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STARTING POINT WITH SOLEDAD O'BRIEN

Terror Arrests Near Olympic Park; Interview with Ben LaBolt, Obama Campaign National Press Secretary; Pundits Debate Health Care Reform Mandate; Mitt Romney Calls Individual Mandate a Tax; Olympic Dreams; First Bite: Taco Bell's Cantina Menu

Aired July 5, 2012 - 08:00   ET

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


SOLEDAD O'BRIEN, CNN ANCHOR: -- people arrested for planning an attack. We're going to bring the very latest on that story.

Plus, Mitt Romney's mixed messages now getting in line with the rest of the GOP, calling the individual mandate in health care a tax not a penalty. Why the change of heart? We'll take a look.

Desperate to stay cool and dire need of food. Seven hundred thousand people are still without power six days after that big storm in West Virginia. Some people haven't eaten for days.

Also, blazing a trail, going for gold. You may not know the name Lia Neal. She is the second African-American woman to ever make the U.S. women Olympic swim team. She's going to join us this morning.

It's Thursday, July 5th, and STARTING POINT begins right now.

(MUSIC)

ANNOUNCER: This is CNN breaking news.

O'BRIEN: All right. Welcome, everybody. Breaking news: six suspected terrorists, five men, one woman have been arrested in London in two separate raids. Apparently one, which was near Olympic Park in London. Police reportedly used smoke grenades and a stun gun on one suspect during the raid.

Police say there is no imminent threat of an attack. The arrests are not related to the Olympic Games which begin in just about 22 days.

Separate incident today, a major terror alert shut the M-6 toll heading into London. Armed police surrounded a coach bus after a passenger was reportedly spotted pouring liquid into a smoking bag.

Also breaking news this morning, the whistle-blowing Web site WikiLeaks at it again. They say they started publishing nearly 2 1/2 million e-mails from Syrian politicians and businesses dating back six years. They describe them as embarrassing to Syria and some of its opponents as well. The Web site says the files, quote, "Shine a light on the inner workings of the Syrian government and economy." But they also reveal how the West and Western firms say one thing and do another.

Other stories making headlines today. Brooke Baldwin has the update for us.

Hey, Brooke. Good morning again.

BROOKE BALDWIN, CNN ANCHOR: Hey, Soledad. Good morning again to you. Good morning to all of you.

About 700,000 people yet again waking up today without power. Take a look at the map here -- 11 states and the nation's capital. Folks, it's been six days since this powerful storms fueled by the extreme heat, the zapped trees, downed power lines.

And look at this picture. It's a pretty interesting picture, all the way from space here. This is Washington's massive power outage from outer space taking by NASA's satellite, showing extensive power outages in Washington and the Baltimore areas.

And in West Virginia, empty shelves here, the heat and power outages have led to a food crisis in this state. The Red Cross expects to provide 25,000 meals today.

Twenty-two people have now died of the storms in the dangerous heat.

Firefighters in the West gaining ground here on the most destructive wildfire in all of Colorado's history. The Waldo Canyon Fire near Colorado Springs is now 90 percent contained. That's a vast improvement. This fire has scorched more than 18,000 acres, destroyed nearly 350 homes.

But keep in mind, this firefighting season, it is far from over, with as many as 45 large fires still burning across the country.

And let's go to Rob Marciano who has been covering for these wildfires for us and talking about heat today.

Rob, good morning.

ROB MARCIANO, AMS METEOROLOGIST: Yes, heat and humidity. Humidity a good thing actually for the folks out West. We'll get into the monsoon season which brings in the circulation that increases the moisture. So, July through September, and we're starting to see that now and even in the next couple of days.

So the forecast for Colorado Springs and other areas out West, that have been enduring the fires, we'll look for increased humidity and a chance not only thunderstorms, but thunderstorms that may actually drop some rain. We'll take that.

Meanwhile, the heat 101 is the forecast high for Chicago again today. We expect 106 again in St. Louis. Record-breaking high temperatures, and the heat spreads across D.C.

When will we see the relief in the heat? Well, here comes a cool front from our friends in Canada. Not going to see it tomorrow. We'll see a little bit maybe on Saturday across Minneapolis. But Saturday, it pushes through Chicago and eventually through the northeast Sunday into Monday.

And at that point, temperatures right around where they should be for this time of year. In many cases, Brooke, that's 20 degrees cooler than where they are right now.

BALDWIN: Bring on the cool. Rob Marciano, thank you.

A tragic Fourth of July on New Orleans Long Island sound. At least two people confirmed dead after this boat carrying 27 people just capsized. Coast Guard officials say 25 passengers were rescued by midnight. One of them is in critical condition. We're told none of the passengers was wearing life vests.

Fourth of July, big bang in the Big Apple. Take a look at this.

Yes, thousands of people lined up and down the Manhattan's west side to watch the annual Macy's Fourth of July spectacular, 40,000 fireworks lighting up the Hudson River. Pretty pictures there.

Speaking of fireworks -- stay classy, San Diego, because this is what happened last night. Check it out. If you're thinking, man, that's a lot of fireworks -- you're right because the entire Fourth of July fireworks show exploding all at once. Whoops!

The show was supposed to last 17 minutes, lasted all of a couple of seconds five minutes before the show was supposed to start. Soledad, they're investigating the glitch.

O'BRIEN: I bet they are.

BALDWIN: I'm not sure how that happened.

O'BRIEN: I bet they are. You know how expensive those things are?

BALDWIN: Incredibly expensive.

O'BRIEN: That's a ton of money that went up in, what, 22 seconds.

BALDWIN: Seconds. Gone. See ya later.

O'BRIEN: Someone messed that up. All right. Brooke, thank you.

Our STARTING TEAM this morning, Marc Lamont Hill so far -- so close, yet so far. It's OK, we'll move you up here one day.

MARC LAMONT HILL, COLUMBIA UNIVERSITY: Exactly.

(CROSSTALK)

O'BRIEN: He knows I can't hit him.

HILL: Exactly.

O'BRIEN: Different oxygen down there.

Margaret Hoover is an author. "American Individualism" is her book.

And Ryan Lizza is the Washington correspondent for the "New Yorker."

Nice to have you guys with us.

RYAN LIZZA, CNN CONTRIBUTOR: Pleasure to be here.

MARGARET HOOVER, CNN CONTRIBUTOR: Good morning.

O'BRIEN: Nice to be back from vaca.

All right. Let's get going. Mitt Romney says he believes the health care law's individual mandate is a tax not a penalty -- had kind of a change of heart there. It could be problematic for his campaign because here's what he told Dana Bash while he was campaigning in New Hampshire yesterday.

(BEGIN VIDEO CLIP)

REPORTER: Mitt --

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: The Supreme Court is the final word, right? Isn't it the highest court in the land? They said it's a tax, didn't they? So, it's a tax, of course. That's what they say it is.

(END VIDEO CLIP)

O'BRIEN: OK.

But one of his top advisers, Eric Fehrnstrom, said, in fact, that Romney agreed with what President Obama agrees with and said that the mandate was not a tax. Romney's new message is now aligned with the Republicans who are criticizing President Obama for raising taxes.

All that brings us to Ben LaBolt, he's the Obama campaign national press secretary.

Nice to see you. Thanks for being with us this morning. We appreciate it.

So, Mitt Romney --

BEN LABOLT, OBAMA CAMPAIGN: Good morning, Soledad. Thanks.

O'BRIEN: Well, thank you. Mitt Romney has said it's a tax because the Supreme Court says it's a tax. So, he believes it's a tax.

The president's advisers say it's a penalty. The president himself in the past has said it's absolutely not a tax.

Let's play a little bit what the president said.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: For us to say that you've got to take a responsibility to get health insurance is absolutely not a tax increase. What it's saying is that we're not going to have other people carrying your burdens for you -- any more than the fact that right now everybody in America just about has to get auto insurance. Nobody considers that a tax increase.

(END VIDEO CLIP)

O'BRIEN: OK. Ben, so does President Obama consider this to be a penalty as his spokesperson told me the other day? Or does he think it's a tax as the Supreme Court has now said?

LABOLT: Well, we're the ones that have been consistent here. We believe it's a penalty. And it actually includes the largest health care tax cut in history -- $4,800 for 19 million Americans.

What hasn't gotten a lot of attention is Mitt Romney not only disagreed with his campaign advisers yesterday but he disagreed with himself. As recently as 2009 he referred to his plan -- the mandate --

O'BRIEN: I'm not talking about Mitt Romney. I'm not talking about Mitt Romney. Let me stop you there, because I'm talking about President Obama.

LABOLT: OK.

O'BRIEN: Does he believe this is tax? Or does he believe it's a penalty? He actually hasn't said yet, as I'm sure you know. He has not specifically said. His spokesperson sitting here with me said it's a penalty. Supreme Court has said it's a tax.

What does he believe?

LABOLT: That it's a penalty. You saw our arguments before the Supreme Court. You see what the president has said over the past several years that it's a penalty for that 1 percent of the population who can afford health insurance but hasn't chosen to get it. Because the fact is that has led the rest of us to pay a hidden tax of $1,000 a year, folks already covered. It drives up our premiums.

O'BRIEN: So, then he disagrees with the Supreme Court decision that says it's now a tax?

LABOLT: That's right. He's said that it's a penalty. You saw our arguments before the court. And --

O'BRIEN: No, your argument before the court honestly also said that it could be -- one of the side arguments, kind of like the backup argument was that it was a tax. So I did see the arguments before the Supreme Court.

LABOLT: It never referred to it as -- it never referred to it as a tax. It said it was a penalty. And that's under the section of the law that is the tax code, but it said very specifically it's a penalty.

O'BRIEN: Let's turn for a minute about what the strategy is. Does the campaign want to continue talking about the health care law and whether it's a tax, a penalty, or, you know, the various synonyms that go with that? Or is it more comfortable for the campaign to talk about the economy? Is that more of a problem, more challenging?

LABOLT: Well, I think we're going to talk about -- we're certainly going to talk about the economy. That's the core contrast on the ballot this fall and what the president's going to be talking about for the next two days in Ohio and Pennsylvania. Voters have the opportunity to break the stalemate at the polls.

Are we going to reward the wealthy with special breaks, strip back oversight from banks and polluters and assume that the market will take care of the rest, like Mitt Romney has suggested? Or are we going to restore economic security for the middle class by investing in education? Investing in research and development? You know, that will be the core contrast.

But the fact is, Mitt Romney is going to have to explain what his alternative to the Affordable Care Act is, because he said kill Obamacare dead on the first day. Where does that leave the millions of people who have pre-existing conditions in this country? Is he going to allow insurance companies to continue to discriminate against women and charge them $1 billion more a year for their health insurance?

All the public polling shows that the American people do not want to see the Affordable Care Act repealed. Mitt Romney has presented no alternative. The Republican leadership, Senator McConnell, has proposed no alternative. You saw that on the Sunday shows last week. And then he will have to explain how he's going to have to deal with this issue.

O'BRIEN: Right.

LIZZA: Ben, it's Ryan Lizza, how are you doing this morning?

LABOLT: Doing well.

LIZZA: I wanted to go back to something Soledad said there when she was pressing you on the government's argument before the Supreme Court. Now, Chief justice Roberts pressed your solicitor general or the Obama solicitor general on this issue. Verrilli had an opportunity to say this was a penalty but instead he said, chief justice, this is administered by the IRS. They talked about how it was under the tax code.

The argument before the Supreme Court was, if you don't agree that this is constitutional under the Commerce Clause, surely you agree it is constitutional under Congress' power to levee taxes. And that is the argument that the Supreme Court took.

So how can you sit there and say you guys didn't go before the Supreme Court and make that argument?

LABOLT: Review the court script -- the court transcripts, Ryan. At no point did Verrilli or any of the government lawyers say it was a tax.

LIZZA: But he said it's administered by the IRS. What does the IRS do?

O'BRIEN: On April 15th, Tax Day, I believe, if I'm not mistaken on that.

LIZZA: What did he mean when he said it's administered by the IRS?

LABOLT: Nowhere during the arguments -- we are the ones who have been consistent here. Consistent it's a penalty. Mitt Romney has disagreed with his own campaign advisers and disagreed with himself about whether his own mandate is a tax. He made clear in 2009 in the "USA Today" op-ed that it was a tax.

O'BRIEN: Let me ask you a question about the Ohio and Pennsylvania, because you raised them. When you look at polling in Pennsylvania, President Obama is ahead slightly, 45 percent to 39 percent. In Ohio, similar numbers, 47 percent to Romney's 38 percent.

But when you take a look at overall in the battleground states, 15 battleground states, this is a poll that was done at the end of June, to the beginning of July, Mitt Romney is leading 51 percent to 43 percent for President Obama with a sample error of plus or minus 4 percentage points.

What's the strategy there? That compared to your other numbers in Ohio and Pennsylvania is pretty bad. And especially these are states, those 15 that would be critical to the election and the analyst would tell you.

LABOLT: Well, I think there were -- there were some states like Indiana and Missouri in that poll that campaigns can dispute whether or not those will be the key battleground states in this election. When it comes to Ohio and Pennsylvania, you know one of the things that has allowed those states to make progress in the past couple of years was the president's decision to grant rescue loans to the auto industry.

When the pundits warned against it, Mitt Romney said we should let Detroit go bankrupt. You know, one in eight jobs in Ohio --

O'BRIEN: Right. You're number in Ohio and Pennsylvania are good. I just did those.

But I was talking about the 15 others and that's problematic. I would assume that you look at these numbers in the campaign and say in these 15 states, we're in trouble potentially.

HOOVER: Definitely, definitely he is, because as you know, Ben -- it's Margaret here -- you guys are about to hit the road on a Rust Belt tour today and tomorrow and the next day. And probably the jobs numbers that we expect to come out tomorrow which we probably expect to be not that good. So, I would imagine this is you guys doubling down, going on the offense because you know this election isn't going to be about health care, it's going to be about the economy. And its' not looking --

LABOLT: Well, well -- we -- we've said all along it'll focus on the core economic contrast. Look, I think the number of jobs you've seen created in these states over the past several years, nearly 150,000 private sector jobs in these states. Many of them were linked to the recovery of the manufacturing sector and that specifically because of decisions that the president has made.

And we'll talk about the contrast with Mitt Romney, somebody who cut funding for manufacturing extension partnership in Massachusetts, cut funding for worker training in community colleges. Went to Detroit last June and actually attacked the president for encouraging young people to go into manufacturing as he was betting on American workers and investing in reviving this sector.

O'BRIEN: Forgive me for interrupting you there, but do you think that strategy's going to work? Will you guys throw that graphic up again, it showed the jobs numbers, the jobs reports and job creation has gone down every month. It was a very startling.

And all those things you're listing about what Mitt Romney has not done or has done in his record of Bain or his record in the state of Massachusetts -- when you look at this and you're a voter, how much of a problem is this graphic for the Obama campaign?

LABOLT: Well, I -- I can't see the visual that you're showing, but --

O'BRIEN: It's a chart that looks like good going down, going down, and April and May job growth numbers for 2012. So, from January to May, you know, it's really small. It's got to be problematic.

LABOLT: The president has had a plan on the table since last September to create a million jobs right now, to put teachers back in the classroom, cops back on the street, construction workers, rebuilding our roads and bridges. Mitt Romney has opposed that plan. The president's got a short-term plan and a long-term plan.

That long-term plan involves investments and things like education to make sure that our workers have the skills that match with the jobs that are available on the market while the president doubled funding for college scholarships. Mitt Romney, the budget plan that he's laid out, would cut funding for that by 20 percent.

And so, what we do now to create jobs, and in the long run, will be a major contrast during this campaign.

O'BRIEN: We'll be watching. And of course, sir, we'll be talking a lot between now and then. Ben Labolt, nice to see you, nice to have you as always. We appreciate it.

LABOLT: Thanks for having me.

O'BRIEN: You bet.

Still ahead this morning on STARTING POINT, is America still the land of opportunity? This morning, we'll take a serious look at the price we could be paying for income inequality and whether the poor can make it anymore. It's the new article that's just come out.

Plus, today's "Tough Call," a cupcake crackdown, considering a ban on homemade treats. No, not because of the peanut allergies, because not healthy. That's kind of the point, isn't it? Here's mark's playlist.

(CROSSTALK)

O'BRIEN: What is that? "Vibrant Thing?"

MARC LAMONT HILL, "OUR WORLD WITH BLACK ENTERPRISE" HOST: Vibrant Thing."

O'BRIEN: "Vibrant Thing." You're watching STARTING POINT. We'll back in a moment.

(COMMERCIAL BREAK)

O'BRIEN: Welcome back to STARTING POINT. Goal of the American dream is to do better than your parents and to set up a life where the kids can do better than their parents, but that might be harder to achieve than realized, especially for the poorest in our population. Income for the wealthiest one percent grew by 275 percent between 1979 and 2007.

But for the bottom fifth of the population, they saw income growth of only 18 percent during that same period. Here's another statistic. If you made a million dollars 20 years ago, you're now making $2.3 million. If you earned $20,000, you're making a little more than $47,500 to date all based on inflation.

So, is it still possible to move up in society and do better than our parents did? Bloomberg news reporter, Esme Deprez, explores that in her new article which is called "Poor Forever." And it's in "Bloomberg" business week, which is out tomorrow.

A story focused on Bridgeport, Connecticut, which you said is the home to the biggest income disparity in the entire nation. Is that right? What kind of income disparity do you see in Bridgeport?

ESME DEPREZ, REPORTER, BLOOMBERG NEWS: Exactly. I went to Bridgeport, the natural (ph) areas, right northeast of New York City, and that's home to the highest income divide in the U.S. So, you have extreme pockets of poverty right up against extreme pockets of wealth.

So, places like Bridgeport which is a city with high child poverty rates, low unemployment, low incomes, and then you have it right next door to, you know, Greenwich, (INAUDIBLE) which has obviously hedge funds and lots of people that work in the financial industry that commute into Manhattan every day. So, they're really butting up against one another right here.

O'BRIEN: You talk in the article about the Gatsby curve. What's that?

DEPREZ: So, the great Gatsby curve was formulated by a university of auto economist (ph) named Miles Corak (ph). And he shows, he maps the measure of inequality against how wealth is transferred through generations. And so, what that curve shows us is that countries with high inequality also have low mobility or they tend to.

And so, the U.S., if you look at the where the U.S. is up on the graph, you see the U.S. at the very top which signifies that we have here high inequality and low mobility at the same time, which is something that we don't typically think of when we think of the American dream.

MARGARET HOOVER, CNN CONTRIBUTOR: What are the factors that most impact mobility, because it seems like, to me, you know, people who are compassionate. We believe in the American dream. We believe that people can make their way up in the world.

And that's the thing. That's what we hedge the American dream on. It's the ability to at least improve your circumstances and be able to transcend the circumstances you were born in. That's the most concerning thing to me about your article is the freezing of the social strata almost. What are those factors? What impacts social mobility?

DEPREZ: So, what this economist that I referenced in my article says impact mobility. It's family, of course, the material that we -- the advantages we give them both material and none we pass on to our kids. The labor market, how education is an important driver to get a good job, and then also just how level the playing field is.

So, it's really dependent on public policy, as well. And what we see is that if you're born into poverty today, kids born into poverty for almost half of kids born into poverty today will stay stuck there until they die. So, that's exactly what we don't think of as the American dream, but that's what the statistics (ph) are telling us.

O'BRIEN: How many people born into the middle class will slide down into poverty?

DEPREZ: So, the middle class is more fluid. You have a roughly equal chance if you're born into the middle class to slide down or to move up. Except if you are born -- if you're a black child born to middle income parents, half of Black children fall down into poverty where at it's 16 percent only for whites. So, there's really a racial disparity obviously going on here as well.

HILL: What are the public policy implications of this? What can we do? What can we install to change this, to shift this? DEPREZ: So, I mean, I think the biggest thing that my reporting over these past seven months that I've been going on to Bridgeport showed me is that there's not one policy solution, that's why we haven't fixed it yet. It's too complex. If you take education, for example, education is one of the most powerful drivers of economic mobility from the bottom to the top.

But it's also, you know, the people in poverty don't get a college education as often as, you know, as others because they don't have this money to pay for it, and they also don't have the academic preparation for it.

O'BRIEN: You focused on a woman who had a great education and went to less work to get a great education and ended up really making less money at the end.

DEPREZ: Exactly. So, that shows you again how complex it is, right? Education is so important, and we know it's one of the most important drivers of upward mobility. But even for, you know, the woman that I profile in the story, even that didn't work for her. So, it's a mixed bag. It's complex.

O'BRIEN: Are we less mobile than we -- I mean, is the American dream this idea -- and I agree with you -- that you can come to this country. That's my parents' story. I know a million people this is their story. Is that just a myth? Or I mean, are we seeing a change this year from say ten years ago, 20 years ago, 30 years ago?

DEPREZ: It's not so much mobility has changed. Inequality has certainly gotten worse over time since 1979. But mobility is really not definitely very different now than it was 20 or 30 years ago. It's just our perception has changed. So, as new data has come in and we're able to learn more about mobility and how wealth is transferred through generations, it just seems like we have less now than we've one assumed. So, it's not necessarily that's changed.

O'BRIEN: Wow. Esme Deprez is a reporter for "Bloomberg News." It's nice to have you. Thank you very much. I don't know how I feel about that. I agree with you. Like, the American dream is kind of what we hold on and hold out for.

RYAN LIZZA, CNN CONTRIBUTOR: It's this sort of core -- every politician just assumes that American mobility is the same as it always has been. And what you're reporting is just eye opening. It's just not true.

O'BRIEN: All right. Esme, thank you. We appreciate it. Your article is terrific.

DEPREZ: Thank you.

O'BRIEN: Still ahead this morning on STARTING POINT, why new secrets about the next iPad have Apple lovers in a tizzy.

And our "Tough Call," put down the big ones (ph). Schools want to ban cupcakes and cookies from all school celebrations. We'll tell you why. That's straight ahead.

(COMMERCIAL BREAK)

O'BRIEN: Welcome back, everybody. In today's "Tough Call," banning baked goods from home in school because they're unhealthy. Schools in Easton, Massachusetts want to ban cupcakes, cookies, candy, et cetera from classroom celebrations. No more homemade sweets. Instead, there's a list of safe foods that fit the wellness policy. Happy birthday, here's a bowl of fruit.

(LAUGHTER)

O'BRIEN: Applesauce, raisins, crackers, cereal. The school committee in charge says this we want to get the focus off of junk food. You can celebrate a birthday without a cupcake. That is true, you can, but it's no fun when you do it without a cupcake.

HILL: Healthy food is fun.

(CROSSTALK)

HILL: This is different. I don't want to over regulate this. You can still have it in your lunch bag. You can still give it to your kids if they want to eat it. You can still sell it in a school store or like back to school night stuff. But every time a kid has birthday, they don't need to eat a box full of munchkins.

(CROSSTALK)

O'BRIEN: So, realistically, it's not a box full of munchkins. It's one cup -- I know because you know what all I do? Couple of times of year, I do my only baking and I make a zillion cupcakes for all the kids in class. Why is that such a big deal?

HILL: But these 40 kids -- well, maybe not every school, but there's at least 20 kids in the class.

O'BRIEN: OK.

HILL: And there's a bunch of birthdays, and they're always snacking, they're always eating. Every day, my daughter comes home and she says something like, we had a birthday day today or it's Arbor Day, or it's Flag Day, and I had a piece of carrot cake, and that's why kids are fat.

LIZZA: This is --

O'BRIEN: That's not why kids are fat, by the way.

(CROSSTALK)

HILL: It is, because we teach them that we have to celebrate with fatty stuff. It's not birthday celebrations that make them fat.

O'BRIEN: OK. Then, how about smaller cupcakes? How about not a giant cupcake? A small cupcake. (CROSSTALK)

HILL: I would take one cupcake for every six kids and we divide it up and we give them a little piece of cupcake.

O'BRIEN: Having kids not have the cupcakes for snack I think is not the way to keep everybody healthy. The way to keep people healthy is to have some kind of moderation and balance.

LIZZA: The one thing, it just makes the kids want it more when you tell them they can't have it.

O'BRIEN: I know, I do.

LIZZA: It's my experience with my own kid. And this is the creeping Bloombergization of America.

HILL: Oh, boo.

O'BRIEN: Oh, boo. I don't agree -

(CROSSTALK)

O'BRIEN: And you know what? I actually don't have a problem with the soda ban. I really don't. I just think that in school it's OK -- the message for the kids should be a whopper with cheese every once in a while is fine. A Big Mac every once in a while is fine. It's fine. For a birthday, you can have a cupcake.

HILL: Let the kid have a cupcake when it's your birthday.

O'BRIEN: Do you have children? You're going to let --

(LAUGHTER)

(CROSSTALK)

O'BRIEN: One child in the classroom --

HILL: It's their birthday. Put a tiara on or something. And everyone else has to watch eating carrot sticks.

LIZZA: No, carrots should not be a punishment.

(CROSSTALK)

LIZZA: They should feel good. We get a carrot.

O'BRIEN: We're moving on.

We're following this breaking news that terror alert near the site of the London Olympic park. Six people arrested. We've got the latest on that story coming up next.

And this young lady may be a household name in a few weeks. Her name is Lia Neal. She's aiming for the Olympic gold, the Olympic swim team's second black woman ever.

Here's your playlist, Vampire Weekend, "The Kids Don't Stand a Chance." We like that. You're watching STARTING POINT, back in a moment.

(COMMERCIAL BREAK)

O'BRIEN: Welcome back, everybody. You're watching STARTING POINT. We're starting with breaking news from London. Six suspected terrorists, five men, one woman have been arrested. It took place over two separate raids. One happened near London's Olympic park. Police used smoke grenades and a stun gun. Authorities say there was no imminent attacks or no imminent threat of attacks. The arrests are not related, we're told, to the Olympic Games, which will begin in 22 days. In a separate incident, a terror alert shut the M-6 toll heading into London. Armed police surrounded a coach bus. Police are now saying they're not treating this as a counterterrorism incident. No suspects were taken into custody.

For the rest of the day's top stories, let's get to Brooke Baldwin who has updates for United States. Good morning.

BROOKE BALDWIN, CNN ANCHOR: Good morning, good morning. Just into us here at CNN, weekly jobless numbers, 374,000 unemployment claims were filed for the first time last week. That is fewer than expected, down 14,000 from the week before. Tomorrow, we will be getting the big monthly job reports. Economists surveyed by CNNmoney.com expect 80,000 jobs were added in the month of June. And that's going to give us a broader picture of how the job market is doing. Again, those numbers tomorrow.

George Zimmerman could be finding out later today whether he'll get out of jail. The judge may rule today on whether the neighborhood watch volunteer may be allowed to post bond. Zimmerman is facing charges in the shooting death of an unarmed teenager, Trayvon Martin.

And one of the most wanted underworld figures in Mexico has been arrested in Los Angeles. He is believed to be a top operative in the La Familia drug cartel working out of the United States. Officials from the U.S. immigration service say they had confirmed her identity using her fingerprints. Mexico put a $375,000 reward on her. She is accused of cocaine and marijuana trafficking, also kidnapping and extortion.

The widow of former Palestinian leader Yasser Arafat wants his body exhumed. Suma Arafat is hoping to find out if he was poisoned after some test results on some of his personal belongings turned up high levels of radioactive substance. Arafat died back in 2004

A report is expected to be released any moment now detailing exactly what happened in the crash of air France flight 447. All 228 passengers and crew died when it plunged into the Atlantic Ocean more than three years ago. It took investigators two years to finally find the place's voice and flight data recorders some 10,000 feet below sea level. And that report, again, any moment now is expected to show a combination of instrument failure and pilot error caused the crash. Reports are circulating that Apple is ready to unveil a mini iPad this year. So if this is true, the device, they say, will be smaller than the iPad, bigger than the iPhone, right around eight inches. So add that as yet another device in our arsenal.

O'BRIEN: So a smaller iPad, isn't that an iPhone?

BALDWIN: It's in between an iPhone and an iPad, which is good for me because I've gone through a few iPhones.

O'BRIEN: Isn't it Samsung who makes those? Maybe that's why, they need the mid-sized market.

HILL: I'm going to buy it just because Apple --

O'BRIEN: It's just like, Apple makes it, I'm in.

They could make i-underwear, and I'd buy it. I-drawers, I'd buy it.

O'BRIEN: TMI.

(LAUGHTER)

O'BRIEN: Mitt Romney is changing his message and his campaign strategy it seems. Now says the health care law's individual mandate is a tax it's not a penalty. Romney's comments, directly, of course, contradict his top campaign strategist, Eric Fehrnstrom, who said the candidate agreed with the president that it was, in fact, a penalty. Romney spoke to CNN's Dana Bash.

(BEGIN VIDEO CLIP)

MITT ROMNEY, (R) PRESIDENTIAL CANDIDATE: The Supreme Court has the final word, right? They said it was a tax, didn't they? It's a tax, of course. That's what they say it is.

(END VIDEO CLIP)

O'BRIEN: Well, he's now aligned with the conservative voices in his party. They've been hammering the president for breaking his promise not to raise taxes on the middle class.

Michael Crowley is the deputy Washington bureau chief for "TIME" magazine joins us this morning. What does it all matter? The debate between penalty, is it a tax? Obviously there's a look from my perspective to see who is flip-flopping on the issue. And both seem to be changing their tune a little bit. But in the big picture for people at home, why does it matter?

MICHAEL CROWLEY, WASHINGTON BUREAU CHIEF, "TIME" MAGAZINE: Well, look, for people at home, I think they can choose to call it whatever they want. First of all, I think, virtually no people at home watching right now are going to deal with this one way or another. The estimates of the number of Americans paying anything as a result of this law is quite low. You have to be able to afford health insurance and choose not to get it and then you pay a pretty small penalty and it can be as low as $695, I think it tops out at 2.5 percent of your income.

So it's a question of campaign message and tactics. And I think what you had here was the Romney campaign came out in a way that left a lot of other Republican candidates high and dry. There was failure to coordinate the message, and I think conservatives were upset at the Romney campaign. So this is a typical problem you have when the standard bearer of the party has to be on the same page with all these other candidates around the country. Sometimes their interests diverge.

O'BRIEN: Right. So here was Alice Stewart when I spoke to her, and she used the words, "Well, he's made it quite clear," which I thought was ironic, I think, since it's been anything but clear. Here's what she said.

(BEGIN VIDEO CLIP)

ALICE STEWART, REPUBLICAN STRATEGIST: He made it quite clear he agreed with the dissent, but he understands that the final word is this is a tax, which is different than what we heard from the president. When he was arguing for passage of this, he promised repeatedly to the American people this was not a tax.

(END VIDEO CLIP)

O'BRIEN: In return, Ben LaBolt, representing as a spokesperson the Obama campaign, said this.

(BEGIN VIDEO CLIP)

BEN LABOLT, DEMOCRATIC STRATEGIST: Well, we're the ones that have been consistent here. We believe it's a penalty. And it actually includes the largest health care tax cut in history, $4,800 for 19 million Americans.

(END VIDEO CLIP)

O'BRIEN: Is this ultimately really a question of flip-flopping? Is that what this debate is over, am I a flip-flopper, no you're a flip-flopper?

CROWLEY: I don't know how much people are flip-flopping here. They're being evasive and trying to play the best short-term message that will, you know, be a political winner for them. But, you know, I think there is some irony here Where Democrats were running away from the idea it was a tax. Now they've been bailed out by this argument constructed by ironically Republican appointee, chief justice John Roberts, actually not the argument they wanted to make to the public, but it's what saved them. But you know, yes, they vacillate a little bit on their position.

But in both cases, each side has been clear on the policy. Obama will defend this law. He's happy it was upheld, and Romney wants to appeal it. It's not clear whether he'll be able to. But I think for, again, the average viewer at home. They're probably not going to pay any taxes or penalty as a result of this law. It's a clear choice, you vote for Obama, the law is going to stay in place and probably strengthen. If you vote for Romney, there'll be an attack to repeal it and he might succeed. That's the choice we're in now. The rhetoric is flip-floppy, but the positions are actually pretty clear.

O'BRIEN: Let me ask you about the feedback coming in from folks weighing in. Here's Allen West first.

(BEGIN VIDEO CLIP)

REP. ALLEN WEST, (R) FLORIDA: I think that the governor probably needs to look at who he has within his circle of advisers and probably get them to provide the right type of counsel and advice.

(END VIDEO CLIP)

O'BRIEN: OK, Tea Party favorite there. Then you have Rupert Murdoch, similar thing. He said "Drop his old friends from the team and hire some real pros. Doubtful." And Jack Welsh, a businessman, he tweeted -- look at all these guys tweeting. I find that really interesting. He says "Hope mitt Romney is listening to Murdoch advice on campaign staff playing in league with Chicago pols, no room for amateurs." What do you think of the inconsistencies? Or as you say everybody trying to get on the same page? Is that problematic or is this just --

CROWLEY: Well, you know, I don't know. I don't think there's a crisis in the Romney campaign at this point. However, sometimes these perceptions do lead to changes. And sometimes if a campaign is feeling pressure from party leaders and donors, sometimes they may not believe internally they have to make a change, but I think they do, sometimes, you know, throw somebody to the lions in a kind of sacrificial way.

But personally I don't think there's a big crisis. I think they weren't straight on this one. They goofed up. I don't think it's going to cause great lasting damage to the campaign. I will say an interesting thing about Romney's inner circle. It's a lot of people from the Boston state house, Massachusetts political pros who he has known since the early 00s. He's got some of those guys from down here in Washington. Not necessarily what you would expect, you know, for Republican nominee. And I wonder if all along there are some national Republican operatives who are wondering if those were the best people to be running a presidential campaign. So I think that's probably the conversation that's playing out behind the scenes right now.

O'BRIEN: I would agree with you. Michael Crowley, deputy Washington bureau chief, nice to see you, thank you.

CROWLEY: Nice to see you, thanks.

O'BRIEN: Still ahead on "starting point," the second African- American woman to ever swim for Team USA. We're going to introduce you to 17-year-old Lia Neal. Plus first reviews of Taco Bell's new gourmet menu items right here on our set. They're dropping off the food. We're going to take a bite. Stay tuned for the verdict. You're watching STARTING POINT. Back in a moment.

(COMMERCIAL BREAK)

O'BRIEN: Right I'm so excited for the Olympics. So you probably have not heard the name Lia Neal, but she's going to be one of the athletes to watch at this year's summer games. Lia placed fourth in the 100-meter freestyle finals on Saturday earned her a spot on the 400 freestyle relay team in London.

Lia does not have your typical swimmer's pedigree. Doesn't come from a swimming hub like California or Florida. From Brooklyn, trained in Manhattan and as you may know, that's not an area that produces a lot of Olympic swimmers.

She's also the second -- only the second African-American woman to make the U.S. Olympic swim team. She's going to be going for the gold on July 28th. And there is Lia, it looks like she just hopped out of the pool about two seconds ago.

Hey Lia good morning to you, nice to see you. Thanks for being with us. The race, I know, is in just about three weeks.

LIA NEAL, U.S. OLYMPIC SWIM TEAM: Hi good morning.

O'BRIEN: Good morning are you -- what are you doing besides obviously training. Are you -- are you anxious? Are you -- what are you doing at this point?

NEAL: So right now I have three days that the USA Team let us come home for. And so like yesterday I just got back like two days ago. So yesterday I spent pretty much the whole day with my entire family and today I'm going to spend like the day -- well, I just had morning practice so I'm going to spend the rest of the day like doing some more -- a few more interviews and having another practice in the evening and then spending some more time with the rest of my team. And by Saturday, I'll have to leave for Tennessee for a training camp.

O'BRIEN: Wow. So you're going to try to squeeze that all in. You know we were talking in my introduction to you about your -- your pedigree, meaning that when you think of areas where fine swimmers, elite caliber swimmers are created New York City is not sort of one place you think of. And also there are not a lot of African-Americans who are elite-level swimmers, as well. Why do you think you're different?

NEAL: I've just been so lucky to be given this opportunity to swim on Agua (ph) . For like -- I've been on the team since I was eight and I'm 17, so it's been nine years. And it's funny how I got started in the sport because it actually started when I was in -- when I was 6 years old. So when I was in the first grade and my classmates and friends they are taking swim lessons and they and their parents suggested that I also take swim lessons too. So that's how I got involved in it.

And then after two years, the swim instructor told me that I should probably join a swim team. So I got introduced to Agua Green (ph) like -- I think after two years swimming on it, I was -- I was put on to the "Swim for the Future" scholarship.

HOOVER: Wow. Wow.

NEAL: And they've been, yes. They've been helping me ever since.

O'BRIEN: So you know the percentage, 70 percent of African- Americans cannot swim. That's a huge number. And it's compared to white kids at 42 percent of white kids cannot swim. What do you think will change that number? Do you think if you're able to do well at the Olympics you literally could be the difference between a kid who is a kid of color saying I'm going to learn to swim because I want to be like Lia?

NEAL: Maybe. I've been asked like if I'm flattered by the fact that some people look up to me as a role model and if I can represent the U.S. while at the Olympics and like -- and hopefully influence other kids to -- like join the sport or start taking swim classes, then that's -- that's like -- that will be really great. Like because I think everyone should be water safe and if not that, then like -- it's -- it's great that anyone is just joining the sport for fun or hopefully like swimming competitively.

O'BRIEN: Lia Neal. Congratulations to you. Congratulations for making the team. We're going to be excited to watch you in the Olympics from London and I know you're already a role model. My kids are so excited to watch you compete.

So thanks for being with us this morning, we appreciate it. Enjoy your last few minutes really.

NEAL: Thank you.

O'BRIEN: Hanging out with your family.

NEAL: Yes.

O'BRIEN: Coming up next, the first bite of Taco Bell's new upscale menu is being launched today. You're going to get to see it here on STARTING POINT. We're back in a moment.

(COMMERCIAL BREAK)

COSTELLO: So we told you about this last month. Today is the day that Taco Bell is going gourmet. You remember we spoke to celebrity chef Lorena Garcia. I've done a documentary on her a couple of years ago. And she is the one who helped Taco Bell develop the new upscale Cantina Menu, trying to give the Chipotle a run for its money.

So today we get the first bite. I like spicy sauce so --

HOOVER: It is delicious. I just tried it, it taste excellent if there's cilantro in the rice it's -- and it is good, right?

O'BRIEN: Remember, she told us, like she's insane about cilantro. She kind of I think she --

(CROSSTALK)

HOOVER: Which I love cilantro. Although there's genetically, some people just don't have their receptors in their palate to be able to take cilantro. And -- but it's delicious. It's very flavourful. It's healthy --

(CROSSTALK)

O'BRIEN: I definitely just like food. Being served food.

HOOVER: And that they are just telling us too, is you know sometimes you go out to Chipotle and you can get it without the rice or without you can get a burrito. You can do that at Taco Bell too. You can get -- they'll customize it just however you want.

LAMONT HILL: You can still get the old-school taco bell, right? Because sometimes (inaudible) restaurant with the drive thru --

HOOVER: You can still get the non-healthy taco bell.

O'BRIEN: I like it. Two thumbs up.

LIZZA: These chains are trying to push healthier food. I mean that's -- you know, that's a good thing.

LAMONT-HILL: See? Like I was saying earlier.

HOOVER: Is that what you were saying earlier, Marc?

O'BRIEN: It all comes back around you.

LAMONT HILL: That's right.

O'BRIEN: All right. So thumbs up? Thumbs down?

LAMONT HILL: Thumbs up.

LIZZA: Pretty good, you know.

HOOVER: Two thumbs up. This is delicious.

O'BRIEN: We basically also just like having food. So anybody else who wants to come and drop off food first thing in the morning, we'd love it.

"End Point" is up next. We're back in a moment.

(COMMERCIAL BREAK)

O'BRIEN: Time for "End Point". Who wants to start? Marc's eating. So don't start with him. HOOVER: I think we're going back to, you know, Jack Abramoff, who we had on at the beginning of the show. He's making this argument that somehow the ruling Supreme Court Justice John Roberts is going to open the flood gates for taxing people.

But I think what exactly it's done and what conservatives say maybe he was being too cute by half (ph) -- maybe he's opened the door for taxing, but politically, how viable is that? Nobody -- (inaudible) -- politically you can't get taxes through. And by restraining the commerce clause, this is the first time -- we think many conservative justices I've talked to suggests that this will actually open the flood gates for more cases that will allow towards a narrowing of the commerce clause. Actually, restricting of government, more limiting of government.

O'BRIEN: Ryan?

LIZZA: Just quickly, big news of the day I think this is this "Wall Street Journal" editorial attacking Romney from the right.

O'BRIEN: Yes, that was very harsh. And his team really.

(CROSSTALK)

LIZZA: And his team. And this is a recurring thing. Every month or so there is this eruption from a conservative base and Romney sort of scurries to take care of it. It happened recently with the (inaudible). It happened with the Mark Rubio VP vetting story. And so the long-term story of Romney having trouble with his base is not going away.

O'BRIEN: Mark, guess what? You don't get to do any. You went very long. You can keep eating, though.

LAMONT-HILL: I want to keep eating it, that's why.

O'BRIEN: Coming up tomorrow on "STARTING POINT" we're going to live in New Orleans as the Essence Music Festival gets going. It's one of the premiere music festivals that celebrates black culture and music. We have an all-star line-up.

Comedian Jay Thomas -- he's from New Orleans. He's going to join us.

Singer and actress Vanessa Williams will be with us. New Orleans mayor, Mitch Landrieu will be our guest. And Louisiana congressman, Bill Cassidy also talking to us and many, many more.

"CNN NEWSROOM" with Don Lemon begins right now. We'll see you from New Orleans tomorrow.

Hey, Don, good morning.