the label. Skippy is recalling some of its peanut butter. We'll tell you if your state is affected.

(COMMERCIAL BREAK)

KAYE: Taking a look at top stories this morning:

U.S. Marshalls have captured the man known as the "East Coast rapist." Thirty-nine-year-old Aaron Thomas was arrested Friday afternoon at his home in New Haven, Connecticut. Police say DNA evidence links Thomas to 17 rapes in four states. One of those states is Virginia where a police spokesman said, quote, "We're all breathing a sigh of relief."

Some brands of Skippy peanut butter are being recalled because of possibly salmonella contamination. Two "Reduced Fat" varieties are involved, Creamy and Super Chunk. They are sold in 16 eastern and mid-western states. So far, no illnesses have been reported.

And for a complete list, check out the FDA's Web site at FDA.gov.

Wisconsin's Republican governor is upping the ante in its high stakes budget. Yesterday, Governor Scott Walker sent letters to the state's 13 public employee unions warning of possible layoffs as early as April. Walker says the layoffs could be avoided if -- if -- 14 Democrats return to Madison to debate a controversial budget bill.

Greg Louganis was perfection on the spring board. He racked up accolades and Olympic medals. But his life since then has been anything but perfect. So, what's he been up to?

Our Dr. Sanjay Gupta catches up with the Olympic star. "SANJAY GUPTA, M.D." starts right now.