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CNN NEWSROOM

Fed May Make Borrowing Money a Bit Cheaper Today; Presidential Candidates Want to Give You a Break on Surging Gas and Health Care Costs; Another Katrina Bungle

Aired April 30, 2008 - 09:00   ET

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

TONY HARRIS, CNN ANCHOR: And good morning, everyone. You are in the CNN NEWSROOM. I'm Tony Harris.
FREDRICKA WHITFIELD, CNN ANCHOR: And I'm Fredricka Whitfield. Heidi continues maternity leave.

HARRIS: You will see events come into the NEWSROOM live on this Wednesday, April 30th.

Here's what's on the rundown.

WHITFIELD: The Fed may make borrowing money a bit cheaper today. Will it help your bottom line? The economy is the "Issue #1."

HARRIS: The presidential candidates and your money. They want to give you a break on surging gas and health care costs.

WHITFIELD: And New Orleans' homeowners get cash to rebuild. Now Louisiana wants millions back. Another Katrina bungle in the NEWSROOM.

And take a look right now happening right in north Philadelphia, a very sizable church burning taking place. This is the Prince of Peace Baptist Church fully engulfed in flames at this juncture. It really does look like it's a total loss...

HARRIS: Yes.

WHITFIELD: ...with seemingly only the frame that may remain after they are able to put out all the flames there. You can see the smoke. You can see the firefighters are certainly on the ground there and doing best they can. But this has created quite a traffic tie-up, as well, during rush hour there on Interstate 76, which is nearby.

Meantime, let's hope that no one was in any immediate danger. You see that it is in the middle of a neighborhood.

HARRIS: Yes.

WHITFIELD: There are row houses right nearby, but we're going to hope for the best out of these live pictures right now. We'll continue to follow the developments there out of north Philadelphia.

HARRIS: All right. We will keep an eye on that. Our top story this morning, your wallet, your concerns, two major stories developing on "Issue #1," the economy. One a decision on interest rates that could reach deep into your pocket. And just minutes ago, a new development on the dreaded R word, recession. There, I said it.

CNN's senior business correspondent Ali Velshi with our money team is on the story from New York.

Where do you want to start, Ali? Let's start with GDP?

ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: Let's start with what you just said, the R word. We are actually -- interestingly enough perhaps one step further away from a recession based on news that we just got.

We just got the reading on GDP. Now GDP is a Gross Domestic Product, it's the broadest measure of the economy that we have and it is typically the one we use to determine whether we're in a recession or not or how fast the economy is growing. We just got the first rate on GDP for the beginning of 2008 and it didn't change from the end of 2007.

The number came in at six-tenths of a percent.

HARRIS: Yes. Yes.

VELSHI: Now you don't need to know much about math to know that six-tenths of a percent is not that much, but it is not different than it was at the end of 2007. So, if you thought we were sliding lower, fact of the matter is we've stayed the same. We know from other measures like home prices and foreclosures and job losses that the economy is slowing down in other places.

But the biggest measure we have, GDP, says that we haven't slowed down. That is a fairly big deal in this environment of negative news all the time.

HARRIS: And let's clarify that. You've mentioned that we've actually -- this is a number that indicates we've moved a bit farther away from recession because the classic definition of recession is what, two consecutive quarters...

VELSHI: Well, it used to be...

HARRIS: ...of negative?

VELSHI: It used to be that. It's now blurrier. The group that actually decides on a recession says a slowdown on the economy that spans several months in various measures. But generally speaking, would to know -- you'd not like to, but you'd have to see GDP negative...

HARRIS: Yes.

VELSHI: ...and we're not negative. It's slow, it's anemic, but it's not a recession at the moment. Now this number gets revised many times.

HARRIS: That's right. That's right.

VELSHI: The folks who are paying attention to that today are the Federal Reserve. They're in a meeting. It's a two-day meeting and at 2:15 this afternoon, Tony, they're going to come out and give us a decision on interest rates. Most of the thinking is they'll cut interest rates by a quarter of a percentage point, some of the thinking is maybe they won't, because when you cut interest rates, I'll tell you what happens, money becomes cheaper to borrow.

So businesses hopefully try and expand, they hire more people, people have lower rates at which they can borrow and they spend more. That's all good news, except what tends to happen is it creates more demand and demand sometimes creates inflation what we have. So what you're expecting today, Tony, is the prime rate -- if the Fed cuts rates, the prime rate will drop by exactly the same amount that the Fed cuts rates, adjustable loans will cost less, and the U.S. dollar may start to weaken further.

HARRIS: How about that. That's why he's the leader of our money team, Ali Velshi, in New York.

Ali, great to see you.

VELSHI: Good to see you, buddy.

WHITFIELD: All right. And the money theme continues or lack thereof in many cases. Pain at the pump. Another day, another record. AAA says gas hit a new high, almost $3.62 a gallon today.

That's fueling new debate in the presidential race. Hillary Clinton and John McCain favor suspending the federal gas tax for the summer. Barack Obama calls it a political gimmick.

(BEGIN VIDEO CLIP)

SEN. HILLARY CLINTON (D), PRESIDENTIAL CANDIDATE: I would immediately lower gas prices by temporarily suspending the gas tax for consumers and businesses. And we will...

(APPLAUSE)

CLINTON: We will pay for it by imposing a windfall profits tax on the big oil companies. They sure can afford it.

SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: Well, let me tell you something. This isn't an idea designed to get you through the summer. It's an idea designed to get them through an election.

(END VIDEOTAPE)

WHITFIELD: All right. Both Democrats want to impose a tax on windfall profits for the oil companies, although that cost could ultimately be passed on to consumers.

Now, earlier on CNN's AMERICAN MORNING, one oil executive said it's time for lawmakers to look at increasing domestic production.

(BEGIN VIDEO CLIP)

JOHN HOFMEISTER, PRES., SHELL OIL COMPANY: The presidential candidates should be out there on the postings saying let's increase domestic production by two to three million barrels a day. That would be something that would put money back into this country, jobs back into this country, and it would bring more supply toward the Americans who need it.

(END VIDEO CLIP)

WHITFIELD: Hofmeister says Washington needs to fast track drilling off the coast of Alaska and in the state's Arctic National Wildlife Refuge.

Well, environmental concerns have bogged down those efforts for many years.

HARRIS: Now to political prescriptions for your health care.

John McCain promotes his plan again today. How does it compare to the Democrats' proposals?

Dan Lothian with the CNN Election Express in Indianapolis.

Dan, good morning to you. If you would, walk us through the plans.

DAN LOTHIAN, CNN CORRESPONDENT: Good morning, Tony. And I'll do that in just a second. You know, health care really is a very important issue. We talk so much about the economy. You've been doing that this morning as well. And that is the issue that a lot of people focus on.

But health care is also at the top of the agenda. There are more than 40 million Americans who are uninsured, and so this is a critical issue. And that's why all of the candidates are coming up with their versions, their solutions.

(BEGIN VIDEOTAPE)

LOTHIAN (voice over): From do it yourself to letting the federal government do it for you, all three presidential hopefuls are offering prescriptions for America's health care system.

Senator John McCain wants you to have the option of buying your own cheaper health insurance. So he would offer tax credits, $2,500 for individuals and $5,000 for families.

SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: Insurance companies could no longer take your business for granted. Offering narrow plans with escalating costs, it would help change the whole dynamic of the current system putting individuals and families back in charge. LOTHIAN: But critics say a few thousand dollars in credits would only cover a fraction of actual health care costs. For example, the average plan for a family of four is more than $12,000. And people with pre-existing conditions might be prevented from getting coverage.

The Democrats are going down a much different road. Both favor some sort of federally mandated universal health insurance but differ on just who should be covered. Senator Clinton says all Americans.

CLINTON: When it comes to health care, I believe with all my heart health care is a right, not a privilege, and everyone deserves quality, affordable health care.

LOTHIAN: Senator Obama backs a plan that would mandate coverage only for children and making sure it's affordable for everyone else.

OBAMA: I believe that the problem is not that people don't want health care. It is that they can't afford it.

(END VIDEOTAPE)

LOTHIAN: Senator McCain says he opposes federally mandated universal health care coverage and he calls what the Democratic contenders are proposing, quote, "big government solutions." Tony?

HARRIS: Dan Lothian for us in Indianapolis.

Dan, appreciate it. Thank you.

And find more on the candidates at CNNPolitics.com. CNNPolitics.com is your source for everything political.

WHITFIELD: Also making news this morning, flexing military muscle. The U.S. now has two aircraft carriers in the Persian Gulf. The USS Abraham Lincoln arrived there Tuesday. It will replace the USS Harry S. Truman.

Defense Secretary Robert Gates insists it's not an escalation. He calls the move a reminder to Iran. It comes as Washington continues to accuse Iran of forging ahead with efforts to supply weapons and training to militants in Iraq.

Here in this country, in Florida, classes canceled today. A shooting at a Florida Atlantic University -- building in Boca Raton leaves students very tense. Police say a gunman opened fire during a party at the university village apartments. Authorities are looking for this man in the overnight shooting. A new campus PA system immediately alerted students to stay indoors.

(BEGIN VIDEO CLIP)

FRANK BROGAN, PRES., FLORIDA ATLANTIC UNIVERSITY: Within moments after it was determined that there was a shooting on campus, the siren sounded. I heard it in my own home. And the public address system was activated.

(END VIDEO CLIP)

WHITFIELD: The college also issued a university-wide e-mail and posted messages on its home page.

HARRIS: Pouring more manpower on western wildfires. Planes and additional crews are being brought in to battle a fire south of Grand Canyon National Park. It has already consumed an estimated 2,000 acres. Officials think the fire was manmade.

(BEGIN VIDEO CLIP)

ROBERT BLASI, TUSAYAN RANGER DIST., KAIBAB NATL. FOREST: An abandoned or unattended campfire that started it, and some folks are being interviewed currently in relation to that.

(END VIDEO CLIP)

HARRIS: No structures damaged. The fire has not yet been contained.

South of Reno, crews are still battling a brushfire there. Half of the 1200-acre blaze is contained at this time. At one point yesterday, the fire briefly shut down a highway, threatened some homes and forced a school to evacuate. Officials hope to get firefighting planes in today. They believe this fire was sparked by downed power lines.

Let's get to Jacqui Jeras in the Severe Weather Center.

Jacqui, winds always a chief concern...

JACQUI JERAS, CNN METEOROLOGIST: Right.

HARRIS: ...for firefighters trying to get the upper hand on these western wildfires.

(WEATHER REPORT)

WHITFIELD: Oh, boy. Yes. More drought, more fires.

HARRIS: And speaking of that -- absolutely. Speaking of that we've got another fire out west.

Our friends in Los Angeles contending with this, this morning at the start of the morning rush. Take a look at this. We understand a Hollywood restaurant is on fire there. Firefighters are battling this blaze inside a restaurant bar area at the (INAUDIBLE).

Boy, you look at these pictures, it's spread beyond the bar area. The corner of Hollywood Boulevard and Vine Street in Hollywood.

Yes, right there. That's it.

WHITFIELD: You couldn't get any more famous of an intersection there in Hollywood. Hollywood and Vine.

HARRIS: And speaking of famous, you know the big Capitol Records Building, with the signature...

WHITFIELD: Right.

HARRIS: Yes. Yes. We're going to see it in just a moment. There it is. There it is. You see it there at the bottom left of your screen? Capitol Records, there it is. That signature structure there in Los Angeles.

WHITFIELD: That's the landmark.

HARRIS: Absolutely a landmark. This is about a block away or so, as you can tell by looking at that picture.

Our affiliate in Los Angeles KABC providing these pictures for us. So you can imagine that scene there in Hollywood pretty congested this morning as folks begin the morning commute. We will keep an eye on that for you. And no word yet of any injuries associated with that fire. But we'll keep watching.

WHITFIELD: All right. And this story is still so disturbing to hear. A daughter held captive for 24 years. Well, now reunited with the children snatched from her arms. Could her abusive father avoid prosecution?

CNN's Phil Black is in Amstetten, Austria this morning.

And Phil, why haven't police filed charges against this man when he already admitted, didn't he, that he had carried out all of these alleged crimes against his daughter?

PHIL BLACK, CNN CORRESPONDENT: Well, Fredricka, the police say they want to take their time on this, really, and do it slowly and do it well. They have him in custody. They have him -- police plan to keep him in custody for an undisclosed period at this time. So he's not going anywhere. And police want to find out precisely how he was able to conceal his crimes for such a long period of time, for 24 years.

Now his lawyer has spoken and given an insight, if you like, into his mindset. And he describes him as an emotionally broken man. He says he's been hit very hard by the fact that his plot has fallen apart and that he is now in custody.

Now, this suspect, Josef Fritzl, has confessed to locking up his daughter, fathering seven children. DNA tests now prove that to be the case as well. It's a tough job for this lawyer. What's he going to do? Well, he says that he believes that Josef Fritzl should undergo a strong assessment of his mental state. It may not excuse him of his crimes but it could determine the extent of his guilt and just how he should be punished.

Let's hear this lawyer's thoughts on that subject now.

(BEGIN VIDEO CLIP)

RUDOLF MAYER, JOSEF FRITZL'S LAWYER (Through translator): This case certainly requires a thorough psychiatric and psychological examination. It has to be determined whether sanity is a given. If this is the case, also a psychiatric disorder is possible, which doesn't lead to mental incapacity, but nevertheless is essential for the assessment of the guilt of the suspect. And the extent of the guilt determines the extent of the penalty.

(END VIDEO CLIP)

BLACK: Josef Fritzl's lawyer says he has already been the victim of some hostility for his decision to represent this man, but he's determined to do so because he believes he deserves a fair trial -- Fredricka.

WHITFIELD: OK. So now let's go back to the daughter being reunited with the children. I guess the children were taken away when they were babies anyway. Did they even know that she was the mother?

BLACK: Certainly it's complex. It's a mix. So there were...

WHITFIELD: Yes.

BLACK: ...six children in all that have survived the ordeal of living under this house. Three were kept underground. Three were allowed to live in the house above as part of the community. Now they have all met for the very first time. All but one child, actually. Five children. Elisabeth, the mother of them and her mother, Rosemary, who lived in the house above for 24 years seemingly unaware that all this was going on within such a close geographic proximity.

The psychiatrist who were there in the room where they met described the meeting as astonishing. They say it went very well, Fredricka.

WHITFIELD: Oh my gosh.

All right. How about some new video now? I'm still hanging on just trying to envision these children and this young lady reuniting.

Let's move forward and talk about some new video here of Fritzl showing him in Thailand. What else do we know?

BLACK: Yes, that's right. According to local newspaper reports here, this was something he liked to do on a fairly regular basis. He jet off to Thailand to relax on the beaches there. And this new video that shows him strutting around in his swim wear on the beach there seemingly having a great time.

The question, though, is how he was able to do this, and particularly how was he able to do this regularly while leaving this second secret family hidden, locked up in this cellar beneath his home where he left his other family living, as well, while he was gone? It's an extraordinary situation. Logistically, police believe that maybe he left some -- he left enough food for them in that locked-up place to sort of look after themselves while he was off having a great time, Fredricka.

WHITFIELD: I didn't think this story could get any more bizarre.

HARRIS: It just did.

WHITFIELD: It's just reached a whole new level.

All right. Phil Black, thanks so much. I know you're going to continue to follow it as we will here at CNN throughout the day -- Tony.

HARRIS: Dozens of deaths linked to contaminated drug. Is it in your medicine cabinet? Dr. Sanjay Gupta will have details.

(COMMERCIAL BREAK)

WHITFIELD: You're in the CNN NEWSROOM. I'm Fredericka Whitfield.

"Grand Theft Auto," grab and go. Police say the new game led to some sticky fingers.

(BEGIN VIDEO CLIP)

UNIDENTIFIED POLICE OFFICER: Hey, knock it off!

UNIDENTIFIED MALE: Tell him to stop.

UNIDENTIFIED POLICE OFFICER: Knock it off.

UNIDENTIFIED MALE: Tell him to stop.

UNIDENTIFIED POLICE OFFICER: Do you want to get tased?

(END VIDEO CLIP)

HARRIS: Yes.

WHITFIELD: Don't tase me.

HARRIS: Yes.

WHITFIELD: All right. Well, he's in the back seat. He was the driver no longer.

The story in the NEWSROOM.

ANNOUNCER: CNN NEWSROOM brought to you by...

(COMMERCIAL BREAK)

WHITFIELD: We want to update you on two fires taking on East Coast. Let's start with the East Coast in Philadelphia, north Philadelphia, on the left of your screen. You're seeing a church that was fully engulfed. Firefighters have the upper hand now because earlier, less than 30 minutes ago, you were seeing a lot more smoke and flames. But right now it's taking place at the Prince of Peace Baptist Church, and certainly it looks like extensive damage now. Firefighters, as you see there, on the rooftop, getting a better view of things.

On the right side of your screen, Los Angeles, the very famed Hollywood and Vine, a fire very actively burning there at a restaurant...

HARRIS: Yes.

WHITFIELD: ...at the 6200 block of Hollywood Boulevard.

HARRIS: Man, look at that.

WHITFIELD: This taking place just across the street from the same Capitol Records Building as we saw earlier. And you could see right there in this tighter view, kind of the rooftop view, of the fire that they are battling there.

More information as we get it, Tony.

HARRIS: In news about your health this morning, heart wrenching stories about a tainted drug. A congressional panel hears from people who lost loved ones to contaminated heparin.

(BEGIN VIDEO CLIP)