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AMERICAN MORNING

Obama Continues Health Care Push in Town Hall Meetings Across the Country; President to Host 'Beer Summit' With Professor Gates and Sergeant Crowley; Housing Market Slightly Improved in May; NYC to Receive Fund for Police Payroll

Aired July 29, 2009 - 07:00   ET

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


CAROL COSTELLO, CNN ANCHOR: Good morning, everyone. Welcome to AMERICAN MORNING. I'm Carol Costello in for Kiran Chetry today.

JOHN ROBERTS, CNN ANCHOR: And good morning to you. I'm John Roberts. Thanks for being here on this Thursday, the 29th of July.

Here's the top stories we'll be breaking down for you in the next 15 minutes or so.

Federal agents looking for an eighth suspect accused of being part of a home-grown terrorist cell in North Carolina. Plus, a part of the story that you'll only see on CNN. Our Jeanne Meserve talks exclusively with the wife and mother of three of the suspects.

COSTELLO: And federal agents and police making another raid on the doctor who with was with Michael Jackson when he died. So, after allegations Dr. Conrad Murray gave Jackson the drug that killed him, what are the feds looking for? Our Ted Rowlands is in Las Vegas with the latest.

ROBERTS: Plus, the president, the professor and the police sergeant meet over beers tomorrow, attempting to cool a racially charged debate. Can the three men agree on what lessons should be learned from the Gates controversy?

We're taking that question to our panel of experts just ahead.

But we begin this morning with federal agents on a manhunt. They are looking now for an eighth suspect accused of being part of a home- grown terrorist cell in North Carolina.

The Feds also tell CNN that the group was gearing up for a violent jihad overseas. The eighth suspect has not been named, but we're told that the person is a U.S. citizen who might currently be in Pakistan.

The group's alleged ringleader, Daniel Patrick Boyd faces a judge on Thursday along with his two sons and four other suspects. Boyd is accused of traveling to terrorist training camps overseas and stockpiling high-powered guns and other weapons.

Let's go live to Raleigh, North Carolina, bring in our Homeland Security correspondent Jeanne Meserve, who talked exclusively with Boyd's wife. And, Jeanne, she is disputing this whole thing.

JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT: She really is. First of all, let me tell you a little bit more about her husband, Daniel Boyd. He's a U.S. citizen. He's the son of a U.S. Marine. And yet, he's supposedly at the heart of this conspiracy according to prosecutors. Amongst those who he recruited, two of his own sons.

Now, Sabrina Boyd, the mother of those two boys, the wife of Daniel Boyd is saying that she has an explanation for every accusation the government is making.

(BEGIN VIDEOTAPE)

MESERVE (voice over): Daniel Boyd fought in Afghanistan in the early 1990s, but had settled in bucolic Willow Spring, North Carolina. He and his two sons were among seven people arrested Monday on terrorism charges. His wife, Sabrina, tells CNN they are innocent.

SABRINA BOYD, WIFE OF DANIEL BOYD: I know that my husband and my son are free of guilt and I'm hopeful that the truth will come to light.

MESERVE: In court documents, the government says the group stockpiled a cache of high-powered weapons. Boyd's wife says they were only responding to news reports that guns and ammunition were becoming scarce.

BOYD: We will say that we do have -- we do own guns in our homes as our constitutional right allowed us. And I don't think there's a crime in that.

MESERVE: The government says the group trained for jihad in rural North Carolina. But Sabrina Boyd says her husband was just helping his boy scout sons with marksmanship.

BOYD: It's one of the merit badges they use, you know, to become an eagle scout. And -- so, it wouldn't be beyond that pale for him to take them out and do target practice. It's not unusual.

MESERVE: The government alleges Boyd and one of his sons travel to Israel to wage holy war. But Boyd's wife says they just wanted to pray in Jerusalem for another son who had died in a car crash.

Since their arrest, she has not been able to talk to her husband or older son, and the strain is showing.

SABRINA BOYD, WIFE OF DANIEL BOYD: And I just want to say that I'm very proud to be Muslim and I'm very proud to be married to Daniel Boyd, and I'm very proud of my children.

(END VIDEOTAPE)

MESERVE: Sabrina Boyd alleges that the FBI played what she called a dirty trick on her family. She says that on Monday, she answered the door. There's an acquaintance there in a bloody shirt with a state policeman. They told them there had been another bad car accident, this one involving her husband and surviving sons.

She says she and her daughter and daughter-in-law went to the hospital where she says she was put in to handcuffs and treated rudely. She says this is all a ruse, that investigators just wanted to get in their house and do a search unimpeded.

We did call the FBI to get the reaction. They said they couldn't comment on that or any other aspect of this investigation.

John, back to you.

JOHN ROBERTS, CNN ANCHOR: Jeanne Meserve for us this morning in Raleigh, North Carolina. Jeanne, thanks.

ROBERTS: An a.m. extra, now. Boyd is just one of many American citizens facing terror related charges. A Minnesota man pleaded guilty yesterday to supporting terrorists. He's accused of traveling to Somalia to fight alongside Islamic militants.

And last week we learned about a Long Island man who pleaded guilty to charges that he conspired to murder U.S. nationals. Court documents say Bryant Neal Vinas left Long Island for Pakistan in 2007, joined Al Qaeda, admits to participating in a failed bombing attack on a U.S. military base, and giving Al Qaeda information about the Long Island railroad for a possible bomb attack on the rail system.

So after a string of arrests across the country related to terrorism, just how safe are we at home? At 7:30, we'll be talking with terrorism expert Steve Emerson. That's' ahead on the most news in the morning.

CAROL COSTELLO, CNN ANCHOR: Also a new twist this morning in the Michael Jackson death investigation. The doctor who was at Jackson's side when he died got another visit from federal agents.

After searching Dr. Conrad Murray's clinic in Houston last week, the DEA raided his Vegas home and medical clinic. Ted Rowlands now on what they were looking for and what they left with.

TED ROWLANDS, CNN NATIONAL CORRESPONDENT: John and Carol, two different stories with these two warrants served in Las Vegas. The one here at Dr. Conrad Murray's clinic took investigators eight hours to serve. They were in there looking at medical records for almost all of the day.

The other warrant was served at Dr. Conrad Murray's house. It didn't take long at all.

(BEGIN VIDEOTAPE)

ROWLANDS: When agents showed up at Dr. Conrad Murray's Las Vegas home, he was there to greet them. After three hours inside, investigators left, according to Murray's attorney, with cell phones and a computer hard drive. Another warrant was served at Murray's Las Vegas clinic where the agents spent the entire day.

MICHAEL FLANAGAN, DRUG ENFORCEMENT ADMINISTRATION: They are looking through records and documents, and looking for any that pertain to the search warrant itself. And those documents will be seized as evidence.

ROWLANDS: The search warrant, according to Murray's attorneys, authorized investigators to look for medical records relating to Michael Jackson and all of his reported aliases, meaning investigators believe Jackson and/or Murray may have used fake names on some records.

LISA BLOOM, CNN LEGAL ANALYST: It's very significant to me that the search warrant refers to aliases. Remember in the Anna Nicole case, the doctors were charged with felonies for prescribing drugs to Anna Nicole under presumed names. It's absolutely a violation of California law.

(END VIDEOTAPE)

ROWLANDS: Meanwhile, John and Carol, the big question is when is that L.A. County coroner's report going to come out? Well, the coroner's office is telling CNN it will not come out this week after all as first expected. They said the earliest they'll have it will be sometime next week -- John, Carol?

ROBERTS: Ted Rowlands for us this morning. Ted, thanks.

Attention, shoppers. Today's special, a health care debate with the president of the United States.

President Obama is back on the road today pushing health care reform at a town hall in Raleigh, North Carolina, then at a meeting with supermarket employees at a Kroger's in Bristol, Virginia.

Senior White House Correspondent Ed Henry live from Bristol this morning from the produce section. And Ed, what kind of welcome can the president expect here at the Kroger's this morning?

ED HENRY, SENATOR WHITE HOUSE CORRESPONDENT, CNN: Good morning, John. What's significant -- as you know, the president in Washington has been trying to tailor his message to people just like the employees here at Kroger's who have health insurance.

And the assumption in Washington among the president's critics is that people with insurance don't want to pay higher taxes to fund reform. They don't want to pick up the tab for the 46 million uninsured.

We found that assumption might be wrong.

(BEGIN VIDEOTAPE)

HENRY: They're rolling out the red carpet in rural Virginia. But the president could get a chilly reception in the frozen food aisle where we found clerk Phil Younce, a McCain supporter, who fears health reform is being rushed just like the stimulus. PHIL YOUNCE, FROZEN FOOD CLERK, KROGER SUPERMARKET: Like the last package that he pushed through, I think it was too hurried, and a lot of mistakes, a lot of things that shouldn't be.

HENRY: But Cathy Montgomery, assistant produce manager, voted for the president and is pumped up he is getting tough with Congress.

CATHY MONTGOMERY, ASST. PRODUCE MANAGER, KROGER SUPERMARKET: I like the fact that he's stepped up and being aggressive. I really do. I'm all for that.

HENRY: Thousands in this region showed up at a health expo offering free medical care this past weekend, exposing a problem all too familiar to doctors here.

DR. BENNETT COWAN, JR., HOSPICE MEDICAL DIRECTOR: Clearly we all recognize, any physician in the hospital would recognize that it's a system in crisis.

HENRY: But like most employees at the Kroger's supermarket, produce manager Steve Shipplett gets generous health benefits. Despite being an Obama voter, he's nervous those benefits may be taxed to cover the uninsured and is demanding more specifics from the president.

STEVE SHIPPLETT, PRODUCE MANAGER, KROGER SUPERMARKET: He's going to have to spit out some numbers, and let the public know exactly what it's going to cost him and what they're going to have to give up.

HENRY: Shipplett says if the president steps up and sells it, then he's willing to step up himself.

SHIPPLETT: He's got to do something, and if it means me paying those taxes to get this reform do, then I would begrudgingly do it, yes.

HENRY: And back in the frozen food aisle, this Republican is ready to do his share, too.

YOUNCE: No matter what kind of plan you're going to come up with, somebody has to pay for it. So, eventually, it comes down to us, the people that's working and paying taxes, we're going to have to pay for it one way or the other. I just hope we can come up with a plan that's worth paying for.

(END VIDEOTAPE)

HENRY: Now, it's important to note the supermarket employees told us they make less than $250,000 a year. That's a category where the president has repeated his campaign promise he will not raise taxes on them.

One of the Senate proposals, though, would tax insurance companies, and critics say the insurance company would pass that on in the form higher premiums to the employees.

Nevertheless, I can tell you, these employees said, look, we're willing to pay higher taxes, higher premiums if it means it's going to be a good plan and if it's spread out and the rich pay as well -- John?

ROBERTS: Ed, this is a number of times the president has gone to Bristol, Virginia which likes to call itself the birthplace of country music. Why does he keep going back to Bristol?

HENRY: That's right.

Big reason is that when he finally beat Hillary Clinton in those long Democratic primaries, right here in Bristol is where he launched the general election campaign. And you'll remember that he won Virginia for first time since 1964 for Democrats.

Even though this is sort of a Republican area and, in fact, Tennessee is on the other side of the supermarket. I'm standing in Virginia, but the pharmacy aisle in that who section, half of the supermarket is across the line in Tennessee. I'm not making that up, John.

ROBERTS: All right, Ed Henry this morning.

HENRY: There's a special as well on cherries this morning, $2.49. So even if you're paying higher taxes, you can save some money, you might get some of that back in the pocket.

COSTELLO: Hey, is the president going to pick up the beer at the Kroger's store that he going to drink with those guys at the White House tomorrow?

HENRY: I'm going to tell you, they sell alcohol here, and I'm also told that originally the doors in the supermarket where the alcohol was delivered was on the Tennessee side. That's not allowed by the Tennessee law. They move the doors on to this side, on the Virginia side. So he could get the beer here.

ROBERTS: And what about melons, Ed? Do they have any melons there?

HENRY: John, I just don't want to go there. Just can't go there.

(LAUGHTER)

ROBERTS: Ed, thanks so much.

COSTELLO: Inside "American Morning" joke.

ROBERTS: Harkens back to a year ago, actually.

Was it the man or was it the suit? This is Olympic champion Michael Phelps losing yesterday in 200-meter free style. You want to -- there we go, we do actually have the pictures. Carol, I was going to ask you to pantomime it for us.

It was the world swimming championships in Rome. It was his first individual loss in four years. He was also the world record holder for that event until yesterday.

COSTELLO: Oh, yes, it was a stunning loss, too. But some are saying his opponent had an advantage. He had one of those high-tech polyurethane swim suits on. And those kind of swim suits will be banned from swimming competition sometime next year, but they're not banned yet. And they certainly work, don't they?

Phelps' coach is really angry at this. Bob Bowman is threatening to pull Phelps from the sport until the suits are banned. He wants them banned right now.

Paul Beeterman, the man who defeated Phelps even weighed in, saying "The suits make a difference. I hope there will be a time when I can beat Michael Phelps without these suits." So even he admitted that the swimsuit was the reason that he was able to beat Michael Phelps.

ROBERTS: But at the same time, hasn't Michael Phelps been sponsored by and promoting the laser suit that's made by Speedo and that the other fellow was wearing a faster one.

COSTELLO: But Michael Phelps lost.

(LAUGHTER)

COSTELLO: He needs the other suit, obviously.

ROBERTS: Colin Powell. We have an exclusive interview with him last night on "Larry King Live." He weighs in on the Henry Louis Gates Jr. affair and the Gates arrest. What he thinks Gates did wrong. Stay tuned for that.

10.5 minutes after the hour.

(COMMERCIAL BREAK)

ROBERTS: As President Obama gets ready to hoist beers at the White House tomorrow with Harvard Professor Henry Louis Gates Jr. and the man who arrested him, police sergeant James Crowley, you have to wonder will this be a teachable moment as the president hopes or just another White House photo-op?

Here to weigh in on all of that, Boyce Watkins, a professor at Syracuse University and a resident scholar for AOL Black Voices. He joins us from Syracuse this morning. And Michael Fauntroy, a professor at George Mason University and author of "Republicans and the Black Vote." He's in our Washington bureau this morning.

Gentleman, Good to talk to you. Boyce, why don't you start us off. Is this going to be a teachable moment or just a photo-op, what do you think? BOYCE WATKINS, RESIDENT SCHOLAR FOR AOL BLACK VOICES: We can only leave it to politicians to take a 400-year-old problem and resolve it to a bottle of beer. In the situation we're seeing as the reactions to the events.

Is sort of like if your wife screams at you over broccoli, the fight really isn't about broccoli. There's something deeper going on.

America is angry about what happened to Professor Gates. They're angry about what happened to Sergeant Crowley. But the truth is there are deeper, latent racial issues in America that need to be addressed.

So really, I would say to the president, we need less beer, more brains, more boldness, because it will take a lot of energy and effort to fulfill Dr. King's dream.

ROBERTS: Michael, what do you think?

MICHAEL FAUNTROY, GEORGE MASON UNIVERSITY: I think there's no question that this is a proxy for bigger issues. But from a political standpoint, if it is possible that they could have a discussion and come to an agreement on some things, we could perhaps use this as a jumping-off point to a bigger and better discussion on this issue.

As Boyce rightly pointed out, this is something that has been going on this is actually about a much larger debate. It's my hope that we will use this opportunity to get to some answers and find some solutions to what I believe to be one of the most significant problems in the history our country.

ROBERTS: General Colin Powell was on "Larry King Live" last night with Larry King. He was asked about the incident. And Boyce, we should point out we're just getting a little bit of instability in your satellite, so we hope that stays stable.

He had a decidedly different take on what happened there in Cambridge than the president did. Let's listen a little bit to what he told Larry.

(BEGIN VIDEO CLIP)

KING: You're saying Gates was wrong?

POWELL: I'm saying Skip perhaps in this instance might have waited a while, come outside, talked to the officer, and that might have been the end of it. I think he should have reflected on whether or not it was the time to make that big of a deal.

(END VIDEO CLIP)

ROBERTS: Boyce, your father was a police officer. What do you think of General Powell's take?

WATKINS: I think his take is correct. One of the things that needs to happen is we need more dialogue to the community and the police, because being around cops through the years, and in many scenarios, disagreeing with what the cops were saying yet listening and learning from them, I was able to see some of the things that others weren't able to see.

And so I agree with Dr. Wilmer Leon and Al Sharpton who were saying that really this situation is more of a civil liberties issue, that we actually have to have a conversation about what are the limits of police force. How far can a cop go in terms of exerting himself in this situation?

While at the same time, we have to realize that even if the officer's wrong, you still need to cooperate and deal with the situation at a later date.

So I really don't feel Professor Gates set a very good example in terms of how to deal with the police, and I don't think that Sergeant Crowley has set a good example either.

ROBERTS: Michael, there is a debate going on about what this was all about. Was it about race, abusive police power, or the class of two egos. What do you think?

FAUNTROY: I think this is a circumstance where it's not just one issue, but multiple issues. There is no question in mind that there are racial elements, police abuse of power elements.

There are also sort of cultural elements. You have this African- American man, very distinguished, and what may be a -- and I don't know this to be a fact -- a blue collar cop. And there's also tension that exists in those kinds of circumstances.

Professor Gates' problem in fact was that in Sergeant Crowley's eyes, he was insufficiently deferential. And he offended Sergeant Crowley and hurt his feelings. That's why he was arrested. This is about a variety of things, not just race.

ROBERTS: And again, the White House happy hour tomorrow. This is going to be the first big conversation about race in this administration. Of course, the president had his famous speech during the campaign.

But is this the right forum for the first big conversation on race? Boyce, I'm thinking that the nation is not going to see this. It's going be a private conversation. We may have some opinions about outcomes and what happened, but is this the right forum for the first big conversation on race?

WATKINS: Well, as much as I have begged the president to talk about race, I'll take any forum I can get. I just simply wish that he hadn't begun the conversation on race by saying I don't --

Skip gates is my friend, because then you sound like you're defending your Harvard crony, and it becomes as much of a class issue as a race issue.

I think what we need to do is take this back to the people. The politicians aren't going to do it. We really need to leverage this moment and create parties and conversations around the country where we can honestly talk about race.

This marriage in the American family between whites and blacks is one that requires us to forgive and be honest and really talk about the real issues if we're ever going to make any progress.

ROBERTS: Michael, very quickly, would you like to see this take place in a more public forum than a picnic table in the back of the Oval Office?

FAUNTROY: I don't have a problem with the setting right now provided that it leads to something public afterwards. They don't need to have this discussion in front of the cameras because that would get in the way of some of the honesty that I think needs to be expressed between the two men involved in this.

Once they can settle their differences, then perhaps we can have something more public.

ROBERTS: We're looking forward to perhaps hearing from the principles after their meeting tomorrow.

Michael Fauntroy and Boyce Watkins, good to talk to you this morning. Thanks for taking the time.

Carol?

COSTELLO: So, you want to buy a house but you're waiting for the market to completely bottom out before you do it? So, is now that time? Christine Romans is working the numbers for you.

It's 18 minutes past the hour.

(COMMERCIAL BREAK)

COSTELLO: Welcome back to the most news in the morning. Attacks on strip clubs?

ROBERTS: Putting on something that's taking off.

CHRISTINE ROMANS, CNN ANCHOR: The "pole tax."

COSTELLO: I love that. What about a cell phone ring tax?

ROMANS: I like that one too actually. Maybe, not really. You've got it.

Budgets across the country on the brink of bankruptcy. Some states are getting quite creative when it comes to dealing with deficits. We saw it happen last week in Oakland, California, a tax on proceeds of medical marijuana.

And now Delaware just passed legislation creating a sports lottery that legalizes single game belting. In New Jersey, if you sign up for a health club membership, you pay a tax on it.

And in Kentucky, new legislation puts a tax on, yes, cell phone ring tones.

COSTELLO: Make no mistakes. They're going to find a way to raise your taxes because they have to get the revenue. You're going to be nickel and dimed across the country.

ROMANS: They have to balance the budgets. The money has to come from somewhere.

COSTELLO: It's going to come from your pocket.

ROMANS: I know.

COSTELLO: So I'm wondering. Is now the time to buy a house? Has the market completely bottomed out, and you can get a deal of a lifetime.

ROMANS: American newspapers this morning, you're seeing, houses, houses, prices going up, sales are going up, things are coming back, there might be a recovery.

Look, let's be very clear about this. There's a little bit of a bump in the housing numbers, a little bit of the bump that comes just a couple of months after mortgage rates hit those record lows.

People have a $8,000 first-time home buyer credit, and you also have a situation where home prices overall were down 32 percent from the high.

So low prices, investors are coming in and buying. New home sales up 11 percent. Existing home sales -- that's the kind of thing you and I are more likely to buy -- up 3.6 percent.

And I want to look at this one. This next chart is what everyone is talking about today. These are home prices. Those red bars show you the catastrophe that has happened to the value of your largest asset -- your house.

But look at that blue bar on the right. According to the S&P index, for the first time in 2006, home prices in May actually rose.

ROBERTS: Huh?

ROMANS: Let me say this again, home prices in May actually rose. They barely rose, but when you look at that chart is shows you what kind of damage has happened here, and then suddenly it goes up.

This is happening, by the way, without any kind of foreclosure relief, really substantial foreclosure relief yet from the administration, but some other efforts they've tried to do.

This is taken as a little bit of a sign of life. The skeptics, of course, this morning are saying there will be a double dip. Right here on "The New York Times," double dip, "Worry about double dips still possible."

But at least the free fall has slowed. The question is, does it continue?

ROBERTS: You've got a numeral this morning?

ROMANS: I do. My numeral is this, 17 percent. This is your perspective. That S&P price up 0.5 percent in May, from April to May. But home prices are still down 17 percent from last summer, the same time last year. So that gives you a little bit of perspective.

So anyone who says we're being giddy-yap about the economic data, let's not overplay it. But it's incredibly important for the value of your biggest asset when it's not falling off of a cliff anymore.

ROBERTS: And that's good news.

ROMANS: Right.

ROBERTS: Christine Romans minding your business this morning. Christine, thanks so much.

So at first it looked like New York City wasn't going to get any new police officers because they weren't going to get the stimulus money to get them. Guess what, about-face. Mary Snowe has the story coming up next.

It's 23 minutes after the hour.

(COMMERCIAL BREAK)

COSTELLO: Homeland Security Director Janet Napolitano is in New York this morning. She's making a big speech on the Council of Foreign Relations. And she'll be talking about preventing terrorist attacks, but she's also expected to announce New York City will receive $35 million in federal stimulus money to hire more police officers.

ROBERTS: Just yesterday we were hearing that New York would not get federal money for police. The Justice Department decided that the need was greater elsewhere.

Mary Snowe joins us now with more on this. The message seems to be, if at first you don't receive, ask, ask again, right?

MARY SNOWE, CNN CORRESPONDENT: And in New York's case, perhaps this is true, and perhaps it will also soften the blow.

New York's new round of money is coming through a different avenue. "The New York Times" is reporting it's through grant for transit security.

But for more than 1,000 other police departments, they are relying on a boost for money specifically targeted to keep officers on the job at a time when there are so many cutbacks.

(BEGIN VIDEOTAPE)

SNOWE: Some major cities were skipped, but more than 1,000 law enforcement agencies across the country, even stretching to the U.S. territory of Guam, are getting $1 billion in stimulus money. The goal is to prevent layoffs, even hire new officers.

Attorney General Eric Holders says in a sign of how tough economic times are, the Justice Department could only provide money from a fraction of the department's requesting aid.

ERIC HOLDER, U.S. ATTORNEY GENERAL: We received applications of more than 7,000 cities and towns and made funding decisions based on crime rate, financial need, and community policing activities.

SNOWE: And it means there were plenty of cities not getting grants through the program known as COPS, Community Oriented Police Services. New York, Houston, Seattle, and Pittsburgh were among those on the empty-handed list. The vice president tried to soften the blow.

JOE BIDEN, U.S. VICE PRESIDENT: I know our friends in New York were disappointed they didn't get any cops money this time out. They're getting today, $6 million in additional local aid immediately for the adjusted assistance grant.

SNOWE: But the New York City's police commissioner says the nation's largest police force has different challenges than other cities. He said New York deserves additional money and is hoping to put more officers on the ground.

RAY KELLY, NEW YORK CITY POLICE COMMISSIONER: We've been attacked successfully here twice. We've had eight major plots since September 11. We know that terrorists want to come here if they can.

SNOWE: It's not the first time New York and Washington haven't seen eye-to-eye over police costs. In 2006, the city had anti-terror funds cut under the Bush administration that caused an uproar.

This time around, New York's mayor says, while he's frustrated, maybe it's a compliment that New York didn't get grant money because the crime rate is down.

MICHAEL BLOOMBERG, (I) NEW YORK CITY MAYOR: It's a compliment that we got left out. It's not the compliment that I like the results of, but I do like the recognition that we are doing well.

(END VIDEOTAPE)

SNOWE: And to the departments that did get this money, the specific money, the attorney general says these grants will allow for almost 4,700 officers to be on the job for three years. Departments then must retain the officers for a fourth year on their own.

ROBERTS: In this economic climate, where are they going to get the money?

SNOWE: That's the big question, because you have to let -- some departments had to lay officers off. So in four years down the road, I guess the assumption is that the economy will be better and they will be able to handle this.

ROBERTS: Let's hope. Mary Snowe, thanks.

SNOWE: Sure.

ROBERTS: And tomorrow, by the way, Homeland Secretary Director Janet Napolitano will be here with us here on "American Morning." We're going to ask her how she plans to make all of us safer from terrorists.

Of course, again, that all comes out of the speech to the Council on Foreign Relations today.

And it's 29 minutes after the hour. Checking this morning's top stories -- a new government study says pregnant women who catch swine flu are more likely to end up in the hospital or, listen to this, even die from it.

And as flu season approaches, the military is considering regional teams of specialists trained to deal with the potential outbreak. The CDC is also talking about the h1n1 virus this afternoon. We're expecting an update on a possible vaccine.

COSTELLO: Could California make pot legal? One state lawmakers and a group of marijuana activists are pushing for the drug to be legalized so it could be regulated, grown at home, and more importantly for the state's budget, taxed.

To get the measure on the 2010 ballot supporters need to collect 430,000 signatures.

ROBERTS: Plus, pull the break -- allegations this morning that a little boy was at the controls of a New York City subway train. Reports say a rider claims he saw a train operator watching and telling the boy how to drive the train.

New York City transit officials confirm an operator and a conductor had been suspended without pay, and they admit they're investigating claims that what they're calling an "unauthorized person" was allowed to operate the train.

COSTELLO: This morning, the feds are searching for an eighth suspect accused of being part of a terrorist cell in North Carolina. Their alleged ring leader accused of hoarding weapons and visiting terror camps overseas.

This is just one in a string of recent high-profile terrorists here at home. So just how safe is America from home grown terrorism? Let's bring in an expert, Steven Emerson. He's the executive director of the Investigative Project on Terrorism.

He joins us live now from Washington.

Good morning.

STEVEN EMERSON, AUTHOR "JIHAD INCORPORATED: A GUIDE TO MILITANT ISLAM IN THE U.S.: Good morning, Carol.

COSTELLO: So it seems like there are a lot of people here in America alleged home grown terrorists being indicted for crimes for jihad.

How scared should we be?

EMERSON: Well, we're seeing a new phase, Carol, here, in the radicalization of American citizens as well as American-born Muslims. In the past six months alone, there had been more than 40 arrests of either American-born Muslims or of Americans who converted to Islam in trying to carry out plots overseas or in the United States.

This is indicative of what's happening in Europe over the last 10 years where the environment there and some of the calls by the Islamic groups have radicalized the Muslim population there. We're seeing it here but more interestingly, we're seeing American citizens who convert to Islam and stage operations from the safety of the U.S. overseas and carry out jihad.

COSTELLO: And I want to talk specifically about Daniel Patrick Boyd, the guy from North Carolina. I mean he just looked like your average Joe. Neighbors said, you know, if he was the terrorist, he's the nicest terrorist we know. He just seemed like such a normal guy. Yet he supposedly carried on this secret life. I mean, from 1989 to 1992, he traveled to Pakistan and Afghanistan.

What did he do there, exactly?

EMERSON: Well, in 1989 to 1992, he volunteered against the Soviets who had occupied Afghanistan and he volunteered and trained with the Afghan Mujahedin, the holy warriors. But he kept up and was interviewed in "The Washington Post," actually, in 1991, where he called the U.S. a Kufar or an infidel country. He kept up his religious animosity to the United States even indoctrinating his own kids willing to send them on suicide operations in Israel and elsewhere abroad to carry out jihad.

So it shows you the extent to which he was radicalized. What's more interesting here is the extent to which there are other cells around the country, Carol, that had been involved in carrying out plots either here in the U.S. or overseas but using the safety of the United States and becoming radicalized here, even though they were originally not radical or not even born Muslim.

COSTELLO: Yes. And I want to get to some of the psychology of this. Because Daniel Patrick Boyd allegedly plotted these terror missions overseas, not here in the United States. But then again, who knows, right?

But how does one who lives in America, grows up in the American culture, become radicalized like this?

EMERSON: You raised an excellent question. And I think part of the answer lies in the fact that once you make this conversion to Islam, and most Muslims are not radical. But once they make a conversion to Islam, sometimes the Islamic groups, the national groups that control the distribution of literature, of the media, of the educational system, teach them jihad and teach them that the United States is the enemy.

Just the other day, letters from Congress representing seven Islamic radical groups claimed to be mistreated by the U.S. government and they themselves in statements in the last 10 years have claimed the U.S. government is the enemy. If you constantly are fed a diet that the U.S. government is the enemy, that the U.S. government is part of a conspiracy to suppress Islam, you will naturally end up radicalized, hating the U.S. and even willing to carry out violence to advance that goal.

COSTELLO: Scary. Steven Emerson, thanks for joining us this morning. We appreciate it.

EMERSON: You're welcome.

ROBERTS: We heard from Colin Powell just a little while ago, on the Henry Lewis Gates, Jr.-James Crowley case. But what does he think about Sarah Palin and the Rush Limbaugh's attacks. Larry King spoke to him exclusively last night. We'll have those thoughts from General Powell coming up. 34 and a half minutes after the hour.

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ROBERTS: Summertime may have come to most of the country but it's almost always summertime in a place like Miami. It's cloudy and 81 right now. Later on today, a high of 90 degrees in that ever present chance of thunderstorms.

COSTELLO: The rainy season there.

ROBERTS: You know, they get some amazing thunderstorms in the summer. There's nothing like a Florida thunderstorm in the middle of -

COSTELLO: It's scary.

ROBERTS: It's really quite something to experience.

Welcome back to the most news in the morning. Former secretary of state Colin Powell thinks that Sarah Palin is "fascinating." He said that last night in an exclusive interview with CNN's Larry King.

COSTELLO: It was a great interview, wasn't? I mean, he said so many interesting things. He also responded to criticism from Rush Limbaugh who questioned Powell's republican credentials. Listen.

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COLIN POWELL, FMR. U.S. SECRETARY OF STATE: Mr. Limbaugh is entitled to his point of view. That's what makes this country great. And he is free to criticize me all he wishes to. LARRY KING, CNN HOST: Of course. I was asking do you take umbrage -

POWELL: Fine.

KING: Do you feel like, wait a minute?

POWELL: No. Because I can handle his criticism. But the problem having with the party right now is when he says things that I consider to be, you know, completely outrageous. And I respond to it. I would like to see other members of the party do likewise. But they don't.

KING: Are you ready to take them on?

POWELL: Well, I know a number of instances where sitting members in Congress or elsewhere in positions of responsibility of the party made light criticism of Rush. And within 24 hours, they were backing away because there is - there is a strong base of support for Mr. Limbaugh.

KING: Your reaction to Sarah Palin, first her leaving the governorship and her role in the party?

POWELL: I think she's a fascinating figure. And you got to hand it to her, early 40, she's been the governor of the state. And she's been the mayor of a city in that state. She's an accomplished one with - you know and also a mom and now a grandmother. I don't think she was ready to be president of the United States last fall when she was named the vice presidential candidate and I said so at that time. We will now have to see what she is going to do.

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COSTELLO: Everybody's wondering about that. More from General Colin Powell next hour, including his advice for the republican party if it wants to become more relevant and competitive again.

ROBERTS: Here's what's on the A.M. rundown this morning. 40 minutes past the hour. The doctor is in. No, actually, it's 40 minutes past the hour. But at 49 minutes past the hour, the doctor is in. Dr. Sanjay Gupta answering your questions about the president's plan for healthcare reform and what it means to you. I think they should know better than to pull these tricky things on a chronically sleep-deprived person. What do you think? That's cruel, isn't?

COSTELLO: It's fun, though.

ROBERTS: Hey, let's watch to see if Roberts bobble this one.

At the top of the hour, are seven men in North Carolina home- grown jihadists? We're the only network talking to one suspect's wife. And attention Kroger shoppers along with today's specials in the meat department, President Obama is taking your question. The health care debate comes to a supermarket in Bristol, Virginia. That's at 8:03 Eastern. It's now almost 41 minutes after the hour.

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ROBERTS: Of course, the big question on Capitol Hill this morning is whether or not the Senate and that's on the left side of your picture there is going to get a healthcare bill done in time for the August recess which is next Friday.

COSTELLO: Want to bet?

ROBERTS: I think that's a sucker's bet. I don't want to take that one. Overcast and 77 right now in Washington, going up to a high of 83 and storms today. Welcome back to the most news in the morning as the president hits the road again today, selling his plan for healthcare reform. We're working all sides of this story. Coming up, our Dr. Sanjay Gupta breaking down what the president's healthcare plan would mean for you as a patient.

COSTELLO: But first, we want to bring in Jim Acosta. He's looking into the politics of reform. In particular, a group of fiscally conservative House democrats who are really making the president sweat. Hi, Jim.

JIM ACOSTA, CNN CORRESPONDENT: Good morning, Carol. That's right. I think the operative question this morning is who let the blue dogs out? When it comes to healthcare reform, President Obama is having just as much trouble with members of his own party as he is with republicans. Take those conservative House democrats known as blue dogs. They'll tell you, without them, the democrats would not have a majority in the House. Something they now all know all too well.

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ACOSTA (voice-over): Running for meetings and meetings, surrounded by news cameras, the blue dogs just might be the most popular breed of politician on Capitol Hill these days.

UNIDENTIFIED MALE: Now, do all of the blue dogs have a picture of a blue dog in their office.

UNIDENTIFIED MALE: Well, they better.

ACOSTA: That's because Arkansas congressman Mike Ross and the rest of the 52 House democrats who make up the fiscally conservative blue dog coalition may block their party's push for healthcare reform, that is, unless changes are made to rein in the plan's cost.

REP. MIKE ROSS (D), ARKANSAS: As it stands now, it would not have the support to get it out of committee and it would not have the support to pass on the House floor.

ACOSTA (on camera): So it would die?

ROSS: Well, I would hope that - that health care reform wouldn't die.

UNIDENTIFIED MALE: And that today we're not just offering --

ACOSTA (voice-over): The blue dogs were born in 1995 after republicans took control of Congress. At the time southern democrats like Tennessee's John Tanner felt they were choked blue, driven out of power by liberals in their party.

UNIDENTIFIED MALE: We're in the middle. And when you're in the middle, you're going to catch the left and right.

ACOSTA (on camera): And you're catching it pretty good right now.

UNIDENTIFIED MALE: From the left and the right. So we must be doing something right.

ACOSTA (voice-over): As for Congressman Ross, he's not only the blue dogs' point man on healthcare, he also represents Hope, Arkansas, hope town of President Clinton.

(on camera): You talked to President Clinton from time to time, is that right?

ROSS: We talked yesterday.

ACOSTA: Has he talked to you about health care?

ROSS: We've talked a lot about healthcare. He shares many of my concerns. He understands the challenges we have in rural America.

ACOSTA (voice-over): Once the owner of a drugstore, Ross says he will get something done for the more than 450,000 people in Arkansas with no health care.

ROSS: I live in a small town of 3,600 people. The lady that owns the Broadway Cafe, she cannot afford health insurance for herself or her employees. And so -

ACOSTA (on camera): Does that weigh in your mind that you can let those folks down?

ROSS: No, we're not going to let them down. In fact, I'll make a prediction here. We'll get health care reform done this year.

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ACOSTA: What kind of reform is the question? Right now, the blue dogs and democratic leaders are at an impasse over whether their plan would give Americans the option of joining a government-run program, the public option, as it's known, that could dash hopes for a full vote by the end of the week in the house before the August recess. And John and Carol, last night, Rahm Emanuel was meeting with those House leaders, those blue dogs talking about all of this. You know things are at a critical stage when Rahm Emanuel is on Capitol Hill, guys. COSTELLO: Doing some arm twisting or maybe just cajoling.

ACOSTA: I think so.

We asked to have our camera into the negotiating sessions. For some reason, they wouldn't let us. I can't imagine why.

ROBERTS: Jim, it's so unlikely.

ACOSTA: I know.

COSTELLO: You should have offered him a beer.

ACOSTA: That's right, more beers. We can get a lot of things done in this down.

COSTELLO: If we just had a beer.

ROBERTS: Bring an ice chest and a portable picnic table with you, Jim. Who knows what you can get?

ACOSTA: Count me in.

ROBERTS: All right. Thanks.

COSTELLO: You know, we've been asking you to send us your health care questions. They've been pouring in to cnn.com/amfix. So Sanjay Gupta, he is going to answer your questions about the healthcare plan. That's coming up next, it's 47 past the hour.

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COSTELLO: 50 minutes past the hour. Welcome back to the most news in the morning. We're taking an in-depth look at the health care debate this morning, and now want to answer some of your questions about the plan. So we want to bring in Dr. Sanjay Gupta.

ROBERTS: And good morning, doc. There's a lot of ground to cover with this one this morning. Let's take a listen to Jason, first of all, he is a CNN i-reporter from San Antonio.

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JASON ROGERS, CNN IREPORTER: Four years ago my father was diagnosed with terminal brain cancer and for 18 months we fought that disease with everything that we had because we felt like every day was precious. We felt like every day that we kept him alive we were one day closer to a cure for that disease.

I guess my question is, under a public option or a government-run healthcare system, would that type of care be possible? Is that something that 10 years from now we'll have to sacrifice or come up with a tremendous amount of cash to be pay for because it would be rationed in our government-run healthcare system? ROBERTS: Sanjay, something that the critics really kind of warn about here is this diminution of service. So what do you have to say to him?

DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: Well, first of all, Jason, thanks for sharing that story. It's such a personal story, I appreciate you sharing it. The rationing of healthcare really gets at the core issue of a lot of what we're talking about. John, as you know, the idea of lowering costs and increasing access, some say you can't do both of those things without starting to create some rationing of health care.

There's a lot of attention focused on a "New York Times" op-ed last Sunday. Peter Singer, he wrote lots of things in this particular article. He is a bioethicist. But one of the things he wrote that caught my eye, the death of a teenager is a greater tragedy than the death of an 85-year-old and this should be reflected in our priorities.

And what he is talking about here is something that makes a lot of people - is very controversial this idea of rationing of health care. How do you assign different values to life? Are some lives less valuable than others? Some people say that we have to make those decisions in this type of healthcare system.

Jason, with respect to your particular question, we decided to take your story to the White House directly and get a response from them. Here's Jason - here's the story of Jason's father, what do you say? And the White House gave us a statement about that. They said our heart goes out to Jason and his family. We know that families across America are dealing with issues like this every day. They went on to say there are a number of different bills making their way through Congress right now but we do know that the reform bill that the president signs will not lead to rationing. It will be fully paid for and will bring down costs over the long term. And it went on to say that the president is going to make sure a plan covers all people of all ages, no matter their circumstance. That's what the bill says, that's what the president says. They are sort of the issue.

ROBERTS: But Sanjay, some critics say that despite what the president intends to do, that these numbers - and they're huge just don't add up. Republican Senator Jon Kyl of Arizona made the point that you can't add millions of new baby boomers now retiring into the system and save money without cutting some benefits, rationing care, diminution of service, whatever you want to call it.

GUPTA: Yes, that's a very core issue. You can try and project what actual costs are going to be. It is going to be very difficult to do. I mean, people talk a lot about the idea that a lot of these are just estimated costs and they are dynamic numbers. They're going to change. Let me share something with you, John, that puts a little bit of perspective on this, going back to the inception of Medicare back in 1965.

According to the Cato Institute, a public policy institute, they say the projected costs for 1990 was going to be about $9 billion. And instead it costs about $67 billion in 1990. So you can get an idea of just how widely varied these numbers are. But again, as the president's talked about, a lot of this is supposed to pay for itself through prevention, through wellness and through cutting costs over the long term.

ROBERTS: All right. That is the big question. How to pay for the whole thing? Sanjay Gupta for us this morning. Doc, good to see you. Thanks.

GUPTA: Thanks, John.

COSTELLO: It's 53 minutes past the hour.

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COSTELLO: Hey, San Francisco, wake up! I'll tell you what the weather forecast is. It is cloudy, 56 degrees. And later today it will be pretty much partly cloudy and 58 degrees. Talking about San Francisco and California, California already has a law on the books, as you know, allowing medical marijuana. And Oakland just became the first city in the country to tax it. And that seems to have gotten one California lawmaker thinking, legal pot equals tax dollars. Our Dan Simon is looking at the push to make green from green.

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DAN SIMON, CNN CORRESPONDENT (voice-over): Marijuana is California's biggest cash crop, valued at $14 billion, worth more than grapes and vegetables. But the state doesn't get a dime from it. State lawmaker Tom Ammiano wants to change that.

TOM AMMIANO, CALIFORNIA STATE ASSEMBLY: There are a lot of very hard second looks now particularly with the economy the way it is here in the state.

SIMON: Ammiano has sponsored a bill that would legalize, regulate and tax marijuana. According to the state tax board, legal pot to Californians 21 and older could bring the cash-strapped state nearly $1.4 billion in revenue.

AMMIANO: Well, I think, you know, you would have some kind of retail outlet. And it could be a Walgreens. I mean, it could be a hospital.

SIMON: The idea got the boost from Governor Schwarzenegger who has spent months trying to avert a budget catastrophe.

GOV. ARNOLD SCHWARZENEGGER: And I think if you study very carefully on what other countries are doing that have legalized marijuana -

SIMON: Most lawmakers right now do not support broad legalization. So advocates are also working towards a 2010 ballot initiative that would let voters decide. And according to a field poll, 56 percent of Californians support legalization. On the local level, meanwhile, the easiest way to cash in is by taxing medical cannabis. Oakland last week became the first city to directly impose tax on dispensaries. City councils in Los Angeles, San Francisco and Santa Cruz are discussing similar measures. It might seem odd for dispensaries to back the idea and want to pay more in taxes. But they welcome the chance to be seen as legitimate, valuable businesses.

Steve Deangelo runs a dispensary in Oakland.

STEVE DEANGELO, HARBORSIDE HEALTH CENTER: Criminals don't pay taxes. Citizens do pay taxes. And our hope is that the movement will be seen as a group of citizens rather than a group of criminals.

SIMON (on camera): Given the political environment, if it does make the ballot, it's possible that voters could legalize marijuana in California as early as next year.

Of course, then all the details would have to be worked out, how you regulate it, tax it, and where it would be sold. Then there is the question of the federal government. Right now it doesn't even recognize medical marijuana. Dan Simon, CNN, San Francisco.

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