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Tax Cuts: Lifesavers for Politicians? NSA Monitoring Phone Calls of Millions of Americans; John Cornyn Defends NSA

Aired May 11, 2006 - 10:00   ET


DARYN KAGAN, CNN ANCHOR: We'll get started here talking about something that might catch a lot of people's attention: tax cuts. It could be a money saver for taxpayers. Will they be a lifesaver for politicians? We're going to focus on your family savings in just a moment.
Right now, the Senate at is talking tax relief with the vote coming later today. Senators are expected to follow the House and OK a $70 billion package. President Bush is eager to sign that into law.

But is the latest package a cut above the rest? It depends on whom you ask.


REP. DEBORAH PRYCE, (R) OHIO: These tax measures that the Republican Congress and our president has produced and is going continue on today and tomorrow, as we debate this and pass it, have been wonderful for America. Our economy has rebounded, unemployment has dropped.

UNIDENTIFIED CONGRESSMAN: The Exxon boardroom is cheering that this is going to pass. The people that work for Exxon, they're not cheering. This is not for America middle class, this is for the rich and famous.


KAGAN: Well let's go from the politics to the pocketbook. We want to see what the tax cut will mean for American families.

Jean Sahadi is here. She is the senior writer and columnist for

Jean, good morning.


KAGAN: I think most people are saying I want to know how much money am I going to save on my taxes.

So we put together a graphic. Let's put that up and talk about it. Starting at $20,000 to $30,000, you going to save $10 a year?

SAHADI: Well, these are estimates from the Urban Berkings (ph) Tax Policy Center. And what they did was they looked at the aggregate impact of this tax bill on people of different income levels.

And as you can see from the graphic, people who earn the most will get the most in terms of dollars. But also, what you can't see is that they'll get the most in terms of the percentage of their tax liability. That will be reduced.

It's perfectly sensible to people who make a lot more money would pay more in taxes, so therefore their savings dollar-wise would be greater. But you really want to look at it proportionately. And proportionately, people who are making a million dollars and up, will save 3 plus percent on their tax liability. Where someone making $20,000 will only save less than half a percentage point.

KAGAN: But to go back and tell the beginning of the story, the people in that million dollar tax bracket are already paying a larger percentage of their income?

SAHADI: Exactly. It's a progressive tax system so they are paying a larger percentage. So what the tax policy center is looking at is what would your tax liability had been if this tax bill did not pass?

KAGAN: OK. Let's move on to Alternative Minimum Tax. A confusing idea until it hits you. And people kind of really get stuck with this thing. So in 10 seconds can you explain what it is in the first place?

SAHADI: Sure. It's a parallel tax system that was originally intended to ensure that the wealthy paid their fair share of tax.

But when it was created, what was defined as wealthy is very different than what's defined as wealthy today. The income exemption levels, the amount income that wouldn't be counted under this system, were never adjusted for inflation.

So every year, lawmakers have to go in and say, OK, we'll approve an increase using income exemption levels so that we don't catch too many class people. Because inflation and salaries have gone up quite a lot since 1969 when this was first create.

KAGAN: So once again, they're raising that level so fewer people might get caught in that web.

SAHADI: That's right.

KAGAN: Now, Roth to IRA changes, why would they allow this to happen?

SAHADI: Well, the bill they pass had to come under the $70 billion spending limit if it was going to be protected from filibuster. The investment tax rate cuts they passed and the ANT relief together are quite expensive. So they needed to do was put in provisions that raised money.

One of them that they put in -- and it's very controversial -- is allowing upper income people to convert their traditional IRAs to Roths. Normally, if you make more than $100,000 you're not allowed to. Under this bill, you will be allowed to.

KAGAN: That's supposed to bring in some income, right? Because isn't there a fee that goes that?

SAHADI: What happens is, when you convert your traditional IRA to Roth, you pay the taxes up front because the traditional IRA is tax-deferred, a Roth, you put in after-tax money and it grows tax- free.

In the early years of this provision, it will raise money. The Joint Committee on Taxation estimates it will raise about $6 billion in revenue through 2015.

But critics of this provision say, long term this is a revenue loser because the government is now forfeiting taxes in the future. In other words, the money that upper income people will be putting into Roths will now grow tax-free. Whereas, if it had stayed in the old IRAs, they would have been taxed on it as income when they withdrew it in retirement.

KAGAN: Sahadi, also critics are saying about this is the whole entire plan is too costly and that it benefits the rich too much?

SAHADI: That is what they're saying. And, you know, proportionately that's what the tax policy center numbers do show. But the supporters of the bill also say that, again, in the aggregate these types of tax cuts help with economic growth, which results in job growth, higher stock prices.

Critics say they don't see the connection quite as clearly.

KAGAN: If you want to know more, again, what it means to your bottom line, do you have something at

SAHADI: We sure do. We have a story on the home page that gives you a numbers breakdown on how much people in different income levels will save.

KAGAN: Jean Sahadi, thanks for your expertise. We appreciate it.

SAHADI: Thank you.

KAGAN: Talking to al Qaeda? The Government wants to know. Talking to your family member, your co-workers? The government may know that as well.

A report in "USA Today" says the National Security Agency has been secretly collecting phone records on tens of millions of Americans. The paper says three major telecoms are giving the government the information. That includes AT&T, BellSouth and Verizon. Qwest reportedly refused to help.

The paper says the program does not involve listening to or recording conversations, just tracking the call. The idea is to analyze calling patterns to detect terrorist activity. Right now the issue has caused anger and concern on Capitol Hill.


SEN. PATRICK LEAHY, (D) VERMONT: Look at this headline. That is what the chairman referred to. NSA has massive database of Americans' phone calls. Shame on us in being so far behind and being so willing to rubber-stamp anything this administration does. The Republican- controlled Congress refuses to ask questions. And so we have to pick up the paper to find out what is going on.


KAGAN: The paper says the NSA's domestic program is more expansive than the White House has acknowledged. Neither the White House nor the NSA would discuss the program.

"CNN Security Watch" keeps you up-to-date on your safety. Stay tuned day and night for the most reliable news about your security.

Surf, sand and smoke. Florida wildfires shut down a major thoroughfare for tourists. Fire crews say it may take several days to open the 12-mile stretch of I-95. It's now closed between Port Orange and Edgewater. Workers are trying to clear trees that have toppled on to the north-south roadway.

Across the state, smoke has closed other roads, but only for short periods. Chad Myers has been watching Florida and the rest of the country as well.

Chad, good morning.

MYERS: Good morning, Daryn. I'm trying to get some rain in here.

And we have significant rain now on the west side of the state, from about Cedar Key almost up to Gainesville. And it has been tracking across the state for most of the morning. And it will get over to those fire regions, those fiery areas now, probably in the next half hour to 45 minutes. So that may help out the firefighters a little bit.


-- Daryn?

KAGAN: Chad, would it be possible, on the same did, in the Continental U.S., to have a hurricane and snow? Do you remember that happening?

MYERS: Wow. I mean, the first hurricane ever was back March 9, 1951. So, certainly, you could have snow in March. But the first one to ever hit the United States was something in the middle of June. So by June, I think snow's about over.

KAGAN: OK. It's kind of like having zits and gray hair all at the same time. It's one of nature's freaky mean lessons.

MYERS: I don't want to think about that.

KAGAN: It shouldn't happen.

Thank you, Chad.

MYERS: You're welcome.

KAGAN: Well, the checks can't hit the mail until Washington weighs in, but Louisiana lawmakers have signed off on the hurricane aid package for homeowners.

The plan would provide $7.5 billion in assistance. The money would go to those people whose homes were heavily damaged by Katrina and Rita. The program is still needs a federal OK and, of course, the money from Congress as well.

KAGAN: Destroyed by Katrina, now here comes the long arm of the Government.

Crews are tearing down condemned homes in St. Bernard Parish, Louisiana. The first houses were broken up, tossed onto trucks, and hauled away yesterday. They were in a subdivision smothered by 10 feet of water. Parish leaders say, in all, 8,000 homes will probably have to be demolished. That number could go even higher. A dozen times, President Bush returns to the Gulf Coast today for his 12th visit since Katrina. He'll be speaking with graduates at Mississippi Gulf Coast Community College in Biloxi.

Aides say that Mr. Bush will challenge the grads to use their talents in the rebuilding effort.

We'll have live coverage of the president's commencement speech at 3:00 eastern.

A hero from one hurricane, a second one, though, destroys his home.


___: It's been real frustrating. I give up.


KAGAN: Find out why a New Orleans man is camping in. Living in a tent inside his house. That's coming up on "LIVE TODAY."

And religion rules, but what about the soul of Iran? I'll talk to the man who wrote the book ahead. "LIVE TODAY'S" revealing look at "Everyday Iran." But first, subway trains and a bus, blown apart, dozens killed in the July 7 London bombing. Could it have been prevented? A new report is out and we'll take a peek.

(COMMERCIAL BREAK) KAGAN: Could it have been prevented? The question following most any tragedy. Last summer's subway and bus attacks were one of the most deadliest act of terror ever on British soil. And today investigators are having their say.

CNN's Paula Hancocks joins me live now.

Paula, these reports seem to say there is a similar type problem happening in Britain as we've seen following terror attacks here in the U.S.

PAULA HANCOCKS, CNN CORRESPONDENT: That's right, Daryn, yes. Two reports, one focusing on the failure of intelligence, saying that there's no single agency or individual that is to blame, but resources, the lack of resources. And also the huge amount of threats that are coming in at the moment and the security services are having to deal with.

Also the Home Office report from the home secretary, John Reid. He talked about -- he gives a narrative, a minute by minute account of what happened on that day, July 7, 2005, when 52 people were killed and 700 injured.

Now, he mentions two of the suicide bombers, Mohammed Sidique Kahn, the ringleader and Shahzad Tanweer, one of his co-suicide bombers did go to Pakistan and they do know that they did speak to al Qaeda figures.

Although at this point, John Reid says it's still unclear how much al Qaeda was involved.

This is what else he had to say.


JOHN REID, HOME SECRETARY, BRITISH HOME OFFICE: We now know from CCTV footage and witness statements that Khan Tanweed and Hussein traveled down from Leeds in a hired car that morning, and met up with Linzi (ph) in the Luton Station Car Park.

Further devices were found in one of the cars, which may have been for self-defense or diversion in case of interception during that job being done. They don't appear to indicate a fifth bomber. And there is no evidence to suggest this elsewhere.


HANCOCKS: So the main headlines from these two reports, lack of resources for security services, and just too many security threats to be dealing with -- Daryn?

KAGAN: Also sounding like the security branches, like we've heard in this country, not communicating with each other and sharing information like, perhaps as well as they could?

HANCOCKS: That's right, yes. This is something that was mentioned even before the attacks themselves. They just don't talk to each other as much as they should. That certainly changed July 7.

But the fact is, there is competition between these branches still.

Security analysts saying that is starting to break down. But of course, this has been going on for decades. It takes time to break down those kinds of barriers between different agencies.

And also the fact that there weren't enough people working in these agencies. But there has been a huge recruitment at MI-5, security services and MI-6 over the past few months. They're doubling and quadrupling in some areas the amount of people they have looking at international terrorism.

KAGAN: So some things have changed since last summer, then.

HANCOCKS: That's right, yes. Just the sheer amount of people they have working on intelligence and finding out as early as possible what potential terrorist are talking about, where they're going and who they're talking to.

Now, another interesting thing we heard was that they are going try and change the national terror alert system. It's very convoluted here in Britain. What they've done embarrassingly just before these attacks, they had lowered the alert system from severe general to substantial.

Now, what this report and the Government is agreeing and saying should be done is it should be made more transparent. It should be maybe like you have in America. It's color-coded. It's obvious. It lets the public knows where they are at a particular time.

The public in Britain do not know what kind of terror alert they're living under at the moment.

KAGAN: Paula Hancocks, live from London. Thank you.

Now, to south Florida, the killer may have been an alligator. Police in Sunrise say a 28-year-old woman was apparently dragged into a canal and killed by a gator. No one saw the attack, but witnesses did say they saw a woman that had been dangling with her legs over the water. Construction workers found her dismembered body.

Another south Florida woman lived to tell the alligator tale. 74-year-old Connie Giddles was gardening when a 6-footer clamped down on her leg. She snapped the gator on the snout; the gator retreated, just like that. And get this, Giddles (ph) went right back doing her gardening.

Now, that is a woman with a plan.

So is Gerri Willis. Her plan today, telling us how to deal with the electricity bills.

GERRI WILLIS, CNN CORRESPONDENT: That's right. I love that woman. She's awesome. KAGAN: I've got gardening to do.

WILLIS: Well, we're going to talk about something else entirely: alternative energy. We're going to show you how to save money when it comes to supplying your home with energy. "Five Tips" is next.



KAGAN: Big story in "USA Today" talking about the big three telecommunication companies handing over phone records of domestic phone calls to the U.S. government for the NSA's program.

Let's go ahead and listen in now with John Cornyn of Texas, defending the program.


JOHN CORNYN, (R) TEXAS: This is not a partisan matter. This is not somewhere the president or the intelligence community is running like a rogue elephant, across trampling our civil liberties.

I think we ought to lower our language and our rhetoric a little bit and be conscious of what's at stake, and what's at stake is the safety and security of the American people.

And it's not something that ought to fall prey to partisan politics. It used to be when we fought wars in this country, that partisanship didn't extend beyond the waters -- past the water's edge, but obviously we're in a different time now. And that's too bad.

One reason why the administration or the intelligence community doesn't read more members of Congress into these highly-classified programs is because Congress leaks. Congress leaks, and the intelligence community knows that, if they brief too many members of Congress on the detail of these highly confidential and classified programs, that our enemies will learn them, because Congress will tell them through the Press Corps

And so, it's been reiterated to me time and time again that there has actually been concrete damage done to our intelligence-gathering capabilities because of the story that first appeared in the New York Times on this story, for which the authors got a Pulitzer Prize.

At the same time I believe our country has become less safe because now our enemy do know, as Senator Feinstein alluded to, that these sorts of programs exist.

But as I was telling Senator Graham, thank goodness there are such things as dumb criminals that make mistakes that make it possible for law enforcement to catch them. And I think there are dumb terrorists, too, who will fall prey to our surveillance methods or legal surveillance methods, no matter how much they compromise during the course of these debates. Thank you.


KAGAN: Senator John Cornyn, Republican of Texas, and there is the Senate Judiciary Committee Chairman Arlen Specter talking about this program that the NSA has this massive database of America's phone calls.

Some people are very upset about this and the privacy issues that it brings to life. But there you saw Senator Cornyn defending it, saying this is a dangerous time and that information might be needed to find a way to find possible terrorists. More on that later.

We should let you know that the telecommunication companies that are cooperating with that, AT&T, Verizon and BellSouth. Senator Specter saying he will call on the heads of those companies to come and testify before the Senate Judiciary Committee. More on that. If you want to continue listen in. If you want to listen in, go to cnn.compipeline and that testimony will continue there.

Meanwhile, we move on to your top five tips today. The electricity bill is expected to be high as summer months come along. It makes you want to think about trying to get off the power grid so you're not tied to the power bills.

Gerri Willis here with your top five tips on -- well, if you don't want to do it all the way, how you can do it partially. Good morning.

WILLIS: That's right. Good morning, Daryn. Good to see you.

Homeowners in sunny states can actually benefit from making some of these moves because they get more bang for their buck when it comes to solar energy.

Take a look at this map. Homeowners who live in southern California or Nevada will benefit from solar energy. If you live in Seattle or Maine, forget about it. You will benefit if your roof faces south and if you live in an area that isn't shaded by a lot of trees, but the geography here is very important, Daryn.

KAGAN: You'll want to look at what the costs will be involved in making that kind of move.

WILLIS: Solar energy can take 20 years to make your investment pay off and they range from 14,000 that are on the low end to 35,000 on the high end.

Unless you can sell your unused energy back to the utility company this, is your benchmark here, you won't be making money on solar energy. Of course, of course, there are local and federal rebates, and tax credits but you to crunch the numbers and see if it makes sense for you.

KAGAN: Maybe baby steps to start with could be your water heater.

WILLIS: That's a great place to start. Cut it by 08 percent by getting a water heater. That's the time to install it, especially given the run-up in natural gas prices.

Installing a solar water heat can cost $4,000 to $5,000 but the payoff is so much more quicker than solar panels. You make your money back in five to six years.

KAGAN: You may want to think romantically but you don't want to lose hope.

WILLIS: I've got to tell you; actually being able to get off the grid is tough. It takes a big investment and start with a smaller system to supplement the main supply of electricity. You'll save money and you'll be able to gauge just how much energy success able to power your entire household. It's smarter than buying a system that may be more than you need. Don't forget you can always add solar panels later.

And you'll want to put the warranty for performance only. So any storms, hurricanes, tornadoes on hail storms are not covered.

Warranties last for 25 years and ten years for solar water heaters. Of course, you need to let your insurance company know about your solar panels so you get insured.

If there's something you would like to hear about, e-mail us at We want to do tips on topics that are important to you. -- Daryn?

KAGAN: Finally, Saturday, "OPEN HOUSE" what will you be talking about this week?

WILLIS: 9:30 a.m., eastern Saturday morning, "OPEN HOUSE" will talk about more alternative energy tips, some that are simple and cheap to do like unplugging your cell phone charger.

And is it time to cash in on your mortgage? We'll talk about that as well as tech envy, really cool stuff. You can buy now for your house, tech phobes take note.

KAGAN: The male audience just shot through the roof.

WILLIS: That's what we're hoping, Daryn. That's where we're going.

KAGAN: With you as host, that's already happening.

Thank you.

WILLIS: Thank you.

KAGAN: Still ahead, a story that started as a drill. It turned into a real-life rescue. A helicopter crashes into the sea. We'll tell you what happened to the crew.

And Iran's president is choosing his words carefully. See who he thinks has a bad Attitude?

We're live from Tehran, next on "LIVE TODAY."



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