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Breaking Details in Pistorius Trial; Woman Missing After Kansas City Restaurant Explosion; Jesse Jackson, Jr. On Trial Today; Gas Princes Jump 46 Cents in 32 Days; Report: Detroit on Brink of Collapse

Aired February 20, 2013 - 09:00   ET

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


CAROL COSTELLO, CNN ANCHOR: Happening now in the NEWSROOM, South Africa stunner, breaking details overnight in the Oscar Pistorius trial. Non-stop shouting the night of the attack, unlicensed ammunition and now new questions about a drug found at the scene.

Plus searching for victims.

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UNIDENTIFIED FEMALE: We just live two blocks down and we just felt our building shake.

COSTELLO: A massive explosion at one of Kansas City's most popular restaurants.

UNIDENTIFIED FEMALE: We thought that a car had literally ran into our apartment.

COSTELLO: The late night blast yours dozens plus this.

SETH MACFARLANE, COMMEDIAN: I'm Seth Macfarlane and I'll be hosting the Oscars this year.

(END VIDEO CLIP)

COSTELLO: It's the road to the Oscars in the NEWSROOM. From the guy who brought you "Family Guy" and "Ted." We sit down with Seth Macfarlane and find out who he's going to go to for Oscar hosting advice. We're live in the NEWSROOM.

Good morning, thank you so much for being with me. I'm Carol Costello. Oscar Pistorius will have to wait at least one more day to learn if he will be granted bail. The hearing for the Olympic sprinter adjourned a little more than an hour ago. Pistorius faces a premeditated murder charge in the Valentine's Day killing of his girlfriend Reeva Steenkamp. Earlier today the defense attorney, Barry Roux gave a spirited cross-examination of the police investigator who responded to the crime scene at Pistorius' home. Here are the key points, the officer conceded a substance found in the house may not have been testosterone as he previously testified. There was no sign of an assault on Steenkamp's body. The investigator said he did not oppose bail for Pistorius and did not establish who owned ammunition in Pistorius' safe. Pistorius said it belonged to his father. Witnesses who heard sounds of arguing were more than 650 yards away and the investigator says he went into Pistorius' home without protective foot covering. CNN's Robyn Curnow is covering the trial for us in Pretoria, South Africa. Good morning, Robyn.

ROBYN CURNOW, CNN CORRESPONDENT: Good morning, we've just seen Oscar Pistorius drive past us in a police van, sirens blaring, the police had covered the windows, you know, cameras literally rushing to try and get a picture of him. They didn't. But today, despite his really, really sad quite traumatized demeanor in the past few days, today I must say he seemed quite confident in court. He was at least sitting up straight. He wasn't hunched over. His hands buried in his head, as has been the case in the past few days and I think good reason in a way. His family and himself to be confident because as you mentioned, his defense team really punching holes in the state's evidence. In a way discrediting them, even weakening their evidence. So does that change the ball game? Will the magistrate soften his views? Will he give him bail? We'll hear tomorrow at 11:00 local time, when that decision is made.

COSTELLO: Robyn Curnow reporting live from South Africa. We want to bring in our CNN legal contributor now, Paul Callan, good morning, Paul.

PAUL CALLAN, CNN LEGAL CONTRIBUTOR: Good morning.

COSTELLO: The story keeps shifting. How difficult is this case for the prosecution?

CALLAN: Well, it's always going to be a difficult case, because they're dealing with a sports hero who has a remarkable personal story, is beloved in South Africa. You're also dealing with a country with an extraordinarily high crime rate and wealthy people in South Africa live behind walled cities, you know, these housing areas that they live because of fear of crimes so they're playing on that and saying that it's reasonable for him to have thought this was a home invasion and accidental shooting of his girlfriend. Prosecutors are fighting an uphill battle, they have a circumstantial case as well so those are the problems that they face.

COSTELLO: The defense seemed to shoot a lot of holes in the prosecution's case today, you know they were talking about domestic violence, hinting at domestic violence, and now we found out that the arguing, somebody heard the arguing but lived far away from Pistorius' house. We thought there were injuries to Reeva Steenkamp in addition to the bullet wounds but turns out there were no other injuries. So what does that say to you?

CALLAN: Well, you know, I think in the end the prosecution is going to say this case is a good case because essentially by the time he got into the bathroom, he would have had to have walked by the bed in which Reeva was sleeping so he should have known that she was not in the bed and if she was not in the bed, there was only one other place that she was likely to be and that would have been of course in the bathroom. Secondly, you would expect that if he's responding to burglars in the house, why wouldn't he shake his girlfriend and say hey, call the police or get yourself into a safe position. So they're going to make a strong argument that he knew it was her in the bathroom and he fired four shots through that bathroom door and it was a very small, confined space in which she was struck. We also heard testimony from a neighbor who heard screaming and people arguing before the gunshots, which would go strongly against his case so the prosecution has a lot to say, too.

COSTELLO: Paul Callan, thanks so much.

CALLAN: Thank you.

COSTELLO: You're welcome.

On to Kansas City, Missouri, where authorities are searching for a missing person after this huge explosion. It was so powerful it blew the roof off a restaurant during happy hour in the downtown area. Witnesses said it felt like an earthquake. Some people walked away with just a few scratches but at least 14 people were hurt. CNN's Ted Rowlands is on the scene in Kansas city. I can't imagine this, eating in a restaurant and suddenly there's this huge explosion.

TED ROWLANDS, CNN CORRESPONDENT: Yes, Carol. The good thing is the smell of gas that permeated this downtown area for up to an hour before the explosion and just moments before the explosion someone came into the restaurant and got almost everybody out. They're still looking for one missing female employee of the restaurant.

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ROWLANDS (voice over): The explosion which witnesses say could be felt blocks away instantly engulfed J.J.'s restaurant, sending debris including glass and bricks flying through the air, flames towered into the sky and black smoke could be seen for miles.

BETH SHELLY, WITNESS: We just live two blocks down and we felt our building shake and thought a car had literally ran into our apartment.

ROWLANDS: There were reports of the smell of gas an hour before the explosion. Fortunately, several people inside the restaurant were evacuated just minutes before the blast. The cause is still under investigation, but according to the gas company, a contractor doing underground work may have struck a natural gas line. After the fire was put out, dogs were brought in, in case there were additional victims.

CHIEF PAUL BERARDI, KANSAS CITY FIRE DEPT: I would always fear there are fatalities in a situation like this. When we got to the scene we had a fully involved restaurant that had patrons probably several patrons inside at the time of the incident and so that's why we're here, searching as we are.

ROWLANDS: The injured range from people who were hit by flying debris to those who suffered severe burns and are now fighting for their lives.

(END VIDEOTAPE) ROWLANDS: And this morning, Carol, they're bringing in heavy equipment to move some debris, they'll bring in the cadaver dogs to search for this employee's remains.

COSTELLO: Ted Rowlands reporting live in Kansas city, Missouri, today.

From southern California to Michigan. A nastiness of now, rain, and wind now being unleashed. The storm, a triple threat, snow in the west, ice in the plains and Midwest and severe storms in the south. Right now, winter storm watches and warnings are already up across California, Nevada, Arizona, New Mexico, and Colorado. Meteorologist Jennifer Delgado is tracking this huge storm system. Good morning.

JENNIFER DELGADO, AMS METEOROLOGIST: Good morning, Carol. Triple threat indeed. We're talking about snow and two separate areas and the potential for severe storms to pop up later this evening across parts of Texas. Here are the areas that we're watching, snow in the central plains as well as in the four corners. What we're going to see today is that storm system out of the four corners shifting over towards the east, it's going to combine with the one right on top of Oklahoma right now, and that is what's going to allow that snow to really come down, we're talking some locations we're going to see about a foot of snow. Here is the radar right now, you can start to see more of that snow winning out as the rain is changing over from interstate 70 down to 40, but again more snow is going to arrive as we go into the evening hours especially into the morning. That's where you'll see more freezing rain working in for areas like Arkansas and the southwestern part of Missouri, and eastern parts of Kansas and some of these locations we are talking about a half to about three- quarter inches of freezing rain and then it moves towards the northeast and it's going to continue to weaken as we go Friday as well as into the weekend. Now for snow totals look at this, Carol, a foot or more through parts of Kansas, six to eight inches in Kansas city and that is going to make for a mess. Keep in mind, 16 states under some type of winter weather advisory.

COSTELLO: Thank you Jennifer.

Other top stories this morning, the Dow will begin trading at a five- year high of 14, 035, that number could go higher on good housing numbers coming in from the government. The commerce department says builders broke ground on more single family homes last month than at any time in the last four years.

Twice convicted murder Warren Lee Hill has lived to see another day, just hours after he was supposed to be executed in Georgia, two courts have granted a stay of execution. One wants more information on his mental state. His lawyers argue he's mentally retarded and has an IQ of 70. It's illegal to execute the mentally disabled.

And once considered a rising star, former Illinois Congressman Jesse Jackson Jr. Heads to court next hour. He's expected to plead guilty to improperly spending campaign money and we're talking lots of money, three-quarters of a million dollars, not for campaign expenses like flyers and buttons but for a $43,000 Rolex watch, $5,000 for fur capes and parkas and nearly $10,000 on children's furniture. Lisa Sylvester joins us now. Good morning, Lisa.

LISA SYLVESTER, CNN CORRESPONDENT: Hi, good morning, Carol. And I can tell you that just about ten minutes or so ago Jesse Jackson jr. And his wife, Sandy, actually arrived here at the courthouse and as you mentioned he is expected in about an hour and a half or so to plead guilty. He faces one count of conspiracy to commit mail fraud, wire fraud and making false statements, and this carries a maximum penalty of about five years with a $250,000 fine and it will ultimately be up to the judge to decide how much time if any he actually will have to serve. Also his wife is facing a separate charge of making, filing false tax returns. Her hearing is later on this afternoon. She resigned from her post as city council alderman in Chicago last month.

I got to tell you, Carol, what a fall from grace for this family and the legacy of the family, the Jesse Jackson name, obviously the son of the reverend Jesse Jackson so we will see in a matter of hours what their fate is but I can tell you that their defense attorneys and both the couple they're going to try really hard that if Jesse Jackson jr. Ends up going to prison that at least his wife does not have to serve any prison time because this couple does have, they have two young children, Carol.

COSTELLO: Just such a sad fall from grace. Lisa Sylvester reporting live from Washington, D.C. This morning.

It's been five months but ABC's Robin Roberts returns to her familiar anchor chair on Good Morning America. She's back on the air today after successfully battling a rare blood disorder. She's been going through dry runs the past few weeks to prepare for her on air return and I think she did just fine.

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ROBIN ROBERTS, HOST, GOOD MORNING AMERICA: Faith, family and friends have brought me to this moment and I am so full of gratitude. There are so many people I want to thank throughout the morning. When I was at home watching through my froggy slippers and see the signs and see people out there it warmed my heart and it's so wonderful, after 174 days.

UNIDENTIFIED MALE: It's one of the reasons you're back here so quickly.

ROBERTS: When I said that throughout the morning I want to say thank you and our viewers, I want to wait until the end because I won't be able to get through it but they have so incredibly wonderful.

(END VIDEO CLIP)

COSTELLO: Roberts had to undergo a bone marrow transplant from her sister to help fight the disease.

Detroit, the motor city, home of Motown could soon make history as the largest city to ever file bankruptcy. Some are hoping for a government bailout.

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COSTELLO: Sixteen minutes past the hour.

Time to check our top stories.

Close call at Savannah's airport as a Delta plane slides off the runway and ends up on the grass. Airport officials say the pilot apparently overcorrected. Passengers are OK. They safely exited the plane and were taken to the airport terminal on buses.

Gas prices on the rise again. Prices at the pump are up 46 cents in the last 32 days, the fastest run-up since 2005. The average price of a gallon nationwide is now $3.77. Some stations in Los Angeles, gas prices are topping the $5 mark.

And the cash-strapped post office is launching a clothing line. Yes, I said a clothing line. The post office announced a licensing agreement with a Cleveland apparel company which will design a line of clothing and accessories under the Rain, Heat & Snow name. The post office will get a small percentage of the sales and you can dress up like a mailman.

President Obama bailed out the auto industry to save Michigan. But what about the city of Detroit? Does it deserve a federal bailout, too?

It's billions of dollars in debt. It's losing its tax base. And today, Detroit is one step closer to declaring bankruptcy which would make it the largest municipality -- municipal bankruptcy in U.S. history.

But back to the idea of the federal government bailing out Detroit. Such a thing is not unprecedented.

In an op-ed for "The New York Times", Mark Binelli from "Rolling Stone" points out, "When New York teetered on the brink of bankruptcy in the 1970s, it was famously told in the headline of 'The Daily News' to 'drop dead'". But President Gerald R. Ford changed his mind and doled out $2.3 billion to New York City in 1975. And $2.5 billion was a lot of money in '75.

Mark Binelli joins us now from New York. He's also author of "Detroit City is the Place to Be: The Afterlife of an American Metropolis".

And in Detroit is Tom Walsh, a business columnist with "Detroit Free Press".

Thanks to both of you from being with us today.

MARK BINELLI, ROLLING STONE: Thanks for having us.

COSTELLO: Tom, I want to start with you. The reason we're doing the story today is because the state of Michigan says Detroit is on the verge of collapse. Help us understand what's happening now.

TOM WALSH, BUSINESS COLUMNIST, DETROIT FREE PRESS: Well, what's happened over the years is the city's lost two-thirds of its population and a lot of it's tax base and it's put off the day of reckoning by continuing to borrow to pay obligations that it's promised over the years.

And, finally, the day of reckoning has come. The liabilities are up to $14 billion. There's no credible plan for how to pay that in the future and eventually nobody will lend the city any money anymore, and they will come after the assets as collateral.

COSTELLO: So, the state of Michigan, it's unlikely to bail out the city of Detroit, even though Detroit was once a major metropolis of the state of Michigan and it's unlikely that Detroit is going to expand its tax base. It's not like they can collect any more taxes.

Am I saying that right?

WALSH: That's exactly it right. The state has limited amount of money, they can put a little bit in the kitty. But no, the next step is an emergency manager for the city. The school district already has one, and that's probably what the governor would do next.

But, you know, ultimately, it could be Chapter 9 bankruptcy. In either case it's somebody with a big stick, either the manager or a bankruptcy judge that would have the power to avoid union contracts to pull the rug out from under bondholders and all the other drastic things for example happened in the G.M. bankruptcy.

COSTELLO: Mark, I'm struggling, if Detroit declares bankruptcy, what would that be like? What would that do to the city of Detroit? Would it just like slowly crumble into nothing?

BINELLI: It's hard to say. We're entering unchartered territory as you said at the top. You know, this would be the largest municipal bankruptcy in U.S. history. And Detroit, I mean, I moved back in 2009 to write a book about the city and it's already, the services have been cut to the bone as Tom said, there's no tax base to speak of.

So, the city can't provide adequate services, 40 percent of the street lights don't work, the murder rate is -- the same number of murders took place in Detroit as New York last year, even though New York has 11 times the population.

All of this kind of stuff is, you know, causing residents to leave the city, lots of residents to leave the city as quickly as they can. So, it's kind of this downward death spiral that's been moving in that direction for quite some time.

So it's not clear to me what an emergency manager can do. I mean, again, as Tom said, it's true. He or she will be able to crack open this union contracts of public employees. That's a big part of Detroit's long-term debt.

COSTELLO: That, of course, they don't have enough people to perform city services. You talk about the crime rate. The mayor would say, I don't have enough police officers because I can't pay them. But going back to the idea that the federal government could somehow help Detroit through maybe a federal bailout. I mean, the Obama administration bailed out the auto industry, right, and was all for that.

So why not help the city of Detroit? Because I would suspect that the people who live in that city voted overwhelmingly for President Obama.

BINELLI: Yes, that's true. This has been suggested by --

WALSH: I think --

BINELLI: Sorry, I this has been suggested by Hansen Clarke, who is the U.S. representative from Detroit. I don't think it's -- I suggested it in the op-ed just to put it out there, I don't think it's a realistic proposal unfortunately in this political climate.

I mean, the federal auto bailout and the stimulus package were all so unpopular with Republicans and I doubt anything like that could get through at this point. But it's something that's worth considering when you look the level of pain that would have to be inflicted to get Detroit's books in order. And you consider the fact that a lot of this long-term debt is municipal bond debt owed to Wall Street banks and as far as I understand, I think it's really difficult even if you declare bankruptcy to get out of that debt.

You mentioned New York nearly going bankrupt in the '70s and federal bankruptcy law was rewritten at that time to basically, so cities going into bankruptcy would have -- you know, would have lots of trouble just canceling that bond debt.

So I think it would end up being another one of those cases where, you know, union retirees, people who still live in the city, they would get the brunt of the pain if Detroit goes into bankruptcy or even if an emergency manager is appointed.

But the Wall Street banks once again will probably not lose.

COSTELLO: I just want to button it up with Tom, you live in Michigan. Well, you both do, actually.

But, Tom, I'd like to button it up with you and I'm kind of running out of time. But I just want to know, you know, as you live in the Detroit area and sit back and watch the city crumbling, you know, give us a sense of how that feels.

WALSH: Well, you know, it's a very sad thing in the neighborhoods especially because that's where -- that's where the deterioration has sort of continued, but downtown there's actually a lot of positive things going on, some clusters of entrepreneurial activity around digital apps and young people moving downtown and some corporate investment. I think ultimately what you need to see is the stakeholders, the business community, the foundations as well as the citizens kind of say, OK, here's what we can bring to the party.

Everybody knows there's going to be pain and the bondholders and everybody's going to have to take a haircut here to get the finances in shape.

But then, we start over again with probably a long period of government oversight, which they did have in New York as well.

COSTELLO: All right. Tom Walsh with the "Detroit Free Press" and the author of -- I'm sorry and "Rolling Stone" contributor Mark Binelli -- thank you for being with us. I wanted to share your book, too. Thank you for being with us. We appreciate it.

BINELLI: Thanks.

WALSH: Thanks for having us.

COSTELLO: Instead of Rocky Mountain State, Colorado's being called Rocky Mountain high. And we don't mean the mountains when we say that. We'll be right back.

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COSTELLO: Now is your chance to talk back on one of the stories of the day. The question for you this morning: is it wrong for a state to embrace pot tourism?

We now have a new word for your vocabulary, smurfing. No, it does not involve body surfing these little blue people as in Smurfs. Smurfing means going from legal pot shop to legal pot shop in Colorado for the purpose of accumulating marijuana to sell on the black market. That would be a big no-no.

Legalizing recreational marijuana is one thing but pot tourism? Now, a Colorado task force has come up with ways to prevent smurfing while encouraging pot tourism. The bill would block those out of state pot shop owners but regular folks, you still are encouraged to come and get that Rocky Mountain high.

So, talk back question for you today, is it wrong for a state to embrace pot tourism?

Facebook.com/CarolCNN, Facebook.com/CarolCNN, or tweet me @carolCNN.

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COSTELLO: Good morning. I'm Carol Costello. Thank you so much for joining me.

Stories we're watching right now in THE NEWSROOM. And just about 30 minutes past the hour.

Opening bell on Wall Street keeping a close eye on the Dow today as it nears a new record high. Housing market takes center stage. The latest numbers show building permits at their highest levels in four years but new housing construction did slow down.

A Wisconsin highway reopens after whiteout conditions caused a 26-car pile-up that snarled traffic for three hours. Sheriff's deputies tell a CNN affiliate a truck jack-knifed and crashed into a ditch. Visibility was poor. Many drivers had no time to stop. Everybody reportedly had only minor injuries.

The bail hearing for Blade Runner Oscar Pistorius resumes tomorrow. He is accused of premeditated murder in the killing of his girlfriend. Police investigator says he's a flight risk despite being a high profile athlete.

We're back in a minute.

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