Return to Transcripts main page

CNN NEWSROOM

Bob Woodward Feuds with White House; Pope Benedict XVI Steps Down; J.C. Penney Sales Off $4 Billion

Aired February 28, 2013 - 15:00   ET

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


BROOKE BALDWIN, CNN ANCHOR: It hasn't happened in 600 years. One hour ago, one man was the leader of the Catholic world and now he is retired. Inside these walls and believers are without a leader.

I'm Brooke Baldwin. The news is now. A legendary journalist suggests the White House threatened him.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: You will regret this.

(END VIDEO CLIP)

BALDWIN: This as President Obama softens his stance on tomorrow's doomsday deadline.

Plus, falling on the sword. J.C. Penney's CEO takes the blame for losing $4 billion in sales in a single year. Looks like the customer has spoken.

And jackpot rumble, seven hairdressers suing a co-worker over a winning lottery ticket. We are "On the Case."

(END VIDEOTAPE)

BALDWIN: Hi, everyone. I'm Brooke Baldwin, top of the hour here.

Gene Sperling, economics adviser, has been revealed as the White House official who had this e-mail spat with Watergate sleuth Bob Woodward, which apparently made Woodward feel uncomfortable. Woodward now has a new group of supporters who are accusing the White House of threatening the journalist.

And just a short time ago, the White House said that is nonsense. Just read the e-mails.

Jessica Yellin at the White House for me right now.

I know there has been some movement on the story just in the past couple of hours. Fill us in.

JESSICA YELLIN, CNN CHIEF WHITE HOUSE CORRESPONDENT: Hi, Brooke.

That's right. I asked Jay Carney about these e-mails and about the spat in the briefing. Let me first catch you up by reading a little bit from the e-mail exchange.

Bob Woodward, renowned Washington correspondent, started this exchange with Gene Sperling over his coverage of the president's strategy on the forced spending cuts. And so Gene Sperling had a conversation with Bob Woodward and then sent him an e-mail saying -- quote -- "I apologize for raising my voice in our conversation today. My bad. But I truly believe you should rethink your comment about saying that the president asking for revenues is moving the goalpost. As a friend, I think you will regret staking out that claim."

And Woodward is focusing on that phrase you will regret that. Well, Bob Woodward wrote back to Gene Sperling: "Gene, you do not ever have to apologize to me. You get wound because you are making your points and you believe them. I also welcome your personal advice. I am listening."

So I asked Jay Carney today about this exchange and why Sperling used that phrase to Woodward, "You will regret your reporting." Here's what Jay had to say.

(BEGIN VIDEO CLIP)

JAY CARNEY, WHITE HOUSE PRESS SECRETARY: Gene Sperling, in keeping with a demeanor I have been familiar with for more than 20 years, was incredibly respectful, referred to Mr. Woodward as his friend, and apologized for raising his voice.

I think you cannot read those e-mails and come away with the impression that Gene was threatening anybody.

(END VIDEO CLIP)

YELLIN: I will tell you anyone who has worked with Gene knows he can get very high-spirited and he does raise his voice in phone calls. I personally though have never felt threatened by him, Brooke.

BALDWIN: Context here, context for this whole spat. This is this huge disagreement over the $85 billion in automatic spending cuts, that deadline midnight tomorrow.

Now, because Congress couldn't agree for a way to undo them, this is basically flat-out going to happen. Why the meeting at the White House tomorrow. You have these top four leaders, he usual suspects right from Congress scheduled to meet with the president and here they are.

Is there a chance they will be looking down the road perhaps March talking about another deadline that is looming?

YELLIN: Absolutely.

First of all, everything is on the table for discussion tomorrow, I'm told, here at the White House. They're willing to talk about anything. The reason for the meeting is optics. They can't not meet when this crisis is about to hit. The White House says it's a crisis. They have to be looking like they're doing something. No one expect there to be real progress tomorrow. The full expectation is these spending cuts will hit tomorrow night some time and then we will go into a protracted debate over how to fix them and as you mentioned that we will face another deadline at the end of the month when the nation's spending budget runs out and we have to negotiate, the Congress has to negotiate to continue and avoid government shutdown, basically.

March 27 is the next deadline.

BALDWIN: That's the next one we will be talking. In the meantime, we will talk to you tomorrow, Jessica Yellin for me at the White House. Jess, thank you.

And now do not call him Pope Benedict any longer. He is now Benedict XVI, left Vatican City via helicopter earlier today, saluted by his throngs of followers. Bell chimed. They peeled, marking this historic, historic day. He landed at the pope's summer residence at Castel Gandolfo. There he was on the balcony walking before this massive crowd, made the sign of the cross perhaps for the final time in public, blessing these crowds gathered outside his temporary home.

(BEGIN VIDEO CLIP)

BENEDICT XVI, CATHOLIC CHURCH (through translator): I am no longer the pope, but I'm still in the church. I'm just a pilgrim who is starting the last part of his pilgrimage on this earth.

(END VIDEO CLIP)

BALDWIN: It is an historic day here without precedent. Benedict XVI has retired.

A new pope, mind you, might not be named for a couple of weeks. Right now, there is no leader for the 1.2 billion Catholics worldwide.

Becky Anderson is in Italy with more -- Becky.

(BEGIN VIDEOTAPE)

BECKY ANDERSON, CNN CORRESPONDENT: It was here at Castel Gandolfo that we witnessed history early on Thursday.

From the window up there, Benedict XVI gave his final blessing and thanked the audience here for their fondness, their love and support. His closing remarks, "Thank you and good night."

It was at this moment that Pope Benedict XVI gave up the mantle of the papacy and cloisters himself away for a life of prayer and reflection, an event unprecedented in the last 600 years, a moment of history in the modern age. His Vatican guard symbolically abandoning their posts, leaving behind a man no longer with the authority to pronounce infallibly, no longer leading a church numbering billions of believers.

The legacy of Benedict's papacy has yet to be determined, but there is no doubt that the Roman Catholic Church is feeling bruised, struggling with a series of crises, financial, moral. Benedict's final words to the faithful reassuring them that it will not sink amidst choppy waters.

The successor to Pope Benedict XVI will be determined over the coming weeks, the faithful eagerly waiting that outcome. And on this occasion more than maybe any other the world watches with a similar closeness.

Becky Anderson, Castel Gandolfo in Italy.

(END VIDEOTAPE)

BALDWIN: Becky, thank you.

And don't expect the next pope to be American. At least that's the word from Cardinal Timothy Dolan, the archbishop of New York. Dolan's name had been floated possibly as a candidate for the job here, but at 63 years old, believe it or not, that's considered young to be pope.

Listen to what he said about his chances.

(BEGIN VIDEO CLIP)

ARCHBISHOP TIMOTHY DOLAN, ARCHDIOCESE OF NEW YORK: People who say that might be drinking too much crop or smoking marijuana.

They asked me today and they said, do you have a chance to follow Pope Benedict? I said I got a better chance following A-Rod at third base for the Yankees than following Benedict XVI as the bishop of Rome.

(END VIDEO CLIP)

BALDWIN: That's a New Yorker there sitting with Christiane Amanpour in Italy.

Now, Dolan met with Pope Benedict earlier today hours before his resignation. He says Benedict seemed fragile.

(BEGIN VIDEO CLIP)

DOLAN: It was very touching. And I don't mind admitting that it was kind of somber, it was kind of sad. I love him. We call him our Holy Father. I will miss him. And that dawned on me today that that is the last time I will see him as the pope.

It dawned on me how fragile he is. I was privileged to be with him for almost a month in October during what is called the Synod of Bishops. And I could see that he had aged a bit, but, boy, oh, boy, he still seemed to be very strong, very alert, very spry.

But yesterday and again today, I saw that he was very, very frail.

(END VIDEO CLIP)

BALDWIN: Cardinal Dolan says the next pope should be very realistic and really listen to all Catholics, all 1.2 billion.

Benedict XVI was shy, reserved, did not relish the rock star aspects, if you will, of being pontiff. The papal conclave may want a more charismatic, maybe more emotional pope as his successor, pope with that real people connection, a pope of the people, for the people.

In fact, the world conclave in Latin means with a key or locked away. And these cardinals, 115 of them, were quite literally -- they will be locked away while they pick this next pope.

Ben Wedeman is our senior international correspondent, joins me tonight there in Rome.

Ben, these cardinals, they will be in these closed-door assembly inside, under the beautiful frescoes in the Sistine Chapel next week. Before we see that white smoke, talk me through what actually happens within this conclave.

BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, what basically the 115 cardinals who are going to be participating in that conclave are going to be in complete seclusion.

There's a special hotel within the Vatican where they will be staying, a very spartan place, but it's been modernized. It was modernized by Pope John Paul II. They will be in seclusion in a way that is hard for us to imagine, no Internet access, no cell phones, no landlines, no access to television, radio or newspapers.

Now, they will be attended by a small group of Vatican staff who will provide them with meals, but basically they will be walking between that hotel within the Vatican and the Sistine Chapel. In the Sistine Chapel itself, they will be meeting throughout the day. They will have four opportunities per day to vote.

And twice a day, you will be seeing either black smoke or white smoke. Now, it's impossible how long the conclave will last. Back in the 13th century, one conclave last two years, nine months and two days. Now, the last conclave was much shorter, just two days, but we were speaking to a historian of the conclave a few days ago and he said that in the old days, what they used to do is give them three days of full meals.

And if they didn't come up with a choice, if they didn't elect a pope, the meals would start to diminish...

BALDWIN: No.

WEDEMAN: ... to the point where if, after a while, if they didn't elect somebody, they were just given bread and water.

BALDWIN: That was their way of saying speed up the process. We need a new leader.

Ben Wedeman, what a thrilling time to be in Rome. Thank you, Ben.

Coming up next, we will be talking sort of all hour, right, we're keeping our eye on the Dow. Take a look with me, a little lower than the last time we checked, now at 14104. We will see if it hits that all-time high. Remember, that was set back in 2007.

Also later, eight hairdressers, they enter a lottery pool and one of them hits the jackpot, $9.5 million. Now a legal battle. We're "On the Case."

(COMMERCIAL BREAK)

(NEWS BREAK)

BALDWIN: And hard to imagine, staying in a hotel with a body floating in the water supply, for weeks, a disgusting reality for some people. And guess what? Now they are taking legal action. We are "On the Case" next.

(COMMERCIAL BREAK)

BALDWIN: A question: If you bathed, if you brushed your teeth, maybe drank a little water from a tank that had a body floating in it, would you flip out? Yes, you might.

Two people, they are now suing the Cecil Hotel in downtown Los Angeles. A Canadian tourist's body was actually found in the hotel's water tank last week. Officials did test that water for health risks to customers. They say they found no issues. Hmm. I don't know if these two people are buying it.

Sunny Hostin "On the Case" with me today.

Yes, a body floating in the water supply? I know.

SUNNY HOSTIN, CNN LEGAL ANALYST: I know. It's just the yicky factor, right?

(CROSSTALK)

BALDWIN: It's everything. Tell me what these two people are asking for.

HOSTIN: Well, they paid about $150 for the room and they want their money back. And I am surprised they haven't gotten their money back.

But what is really interesting about this complaint is that they want money earmarked for future medical expenses and that sort of thing. I think that's fascinating because as you mentioned, the water was tested and found at least by the folks that the hotel sort of commissioned to be fine to drink, but they are not buying it.

They think that they may have problems along the line. I got to tell you this is a case that should never have even sort of ended in a complaint. This is the case when you own the hotel and you think this was so yicky and nasty and horrible and gross, just give them something. Just give them some money to go away, because then we wouldn't be talking about it. Right? BALDWIN: Yes. How about this one then? I feel like this one kind of comes up over and over and you learn lesson, but nevertheless not everyone does. This lotto, so a woman tells her co-workers that the lotto pool they entered didn't pan out.

But the ticket she bought separately, that did. They are not buying it. Now, this woman's fellow hairstylists -- you imagine them all chatting in the salon, all seven of them.

HOSTIN: I know.

BALDWIN: They are suing for some of the winning lottery ticket, a whopping $9.5 million.

How does the woman who said she won prove that she was the one and not the pool that won the ticket?

HOSTIN: Yes. And it's up to her to prove it, right?

And you are right. Every time there is a big lotto that is hit and there is a pool, you and I talk about this. You know why we talk about it? Because people don't do the right thing. When you're in these pools, the way to protect yourself is make photocopies of everything.

BALDWIN: Make copies.

HOSTIN: And that way, if the number wins, you know if you were part of that pool.

Now, she has got to now do something to show that her little ticket that won $9.5 million is in fact the ticket that she paid for and bought outside of this pool.

BALDWIN: Is it possible?

(CROSSTALK)

HOSTIN: I don't know if she does it. I guess perhaps surveillance video, but if they don't have that sort of documentation that we always tell people to please have if you're part of one these lotto pools, she may be out of luck. These hairstylists may be looking pretty good in a couple of -- well, maybe a year.

Takes a long time for these things to wind through.

BALDWIN: Photocopy those tickets. That's what we do all the time.

(CROSSTALK)

HOSTIN: Photocopy them. We should play an office pool together, Brooke. We have never done that.

(CROSSTALK)

BALDWIN: I would share with you, Sunny Hostin. Thank you. HOSTIN: OK. I would sue you if you didn't.

BALDWIN: I bet you would. I bet that bottom dollar.

(LAUGHTER)

BALDWIN: Thank you very much. We will see you tomorrow.

HOSTIN: Thanks.

BALDWIN: That's a tough cookie, that Sunny Hostin.

Coming up next, some bad news for Groupon. Dennis Rodman hangs out with the leader of North Korea. And you might be able to buy props from a TV show like "Lost" at the Goodwill store. Oh, and that media that flew over Russia, remember that from a couple of weeks ago? We know now a lot more about that. The power hour next.

(COMMERCIAL BREAK)

BALDWIN: Bottom of the hour. I'm Brooke Baldwin.

Technology, sports, business, health, science, showbiz, boom. We are hitting it right now.

First up, our daily deals and endangered species. Shares of Groupon, they're tanking. The granddaddy really of the flash discount sites lost quite a bit of money last quarter and one analyst calls Groupon's forecast for the quarter underwhelming. Groupon went public 15 months ago at $20 a share and it's trading today in the $4 range.

It went down to the wire between the Houston Rockets and the Milwaukee Bucks, score tied 107-107. Want you take a look at the winning shot by the Bucks' Monta Ellis. And it goes in. Incredible. This is the second career buzzer beater for Ellis. The first was actually in a game against the Nets back in 2007.

(BEGIN VIDEO CLIP)

DENNIS RODMAN, FORMER PRO BASKETBALL PLAYER: We got invited and we just come over and have some fun and hope that it will be some fun.

(END VIDEO CLIP)

BALDWIN: What should we call this, hoops diplomacy?

Dennis Rodman, you recognize this guy? He is in North Korea. The former NBA bad boy got his wish and got to meet Presidential Kim Jong- un. Rodman and Kim watched a basketball game, natch. Take a look here. These are pictures. The two of them, smiles on their faces. We are just getting these in from "Vice" magazine. How about that?

Chatting, laughing and having a little fun courtside. Afterward, Rodman reportedly called himself a friend of Kim and a friend of the North Korean people. Take a look at these fancy digs now. This is the world's tallest hotel. This is officially opening this, the J.W. Marriott Marquis. This in Dubai. Ready for the numbers? -- 72 floors, 1,164 feet tall. That is just 290 feet shorter than the Empire State Building.

Even though Guinness World Records has crowned it the tallest hotel, though, keep in mind this is actually less than half the size of the world's tallest skyscraper, which is obviously in Dubai as well.

Here's another number for you, $427 million, as in dollars. This is how much J.C. Penney lost in the last quarter. We actually talked here at CNN with CEO Ron Johnson last year when he did away with coupons, did away with those short-term sales. Here he was.

(BEGIN VIDEO CLIP)

RON JOHNSON, CEO, J.C. PENNEY: The big idea here I think is that ultimately everyone knows the right price.

If you were to walk in the closet today and look through every item in your closet, you will be surprised. You remember not only where you bought it, about how much you paid for it and what day you bought it. And if the customer is that smart, there's no reason to play games. Let's just give him or her the right price the first time so that they can shop on their terms.

(END VIDEO CLIP)

BALDWIN: Well, given all the money they have lost, Alison Kosik, I guess it just proves we like our sales.

ALISON KOSIK, CNN CORRESPONDENT: Oh, God, I love a good sale, I'll tell you what.

BALDWIN: Right?

KOSIK: But you know what?

This has got Ron Johnson, by the way, who is an ex-Apple guy, saying, you know what? Never mind with my revolutionary new strategy. It's just not catching on. I want to show you why.

Sales at J.C. Penney since Johnson took over, look at this, especially in the quarters that include the Christmas season, dropped by more than $2 billion. And profit margins, well, they shrunk as well.

Remember, the whole reason that J.C. Penney changed its whole strategy was because it was losing money on all those coupon and sale items. But because the reaction to the new strategy has been so bad, it's ended up having to sell so much more stuff on clearance that they're losing even more money.

Well, now, the company is desperately -- desperately -- trying to hold on to part of the new strategy. It's setting up lots of in-store boutiques, it's signing new brands, but bringing back those weekly sales. And he's doing kind of a turn-around that, as Ron Johnson is putting it, we are towards reconnecting with our core customer while attracting new customers.

It may be where the company essentially went wrong in the first place, Brooke, you know, losing sight of that core customer. Makes you wonder if he knew his customer in the first place, Brooke.

BALDWIN: Yeah, looking for reconnecting with cha-ching, as well.

Alison Kosik, thank you.