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CNN NEWSROOM
Driver Killed When Jeep Catches Fire; Chrysler Rebuffs Government Recall; Obama Security Team Shakeup; Susan Rice's Controversial Past; Second Levee Fails In Missouri; First Lady Talks Back to Protester; Mississippi Governor Comments Spark Uproar; Delta To End Memphis Hub Operations; Baseball Stars Facing Huge Suspensions; Lawmakers Debate Taxing Pot
Aired June 5, 2013 - 10:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
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CAROL COSTELLO, CNN ANCHOR: Happening now in the NEWSROOM, running for higher ground, a levy breaks as crews desperately try to prevent another breach.
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UNIDENTIFIED FEMALE: Me and my other cousins are going to take the kids and get away from danger.
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COSTELLO: Evacuations now under way.
Also, IRS mess.
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UNIDENTIFIED MALE: Their dream to become the next great dance sensation.
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COSTELLO: Silly videos just the start, presidential suites, baseball tickets and swag, too.
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UNIDENTIFIED FEMALE: The IRS for its employees to take home like this tote bag with a special logo made just for the conference.
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COSTELLO: Millions of dollars of your money wasted. Plus, A-Rod, Ryan Braun, and more probably suspended for what else, performance- enhancing drugs.
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UNIDENTIFIED MALE: I will not make any further statements about it. The truth has not changed. I do not know the specifics of the story that came out today. I have already addressed it. I've already commented on it. I will say nothing further about it.
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COSTELLO: And the Powerball mystery. Who holds the $590 million ticket and why haven't they claimed the prize? You are live in the CNN NEWSROOM.
Good morning. I'm Carol Costello. Thank you so much for joining us. We start this morning with your safety. Chrysler is refusing to recall almost 3 million jeeps because of a fire risk, despite accidents like this one. A fiery crash on a Houston highway, the burned out wreck belongs to the driver of a Jeep Cherokee.
The fire started when the car was hit from behind and then burst into flames. The driver died. Now he is one of the more than 50 people who have died after their Jeeps caught on fire following a rear-end collision.
Athena Jones has been following the story for us. Athena, why won't Chrysler recall these vehicles?
ATHENA JONES, CNN CORRESPONDENT: Well, Chrysler says that the government has not had a full analysis of the data. I can tell you, Carol, this is an unusual story. It is also important for anyone who is concern about the government's ability to regulate our roads.
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JONES (voice-over): In a rare act of defiance, car company giant Chrysler refuses to recall almost 2.7 million vehicles as requested by the National Highway Traffic Safety Administration. For nearly two decades, some Jeep SUV models have had a tendency to burst into flames after a rear end collision. The NHTSA is requesting that upgrades to the older models be installed to keep fires from starting.
JOAN CLAYBROOK, FORMER NHTSA ADMINISTRATOR: The definition of a safety defect it's a bad design, if it's harmful to people and if it occurs repeatedly and that's all been the fact here.
JONES: The models in question are 1993 to 2004 Jeep Grand Cherokees and 2002 to 2007 Jeep Liberties. The company says it's been working with the government on the fuel tank fire issue since 2010. Chrysler says their SUVs met the minimum standards for rear end collisions. But in a June 3rd letter from NHTSA to Chrysler, the agency said bluntly, quote, "The existence of a minimum standard does not require NHTSA to ignore deadly problems."
Chrysler responded in a statement saying, "We believe that NHTSA's initial conclusions are based on an incomplete analysis of the underlying data. And we are committed to continue working with the agency to resolve this disagreement." But it's the data that's scaring some consumer advocates.
The Center for Auto Safety says its data shows the risk of fire for a Grand Cherokee in the model years in question is more than 20 times greater than the risk in a comparable Ford Explorer.
PETER VALDES DAPENA, SENIOR AUTOMOTIVE WRITER, CNNMONEY: Chrysler contends that their gas tanks on these vehicles were built according to government safety standards available at this time and basically that there is no problem. That the number of people who've died in rear end collisions is far lower than safety organizations are alleging. And that at any rate it's less than the industry average for that type of vehicle built at that time.
JONES: Recalls aren't unusual, but this is the first time since 1996 that an automaker has challenged a recall demand from the NHTSA. That case also involved Chrysler and the company prevailed in a two-year federal court battle.
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JONES: And so Carol, we could have another fight on our hands. As one analyst said, Chrysler is taking a risk by taking on the government here. They could end up winning this battle, but there is no way to predict the impact all of this could have on future sales -- Carol.
COSTELLO: I was just going to ask you about that. If they start investigating this stuff in 2010, I mean, as a consumer, I would have wanted to know about it either from the government or from Chrysler.
JONES: That's certainly what consumers are saying. They want to know the recall is going to happen. The question is, is it going to happen? We don't know if it's going to end up being a two-year court battle like Chrysler had in 1996. But we are certainly going to keep watching this because this is not just about jeep owners, but also the folks who are sharing the roads with Jeep owners -- Carol.
COSTELLO: You got that right. Athena Jones, thanks so much.
President Obama's national security is getting a shakeup and some Republicans are calling it a slap in the face. Tom Donelan is resigning as President Obama's national security adviser. And guess who his replacement will be? The highly controversial U.S. Ambassador to the United Nations, Susan Rice.
Dan Lothian is at the White House this morning. Dan, this is not going to please Republicans, but I'm thinking President Obama doesn't much care.
DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: Well, it does appear that way. I mean, clearly some Republicans already tweeting out there, making a note that they don't believe that this is the right choice. Remember, Susan Rice was one of the top contenders to become the next secretary of state. She had to withdraw her name amid all of that firestorm over the so-called Benghazi talking points.
But clearly, what the president is doing through this choice, someone who has been very close to the president over the years, a top adviser, the president is saying he still has confidence in Susan Rice. This is a position that does not need any kind of congressional confirmation.
So we probably will not see any major dust-up as we would have seen for someone for secretary of state. But nonetheless, there is that talk out there on twitter and others making it known that they don't believe this is the right choice, some considering this a slap in the face -- Carol.
COSTELLO: Dan Lothian reporting live from the White House. As we said, Susan Rice has been under the microscope ever since the Benghazi attacks. Remember what she said on the Sunday talk shows days after the U.S. Consulate was attacked in Libya.
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SUSAN RICE, U.S. AMBASSADOR TO U.N.: It is important to know that there is an FBI investigation that has begun and will take some time to be completed. That will tell us with certainty what transpired. But our current best assessment based on the information that we have at present is that, in fact, what this began as was a spontaneous, not a premeditated response to what had transpired in Cairo. In Cairo, as you know, a few hours earlier, there was a violent protest that was undertaken in reaction to this very offensive video that was disseminated.
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COSTELLO: Of course, that later was proved not to be true. Republicans accused Susan Rice of abetting a cover up by the Obama administration. John Avlon is a CNN analyst and political director for the "Daily Beast." So John, good morning, first of all.
JOHN AVLON, CNN CONTRIBUTOR: Good morning, Carol.
COSTELLO: What does this move say to Republicans?
AVLON: It says that President Obama is not going to be constrained by their outrage and this of course, is adding to the frustration. Already, Susan Rice is not on the Republican congressmen's Christmas card list, but this appointment which doesn't need Senate confirmation is going to be read and already is being read as a slap in the face.
But President Obama says, look, he doesn't much care. He is rewarding Susan Rice for her loyalty to his administration and moving her into the White House. She is going to have more influence now than she ever did on White House policy.
COSTELLO: I mean, Democrats will say Republicans got tear way when Rice withdrew her nomination to become secretary of state.
AVLON: That is exactly right. You know, they got who they wanted, Secretary of State John Kerry. But this move and the move of Samantha Power to the U.N. ambassador post that Susan Rice now holds really shows a coalescing within the Obama administration. This is advancement of two women who were among the lead advocates for intervention in Libya, two women who are in fact Democratic interventionist and policy terms not far from some of the Republican critics.
It is a fascinating decisive move by a president who apparently is liberated by a second term, not worried about burning bridges with Republicans and congress who are already his critics.
COSTELLO: Well, I guess the larger question -- you can't remove politics, right. You just can't. I mean, why aggravate an already tense situation with Republicans? I mean, we're going to suffer through years of this until the next presidential election, doesn't this make it worse?
AVLON: It might make it worse in the short term. I think there are two things you need to distinguish. First of all in terms of policy, Susan Rice actually agrees with some strong administration critics many of the times such as Lindsey Graham and John McCain. This is about Benghazi talking points.
But the president is circling the wagons and appointing strong supporters from his inner circle. That's what second term presidents do. I do think it's significant. If you look at in particular Samantha Power and Susan Rice, you see two Democrats who were shaped enormously by the Bosnian intervention formed, by the reaction to our failure to intervene in Rwanda.
So these are actually strong confident moves about a Democratic vision of foreign policy, the beliefs in humanitarian intervention, that is a signature of President Obama and it raises real questions about what the administration will do going forward in Syria.
COSTELLO: All right, John Avlon, thanks for your insight. We appreciate it.
AVLON: Thank you, Carol.
A second levy along the swollen Missouri River has failed and now flood waters are creeping up to people's homes. This is near West Alton, Missouri. The river is nearly 9-feet over its banks. People who live in 43 homes nearby have been told to evacuate.
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ROBIN SURDYKE, RESIDENT OF WEST ALTON, MISSOURI: I'm freaking out. I have a whole new respect for people that live near flood plains, levees and stuff. It's a totally different feeling than I've ever had.
UNIDENTIFIED MALE: Are you scared?
SURDYKE: Yes, very scared.
LAMONT BOYKIN, RESIDENT OF WEST ALTON, MISSOURI: I am moving my vehicle and my things to another residence for right now.
UNIDENTIFIED MALE: Where it's higher and dryer?
BOYKIN: Higher and dryer. (END VIDEO CLIP)
COSTELLO: CNN's Martin Savidge is live in West Alton, Missouri. Martin, I hear they're expecting rain there.
MARTIN SAVIDGE, CNN CORRESPONDENT: Yes. That is the next concern, Carol. Good morning to you, by the way. This area we are standing in was completely dry yesterday. Here's the irony of this situation right now. The crest of the rivers in this area, there are two of them, by the way, there's the Missouri and the Mississippi. That's why West Alton seems to be so vulnerable. It has two huge waterways that are surging with flood waters running beside it.
What happened here was that second levee break yesterday as you pointed out, but the water has been slowly making its way in, creeping over 2 miles to get where it is right now. You point out that there are only about two dozen, three dozen people evacuated on top of several hundred that were evacuated on Monday due to another flood protection system failure.
So all of that is, of course, increasing the anxiety at a time when you think that people would be feeling better because the water levels are going down, but the flooding is actually getting worse. If you live in that house behind me here, you are definitely getting nervous as the water creeps higher. This may look bad. There's not much they can do about it authorities say.
The breach is too big. They'll have to wait until the flood waters recede. There is another place 4 miles away on the Mississippi where they had a slide on a levee. That's where the earth actually moves on the back side of the levee. They are very worried about that one. It's right next door to a major power plant and right beside a highway that would be used for evacuation.
Last night, they were racing to get into place a stone levee. You could call it a kind of a watery Alamo along Highway 94. That is the line they are trying to draw so that if that levee gives way, they have at least got a way of slowing the water down. There are a lot more homes, as we already point out, they need to keep the lights in that area to power to many people here -- Carol.
COSTELLO: We'll keep our fingers crossed. Martin Savidge reporting live from West Alton, Missouri this morning.
Michelle Obama, she is way more popular than her husband. Her approval ratings are sky high, but Mrs. Obama proves she is not impervious to hecklers. The first lady was reading prepared remarks last night when she was interrupted by a protester who says the LBGT community is not protected from work place discrimination. Here's the heckling. Listen.
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MICHELLE OBAMA, FIRST LADY: We have an obligation to stand up for those kids and I don't care what you believe in. Wait. Wait. One of the things, one of the things that I don't do well is this. (END VIDEO CLIP)
COSTELLO: According to reporters who were there, people who were there, Mrs. Obama then approached the heckler and said, listen to me or you can take the mic, but I'm leaving, you all decide. You have you one choice. Now the heckler was from a gay rights group as I said and she was eventually escorted out of the building. Mrs. Obama did stay.
Let's bring in CNN analyst L.Z. Granderson. He is joining us on the phone from Grand Rapids, Michigan. Good morning, L.Z.
L.Z. GRANDERSON, CNN CONTRIBUTOR (via telephone): Good morning, Carol.
COSTELLO: Oddly enough, you are actually writing a column on this very topic, right?
GRANDERSON: Yes, actually, I am. I have started writing this piece yesterday in regards to the House Democrats not voting on the issue of marriage equality in Illinois and what happened to the first lady last night kind of ties into what I see as a complicated relationship the Democrats have with the LGBT community.
COSTELLO: So this event and Michelle Obama was talking about children, right, educating and eating right and all of that, was that the proper forum for someone to go in and complain about this particular issue? Was it helpful?
GRANDERSON: Well, you know, hecklers don't get into patience. There is never a right time, you know, to heckle. So, you know, while you would have preferred it to have been an event that wasn't dealing with children, the fact of the matter is, is that when hecklers have an issue and they feel as if they are not being heard in traditional ways.
They will take these opportunities, these other avenues to try to make sure their voice is more importantly at that point is being heard. I don't think it's fair necessarily to heckle the first lady because she's not the one that sets policy. Nonetheless, heckling her has us talking about the issue and the president made himself back in 2008.
COSTELLO: Some people might say, though, that the gay rights movement has come such a long way. It wants everything all at once. It just doesn't happen that way.
GRANDERSON: Well, you know, if you look at the pattern that has hatched under the Obama administration, what tends to happen is you have protesting. You have heckling and then you have movement. Unfortunately, there haven't been a lot of examples of it being the other way around. I give you a case in point.
The president implemented rights for LBGT couples in hospitals in 2010 through executive order. This was something that could have been done back in 2009 since he got into office. But if it was in response to all the heckling that had been going on because it seems as if they were moving so slowly on behalf of the LBGT community
So it seems to be, OK, I'll give you this doggy treat if you will, you know, his evolved opinion with marriage equality. You can't overlook the fact that the timing of it was quite interesting because he was set to speak in front of LBGT activists at a big huge fundraiser hosted by Ricky Martin.
It surely before that, he came out for marriage equality. When you look at it through that lens of timing, yes, it's true. This administration has done much more than any other in the history of this country for LGBT people. With that being said, they've had to be prodded into doing so.
So this perhaps is another prodding if you will to get the administration to get Democrats to hold true to the words they have in their platform about standing up for the LGBT community.
COSTELLO: All right, L.Z. Granderson, thanks so much. We appreciate you being with us this morning.
GRANDERSON: Thank you very much.
COSTELLO: Still ahead in the NEWSROOM, baseball bombshell, two of the games' biggest stars now at the centre of a doping scandal facing possible long-term suspensions.
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COSTELLO: It's 21 minutes past the hour. It's time to check our top stories. Mississippi Governor Phil Bryant finding himself in the middle of a controversy after giving this response to a question about why American schools had fallen behind other countries.
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GOVERNOR PHIL BRYANT (R), MISSISSIPPI: I think both parents started working and the mom is in the work place. It's not a bad thing. I'm going to get in trouble. I can just see. I can see the e-mails tomorrow.
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COSTELLO: I think he's already seeing those e-mails. Bryant was speaking at a "Washington Post" forum on education. He went on to say that both parents being pulled away from homes for a long period of time has contributed to the reading problem in this country.
FBI agents have raided the office of California State Senator Ron Calderon. The FBI says no arrests are planned, but declined to comment further on the investigation. Calderon's spokesman declined to comment as well.
Delta says it will end hub operations at Memphis International Airport right after the Labor Day weekend. The Atlanta-based airline will cut service to the airport from 92 flights daily to about 60. Some 230 customer service jobs will be lost. It's the middle of the baseball season and we should be talking about the games and you know the all stars and who you are voting for. But sadly we are once again talking about scandal. Yes, the scandal has everything to do about doping.
ESPN is reporting that Major League Baseball will seek suspensions against Alex Rodriguez, Ryan Braun and about 20 other players for links to the now closed Biogenesis Clinic. CNN's Pamela Brown has more from Yankee Stadium.
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BROWN (voice-over): ESPN is reporting that Major League Baseball is preparing for an unprecedented wave of player suspensions that include Yankees star, Alex Rodriguez, and the Brewers, Ryan Braun. Rodriguez, Braun and some 18 other players are allegedly linked to a Miami area clinic at the center of an ongoing performance enhancing drug scandal. On Tuesday night, Ryan Braun refused to talk about it after his game.
RYAN BRAUN, MILWAUKEE BREWERS: I'm not answering any further questions regarding the whole situation. You know, I dealt with it for a long time over the last year and a half. Aside from that I don't really have anything further to say.
BROWN: Yankees manager, Joe Girardi, was peppered with questions at a post-game news conference.
JOE GIRARDI, NEW YORK YANKEES MANAGER: I think we all had hoped we kind of got through it. But obviously we're not through it yet.
BROWN: Major League Baseball issued this statement following the ESPN story. We can't comment on an ongoing investigation. ESPN reports that Tony Bosch, founder of this now closed clinic in Miami has reached an agreement to cooperate with the League's investigation. The "Miami New Times" first reported in January that Bosch's Biogenesis Clinic was a pipeline to performance enhancing drugs for several players.
TIM ELFRINK, "MIAMI NEW TIMES": Well, it's clear that Biogenesis like a lot of anti-ageing clinics was selling an awful lot of HGH, a number of other drugs, you know, that are widely banned in sports.
BROWN: Representatives for Alex Rodriguez issued a denial after the January report. The news reports about the purported relationship between Alex Rodriguez and Anthony Bosch are not true. Alex Rodriguez was not Mr. Bosch's patient. He was never treated by him and was never advised by him. According to ESPN, players could be suspended for 100 games, a penalty usually given to second offenses. If upheld, the suspensions may be the largest in American sports history. A-Rod fans, disappointed.
TREVOR KAUFMAN, YANKEES FAN: I looked up to him when I play baseball because he was a really good player before and I really liked him. It just saddens me kind of.
BROWN: Not only is the legacy of these baseball giants at stake, but more importantly, that of America's pastime.
GIRARDI: I worry about baseball being affected as a game, the whole thing. And what it's been through in the last 15 years and that's my concern.
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COSTELLO: That was a CNN's Pamela Brown reporting from New York.
Coming up in the NEWSROOM, as states look for more tax revenue, some are turning to pot. The highly controversial and still illegal drug may be a way to balance the budget. But how much tax is too much?
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COSTELLO: How much do you tax pot? Right now, two states, Colorado and Washington allow the recreational use of marijuana. Before it is available at a convenience store near you, the debate is growing over how much of a piece the government should take out of the pot pie. Kevin Fisher is the co-owner of Rocky Mountain Remedies. He joins us live from Washington. Good morning.
KEVIN FISHER, CO-OWNER, ROCKY MOUNTAIN REMEDIES: Good morning, Carol. A pleasure to be here.
COSTELLO: It's nice to have you here. You are lobbying Congress for pot taxes. As it stands right now, how much will pot be taxed?
FISHER: Well, there are two aspects to taxation. There is a sales tax aspect and then there is the income tax aspect. We're here today talking about 280-E from the tax code. That's a portion of the tax code meant to prevent deductions by illegal businesses, say cocaine dealers and speedboats. It should not be applied to legal cannabis businesses in the state of Colorado and Washington.
COSTELLO: So if it is applied, what does it mean as far as taxes are concerned?
FISHER: It means in some cases we pay up to a 90 percent marginal tax rate. A great example would be if I was to hire a front desk employee at $40,000 a year that, employee is going to pay income tax on that $40,000. I will pay payroll tax and then I am going to pay income tax as well. So a $40,000 salary can turn into $35,000 worth of taxes for the federal government.
COSTELLO: Wow. Many Congress people aren't so much in favor of legalizing marijuana. Don't you have a tough road ahead?
FISHER: We do. We certainly want to do our part. We want to contribute. We want to create jobs. We want to bring in sales tax revenue and we want to bring in revenue. But a misapplication of tax code is not something we are in favor of.
COSTELLO: Well, you know, throughout history, cigarettes and alcohol, for example, have faced much higher tax rates than other products so why should lawmakers go easy on recreational marijuana especially --
