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Health Care Reform Deal?; Free Flights For Homeless; 911 Caller Speaks Out; Madoff's Wife Sued for $45 Billion; Money, Money, Money

Aired July 29, 2009 - 18:00   ET

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


WOLF BLITZER, CNN ANCHOR: The president and members of Congress have been struggling for weeks to put together a very complicated puzzle to achieve health care reform and do it this year. Now one significant detail has fallen into place.

House Democratic leaders have reached an agreement with a key group of holdouts, the fiscally conservative members known as the Blue Dogs. Four of those seven Blue Dogs, those are the moderate and conservative Democrats, members of the Energy and Commerce Committee, have signed on to the deal.

The president is calling it extraordinarily constructive.

Our senior congressional correspondent, Dana Bash is here.

Dana, does the president give up anything in this deal?

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Not so much, Wolf, on the core principles of what he wants in a health care bill, but the House is officially defying his deadline.

(BEGIN VIDEOTAPE)

BASH (voice-over): If the president had any lingering hopes for a summer vote on health care, forget about it. Under the new deal with some conservative Democrats, the House would follow the Senate's lead and delay a vote until the fall.

REP. MIKE ROSS (D), ARKANSAS: We believe every member of Congress should have the opportunity to not only read the bill, but to spend the month of August visiting with their constituents about it.

BASH: Conservative House Democrats concerned about cost say they trimmed the overall price tag of the health care bill to just under $1 trillion, and to try to protect small businesses they convinced House Democratic leaders to exempt companies with payrolls below half a million dollars from a mandate to provide or help pay for health coverage.

But perhaps the most important to the president, this House deal keeps an option for consumers to get health care insurance through the federal government. Conservative Democrats successfully made changes to the way a public plan would be structured, but that government-run insurance option one of the president's top priorities remains intact in the House Democrats' plan.

(END VIDEOTAPE)

BLITZER: Dana, will this deal hold in the House?

BASH: It may, but, you know, we're already in the hours since it was announced hearing that the ugliness and the division among Democrats, it is continuing.

First of all, on the right, you have conservative Democrats, those Blue Dogs, many of them who are not happy with this. They say that it doesn't go far enough in containing costs. And, Wolf, on the other side of the Democratic spectrum, you have liberals, progressives, like a leading member of the Congressional Black Caucus, saying it goes too far; it doesn't do enough now to have meaningful reform.

BLITZER: And there's a whole different puzzle that still has to be resolved in the Senate.

BASH: Yes, that's right. Those six negotiators, the bipartisan negotiators, they are continuing to meet, continuing to show progress, but, you know, what is going on there is the more they are talking about progress, the more skittish the Republicans who are involved in that are getting.

In fact, I'm told by Republican sources that there's a lot of pressure on those three Republican senators to either bail or at least not give in too much. So, the more Democratic leaders talk about progress, the more problematic it could be to actually get that final deal.

BLITZER: This isn't over by any means.

All right, Dana. Thank you. Good clarification.

President Obama says it's OK if the Senate, now the House, will miss his August deadline for a health care vote. He traveled to North Carolina and Virginia today to retool his pitch for health care reform legislation. At a grocery store just a short while ago in Bristol, Virginia, he emphasized that any bill he signs will include protections for consumers.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Let me be specific: We will stop insurance companies from denying you coverage because of your medical history, because you've got a preexisting condition.

I will never forget watching my mother on her hospital bed dealing with cancer trying to argue with health insurance companies, even though she'd been paying her premiums, saying that her cancer was a preexisting condition, even though it hadn't been diagnosed when she first got her insurance.

And I said then and I continue to believe that that's not right.

(END VIDEO CLIP)

BLITZER: In a new interview with our sister publication "TIME" magazine the president disclosed he has been spending at least one- third of his time in recent days on this issue of health care reform.

Let's turn to North Carolina, where eight suspects now stand accused of plotting what has been described as a violent jihad overseas. We're learning more today about who they are, the crimes they allegedly wanted to carry out. We're also hearing doubts about whether these men were big-time terror plotters or little more than thugs.

Let's go to our homeland security correspondent, Jeanne Meserve -- Jeanne.

(BEGIN VIDEOTAPE)

JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT: Wolf, sources now tell us that the eighth suspect in this case is Jude Kenan Mohammad, who is believed to be in Pakistan. Some people who know him and others charged are skeptical they had anything to do with terrorism.

(voice-over): A friend of Jude Mohammad's family believes he went to Pakistan to resolve a religious crisis, not to wage jihad. The same religious crisis, she said, led to a friendship with Daniel Boyd, the man the government says was at the center of this alleged terror ring.

UNIDENTIFIED FEMALE: Daniel would talk to some of the youth that had troubles, that had nowhere to go. In all fairness, I would like to say that they would come to him for help and guidance.

MESERVE: Sources say all of the accused went to the same mosque, but they cut different profiles. Two of them, Ziyad Yaghi and Omar Hassan, were described by one member of the Muslim community as thugs.

In a photo purportedly from Yaghi's Facebook page, he displays a knife. In December of 2008, at this address, Yaghi and Hassan confronted and allegedly beat up a young man who owed them money and drove him to an ATM. They were charged with kidnapping and robbery with a dangerous weapon, but pled guilty to lesser charges.

The lawyer who reported Yaghi says his client did not always use good judgment, but having visited him in jail Tuesday does not believe Yaghi is a terrorist.

UNIDENTIFIED MALE: No anti-American rhetoric, no pro-jihadist rhetoric, no -- his only anger was that why can't the FBI just leave me alone?

MESERVE: Omar Hassan's father did not want to talk on camera about the terrorism charges against his son, but told us: "My son is isn't. He had nothing to do with any of this."

(on camera): We had expected to learn more about the government's case at a court hearing tomorrow, but it has been postponed, so defense lawyers have more time to prepare -- Wolf, back to you.

(END VIDEOTAPE)

BLITZER: All right, Jeanne, thanks very much.

Let's get to a CNN exclusive right now, Iraqi in a deadly clash with Iranian exiles, and we have the video to show what's going on.

This is a dramatic example of tough choices Iraqi officials are making as the U.S. military pulls out. Here they're targeting refugees considered terrorists by both Iran and the United States, at least for now.

CNN's Arwa Damon has our exclusive report from Iraq -- Arwa.

(BEGIN VIDEOTAPE)

ARWA DAMON, CNN CORRESPONDENT: Wolf, some very dramatic events at an Iranian refugee camp as residents clash with Iraqi security forces.

(voice-over): Scenes like this risk unfolding again and again, as the U.S. military takes a back seat in this war. In this Iraqi police video officers storm a camp where militant Iranian exiles have lived for more than two decades. They used to be protected by the United States military. That is no longer the case. The Iraqis say their intent was to implement rule of law.

This is the same assault shot by residents from inside camp telling its own and different story. Residents scream at the top of their lungs trying to drive the police back, as the police batter them with batons and water cannons, shouting God is great in unison.

The two sides end up caught up in a fierce face-to-face battle that left residents dead and scores of wounded on both sides. The residents say they were unarmed and that this was a raid on their camp with the intent of getting rid of the organization.

The group, a highly trained male and female fighting force, was formed in exile and is the largest and most militant group opposed to the Iranian regime. They fought alongside Saddam Hussein's forces in the Iran-Iraq War of the 1980s. They're also a designated terrorist group by the United States.

Yet, they have powerful allies in D.C. who say the group has passed on critical intelligence on Iran. And now with America pulling out, Iran wants them handed over.

(on camera): Wolf, here's the issue. Is Iraq going to just assert control over the camp, like the government says it is, or is it in the process of forcing these exiles to return to their country where at best they face imprisonment?

(END VIDEOTAPE) BLITZER: All right, Arwa, thanks very much. Good, comprehensive report.

Let's go to Jack Cafferty right now for "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: Wolf, global warming has become a religion among the First World urban elites. Now, that's just one explosive charge made by Australian geologist Ian Plimer, who says that manmade global warming is little more than a con job on the public perpetrated by environmentalists and politicians.

According to "The Vancouver Sun," this controversial geologist says global warming is not caused by human behavior. Rather, it's an entirely natural phenomenon. By looking back thousands of millions of years, he says the changes in the Earth's climate are cyclical and random.

For example, polar ice has only been present on Earth for less than 20 percent of geological time and animal extinction is a natural part of evolution. Plimer shoots down the current logic that global warming can be reversed. He gets particularly worked up about carbon dioxide. He says it's actually at its lowest levels it's been for 500 million years.

Critics have slammed Plimer's new book. They say he makes a lot of basic errors and manipulates the data. Here in the U.S., I guess it depends on who you ask. The city of Chicago is seeing its coldest July in 67 years, average temperature 68.9 degrees. On the other hand, ask people in Seattle or in parts of Texas that are melting under a blazing sun and suffering through one of the worst droughts in many years if they think global warming is real. They probably would tell you, oh, yes.

Here's the question. Are you more or less concerned about global warming than you were a year ago? Go to CNN.com/caffertyfile. You can post a comment on my blog -- Wolf.

BLITZER: Thank you, Jack. We will get back to you shortly.

One man, one hospital's mission helps patients get better, not sicker, or die from infections caught at the hospital.

(BEGIN VIDEO CLIP)

DR. RICHARD SHANNON, UNIVERSITY OF PENNSYLVANIA: Well, what we were able to demonstrate is, in that less than a year, we were able to reduce the number of infections by 90 percent.

DEBORAH FEYERICK, CNN CORRESPONDENT: And if can you reduce it 90 percent on a wing like this, clearly, the indications for the larger hospital are huge.

UNIDENTIFIED MALE: Absolutely.

(END VIDEO CLIP) BLITZER: To help save lives, and some doctors treat patients like building cars. It could save you money and possibly your life if you have to be in a hospital.

And wait until you hear why New York City is giving homeless people a one-way ticket to Paris or perhaps an island paradise.

And a Boston police officer allegedly calls the Harvard scholar Henry Louis Gates a despicable racial slur. Could this inflame more racial tension?

(COMMERCIAL BREAK)

BLITZER: It's a deadly and costly threat to America's troubled health care system, and it's lurking in almost every single hospital right now.

This is a staph infection under the microscope. Bacteria like these are killing almost 100,000 people a year. And they're costing us as much as $40 billion, yes, $40 billion a year. Imagine the benefits for all of us if hospitals could reduce or even wipe out these infections.

Let's go to CNN's Deborah Feyerick. She's been investigating. She's got a story that you will see only here on CNN.

Deb, what have you learned?

FEYERICK: Well, Wolf, talk to anyone you know, and they likely know someone who went into a hospital to be treated for one illness only to develop a separate life-threatening infection. It is scary. It is costly. And it seems it can be prevented, so why aren't more hospitals fixing the problem?

(BEGIN VIDEOTAPE)

UNIDENTIFIED FEMALE: If you had known Josh, what a great guy he was...

FEYERICK (voice-over): A sky-diving accident landed Josh Nahum in the hospital with a broken leg and fractured skull. Still, his doctors were optimistic, says mom Victoria.

VICTORIA NAHUM, LOST SON TO HOSPITAL INFECTION: The two neurosurgeons told us that, within 18 months, he was going to be 100 percent recovered.

FEYERICK: Instead of a full recovery, Josh Nahum died, not from his injuries, but from an infection he got while in the hospital.

NAHUM: Nobody ever thinks that they're going to go into a hospital only to be made more ill.

FEYERICK: Yet, it is incredibly common. Josh is one of 99,000 people who die from these infections each year. According to the CDC, 1.7 million people who check into hospitals get sicker and stay longer, these hospital-acquired infections an accepted cost of doing business.

DR. RICHARD SHANNON, UNIVERSITY OF PENNSYLVANIA: Most of us really believed that you couldn't eliminate these conditions, that we just had to come to live with them.

FEYERICK: And the cost is staggering, $40 billion a year. Medicare and Medicaid recently announced they would no longer cover infections acquired in hospitals, many of which are scrambling to cut financial losses by lowering infection rates.

(on camera): So, you are suggesting 51 patients didn't make it out of the hospital?

SHANNON: Well, actually, 21 patients died, and the rest ended up going to a nursing facility.

FEYERICK: Dr. Richard Shannon of the University of Pennsylvania is among a handful of doctors who appear to have discovered an answer.

SHANNON: Well, what we were able to demonstrate is, in that less than a year, we were able to reduce the number of infections by 90 percent.

FEYERICK: And if can you reduce it 90 percent on a wing like this, clearly, the indications for the larger hospital are huge.

SHANNON: Absolutely.

FEYERICK (voice-over): Working with a team of nurses who handle the sickest patients, Shannon tracked the nurses' every move to figure out why infections are so easily carried room to room by hospital workers.

Dr. Shannon's team found infections spread in large part because central lines like catheters for blood, medicine, and urine were not being handled in a single standardized way.

(on camera): You have all these great nurses in a hospital, and you would think that, for example, doing a catheter would be routine procedure.

CHERYL MAGUIRE, ICU NURSE MANAGER: We don't have standardized practices in place, necessarily, so we learn as we go, and we, you know, invent our ways of doing things and pass it on to the next nurse that we train.

FEYERICK (voice-over): Taking a cue from carmakers like Toyota, Dr. Shannon streamlined procedures, making them more efficient and, therefore, significantly more sterile.

UNIDENTIFIED FEMALE: All finished.

UNIDENTIFIED FEMALE: All right. Feels good.

FEYERICK: Among the changes, new more complete kits to handle dressings. UNIDENTIFIED FEMALE: These are actually labels that we added to know when to change the dressing.

FEYERICK: Signs and hand sanitizers everywhere, and plenty of basic equipment like gloves and gowns in different sizes to promote a more sterile environment.

(on camera): Were you surprised at how simple it ended up being?

SHANNON: Absolutely. I was shocked. I thought, listen, this is just a few doctors who are not following sterile procedures. It turns out it has nothing to do with that.

FEYERICK (voice-over): The cost for these basic changes? Seventeen dollars per patient, and a hospital bill roughly $16,000 cheaper per person, says Shannon. Though it's too late for Victoria Nahum, who lost her son, she's now on a mission to help others avoid the pain.

NAHUM: We didn't want other people to feel the loss that we were feeling.

(END VIDEOTAPE)

FEYERICK: Now, using those new kits that you saw there in the piece, Dr. Shannon and his team were able to standardize the catheterization process, getting nurses down to eight steps in eight minutes. That virtually guarantees the procedure remains sterile and increases the odds for patient safety -- Wolf.

BLITZER: Deb Feyerick, good report, excellent report. And when you think about the fact that nurses interact with patients, what, about 100 times a day, it's a relatively easy way to start to deal with this really critical problem.

FEYERICK: Absolutely.

BLITZER: Deb, Deb Feyerick, working the story, thank you.

The 911 caller in the Henry Gates case finally speaking out.

(BEGIN VIDEO CLIP)

LUCIA WHALEN, MADE 911 CALL: I was a target of scorn and ridicule because of the things I never said.

(END VIDEO CLIP)

BLITZER: We're going to have more on that and a shocking new development in the case. Stand by.

After hearing of the dangers of texting while driving -- you saw a report yesterday here in THE SITUATION ROOM -- lawmakers are now proposing a nationwide ban on the potentially deadly distraction.

Plus, some startling allegations against the wife of the fraud mastermind Bernard Madoff.

(COMMERCIAL BREAK)

(NEWS BREAK)

BLITZER: It's a unique way of solving a daunting problem in New York, simply send the homeless packing.

(BEGIN VIDEO CLIP)

MICHAEL BLOOMBERG (I), MAYOR OF NEW YORK: The average cost is trivial. Most people go by bus. There's very few overseas. There's very long distance.

(END VIDEO CLIP)

BLITZER: Mayor Bloomberg defending his plan to give the homeless a free one-way ticket. The best political team on television is getting ready to join the discussion.

And new fuel for the controversy over the arrest of a black scholar. We're investigating allegations of a racial slur made by a Boston police officer.

(COMMERCIAL BREAK)

BLITZER: There's a shocking new twist in the case of the Harvard University professor arrested at his own home, the ripple effects reaching the White House and beyond. But now there's fresh fallout.

Let's go live to CNN's Elaine Quijano. She's working the story for us.

Elaine, you have new information about a police officer put on administrative leave for uttering a racial slur. What do we know?

ELAINE QUIJANO, CNN WHITE HOUSE CORRESPONDENT: Yes. This was in written form. A Boston police spokesperson, Wolf, is confirming to CNN that one of its officers, Officer Justin Barrett, was placed on paid administrative leave yesterday.

Why? Because the Boston police commissioner found out about a letter containing a racial slur that was sent by e-mail to "The Boston Globe," as well as to some of Officer Barrett fellow National Guard members.

Now, a source familiar with this investigation says this was an anonymous letter giving Barrett's opinion on the Gates situation and that the term -- I'm quoting here, Wolf -- "jungle monkey" was used in this correspondence. That's according to the source.

Now, the letter can be categorized as a rant against media coverage of the Gates situation. A termination hearing for Officer Barrett is now pending, and we're told that Barrett is going to get legal representation from his police union, the Boston Police Patrolman's Association. CNN has contacted the union. We're told, Wolf, to expect a statement tonight -- Wolf.

BLITZER: And we also know that today that woman who made the original 911 call has come forward to clear the air and clear her own name as well. What is she saying?

QUIJANO: That's right. Lucia Whalen is her name, and she said today basically she has been through the ringer. Well, today she tried to set the record straight.

(BEGIN VIDEOTAPE)

QUIJANO (voice-over): Joined by her husband and her attorney, Lucia Whalen reluctantly came before the cameras.

WHALEN: Cambridge is a wonderful place. And when I was called racist and I was a target of scorn and ridicule because of the things I never said.

QUIJANO: What she never said in her 911 call to Cambridge police was that she saw two black men.

(BEGIN AUDIO CLIP)

DISPATCHER: Are they white, black or Hispanic?

WHALEN: Well, there were two larger men. One looked kind of Hispanic, but I'm not really sure. And the other one entered, and I didn't see what he looked like at all.

(END AUDIO CLIP)

QUIJANO: But in his police report, Sergeant James Crowley said he spoke to Whalen on the scene and said Whalen described seeing -- quote -- "what appeared to be two black males with backpacks."

That's not what Whalen said she said.

WHALEN: As I said, the only words I exchanged were, "I was the 911 caller." And he pointed to me and said, "Stay right there."

QUESTION: Nothing more?

WHALEN: Nothing more than that.

(END VIDEO CLIP)

QUIJANO: Asked about the discrepancy, a Cambridge Police Department spokesman said that's an issue that could be reviewed in the future.

In the meantime, for Lucia Whalen, vindication.

(BEGIN VIDEO CLIP, COURTESY WHDH)

LUCIA WHALEN, 911 CALLER: Now that the tapes are out, I hope people can see that I tried to be careful and honest with my words. (END VIDEO CLIP)

QUIJANO: And despite everything, Whalen says she would do it all again.

(BEGIN VIDEO CLIP, COURTESY WHDH)

LUCIA WHALEN, 911 CALLER: You have to know if you're a concerned -- you're a concerned citizen, you should do the right thing. If you're seeing something that seems suspicious, I would do the same thing.

(END VIDEO CLIP)

QUIJANO: As for that White House meeting Thursday, her attorney suggests Whalen's actions should have earned her an invitation, too.

(BEGIN VIDEO CLIP, COURTESY WHDH)

WENDY MURPHY, WHALEN'S ATTORNEY: So the three highly trained guys who acted badly are getting together tomorrow for a beer at the White House. And that's a good thing. But the one person whose actions have been exemplary will be at work tomorrow here in Cambridge. I don't know, maybe it's a guy thing. She doesn't like beer anyway.

(END VIDEO CLIP)

(END VIDEO TAPE)

QUIJANO: Now, we did reach out to the White House to see if, in fact, officials invited or considered inviting Lucia Whalen to that get-together at the White House tomorrow night with President Obama, Sergeant Crowley and Professor Gates. We have not heard back -- Wolf.

BLITZER: If you hear, let us know.

Elaine, thank you.

The racial tension caused by this episode could ease dramatically tomorrow, as Elaine just reported. That's when President Obama, Professor Gates and Officer Crowley will all meet at the White House. They'll talk about what happened over beer.

And now we're learning which beer each man wants to drink. The White House says President Obama will have Bud Light, Professor Gates will have Red Stripe and Officer Crowley will have Blue Moon.

Startling allegations against the wife of convicted swindler, Bernard Madoff, who's serving a prison sentence of more than a century. The trustee seeking to collect funds from Madoff's victims is suing Ruth Madoff for millions.

Our senior correspondent, Allan Chernoff, has covered the Madoff scandal from the start -- Allan, Bernard Madoff has claimed his wife knew nothing of the fraud. ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: That's right. Even though Bernard Madoff has made that claim, the trustee right now is saying that Ruth Madoff had tens of millions of dollars funneled into her personal investment accounts.

(BEGIN VIDEOTAPE)

CHERNOFF: (voice-over): Bernard Madoff, serving life in a North Carolina medium security prison, accepted a visit Tuesday from victims' attorney Joseph Cotchett, who is suing Ruth Madoff and other family members. Cotchett spoke with Madoff for more than four hours and says the fraud mastermind maintains his wife knew nothing of the scheme.

JOSEPH COTCHETT, ATTORNEY FOR MADOFF VICTIMS: He was trying to persuade me that he did it alone. He wants to protect her, surely. I mean this is a committed guy. They've been married some 40 years or more. I think there's a lot of love there.

CHERNOFF: But today, the trustee for Madoff victims charges in a lawsuit that Ruth Madoff had at least $45 million of client money directed into personal investment accounts, including $11 million into DWD Associates, a real estate investment controlled by Blumenfeld Development Group and $1.75 million into another partnership, Sterling American Property Five. Neither real estate firm would comment.

Another $2.8 million allegedly went into Ruth Madoff's personal account at Bank of New York during the past two years and over $3 million of client funds were used to pay Ruth Madoff's American Express bill.

Some Madoff victims have remained convinced Ruth was party to the fraud.

UNIDENTIFIED FEMALE: His wife was working right along with him. She's not stupid. I mean she had to know.

CHERNOFF: Prosecutors have not charged Mrs. Madoff with any crime. But last month, under an agreement with the Justice Department, Ruth Madoff agreed to forfeit property worth more than $80 million, including a Manhattan penthouse. She was permitted to keep $2.5 million.

Ruth Madoff's attorney said in a statement: "Ruth already forfeited to the U.S. Attorney's office almost all of the assets named in this complaint. The trustee's action is wrong as a matter of law and fairness."

Attorney Cotchett says he believes there's more Madoff money to be found. Even so, he admits prisoner number 61727-054, in his prison khakis, was charming.

COTCHETT: He could charm your socks off.

(END VIDEO TAPE) CHERNOFF: The federal investigation into the Ponzi scheme continues. Thus far, the only person aside from Bernard Madoff charged is his accountant -- Wolf.

BLITZER: Allan Chernoff, thanks very much.

New York's mayor tells the homeless get packing.

(BEGIN VIDEO CLIP)

MAYOR MICHAEL BLOOMBERG (I), NEW YORK: Whether we're transferring the problem elsewheres, I don't know when they get to the other place whether or not they find jobs or, you know, maybe it's -- it may be easier for them.

(END VIDEO CLIP)

BLITZER: Michael Bloomberg offers one way tickets to his city's homeless.

How many are taking him up on the offer?

(COMMERCIAL BREAK)

BLITZER: Let's get to the best political team on television right now and our own Jessica Yellin, who's going to kick this off.

What have you got there?

JESSICA YELLIN, CNN NATIONAL POLITICAL CORRESPONDENT: Wolf, I've got three words for you -- money, money, money. It's really one word. But everyone right now is arguing about money and how much it will take to reform health care -- that is, everyone on Capitol Hill.

And dispose -- surprises -- despite this breakthrough today in the House, Democrats are still squabbling with Democrats over how to trim the costs of a reform bill.

And then it's Democrats versus Republicans over how to pay for reform. And now, it's also the White House number guys versus the accountants at the Congressional Budget Office arguing about Medicare's costs.

It's all this talk about money, but not so much talk on Capitol Hill about doctors, patients, how to make the health care system work better for everyone.

Guess who says he's frustrated?

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Sometimes I get a little frustrated because this is one of those situations where it's so obvious that the system we have isn't working well for too many people and that we could just be doing better.

(END VIDEO CLIP)

YELLIN: Let's not forget who started this. It was President Obama who sold health care reform as a way to save the country money over the long-term. He knew as well as any politician you can never reach agreement on numbers.

The question is, did the president make a strategic political mistake selling health care reform to Congress as a cost cutter -- Wolf.

BLITZER: Good question -- Candy Crowley, what's the answer?

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Well, first of all, the reason that politicians argue numbers is that no one really knows. No one has any idea, in 10 years, what this plan -- whatever this plan is -- is going to cost in 10 years.

Did he make a mistake?

Probably not, except for I have to tell you that right now, these politicians are arguing where Americans are not. They want to know about their doctor. They want to know about their health care plan. They want to know if they're 85 years old and they need a hip replacement, whether they're going to get it. And these guys are talking about trillions of dollars and cutting a billion.

BLITZER: Can the president turn this around?

DAVID FRUM, FORMER BUSH SPEECHWRITER: If he -- look, I am the one person, maybe, who thinks talking about cost control is really important. I mean, because there are small businesses all over this country that are being broken by these costs, that are facing -- the health insurance costs for a family of four has gone from $6,000 or thereabouts in 2001 to over $13,000 just before the recession. And two -- three quarters of that money small business employees have to pay. It comes out of employee wages, but it weighs on small business. It weighs on big business, too.

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: And let me tell you something, Wolf, that the -- it's not just Republicans who are talking about money. It's -- it's Democrats. And even if the president hadn't mentioned the idea of making sure that this is deficit neutral, it would have come up. And it would have been absolutely imperative because there are so many conservative Democrats in the Senate and the House. They helped expand the Democrats' majority. They say we we're not going to do anything that adds to the deficit.

But let me just tell you one other thing that's interesting. We are talking about money. But in talking to senators coming out of their bipartisan negotiations, they actually are, behind closed doors, trying to figure out a way, in terms of policy, to do this so it doesn't adversely affect doctors, doesn't adversely affect small businesses and people, in terms of whether or not they can keep going to their doctors.

It is part of the discussion behind closed doors.

BLITZER: Do you believe all these estimates of how much they can save from the existing expenses by cutting here and cutting there?

FRUM: I think we should all be really skeptical. Between -- in the late 1990s, the rate of health care inflation in the United States went down. Not only did nobody predict that in advance, but even after it happened, nobody could explain convincingly why it happened.

So if you can't explain the past, guessing the future is going to be even more difficult.

BLITZER: And these -- these experts at the Congressional Budget Office, the OMB, the Office of Management & Budget, they have all these numbers over the next 10 years. We don't where we're going to be in six months.

CROWLEY: Exactly. Exactly.

Now, the numbers -- just to sort of pick up real quickly on what David said, the numbers that matter out there are $500,000, the new top for businesses that don't have to get -- get health care for their employees.

What also matters is how much will my health care cost?

Those are the numbers that matter. And, hopefully, that's what's going on behind closed doors that you're talking about.

BASH: Exactly. And they say it is.

BLITZER: We'll see.

Guys, hold on.

Don't go away.

One way tickets out of town for the homeless.

(BEGIN VIDEO CLIP)

BLOOMBERG: Given the cost of providing shelter for a family, this saves the taxpayers of New York an enormous amount of money.

(END VIDEO CLIP)

BLITZER: Hundreds have taken New York Mayor Michael Bloomberg up on his offer.

But what happens to them after they leave?

And a company says it plans to turn a lock of Michael Jackson's hair into diamonds.

Any wonder why our own Jeanne Moos thinks that's Moost Unusual?

(COMMERCIAL BREAK)

BLITZER: Jessica Yellin is back, along with the best political team on television.

All right, let's go to our second session.

What's going on?

YELLIN: Wolf, I've got for you news of a travel deal from New York's Mayor Bloomberg. That's right. You know every New Yorker wants to escape the big city during the summer. And now Mayor Bloomberg is offering something for the homeless -- a ticket to Paris, San Juan or any destination of their choice here in the US. They just need a family member to agree to take them in.

And the catch?

It's one way. Clearly, this is all about saving the city money. The mayor says New York is legally required to provide shelter to any homeless person who wants it. And that gets pricey. It can cost more than $35,000 a year for a single homeless person. It's a lot cheaper to buy them a ticket to fly. So the city has given out 500 tickets so far. And the mayor says none of the departed homeless have returned.

But is it really the right thing to do?

The mayor does not seem too worried about what happens at the other end.

(BEGIN VIDEO CLIP)

BLOOMBERG: Whether we're transferring the problem elsewheres, I don't know when they get to the other place whether or not they find jobs or -- you know, maybe it's -- it may be easier for them. What is true is if they -- if we don't -- we either have two choices. We can either do this program or pay an enormous amount of money daily to provide housing.

(END VIDEO CLIP)

YELLIN: Hmm. No word yet on how other mayors around the country feel about that statement.

So the question is, is it OK for Mayor Bloomberg to be sending these potential tax burdens to other cities Wolf.

BLITZER: That's the question.

David Frum, what do you think?

FRUM: Well, let's have a little context here. Homelessness has been one of the great success stories of the past dozen years. In the Bush years, we saw a one third decline in the number of chronic homeless people thanks to the leadership of, mainly, Philip Mangano, who really deserves a lot more recognition as one of the most successful members of the Bush team. BLITZER: Just to be up front, you worked in the Bush White House.

FRUM: I worked in the Bush, but I had nothing to do with this. I did -- no credit for me.

But -- and Phillip is not a friend of mine. I don't -- I've never met him. But he was one of the real heroes.

We had a -- we had about 50,000 of the most hard core of the homeless moved permanently out of the homeless population through a series of strategies that emphasized housing.

Now, what Mayor Bloomberg is doing in New York is an attempt to connect the less hard core people with family members. And if they're -- they have family and if the family will accept them, this looks like a good option. It doesn't -- it -- it sounds heartless. But when you hear the context for it, it makes a lot of sense.

BLITZER: We haven't heard a lot from President Obama on the homeless. Sure, he's spoken about it, but it's certainly not one of his highest priorities.

BASH: No, we haven't. And, you know, certainly, things may have gotten better during the Bush years. But let's -- you know, we all know the economic times that we're in. And they're terrible. And there is no question -- I don't have the hard statistics with me, but there's no question that it had to have gotten worse because of -- of the recession that we're in.

You know, it's interesting, I called around to the Hill, because New Yorkers are not exactly a shy group of people. And if they were upset about this, they would have called their -- their member of Congress or their senator.

And it's amazing. We've heard very little -- almost nothing from their constituents, these members of Congress. So it doesn't really seem to be, at least right now, shaking New Yorkers and really outraging them.

BLITZER: I guess New Yorkers want to get rid of the homeless, like a lot of other cities like...

(CROSSTALK)

BLITZER: Yes?

CROWLEY: It's not surprising to me that people with homes who, you know, walk to work and walk over the homeless don't have a problem with this program.

I guess, just kind of fundamentally, there's something about it that makes me -- it sort of offends me at a personal level to sort of pay to get rid of someone. And if I thought like -- to me, you need to more, like how do they know -- do they bring the cell phone and say here's my sister, she'll take me? How does he know none of them have come back?

How do...

FRUM: Well, but the city makes a follow-up.

CROWLEY: I mean how do they make this work?

FRUM: The city's social service agencies make a follow-up call. And the population for whom this program would be most attractive would be the less hard core. I mean the people who are really disturbed do not have relatives who are willing to take responsibility.

BLITZER: Let's remember, these homeless are human beings, when all is said and done, as well...

BASH: Absolutely.

BLITZER: ...not just statistics or whatever.

Guys, thanks very much.

FRUM: Thank you.

BLITZER: Now let's check in with Lou to see what's coming up at the top of the hour -- Lou.

LOU DOBBS, HOST, "LOU DOBBS TONIGHT": Wolf, thank you.

At the top of the hour, we'll have the latest on what appears to be a truce among some Democrats in the showdown over health care. But the Democratic Party remains divided over the president's plans. The battle is far from ended.

We'll also be examining the president's assertion that his massive stimulus package is actually helping the economy. Critics say the president's policies are making the economy worse. That's the subject of our Face-Off debate here tonight.

And troubling new evidence that tanning beds are a make percent cancer threat -- some say along with cigarettes and asbestos. That bad. We'll have the special report.

And among our guests tonight, one of the Senate's top Republicans, Senator John Barrasso. He's also a physician. We'll be talking about the president's health care plans and a lot of other issues.

Join us for all of that, all the day's news and more at the top of the hour -- Wolf, back to you.

BLITZER: See you then.

Thank you, Lou.

Let's go to Jack once again for The Cafferty File -- Jack.

CAFFERTY: I can't believe they're doing that. New York to the homeless -- here's a bus ticket, get lost. I mean what -- what compassion. What warmth. What sensitivity.

The question -- are you more or less concerned about global warming than you were a year ago?

Jeff writes from Washington -- the state, not the capital: "It's supposed to be 102 in Seattle today -- the all time high since recordkeeping began 118 years ago. We've had four days of rain since the middle of May. If that's not enough truth, then I don't know what will convince some people. Yes, there's global warming."

Robert in Alaska: "I have to say, I'm less concerned because I have heard of conflicting data that suggest to me that more studies are necessary. That said, though, I live in Alaska and I do see the effects of warming on our glaciers and tundra."

Mike says: "I've lived in the Northeast for 20 years of my life so far and I've never seen acorns falling from the trees so early. And I've never seen so much rain this time of the year. Native tomatoes and other vegetation won't grow. I hope things don't get worse."

Brian writes: "I wasn't concerned about global warming a year ago and I'm definitely not concerned about it today."

Jim in California: "Global warming is real. It's caused by human activity. More than 90 percent of world's climatologists agree with that statement and give it a probability of greater than 90 percent. You may not like it, but you'd better believe it. Denial won't make the temperature go down."

Josh writes: "Less. We had a cooling scare in the '70s, then warming. Now it's conveniently called climate change. The only sure thing about climate change is just that -- change. It's slick political maneuvering to try to rename it."

And John in Massachusetts says: "We just had a terrible winter and a pretty lousy spring, so my mind is elsewhere. This debate will go on and on until either New York looks like Venice or it doesn't. In any case, none of us will ever see it."

If you didn't see your e-mail here, you can go to my blog at CNN.com/caffertyfile and look for yours there among hundreds of others -- Wolf.

BLITZER: All right, Jack.

See you tomorrow.

Thank you.

A lock of Michael Jackson's hair is getting a makeover no one could have imagined. (BEGIN VIDEO CLIP)

GREG HERRO, PRESIDENT/COFOUNDER, LIFEGEM: We've secured a lock of Michael Jackson's hair and we are turning it into a diamond.

(END VIDEO CLIP)

BLITZER: You heard him right. A company plans to turn Michael Jackson's hair into some sparkly keepsakes.

(COMMERCIAL BREAK)

BLITZER: Here's a look at some Hot Shots.

In China, an investor looks down after watching the stock price monitor as the Shanghai Index falls.

In South Korea, high school students pull tires for exercise as part of survival camp.

In Germany, animal statues made from hay a part of a Grain Day celebration.

And in Washington, two kids feel the wind from President Obama's helicopter as it takes off from the White House.

Hot Shots -- pictures worth a thousand words.

A lock of Michael Jackson's hair -- a precious item, perhaps, for his diehard fans. But the singer's strands may soon become something precious by anyone's standards -- diamonds.

Here with this Moost Unusual story, CNN's Jeanne Moos.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT: (voice-over): Take a bit of Michael Jackson's hair...

UNIDENTIFIED MALE: Wow! I mean, I don't see how that's possible.

MOOS: Take his hair and turn it into manmade diamonds.

UNIDENTIFIED MALE: I think it sounds pretty crazy and unrealistic.

Can they even do that?

HERRO: And we're going to reduce Michael Jackson's hair to pure carbon.

MOOS: It may sound like pure B.S., but that's what they do at LifeGem. They use pressure and heat to turn hair or cremated ashes of a loved one into diamond keepsakes.

But Michael Jackson?

UNIDENTIFIED FEMALE: Oh, God.

MOOS: His hair came from that Pepsi commercial fire. "Us Weekly" obtained an unforgettable film. The man in the mustache was the executive producer of the shoot. Ralph Cohen helped put out Michael's hair using an Armani jacket. Then after Michael was taken away...

JOHN REZNIKOFF, PRESIDENT, UNIVERSITY ARCHIVES: He noticed on the floor there was this charred piece of hair and he put it in his pocket.

MOOS: John Reznikoff is the world's foremost hair collector. He's got locks from Marilyn Monroe, from Abraham Lincoln, from Einstein.

REZNIKOFF: And I have Geronimo's pony tail, which is...

MOOS (on camera): The whole pony tail?

REZNIKOFF: Yes.

MOOS (voice-over): Reznikoff says he paid a little under $100,000 for the clump of Michael Jackson's hair that the executive producer stuck in a hospital envelope after following Michael to the hospital.

(on camera): The whole idea of picking up his hair and turning it into a diamond, I mean, right away some people say yuck.

REZNIKOFF: I'm usually able to disarm people on the hair thing when I say that I bet your mother has a lock of your baby hair in your baby book.

MOOS: So how many diamonds do you get from a lock of hair?

Well, anywhere between one or two to 10. The LifeGem folks say they plan to offer the Jackson family one of the diamonds free of charge.

(voice-over): The collector, Reznikoff, teamed up with LifeGem in 2007 to turn Beethoven's hair into diamonds, one of which was auctioned off for almost 200,000 bucks. They figure Michael's would fetch much more.

Reaction online was outrage: "This is tasteful and refined? To who, pigs?"

(on camera): I think that's what people find a little creepy, making money off his hair.

HERRO: We create diamonds from hair. We have Michael Jackson's hair. It would almost be remiss of us to not make a diamond to offer that to the world.

(VIDEO CLIP)

UNIDENTIFIED CHILDREN (singing): We are the world.

(END VIDEO CLIP)

MOOS: We are the diamonds.

Jeanne Moos, CNN, New York.

(END VIDEO TAPE)

BLITZER: Thank you, Jeanne.

Tomorrow during our 6:00 p.m. Eastern hour, the president, the professor and the police officer -- they're all getting together over at the White House for that famous beer or two. We'll have coverage right here in THE SITUATION ROOM tomorrow.

We want you to check out our political podcast. To get the best political team to go, subscribe at CNN.com/situationroom.

I'm Wolf Blitzer in THE SITUATION ROOM.

Up next, "LOU DOBBS TONIGHT" -- Lou.