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AMERICAN MORNING

Barack Obama's First Showdown with Congress Over Bailout Money Set Today; U.N. Relief Agency Building Attacked; Pakistan Arrests 124 Suspected Militants; Obama on the Cover of A Feminist Magazine Sparks Controversy

Aired January 15, 2009 - 06:00   ET

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


(BEGIN VIDEO CLIP)
KIRAN CHETRY, CNN ANCHOR (voice-over): Breaking news. Barack Obama's first showdown with Congress today, putting his prestige on the line in a battle over the bailout on this AMERICAN MORNING.

(END VIDEO CLIP)

CHETRY: And good morning. It's Thursday, January 15th. I'm Kiran Chetry.

JOHN ROBERTS, CNN ANCHOR: Good morning, I'm John Roberts. How quickly the honeymoon is over.

CHETRY: That's right. Bipartisan opposition but, you know, they want a little bit more accountability this time.

ROBERTS: Well, it's just bipartisanship in Washington.

CHETRY: It's something, right?

ROBERTS: That's one thing.

We begin this morning with breaking news out of the Middle East, and live pictures as Israel kicks up its intensity with its war with Hamas. Flames now burning out of control at the United Nations central compound for humanitarian aid in Gaza city. That complex houses food and medicine. One U.N. official telling CNN that the complex was hit with shells containing the chemical white phosphorus which burns anything that it comes into contact with.

Israeli Defense Minister Ehud Barak say the incident was a "grave mistake." In a moment, we'll talk live with the director of operations for the U.N. Relief and Works Agency in Gaza city.

Today, the first real test of Barack Obama's political clout. In just a few hours, the Senate will vote on whether to tap into the last of the federal bailout money. Obama wants the $350 billion to expand lending to consumers and small businesses, but lawmakers, even from his own party, are torn over the unpopular rescue plan. In a moment, we'll go to Washington live for the latest.

Obama also said that he might use some of that bailout money to reduce foreclosures, which according to a brand new research out this morning spiked a record 81 percent last year. That means one in every 54 households received a notice last year. And despite recent government and private efforts to keep people in their homes, foreclosure filings were still up 17 percent last month.

CHETRY: Well this morning, just five days, five hours and 59 minutes until Barack Obama's inauguration. Obama's first major showdown with Congress is about to take place in just a few hours. The Senate is going to be voting on whether or not to give the incoming administration access to billions of dollars in financial bailout money. It's the second half, if you will, of that $700 billion package.

Obama has been trying to line up support, but he is facing a pushback both from the left and the right. And last night, he told CBS'S Katie Couric that he's open to discussions but failing to release the $350 billion is not an option.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT-ELECT OF THE UNITED STATES: If Congress has better suggestions where they can show me that one approach is going to be better than another approach, I'm happy to take it. I don't have pride of authorship here. But the general framework, the general outlines of the plan are ones that we have run by economists from the left and the right, conservative, liberal.

This is a package that I think is going to make sense. I have every confidence that it's going to work, but it's going to take some time and we've got to do it with some speed. So my main message to Congress right now is get it done.

KATIE COURIC, ANCHOR, CBS NEWS: And if it doesn't work?

OBAMA: Failure is never an option, not in America.

(END VIDEO CLIP)

CHETRY: Well, Suzanne Malveaux joins us now from Washington. Barack Obama is saying failure is never an option. I mean, a lot of it sounds like the same pushback that President Bush went through trying to get the first $350 billion.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Kiran, this really is a high stakes situation here. Barack Obama obviously trying to push forward this money here. I mean, this is a real test for him, whether or not he can even convince his own party, members of his own party to go along with this.

This is something -- you know, I talked with senators and it's going to be a real nail-biter. It's going to be very, very close. The Senate leadership, the Democrats, they believe that they can push this thing through. But you take a look at the blue dog Democrats, those fiscally conservative, they're not on board. You take a look at a lot of the Republicans, they're not on board with this.

So all eyes are going to be on the Senate today. How are they going to decide? What are they going to do? Are they going to vote down this money?

Another thing you should take a look at, though, Kiran, today, is what's going to happen on the House side. Congressman Barney Frank, he's got a bill that's out there essentially that would say, look, here is how the money is going to be followed here. This is how we're going to track it. There will be some restrictions. There will be some accountability.

Does that bill go forward? It might actually help some of the senators sway them and say OK, we're not going to block this money. So all eyes today on what these lawmakers are going to do.

CHETRY: And if the Senate does block the money, then as you said it turns to the House to see how they are going to vote. They need both chambers. But it's interesting, I mean, even some Democratic lawmakers are saying look, I can't even go home to my home district, you know, or my home state and I'm hearing it from all my constituents, even though they want to support Barack Obama and give him his first legislative victory. At the same time they're saying "I have to answer to my constituents as well."

MALVEAUX: Absolutely. I mean, a lot of people are torn here. I mean, a lot of people are saying look, what happened to the first $350 billion? We're not signing up for this. We're not necessarily on board, but what you see Barack Obama doing and it's something that they did often in the campaign. The idea is kind of like a charm offensive, you know. I mean, they would often say hey, if you just get to know the guy, you'll like him.

Barack Obama working the phones, behind the scenes, reaching out to Democrats, reaching out to Republicans, that kind of one-on-one contact, that persuasive, that charm, using all of this, essentially this personal appeal to at least have them listen to him, you know, listen to what he's got to say. And the hope is that they're going to buy into this, buy into the idea that this money is necessary.

CHETRY: All right. Suzanne Malveaux for us this morning. We'll follow this throughout the morning, of course. Thank you.

ROBERTS: Christine Romans is with us this morning "Minding Your Business." A new Gallup poll show 62 percent of Americans think that Congress should block those remaining TARP funds until they get some sort of an idea of how it's going to be spent.

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: And, you know, how will they be spent? You have Barney Frank and houses as Suzanne just pointed out saying we like to have foreclosure relief. We'd like to have more relief that Americans can feel because so much of that first chunk of the TARP money, the TARP money, the bailout money, Americans couldn't feel it. You can't see something that didn't happen, which was a meltdown of the financial system. So we'll see today if Barack Obama and some of the Democrats who were trying to lead the way on this who can go to get their way.

But remember, Congress already passed all this money. What they're trying to do now is not give the seal of approval on the second half of it so that the law was originally written so that this money would be available and it would be difficult not to give the second half.

ROBERTS: The other problem with the TARP money, too, is it would sort of like -- where did it go? Nobody knows.

ROMANS: Nobody knows. We know it went to the banks. A lot of it went to the banks. At the very same time, yesterday on Wall Street, big concerns again about the health of the banks.

You've got reports that Bank of America might have to get more money. They've already got $25 billion. They might need more money. You're going to get bank earnings in the next few days, the next few weeks, that are like, could be really abysmal.

And you've got Fed governors, Fed officials who in their speeches saying we need the second part of the TARP. Most of that money is going to go to the banking system, which is not where -- it was not where people want it to go.

(CROSSTALK)

CHETRY: But doesn't it ever feel like bizarre world? I mean --

ROMANS: It feels like bizarre world every day.

CHETRY: We're doing something crazy. We want too know where the money is going to go before we release billions of dollars.

ROMANS: I know.

CHETRY: It would seem like a no brainer but --

ROMANS: I know. Well, it goes into the banks. Dollars don't have fingerprints, you can't trace them all. It goes into the banks and what the banks have been sort of saying is that, you know, we're not going to lend to the people who can't pay it back. That is what got us in the mess in the first place. That's one of the reasons why lending hasn't increased.

ROBERTS: We'll see which way this goes.

ROMANS: Yes.

ROBERTS: Christine, thanks.

Returning to our breaking now, right now a column of black smoke rising over Gaza city as flames race through the United Nation's central compound for humanitarian aid. The complex houses food, fuel, medicine and about 700 Palestinians who were seeking refuge from the fighting. Israeli Defense Minister Ehud Barak says the incident was a grave mistake.

Joining me now on the phone from Gaza city is John Ging. He's the head of operations in Gaza for the United Nations Relief and Works Agency. Mr. Ging, what's the current situation on the ground there in your complex?

VOICE OF JOHN GING, UNRWA DIRECTOR: The current situation is very, very dangerous, and now we have a fire and our compound has been hit a number of times this morning under this all night long barrage of artillery and tank fire into this area of Gaza city, which is very densely populated.

So they shot one artillery shell hit one of our buildings where three were injured and then we are dealing with three more rounds that were fired into the compound, which have caused phosphorus fires.

ROBERTS: Right.

GING: My staff on the ground extremely lucky that they were not injured when those rounds hit into the workshops area, the warehousing area. And now, they're on fire basically and, of course, it's a major problem there because those people should know you can't touch phosphorus with water otherwise it becomes very toxic.

ROBERTS: Right. Yes.

GING: (INAUDIBLE) doesn't put them out.

ROBERTS: Let me just drill down on that for a second if I could. As we said, Defense Minister Ehud Barak says this was a grave mistake. You claim that it was white phosphorus artillery shells that hit the compound. Phosphorus, as you said, when you pour water on it, the fire just gets worse. The only way to try to put out the fire is to smother it with sand or some other compound. But this idea that they're using white phosphorus shells which will burn anything short of metal and will give extraordinary burns to human beings, all the way down to the bone, any idea why they're using white phosphorus shells in an area like that?

GING: No, that's the question which you might need to put to them. That's the question that you need to course through them. I'm now here at the receiving end.

It looks likes phosphorus. It smells like phosphorus, and it's burning like phosphorus. That's all I can -- that's all I can say. That's why I'm calling it phosphorus.

We're trying to deal with this. Our whole transport compound is on fire and now that's in danger of spreading into the warehouse with all the food and medicine, thousands of tons of food and medicine.

This is a hub of the whole operation, the whole United Nations operation here in Gaza. This is the hub. This is where it all comes to, gets distributed from.

ROBERTS: Right.

GING: We were hugely fortunate this morning that the tankers of fuel, thousands upon thousands, hundreds of thousands bases (ph) of fuel ready to be deployed but they didn't go up at the same time. We have warned the Israelis hour by hour through the night of the vulnerabilities here as the shells came closer and closer and shrapnel was coming into the compound on a regular occasion and nonetheless, we have now been subjected to these direct hits.

ROBERTS: All right. Well, boy, don't know what you can do if you can't even get the emergency equipment there. Best of luck to you, John. We'll keep on following the story this morning.

GING: Thanks a lot.

ROBERTS: John Ging from the U.N. Relief and Works Agency this morning from Gaza city.

CHETRY: Well, he doesn't take office for another five days but Barack Obama's presidential portrait has just been released. It was taken by the new official White House photographer, Pete Souza. It's the first time an official presidential portrait was taken with a digital camera.

And Barack Obama will be sworn in on Tuesday. CNN's coverage at the inauguration begins this Saturday morning as we follow "The Obama Express" on its historic trip from Philadelphia to Washington, D.C. It all begins at 10:00 a.m. Eastern right here on CNN.

And we'll be live in Washington with a special inauguration edition of AMERICAN MORNING. It all starts at 5:00 a.m. Eastern time, so wake up to the most inauguration news in the morning right here on CNN.

ROBERTS: Barack Obama says the rest of the bailout money is essential to fixing the economy, but will the Senate give him the green light to use the remaining $350 billion. Our political experts look at what the president-elect has at stake.

It's 10 minutes now after the hour.

CHETRY: Uproar over a magazine cover. The Superman pose that some are calling a sellout.

(BEGIN VIDEO CLIP)

AMY SISKIND, THE NEW GENERATION: The problem with the cover is it's a man standing in a Superman pose, and, thank you, but the women of this country can stand up for themselves.

(END VIDEO CLIP)

CHETRY: What's a man, even this man, doing on "Ms."? You're watching the Most News in the Morning.

(COMMERCIAL BREAK)

CHETRY: Well, this morning, a woman's magazine featuring the cover with President-elect Barack Obama is raising a few eyebrows. The shot features Obama striking the iconic Superman pose while revealing a shirt reading "This is what feminism looks like."

CNN's Jason Carroll has been looking into it. And this is not just any magazine, this is "Ms."

JASON CARROLL, CNN CORRESPONDENT: This is "Ms." -- yes, we were looking at a little earlier. Here it is right here if you guys can see it. This is the one that's causing all of the controversy.

Critics say this is the wrong cover especially for a feminist magazine and they say it sends the wrong message to women. "Ms." magazine says it's the right cover saying it's the right time to showcase a man like Obama who identifies himself as a feminist.

(BEGIN VIDEOTAPE)

CARROLL: He's graced the covers of just about every major magazine, "Time," "Newsweek" "Ebony" "Rolling Stone" even "Tiger Beat." Some flattering, others controversial, while this upcoming cover of "Ms." Magazine in the latter category.

AMY SISKIND, THE NEW GENERATION: The problem is it's a man standing in a Superman pose, and thank you, but the women of this country can stand up for themselves.

CARROLL: Feminist like Amy Siskind remember a feminist movement united under the cause of advancing women's rights. "Ms." magazine was a leading voice then. Its original cover featured a Wonder Woman for president. How Siskind wonders could they feature a Superman, declaring this is what a feminist looks like?

SISKING: If they had put "is this the face of feminism" instead of "this is the face of feminism," it would have been a provocative cover. But I think by proclaiming it, it was a real mistake.

KATHERINE SPILLAR, EXECUTIVE EDITOR, "MS." MAGAZINE: This is not a takeoff on that original cover. I think people have overreacted.

CARROLL: "Ms." magazine's knows its cover ignited a debate. The executive editor says it's not selling out by featuring Obama.

SPILLAR: We had a couple of people contact us, why would we put a man on the cover. It's because, indeed, men, too, can be feminist.

CARROLL: Siskind agrees men can be feminists. In fact, some are part of their organization called "The New Agenda." But she, like some political observers say so far, Obama just hasn't done enough to support women.

JULIE MENIN, DEMOCRATIC COMMENTATOR: There is still some concern from some women's groups about President-elect Obama, and specifically, some of the concerns they have are there have not been that many women appointed to his cabinet.

CARROLL: And while "Ms." says it has received a mostly positive response to the cover, Siskind got responses like this on her blog. "Obama won because he was not a woman. So why does "Ms." have to rub it in our faces?"

Another writes, "Another example of how truly silly the hero- worship of Obama has become."

SPILLAR: I think they should read the magazine. We explained why the illustration and why we wanted to really wake people up to the opportunity that now exists.

(END VIDEOTAPE)

CARROLL: And Amy Siskind says a better choice, cover choice would have been Senator Hillary Clinton or even Governor Sarah Palin. "Ms." magazine says they've had men on their covers before and overall, subscriptions are up because of this issue.

CHETRY: The special inaugural issue.

CARROLL: Yes.

CHETRY: So -- all right, the controversy continues. Thanks, Jason.

CARROLL: All right.

ROBERTS: A heartfelt open letter from our next president to his daughters. Barack Obama shares his thoughts about the puppy, the move to the White House, and what he wants most for his little girls.

And how far would you go to get a ticket to the inauguration? History has never been hotter. The inaugural desperados.

It's 17 minutes after the hour.

(COMMERCIAL BREAK)

ROBERTS: Waking up Philadelphia this morning with the soundtrack from "Slumdog Millionaire." Four Golden Globe awards and headed for the Oscars.

Live picture of Philly right now. And today's frigid temperatures in the northeast trying to put everybody to the test. Right now, 25 degrees but it feels like it's 16 degrees outside. It's a kind of bitter cold that numbs the face, kills car batteries, freezes water pipes. Makes you want to be in Mumbai this morning where it's probably nice and warm.

Rob Marciano is tracking the massive cold snap here in the northeast. You know, 26 degrees, 16-degree wind chill factor, really cold here for folks in the northeast. Still nothing compared to International Falls, Minnesota, yesterday, where it was minus 33.

ROB MARCIANO, AMS METEOROLOGIST: Yes, even colder than that. I'll show you some numbers, John. You're going to be pretty impressed and you'll probably cringe.

Nineteen right now in New York. Obviously, that's small potatoes compared to minus nine, which is the actual temperature. That doesn't include the wind chill in Chicago. Thirty in Birmingham but also a 30 in Jacksonville. So this cold certainly has got all the way down in the south and into the Gulf of Mexico and also Florida.

All right. Check out some of these record low temperatures. Embarrass, Minnesota, minus 47, International Falls, minus 42. Again, these are actual temperature, not wind chills. You couple the wind chills and we're talking about temperatures that felt like 60, 70 degrees or so below zero.

All right. Some light snow heading through New York. You'll see a little bit of delay action there. Philadelphia as well. and here is that snow band up the I-95 corridor. It shouldn't be a tremendous amount but certainly enough to slow things down here and this, John, will be the leading edge of the real cold air that will be rolling into New York tonight.

Eight degrees for an overnight low in New York tonight, minus 12 in New York -- in Chicago, excuse me, and 14 for a low in Atlanta. So everybody east of the Rockies getting a piece of the cold. Stay warm. Back up to you.

ROBERTS: Fourteen, you said, in Atlanta?

MARCIANO: That's right.

ROBERTS: Ooh! That is cold.

MARCIANO: That's nasty.

ROBERTS: Welcome to the club, Rob.

MARCIANO: All right.

ROBERTS: Thanks.

CHETRY: How about this one? They bill it as the world's best job. The Queensland Tourism Board in Australia has been inundated with applications from around the world. Why? Well, check this out.

They're looking for an island caretaker in Australia's Great Barrier Reef. You live there rent free, you explore the region and you blog about the experience. The salary for six months of work is about $100,000. Queensland Tourism officials say their Web site is getting 200 hits a minute, and it crashed. The deadline, by the way, to apply if you're interested, February 22nd.

Well, Barack Obama wants access to the last of the financial bailout money. He's threatening a veto if he doesn't get it. We're going to take a look at whether the president-elect's bipartisan pitch to lawmakers is working.

We're also following breaking news in the Middle East. A potential humanitarian disaster unfolding as we speak. The United Nations compound containing food and medical supplies right now engulfed in flames in Gaza city. We'll have the latest development. It's 23 and a half minutes after the hour.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

CONAN O'BRIEN, HOST, "LATE NIGHT WITH CONAN O'BRIEN": President Bush has been giving Barack Obama a lot of advice. They've had a few meeting and he's giving Obama advice.

Yes. President Bush has told Barack Obama that his biggest challenge will be an enemy attack. That's what he said. Specifically, Bush told Obama to keep your eye on Hillary.

(END VIDEO CLIP)

CHETRY: Late-night laughs there. Barack Obama wanting to hit the ground running when he takes office in just five days. Already some bumps in the road though for the president-elect, including a Senate vote today to block the release of the remaining $350 billion in bailout money, the first real test of Obama's political clout.

And joining me now to take a look at the challenges he'll face going forward from Boston, Doug Hattaway, Democratic strategist and former communications adviser to Hillary Clinton's campaign. And also here with us, CNN contributor and Republican analyst, Leslie Sanchez.

Good to see both of you this morning.

LESLIE SANCHEZ, CNN CONTRIBUTOR: Great, thank you.

DOUG HATTAWAY, FMR. COMM. ADVISER TO HILLARY CLINTON CAMPAIGN: Good morning.

CHETRY: So, Leslie, there are about a half dozen Republican senators who voted for the original $350 billion rescue plan who say they're going to oppose it this time. How does he make the case to Republicans? How will he be able to win them over that this is not just a lost cause?

SANCHEZ: Oh, no, it's not that the Republicans I think don't want to be responsive to this economic downturn as much as there is an air of caution. How is this money going to be used, the transparency, the accountability? They want to ensure that this is not just government run amuck and that there's a responsible government. So I think that very much this is what constituents are asking for and that's what the call to leadership is going to be for President-elect Obama.

CHETRY: And, Doug, the interesting thing is it's not just the Republicans. He's actually facing some opposition within his own party. There are some Democrats who say they're torn between wanting to give Obama his first political win, but also having to answer to outraged constituents, who say, don't write another blank check, you know, with our taxpayer money. HATTAWAY: Right. And I think the Democrats are saying that before, too, after the Republicans threw $350 billion at the bank and nobody knew where it went. Of course, questions are going to be raised. I think it's part of the process. I don't think anybody wants to block this, because that would create the perception that Congress is throwing up roadblocks when the president-elect wants to do something to help the American people.

And this is, I think these checks and balances going on is healthy and there will be a good outcome of it. I don't think people expect the money really to be blocked, but there is going to be accountability and it's going to go -- the money is going to go toward homeowners and more toward people that need it, rather than disappearing down a black hole and that's obviously a good thing.

CHETRY: And, Leslie, what do you think about that? I mean, is there going to be any Republican resistance to having this focus a little bit more on foreclosures and home loans?

SANCHEZ: No, I think they're trying to see what's going to have the best economic effect. I mean, don't negate the fact you have a special inspector general that's going to be looking at a lot of those TARP, you know, those financial funds. Those reports are going to be slow coming. It takes a long time to analyze that data, but that's the type of information that Congress is going to keep a watchful eye on.

And there are lessons that we've learned from other types of big bailouts and there are types of government intervention. I think overall what's going to keep the credit markets moving and allow people to have not only access to credit but encourage them, continue the finalization of purging of the market.

CHETRY: Hey, Doug, I wan to ask you about this. A very interesting meeting with President-elect Obama at the home of renowned conservative George Will. A lot of other columnists there. Barack Obama having dinner with them. Pretty much a charm offensive and some liberals are saying why waste your time? You don't really need conservative support. We have the majority in both Houses. And why court conservatives? What do you think about the so-called charm offensive?

HATTAWAY: I think President-elect Obama is sincere about changing the tone and bringing new politics. I think it's part of that and it's kind of delivering on a promise to do that.

He might not need George Will to pass his -- to help pass his agenda, but I think reaching across the ideological divide is something that is actually going to give people a lot of comfort that he is keeping that promise to change the tone, to do things differently. He could actually get some good ideas. He could actually reduce some opposition.

CHETRY: Right.

HATTAWAY: But at the end of the day, I think the country is ready for a new -- for leaders who are going to reach across those divides.

CHETRY: OK.

HATTAWAY: So I think it will help him politically.

CHETRY: Leslie, I just got to get this in, though, because while some of the liberal blogs are grumbling about it, the right-wing blogs are, too. In fact, this is interesting.

HATTAWAY: Right.

CHETRY: Right Wing News "making a P.R. move by making meaningless nods to the right so that when he supports policies that Lenin would blanch at, he can come back and say sure, I ran a trillion-dollar deficit, got rid of 'don't ask, don't tell,' and stopped the building of the border fence, but I ate dinner with George Will. See? It all balances out. I'm a moderate."

SANCHEZ: He's going to have to do a lot more than that to be a moderate. I mean, clearly you can look at some of his appointments and say he's moving more to the center. He sounds and talks like a centrist. I mean, it's going to be this big government bailouts.

What is entailed in there, what kind of pork-barrel spending? What kind of deficits are they going to be running up? I mean there are so many different policies a long history of failed Democratic policies, that it's going to be good to have conservatives at the table at least to meet somewhere in the middle.

CHETRY: I want to thank both of you, Doug Haddaway and Leslie Sanchez, for being with us this morning. Thanks so much. We're also going to be taking a look at the top issues that Barack Obama will face as president, we're breaking them down with our experts. If you have a question that you want to ask, go to cnn.com/am and send it to us.

ROBERTS: Just about 31 minutes past the hour now. We're following breaking news out of the Middle East for you today. Right now, a dangerous situation unfolding as flames burn out of control at the United Nations central compound for relief in Gaza City. You're looking at live pictures. A United Nations official telling us earlier this morning that he believes the complex was hit with shells containing the controversial chemical white phosphorous. Israeli defense minister Ehud Barak says the incident was a, "grave mistake."

New arrests this morning in connection with November's deadly attacks in Mumbai. Pakistani officials reportedly rounding up 124 suspected militants. The Pakistani leaders say they need more information from India to prosecute the suspects. The Mumbai attacks left 164 people dead.

Tensions still running high in Oakland over the fatal shooting of an unarmed black man by a transit officer on New Year's Day. Police made nearly two dozen arrests overnight after street protests turned violent. The now former transit cop has been charged with murder in the racially charged case. Authorities say there was a bomb scare at his family's home last night.

The stock of Apple computer falling sharply after CEO Steve Jobs revealed that he was taking a six-month medical leave of absence. Jobs recently announced that he is suffering from a hormonal imbalance that's caused him to lose weight. In a letter to Apple's staff the 53-year-old Jobs said his health issues are more complex than originally thought. Jobs says that he is not stepping down and will still be involved in "major strategic decisions."

This morning, brand new evidence pointing to more tough times for Main Street. According to research, the number of homeowners caught in the wave of foreclosures grew a record 81 percent last year. That means more than 860,000 families lost their homes. CNN's personal finance editor Gerri Willis has been looking into this one and despite everything that they're trying to do to stem the bleeding, those wounds are still gaping.

GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: No kidding, John. The numbers here really astonishing. Just out this morning, foreclosures last year in this country over 3 million -- 3.1 million people lost their homes or were in some state of foreclosure, everything from default notices to auction sale notices, bank repossessions. As you just said that's up 81 percent from last year, 225 percent from the year before. This is just unheard of, folks. I've never seen this in my lifetime. Most folks haven't either.

Let's take a look at December, just last month. I have to tell you, John, the expectation here was that the numbers would get better here because Fannie Mae and Freddie Mac they both said hey we're going to have a moratorium on foreclosures, there will be fewer. Didn't happen. Up 17 percent, does not bode well for the first quarter of this year.

Now let's really zoom in on the areas that had the worst time. Same old Sunbelt states we've been talking about for a long time here. Nevada, Florida as well, Arizona, California is another area with a whole lot of problems. Stockton, California, still the center, the white hot center of foreclosures. 9.5 percent of houses in Stockton, California, are in foreclosure, which is astonishing.

ROBERTS: One in 10 houses.

WILLIS: Crazy. A lot of overbuilding the big story there of course, as you know. You've seen the pictures of Stockton, California, suburb after suburb after suburb. I have to tell you, I've been looking for upbeat information here to tell you about.

ROBERTS: There's none of it.

WILLIS: It's going to get worse before it gets better. As a matter of fact, 70 percent of the properties that banks own right now, that they've taken back right now, have not even hit the market yet. They're not even on the MLS. They're not even in the market. People can't go see them yet so this gets worse before it gets better, puts more pressure on Washington, of course, to get involved and do something. But I have to tell you, when you think about this, John, 1 in 54 homes in this country in some state of foreclosure.

ROBERTS: What can people who are facing foreclosure do?

WILLIS: It's a very tough thing. Let me give you some phone numbers here that might be able to help you out. First, think about going to hud.gov, it's a Web site, Department of Housing and Urban Development. They have counselors in your neighborhood, possibly. They have them all over the country. Call 800-225-5342.

The Homeownership Preservation Foundation, another place to go. And listen, if you're having trouble with debt, maybe you're just worried you're going to lose your house, you're trying to get your debt in order, call the National Foundation for Credit Counseling. And then get you a counselor 866-845-2227. There's a lot of pain out there, John.

ROBERTS: Stress, anxiety. It's got to be terrible for these folks.

WILLIS: Yes, exactly. We'll have some more ideas on how to help folks later in the show.

ROBERTS: All right you're very helpful with all of this. Thanks, Gerri

WILLIS: My pleasure.

CHETRY: Still ahead it's like the super bowl of all super bowls. The tickets are that hard to get, inaugural ticket fever and the quest to be there at any cost.

Plus, an open letter to his little girls. Barack Obama shares his personal hopes and dreams for his daughters and for all children. Our next president in his own words. Its 35 minutes after the hour.

(COMMERCIAL BREAK)

CHETRY: To the world he's America's next president but to Sasha and Malia Obama, he's just Dad. And Barack Obama wrote an open letter to his daughters explaining why he decided to run for president and in the process forever changing their lives along with his. Alina Cho joins us now with the letter. It's very touching.

ALINA CHO, CNN CORRESPONDENT: It is, it's really heartfelt. No matter what your politics are, you have to appreciate this Barack Obama as a dad. This is an opener (ph) letter, Kiran. Good morning, everybody. Just days before Barack Obama becomes the 44th president and the first African-American to hold the office, "Parade" magazine asked him to share his personal thoughts on the occasion and why he pursued the office with his two young daughters, and that's exactly what he did.

In a rare open letter the president-elect writes, "Dear Malia and Sasha, I know you both had a lot of fun these last two years on the campaign trail. But I also know that it hasn't always been easy for you and mom and that as excited as you both our about that new puppy, it doesn't make up for all the time we've been apart." Mr. Obama then writes about how when he was a young man he thought life was "all about me" but things obviously changed when his daughters came around. Quote, "I soon found that the greatest joy in my life was the joy I saw in yours."

He goes on to say, "I realize that my own life wouldn't count for much unless I was able to ensure that you had every opportunity for happiness and fulfillment in yours. In the end girls, that's why I ran for president." And the letter concludes, "These are the things I want for you, to grow up in a world with no limits on your dreams and no achievements beyond your reach. I love you more than you can ever know, love, Dad."

Now, Obama, as many people know, has talked about his daughters numerous times, most recently this past Sunday, when he sat down with ABC's George Stephanopoulos. Mr. Obama described how his girls are handling the transition to D.C. and the spotlight.

(BEGIN VIDEO CLIP)

OBAMA: I'm trying to figure out why it is that they don't seem to be phased by anything. Folks think I'm cool. They are a lot cooler than I am.

(END OF VIDEO CLIP)

CHO: Maybe they are. Now we should mention in the letter to his girls the president-elect also says, "With the great privilege of being a citizen of this nation comes great responsibility." Kiran, does that sound vaguely familiar?

CHETRY: Yes, it does.

CHO: Subtle or maybe not so subtle reference, I think, to Spider-Man, which he's a fan. He's on the cover of the new Spider-Man comic book. And the mantra of course, Spider-Man mantra, with great power comes great responsibility.

CHETRY: But it also very wonderful for these girls to know how much their dad loves them. Especially since he talks a lot about his upbringing and how much he was affected by the absence of his father.

CHO: I mean what an amazing thing for the historical record. What an amazing thing for the family record. Can you imagine down the line, 20, 30 years when these girls get married, having this letter from their father. It's just really very extraordinary. By the way we should mention as for the puppy, still a tossup between the labradoodle and the Portuguese Waterhound. No official decision yet on that one. We'll keep you updated. Kiran?

CHETRY: Just get a dog!

CHO: Has to be hypoallergenic.

CHETRY: I know.

CHO: Malia's got allergies.

CHETRY: Thanks, Alina. Forty minutes after the hour.

ROBERTS: How hot are tickets to the inaugural now?

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: I couldn't pass it up.

(END OF VIDEO CLIP)

ROBERTS: How far some people are going to get their hands on the hottest ticket on earth, inaugural desperadoes. D.C. or bust. You're watching the most news in the morning.

(COMMERCIAL BREAK)

ROBERTS: That was my first album that I ever bought. Welcome back to the most news in the morning. Shows you how old I am. There are just five days left until Barack Obama is sworn in. The hottest ticket in Washington becoming even hotter this morning. Bidding wars are now breaking out for the chance to witness the historic inauguration. Jim Acosta has been working this one for us, he's live in Washington. Jim about the age where you probably, New Kids on the Block or 'N Sync would probably be the first album that you bought?

JIM ACOSTA, CNN CORRESPONDENT: Wait a minute, I am not going there John, I am not admitting that.

ROBERTS: Good morning, Jimmy.

ACOSTA: Good morning, John. You're right, I think this event has everything but Pastor Rick Warren asking the question, "Are you ready for some football?" We do know there will be plenty of tailgaters out there. It is the hottest ticket in Washington and people in this town are pulling out all the stops to get their hands on one.

(BEGIN VIDEOTAPE)

OBAMA: Unprecedented numbers of Americans are planning to join us in Washington.

ACOSTA (voice-over): Welcome to Washington. Home of super bowl 44, as in the inauguration of the 44th president. Tickets are going fast, in all sorts of ways.

UNIDENTIFIED MALE: We have a lot of interest in this inauguration.

ACOSTA: Senate Majority Leader Harry Reid picked seven lucky winners out of a hat. What was your first reaction when you heard you had a ticket?

JENNY HARROW, TICKET HOLDER: Kind of that facial expression right there. ACOSTA: Jenny Harrow got her ticket from a friend. Like a lottery winner, she was all of a sudden very popular.

HARROW: I had gotten some offers, people are saying I could make a killing but the money's not worth it.

ACOSTA: Not everyone shares that opinion. On the Web site Craigslist scalpers are selling tickets to the swearing in for thousands of dollars. How did they end up there? Don't blame them. Each inaugural members of congress are given hundreds of tickets to pass out to employees and friends.

ANNIE SCHROEDER MULLINS, POLITICO, GOSSIP COLUMNIST: Once the offices give away these tickets you can't really control what happens after that.

ACOSTA: A handful of congressional offices have confirmed to CNN and other media outlets they've uncovered a variety of schemes to auction off their tickets. Technically it's not against the law.

MULLINS: It's a huge gray area. Don't you love it? Of course Washington, everything is a gray area.

SEAN PATE, STUBHUB.COM: The little rock star status of president-elect Obama has kind of made these events a can't miss event.

ACOSTA: The online ticket service, Stubhub decided against the selling of swearing in tickets and is instead offering up pricey passes to the parade and inaugural balls.

PATE: For some of the galas as well as the parade they've actually exceed this week's NFL championship games.

ACOSTA: Jenny Harrow says you can't put a price tag on history.

HARROW: Money comes and it goes. I mean experiences like this are once in a lifetime. So I couldn't pass it up.

(END OF VIDEOTAPE)

ACOSTA: The Senate just passed a bill to make inaugural scalping a crime but with less than one week to the transfer of power it's doubtful that bill is going to become a law soon enough to count this time. John. And I'll tell you I talked to one Congressional staffer yesterday about all of this and he said he literally learned of a scheme where a person was going to come up, pick up their ticket inside the Capitol, and then walk off the grounds and sell it to somebody on the spot.

ROBERTS: Well, I imagine you probably could, and get some pretty good coin for it as well.

ACOSTA: Absolutely.

ROBERTS: Jim, thanks very much. Hot ticket there, no question about that. 47 minutes now after the hour.

(BEGIN VIDEO CLIP)

CHETRY: The governor's scandal, set to music.

(MUSIC PLAYING)

Jeanne Moos on creativity, corruption and a most unusual song contest.

(END OF VIDEO CLIP)

CHETRY: You're watching the most news in the morning.

(COMMERCIAL BREAK)

CHETRY: Roland Burris, come on down! After his initial rejection, Burris will be sworn in this afternoon as Barack Obama's replacement in the senate, and the man who chose Burris, embattled Illinois Governor Rod Blagojevich might not seem like someone you'd turn to for inspiration. But in Chicago he's inspired some aspiring songwriters to pick up their picks and put pen to paper. Here's Jeanne Moos.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT: They're not exactly singing his praises, but they are singing.

UNIDENTIFIED MALE: (singing) Blago, blago, go, go.

MOOS: Blagojevich isn't gone yet. In fact, he's inspired the "Write a song for G-Rod" contest, Governor Rod Blagojevich.

UNIDENTIFIED MALE: (singing) Hey, Blago, how low can you go?

UNIDENTIFIED FEMALE: (singing) Money takes are you listenin', campaign cash is a-glistenin.

MOOS: Blame it on the Chicago paper called "The Red Eye." They got the idea when a "Chicago Tribune" reporter asked Blagojevich --

UNIDENTIFIED MALE: Governor, why are you out for a run this morning?

GOV. ROD BLAGOJEVICH (D), ILLINOIS: It keeps love in your heart.

MOOS: Struck by that phrase, "The Red Eye" launched its song contest asking for original compositions that include the line.

UNIDENTIFIED MALE: (singing) Keep love in your heart.

UNIDENTIFIED MALE: (singing) Keep love in your heart. It's a bleepin' (INAUDIBLE).

MOOS: The entries ranged from rap -- UNIDENTIFIED MALE: (singing) This goes out to Blago. Listen, the truth will set you free, make you move, you ain't nothing but a crook to me.

MOOS: To ballads.

UNIDENTIFIED MALE: (singing) This is the story about a Rod who thought he needed a wad.

MOOS: The governor's hair was a common theme.

UNIDENTIFIED MALE: (singing) Every morning I look in the mirror and brush my luscious hair.

UNIDENTIFIED MALE: (singing ) Where'd you keep your money from pay to play? Did you stash it underneath your gigantic toupee?

MOOS (on camera): Now since the Blagojevich scandal is all about pay for play, you'd think the contest winner would get paid to play the winning song, a cash prize, right?

UNIDENTIFIED MALE: (singing) Come on, baby, let's pay to play.

MOOS (voice-over): Wrong. What the winner got was air time to perform on WGN's midday news.

UNIDENTIFIED MALE: (singing) Nobody knows aspiration like the least popular governor in the nation.

MOOS: The Keith Harrison Band took the honors.

KEITH HARRISON, CONTEST WINNER: I really don't know much about Governor Blagojevich. I'm originally from New Jersey.

MOOS: But music and corruption are universal.

UNIDENTIFIED FEMALE: (singing) We'd all like to know where Rod got his dough, walking in Blagojevich's land.

UNIDENTIFIED MALE: (singing) Oh, Blago, Blago, go, go

MOOS: We're going.

Jeanne Moos, CNN.

UNIDENTIFIED MALE: (singing) Your heart bleep, bleep, bleep.

MOOS: New York.

(END OF VIDEOTAPE)

CHETRY: He named his son Hitler, Adolph Hitler.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: This is America. They say it's free. You have a right to name your child what you want to name your child.

(END OF VIDEO CLIP)

CHETRY: A bakery refused to write it on his birthday cake and now child welfare has taken all of his kids away.

Plus, the serious illness that forced billionaire Steve Jobs to step down. Apple stocks plunged. Is he sicker than he says? You're watching the most news in the morning.

(COMMERCIAL BREAK)

ROBERTS: Welcome back to the Most News in the Morning. Venezuela has cut all diplomatic ties with Israel, a week after shutting down the Israeli embassy in Caracas. Venezuela's President Hugo Chavez is an outspoken supporter of both Hamas and Iran. Is he a real threat to the United States and is America taking Chavez seriously enough and what are the implications for the incoming president?

Doug Schoen co-authored the book "The Threat Closer to Home, Hugo Chavez and the War against America." He joins me now. I got through the book yesterday, very interesting read. Many people in America view Chavez as an annoyance, call him a dictator, a clown, is that the right way to view him?

DOUG SCHOEN, SENIOR COUNSELOR, EDELMAN P.R.: I think it's a mistake, John. I think Hugo Chavez is a threat to America, I think he's somebody who's worked with Hamas and Hezbollah, training cells for Hezbollah in Venezuela, ongoing economic, political and military links with Iran and he said he's going to do everything he can to undermine us, I'd take him at his word.

ROBERTS: Right off the bat in the very front of the book you quote (INAUDIBLE) who was the former ambassador to Venezuela back in the 1980s as saying that he's more dangerous than bin Laden and the effects of Chavez, his war against America could eclipse those of 9/11.

SCHOEN: Well the reason we say that in our book is because Chavez is supporting terrorism on a daily basis, is doing nothing about drug interdiction, supports Iranian nuclear ambitions, North Korean nuclear ambitions, works with the Syrians. He's given al Qaeda and Hamas an open invitation to come to Caracas.

ROBERTS: You point out in the book that in his state of the union address back in 2002, President Bush labeled Iran, Iraq and North Korea the axis of evil. But you say wait a minute the true axis of evil is Caracas, Tehran.

SCHOEN: Exactly right. There is a weekly flight between Caracas or three times Caracas into Tehran, the joke in Venezuela is it's very easy to get a seat, just tough to get on unless you're an arms trafficker or somebody involved in terrorist activity.

ROBERTS: You believe there is a free flow of fighters and arms going back and forth between Iran and Venezuela?

SCHOEN: I do and just last week a ship was intercepted in Turkey containing motor parts that in fact had explosive devices. So I think it's going on, yeah.

ROBERTS: We all remember the famous speech that Hugo Chavez gave at the United Nations where he called President Bush the devil and said you could smell the sulfur in the air from his appearance at the United Nations the day before. Of course Chavez blames President Bush for 2002 coup attempt against him. My question is, is Chavez at war with America or is he at war with President Bush and will things be different in an Obama administration?

SCHOEN: Excellent question. He used Bush as a proxy to organize anti American activities. I think he's hoping to reach out to Obama to make nice, to continue below the radar those anti-American activities.

ROBERTS: You point out that between Ahmadinejad and Chavez, there was a coordinated effort to drive up the price of oil. Of course the price of oil has now crashed, economy is in the dumps. Chavez, if he has designs on global or at least hemispheric revolutions seems to have been thwarted somewhat in that, is now reaching out to western oil companies again. Is that a real change of heart here, or is that just sort of a temporary thing that he needs to do in order to stay alive?

SCHOEN: It's a practical adaptation to current circumstances to try to strengthen his own economy. He's down in the number of barrels of oil he's producing. He's down obviously in the price of oil. He needs money. His budget is in severe deficit and he wants to keep funding not only his country, but his nefarious activities around the world.

ROBERTS: Economically, is that really the way he can hurt the United States? Certainly he couldn't hurt the United States militarily, could he?

SCHOEN: Well he uses third party proxies, like Hamas, Hezbollah, the Iranians and the Syrians to support those activities. If you go back to the FARC in Colombia, he was funding them and they were certainly behind drug supplies to the United States. I think he needs to be branded a state sponsor of terror.

ROBERTS: You think this is going to be a big challenge for Obama?

SCHOEN: I think it's a huge challenge for Obama because he not only has to contain Chavez he has to build a positive coalition in Latin America to support American interests, not oppose us.

ROBERTS: Doug Schoen, the author of the new book "Hugo Chavez and the War against America, The Threat Closer to Home". It's a great read. Doug, thanks for coming in this morning.

SCHOEN: John, thanks for having me. ROBERTS: Appreciate it.

SCHOEN: Thank you.

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