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President Obama Addresses Fiscal Cliff; The Fiscal Cliff & Your Finances; Thousands Flee Fighting In Syria; Defiant Iranian Response; Returning Purple Hearts; Nave SEALS Charged; India's Cafe Culture; Obama Addresses Fiscal Cliff

Aired November 9, 2012 - 12:00   ET

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


SUZANNE MALVEAUX, CNN ANCHOR: Welcome to NEWSROOM INTERNATIONAL. I'm Suzanne Malveaux. Here's what's going on right now.

President Obama speaks to the nation that is teetering on the edge of a financial crisis. About an hour from now, the president is going to talk about his efforts to avoid the so-called fiscal cliff. That is the massive spending cuts and tax hikes going to take -- it would actually affect 90 percent of Americans. We're going to bring you the president's remarks live. We're also going to break down what's at stake for the economy, as well as your personal finances.

Just three days after celebrating his re-election, President Obama confronting a looming financial emergency. Now, the president and leaders of Congress have just 53 days to come up with a solution to avoid going over the so-called fiscal cliff. What are we talking about? It's a combination of automatic spending cuts to the tune of $1.2 trillion over the next 10 years. Tax increases for 90 percent of Americans.

I want to bring in our chief White House correspondent Jessica Yellin to talk a little bit about this.

And, Jessica, you bring up a very good point here. You say the president, you know, can be critiqued and criticized for being vague on some plans during the second term campaign, but he's been pretty clear, right, on his stance regarding the fiscal cliff and his bottom line. Tell us what it is.

JESSICA YELLIN, CNN WHITE HOUSE CORRESPONDENT: That's right, Suzanne. He has laid out that his negotiating terms include the following. He is willing to compromise and raise some revenue by altering some parts of Medicare and Medicaid on entitlement reforms. He is also insistent that some revenue be raised by changing the tax rates. You know those Bush tax cuts expire at the end of this year, and he has said that the wealthiest Americans must pay more. We've heard it on the campaign trail over and over. One thing he's hit is that those who make $250,000 and more must pay more. Maybe he'll move that number. Who knows. But he did say quite clearly, the White House has, that they would veto any bill that does not include a tax increase for the wealthiest Americans, Suzanne.

MALVEAUX: And, Jessica, we heard Boehner, John Boehner, actually just within the last 30 minutes or so, talking about that there are ways to raise revenue and spending cuts as well. That all options are on the table. Do you think the White House sees that as some sort of opening, if you will, to negotiations?

YELLIN: I think that both sides are hopeful that there is wiggle room for negotiations. Everybody knows that something has to get done because the economy will take such a serious hit if it doesn't. Here is where I see the battle line right now. Republicans I'm talking to on Capitol Hill tell me that they are willing to raise revenue. That's a big change. They're willing to raise revenue, but without a change in the tax rates.

So the president has said that the highest earning Americans have to pay more. Congressional Republicans saying no change to the tax rates. So that's a big difference of opinion. They'll have to find a way to bridge that divide. But beyond that, they're willing to compromise on entitlements. They're willing to find cuts. So there does seem to be room for compromise. There's also a willingness to get something done and avoid the hit to the economy.

Suzanne.

MALVEAUX: Something else that struck us when we were listening to Speaker Boehner was the one thing he said. He said, OK, I'm willing to work with the president, but then he also seemed to put the onus, the negotiations, on the president, and he said it really was the president's turn to lead. I want you to listen to this.

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER (R), SPEAKER OF THE HOUSE: This is an opportunity for the president to lead. I think it's important for us to come to an agreement with the president, but this is his opportunity to lead. On an issue this big, the president has to lead. I think members on both sides of the aisle want to resolve this issue. The president -- the president's going to have to lead here.

(END VIDEO CLIP)

MALVEAUX: All right, Jess, by our count, that was four times, I think, and it ranged from tax reform to immigration reform as well. What do you make of that? I mean is he basically saying this is up to the president to lead? I mean doesn't he have a responsibility within the GOP to move the needle here?

YELLIN: Well, this is a bit of a strategic political tug-of-war that's going on. Obviously, the president is the leader of the nation. He has an obligation to lead. But he also has a bit of the political edge now because he has won re-election on the promise that he will raise these taxes. And so there is some push-pull going on, on the politics.

One thing I would point out, I've said this before, Suzanne, the one partner in all of this who has been absent that both sides want to lead is the business community. And they want leaders in Wall Street and CEOs of major corporations to step up and speak publicly to say, we want this to get done. And what they say privately is, we're willing to see a little tax increase if that's necessary. If that's how they feel, they want them to say it publicly, Suzanne.

MALVEAUX: All right, Jessica, good to see you. Thank you.

We're throwing around this term, fiscal cliff, but really it's a manmade crisis that's going to affect everybody, all our finances. And economists say the combination of these massive spending cuts and the tax increases could actually push the country back into a recession. Ali Velshi, he's in New York to talk about what it means for all of us.

And, first of all, Ali, if you could, break down the scenario of what this fiscal cliff entails.

ALI VELSHI, CNN CORRESPONDENT: Yes, it's been (ph) in my existence, by the way, Suzanne, that all the stuff I have to talk about have the worst names going -- sequestration and fiscal cliff and credit default swaps. Let me tell you what this means. The point is, it's a cliff that if we go over, growth drops very dramatically because government spending -- a lot of money is pulled out of the economy, demand drops, people get unemployed, they don't pay taxes and the economy goes from 2 percent growth right now where it is, to about negative 1.5 percent growth. That would be a recession.

Let me tell you what it means, though, to people. As that car gets over that cliff, there will be an average increase, according to the Congressional Budget Office, of $3,500 per household in tax increases. This is the spending cuts. This is the Bush tax cuts going away. This is the alternative minimum tax patch going away. The payroll tax holidays. $3,500 per household increase.

$109 billion in automatic across the board spending cuts will take effect. Half of them will be in defense. Half of them will be in non- defense. And the Congressional Budget Office, the non-partisan body, says millions of jobs will be lost. A million next year alone. Unemployment will jump to 9 percent next year. And, of course, we'll be back in that recession.

Now, in fairness, Suzanne, nobody -- most thinking people don't think we'll get there, but most thinking people thought we'd get a resolution to the debt limit earlier than we did too. So, you know, faith in Washington doing the right thing is a little bit low, but it does sound like, from the conversation you just had with Jessica, that everybody's taking it quite seriously.

MALVEAUX: And talk specifically about the tax cuts that are going to expire. How much are most Americans probably going to end up paying in increased taxes?

VELSHI: Well, it all depends because the reason this is a fiscal cliff is, it's not a plan. It's a bunch of stuff that came together at the same time that when it all expires at the end of the year will have this net effect of making people pay more money. So it's hard to tell because President Obama wants the tax cuts to expire for everybody but -- only for the rich, so everybody else gets an extension. The Republicans say everybody's got to get it. So we're fighting over the 2 percent highest income earners who will see an increase in their taxes.

But basically tax rates will go from a low of 10 percent to a high of 36 percent right now to a new system where the lowest would be 15 percent and the highest would be 39 percent, which, by the way, is where they were, President Obama likes to point out, when Bill Clinton was president.

MALVEAUX: All right, Ali, thank you. We'll be watching it closely.

A rare public show of emotion from President Obama. He was moved to tears when he thanked his campaign staff the day after he was re- elected. Watch.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: When you guys (INAUDIBLE) means that the work that I'm doing is important. I'm really proud of that. I'm really proud of all of you. And -- and for you to stand (ph) up (ph) --

(END VIDEO CLIP)

MALVEAUX: Here's more of what's ahead on CNN International.

Thousands escape the violence in Syria and flood across the border into neighboring Turkey, setting off another humanitarian crisis.

And with the election finally over, the American people are ready for specifics on how Washington plans to avoid the so-called fiscal cliff. We're going to hear from the president next hour with his plan.

(COMMERCIAL BREAK)

MALVEAUX: The numbers are astounding. In just 24 hours, more than 11,000 people have crossed the board from Syria into either Turkey or Jordan. That is 11,000 people. They're trying to escape from scenes like this one.

(VIDEO CLIP)

MALVEAUX: Rebels in a border town setting off rockets to fight government forces. So far the war on Syria has left more than 35,000 people dead. Ivan Watson, he's joining us live from Istanbul, Turkey.

And, first of all, Ivan, you look at these pictures. We saw one of these battles that are taking place in Syria. The fighting seems to be spilling across the border now. If those rebels are successful in maintaining the control of the border towns, what does that mean in terms of where this civil war goes?

IVAN WATSON, CNN CORRESPONDENT: Well, first of all, that gives an open life line out to Turkey, which has supported the armed and unarmed Syrian opposition. It gives them easy access to Turkish hospitals, to getting their members back and forth, to get refugees out to escape Syrian regime offensives. For the past six months, the rebels have bit by bit, they've been making cheese of Syrian government's control of this long border between Syria and Turkey, grabbing control of different other border towns and crossing pounds.

What we've seen over the course of the last 48 hours (INAUDIBLE) Syrian side of this border town with the rebels claiming victory on Friday. We can't confirm that. But also pushing more than 8,000 Syrians, fleeing the fierce fighting across the border into Turkey just at that one place. And also a lot of gunfire right across the border, Suzanne, that has wounded at least seven Turkish citizens on the Turkish side of the border.

MALVEAUX: So, Ivan, how does Turkey deal with this? I mean clearly they are inundated with refugees and now you have the fighting that has spilled over into -- from its neighbor.

WATSON: It's not the first time the fighting has spilled over in recent months. Several Turkish citizens, at least five, were killed by Syrian artillery strikes in another similar border village. And now whenever Syrian government troops fire into Turkey, the Turks fire back with their artillery. That's one measure they've taken.

But the refugee crisis is much more troublesome because you now have officially at least (INAUDIBLE) Syrian refugees in refugee camps in Turkey. Tens of thousands of additional refugees living outside of camps. And it is pushing the Turks to the limit. At some points they've been forced to close the border leaving thousands of Syrians in dire conditions waiting for camps to be built here in Turkey, waiting at the fence so that the refugees can come in.

So it's a very difficult situation. And it's really starting to scare Turks who are afraid they could get dragged into a war with their Syrian neighbors.

MALVEAUX: Yeah, it is a scary situation on both sides.

Thank you very much, Ivan.

Iran now taking a pot shot at an American drone. The question now, is it an act of war? We're going to get the latest on this dangerous stand-off.

(BEGIN VIDEO CLIP)

MALVEAUX: It's a defiant reaction from Iran on its attack against an unmanned U.S. drone. The incident happened last Thursday in the Persian Gulf.

The Pentagon says two Iranian fighter jets fired on the U.S. Predator surveillance drone. The drone was not hit and returned to its base.

Now, an Iranian news agency quotes a top Iranian military official as saying his country took "decisive action" against the drone.

Another top Iranian general tells the news agency, quote, "If any foreign planes try to enter our country's space, our armed forces will confront it." The Pentagon insists the drone was in international airspace east of Kuwait. Now, the Pentagon spokesperson asked -- was asked if this attack amounts to an act of war. Here's what he said.

(BEGIN VIDEO CLIP)

GEORGE LITTLE, ACTING ASSISTANT SECRETARY OF DEFENSE FOR PUBLIC AFFAIRS: I'm not going to get into legal labels.

The reality is that we have a wide range of options, as I said before, to protect our assets and our forces in the region, and we'll do so when necessary.

We have communicated to the Iranians that we will continue to conduct surveillance flights over international waters, over the Arabian Gulf, consistent with longstanding practice.

(END VIDEO CLIP)

MALVEAUX: Barbara Starr broke the story and she joins us live from the Pentagon.

So, Barbara, we know last December a drone went into Iranian airspace, crashed. The Pentagon says this Predator drone never entered Iranian territory.

You've got the details. What do we know?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, Suzanne, what the Pentagon is saying is the drone was 16 miles off the coast of Iran. The international limit, of course, is 12 miles. So, close, but not that close.

They are insisting that this was a routine surveillance mission. When these two SU-25 jets came up and started firing at the drone.

In fact, operators turned the drone away so it would leave this area and the Iranian jets pursued it.

One of the reasons this is so concerning to the U.S military is they say that these jets belong to Iran's Revolutionary Guard corps. This is the aggressive arm of the Iranian military, not the regular forces, if you will.

And they have caused trouble in the past, so there's a lot of concern that this is an indication perhaps that these particular forces are looking for trouble and not necessarily under the direct control of the central military forces inside of Iran.

Suzanne?

MALVEAUX: So, you've got aggressive behavior on that part, and this has not been the first time.

Back in January you saw these Iranian boats approaching U.S. military ships at the Strait of Hormuz in the Persian Gulf. A lot of folks thought that perhaps Iran is trying to mess with those crucial oil shipping lanes in the Gulf there.

What is the concern for the Pentagon now?

STARR: Well, you know, that's exactly why these drones are out there conducting this surveillance. It's absolutely critical in the view of the United States and the Gulf allies, actually, of course, to keep the oil shipping lanes open, free, no problems on the waters, certainly no problems in the airspace overhead.

The concern is that Iran, if it decided to take some military action, would begin in the Gulf by mining those waters, so the drones are helpful in keeping a wide surveillance from above, watching the waters, making sure nobody is putting out any mines.

It's all about the oil shipping lanes and the economy in this region. Nobody wants to se a shooting war. Nobody wants to see any instability in the region.

MALVEAUX: All right. Barbara, thank you for breaking the story, and obviously, giving us the latest details. Appreciate it.

This guy, he literally broke his back serving his country. Well, now, he is helping other vets put their lives back together.

(COMMERCIAL BREAK)

MALVEAUX: This weekend, Americans celebrate Veterans Day, paying tribute to the men and women who have served this country.

One National Guard captain is showing his appreciation to fellow comrades all year long by finding and returning lost Purple Heart medals to the heroes who earned them on the frontlines.

Take a look.

(BEGIN VIDEOTAPE)

CAPTAIN ZACHARIAH FIKE, U.S. ARMY: Ralph sacrificed more than just his service to his country. He sacrificed his blood.

BARBARA MACNEVIN, DAUGHTER OF PURPLE HEART RECIPIENT: My dad, Ralph W. Bingham, he was a veteran of the First World War, the big war.

FIKE: For that sacrifice, he was awarded our nation's oldest medal, the Purple Heart.

B. MACNEVIN: He lost his right leg fighting in France, and he received a Purple Heart for that. We had it for many years in my home where I grew up.

ROBERT MACNEVIN, GRANDSON OF PURPLE HEART RECIPIENT: Unbeknownst to us, it was lost in some manner in one of his moves later in his life.

FIKE: I found Private Ralph Bingham's medal on craigslist.

This has been a calling of mine for about the last three years. I locate lost or stolen medals.

These are all the Purple Hearts that I'm currently working. Some I've located the families. Some I haven't.

I do these on my own time. I don't consider it a hobby. It's more of a calling and an honor.

A lot of times they put it in a shoebox under the bed, and it gets misplaced, and they lose it.

I myself have a Purple Heart. It hangs on the wall in my mother's home and I would hope that one day, if my medal was lost, someone would do the same thing for me and my family.

It is truly an honor to bring Private Bingham's Purple Heart home to his family and I am, again, truly humbled by his sacrifice.

It is a great honor to bring home his Purple Heart. Thank you very much.

B. MACNEVIN: The medal means a lot to me, especially, and to our family.

FIKE: So, that's it. That's the Purple Heart.

B. MACNEVIN: I remember seeing it as a girl growing up. You know, my mother kept it in a certain spot in the dining room.

FIKE: To see how appreciative they were was ju8st a tremendous feeling.

I'm glad it is home to where it belongs, and I'll move on to the next medal.

(END VIDEOTAPE)

MALVEAUX: And don't miss "AC 360's" Veterans Day special, "The Battlefield at Home." It airs this Saturday night at 8:00 p.m. Eastern.

President Obama just won four more years in office and his to-do list already, as you can imagine, jam-packed, especially when it comes to national security.

We're going to take a look at the global hot spots and potential threats that our country is facing right now.

(COMMERCIAL BREAK)

MALVEAUX: President Obama has four more years to tackle some of the most complex world challenges, like curbing Iran's nuclear ambitions before Israel strikes, trying so stop the bloody civil war in Syria that has killed more than 32,000 people, and dealing with terrorism through deadly drone strikes.

So, how does he make headway? CNN reporters, Elise Labott, Jill Dougherty and Suzanne Kelly, they're our experts on these topics. Together, this power team wrote a column on CNN.com's Security Clearance blog about the president's world of challenges.

Great to see you guys all at once. Let's tackle some of this.

Elise, I want to start with you. Let's talk Syria. More than 32,000 have died in nearly the two years of fighting. In your article, you say some officials have suggested a second Obama administration might take a muscular approach to the crisis.

What does that look like?

ELISE LABOTT, CNN FOREIGN AFFAIRS CORRESPONDENT: Suzanne, it's a couple of things.

I think, first of all, you could see a more robust effort to the Syrian armed rebels with lethal aid. The administration has avoided doing that so far, but they realize that the Islamists are all the ones with the guns and the money and, therefore, they would have the power in a future Syria. So, I think they might aid them a little bit more.

I also think that there could be support for a no-fly zone. You've seen, in recent days, Turkey has said that it could put Patriot missiles on the border with Syria because of all these skirmishes.

So, I think if Turkey were to take the lead here, the U.S. could support, eventually, a no-fly zone to protect some of those Syrian armed rebels.

And, lastly, I think the opposition is really has been un-unified and fragmented. The administration is supporting Qatar's efforts and Turkey's efforts today in Qatar to get together a conference where they're trying to get a more unified opposition which will take into account some of those Syrians that are dying and fighting on the ground and would -- are actually doing the work to prepare for a new Syria.

MALVEAUX: Elise, you also talk about Iran. Today, we just learned that Iran's military shot down a U.S. spy drone last week and, throughout the campaign the Israeli government was criticized for not pressing Iran more on its nuclear ambitions.

What is the president -- what are his options here?

LABOTT: Well, I think, Suzanne, and even his former Mideast advisor, Dennis Ross, yesterday just said that 2013 is going to be a decisive year for Iran.

If you look at the advancement of Iran's nuclear program, if you look at the sanctions that are hurting Iran, and you also look at Israel's threats to launch military action, these are all signs that President Obama has to really work with Iran for a deal. There's been some talk about possibly the U.S. and Iran holding talks in the next couple of months. Really has to make sure that Iran is willing to strike a deal to suspend its nuclear uranium enrichment in order to get this going.

MALVEAUX: OK.

Jill, I want to bring you in here. You were the Moscow bureau chief for many, many years here. You know all the things about Russia here.

The president was re-elected and you write that the Russian president, Vladimir Putin, congratulated him on a phone call, but you say it doesn't mean that the relations between these two are so smooth.

You write that "Moscow and Washington are still at odds over how to end the carnage if Syria and Russia still considers U.S. plans for a European missile defense system a threat."

What is the main problem with this, and how do they overcome that defense system here to find some sort of breakthrough?

JILL DOUGHERTY, CNN FOREIGN AFFAIRS CORRESPONDENT: Well, you know, remember that conversation between President Obama and Dmitri Medvedev who, at that point, was the president about a year ago in which he said, look, I need -- give me some slack.

In other words, after the election, I'll be able to do more, and he, indeed, asks that Mr. Medvedev take that message back to Vladimir, which Mr. Medvedev did.

So, the whole idea was -- I mean, really, one of the sticking points is missile defense, that U.S. plan for missile defense in Europe. The Russians are vehemently opposed to it still, and they consider it a threat.

So, many of the people that we're speaking to may need more clarity on the U.S. side about what the intentions are might help to kind of break free this logjam because, actually, both countries could theoretically work together on that.

The other thing would be arms control. They already did the new START deal. Maybe they could do more. Maybe they could get down to, let's say, 1,000 weapons and their delivery vehicles.

MALVEAUX: All right.

DOUGHTERY: That is a possibility.

MALVEAUX: OK, thank you, Jill.

Suzanne, let's talk terrorism. In the article, you write here, "Counterterrorism officials also believe that Al Qaeda in the Arabian Peninsula, based in Yemen, is continuing to plot against Americans. That is in no way expected to slow down in the near future."

So, how does the Obama administration that's now relying heavily on drones to take out al Qaeda leadership, particularly in Pakistan and Yemen, how do they deal with this terrorism threat?

SUZANNE KELLY, CNN INTELLIGENCE CORRESPONDENT: Well, I don't think there's going to be any indication that the drone program is going to slow down. It's been a very effective tool for the Obama administration, despite how you feel about it, and targeting that top- tier of leadership among AQAP in Yemen has been really important.

Now, the critical question is going to be the bomb-maker. You'll remember, Suzanne, back in May this very highly-skilled bomb-maker who works for AQAP developed a bomb that was almost undetectable and they were planning to use it to bring down a U.S. airliner.

So, here's the dangerous part of this. How many other people has that bomb-maker trained? That's what they're trying to find out right now, and that's going to probably determine a lot of how the U.S. proceeds in the future against this group.

There's another group, as well, AQIM. It's another affiliate. They're located in North Africa. It's another top concern for the Obama administration in term two because they also are very active in targeting people.

The difference between AQAP and AQIM, AQIM is more of a local organization. They don't really target Americans where they live, but they're conducting a really high number of kidnappings, ransoms are way up, and they're making a lot of money to continue to plot what they're plotting.

MALVEAUX: All right. Suzanne, Elise, Jill, thank you to all of you. A powerful team there. Appreciate the ladies in the house. Good work as always. Smart, intelligent conversation. Thank you.

Reminder, President Obama going to speak to the nation that is now teetering on the edge of a potential financial crisis. Going to bring it to you as soon as it starts in about 30 minutes or so.

(COMMERCIAL BREAK)

MALVEAUX: He started his career as an oil executive. Well, now, he's going to be the new archbishop of Canterbury.

Justin Welby was appointed this morning in London to become the spiritual head of the world's 80 million Anglicans.

Currently, he is the bishop of Durham, a post he has held for just a year. Welby is an opponent of gay marriage, but he said he would listen attentively to the concerns of the gay community.

He is also a big supporter of female archbishops.

(BEGIN VIDEO CLIP)

JUSTIN WELBY, APPOINTED ARCHBISHOP OF CANTERBURY: This is a time for optimism and for faith in the church. I know we are facing very hard issues In ten days or so, the general synod will vote on the ordination of women as bishop. I will be voting in favor and join my voice to many others in urging the synod to go forward with this change.

(END VIDEO CLIP)

MALVEAUX: Welby will be enthroned as archbishop of Canterbury on March 21st.

Tomorrow, people around the world will celebrate Malala Day in honor of Malala Yousufzai. She is the 15-year-old Pakistani girl who was shot and critically injured by Taliban militants simply for promoting a girl's right to education.

Malala is recovering in a hospital in Birmingham, England. She still needs to have surgery on her skull and her jaw, but her dad says she is making progress. Good for her.

The Navy is now reprimanding seven members of the elite SEAL Team 6 for working on a video game. A navy official says the SEALs were paid consultants for the "Medal of Honor" war-fighting video game.

An official says the SEALs are charged with dereliction of duty for revealing classified material and showing their official combat gear, which is not allowed. They're going to lose pay for two months and no longer be eligible for promotions.

Worlds collide as coffee culture comes now to India.

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MALVEAUX: American coffee giants like Starbucks tapping into India's booming cafe culture. But in a country where tea is deeply rooting in the culture, do they really stand a chance? Our Mallika Kapur, she went to Mumbai to find out.

(BEGIN VIDEOTAPE)

MALLIKA KAPUR, CNN CORRESPONDENT (voice-over): Most people in India wake up to this every morning, a cup of chai, steaming, sweet, and milky.

HOWARD SCHULTZ, CEO, STARBUCKS: I think the lines are already starting. People are calling.

KAPUR (on camera): There is a buzz?

SCHULTZ: Yes, there is a buzz.

KAPUR (voice-over): One man believes that's changing. Howard Schultz, founder and CEO of the world's largest coffee chain, has partnered with the Tata Group (ph) to open Starbucks in India. The first one launched in Mumbai in October.

SCHULTZ: There's a tremendous amount of coffee that's being sold and served in this market. We will sell very high quality tea and chai tea in our stores, but I suspect that we're going to do extremely well here.

KAPUR: Though India's domestic coffee consumption is increasing on an annual basis, it's still not very much.

KAPUR (on camera): In India, the per capita consumption of coffee is 82 grams. That's less than what's in this little packet. To put it in context, in the United States, it's four kilos. And that's all of this.

KAPUR (voice-over): But in India, coffee isn't what draws people to a cafe.

ARVIND SINGHAL, CHAIRMAN, TECHNOPAK ADVISORS: These cafes are (INAUDIBLE) place where people go to meet. Coffee is incidental. Sometimes people ask this question, but India doesn't have a coffee culture. It doesn't matter. You could be selling lemonade in Starbucks in India, and people still come.

KAPUR: Modern, clean, aspirational (ph). Cafes are particularly popular with India's youth.

UNIDENTIFIED FEMALE: In Mumbai, especially because the (INAUDIBLE) is so much and there's so much population, there's just no place to hang out, you know?

KAPUR: India's economic growth means people have more spending power. They're travel abroad, developing new tastes and adopting western lifestyles, making the cafe culture a part of India's social fabric. According to retail consultancy Technopak, total revenue from the cafe market is expected to grow by 13 to 14 percent over the next five years to touch $410 million. The current market leader, a domestic brand, Cafe Coffee Day, has more than 1,000 stores across India. It says it plans to get even bigger.

K RAMAKRISHNAN, MARKETING PRESIDENT, CAFE COFFEE DAY: We are looking to be a 2,000 cafe brand by the end of 2014. Which would mean that roughly we need to add one cafe every working day. And we're working towards that.

KAPUR: International brands too are pursuing this market of a billion people. Costa is here. Dunkin' Donuts entered India in September. The latest entry, Tata Starbucks.

R. K. KRISHNA KUMAR, VICE CHAIRMAN, TATA GLOBAL BEVERAGES: I think the offering of this Starbucks partnership and this store is a common (ph) on India's potential. Then you open newspapers and television channels, you only see or hear or read about the sad things that happen in India. This is about the bright side of India. This is about the expanding market here.

KAPUR: A market that's still predominantly focused on tea. India is one of the largest producers and consumers of tea in the world. And there's a campaign brewing to declare it the country's national drink. The new cafes haven't impacted the stream of customers at (INAUDIBLE) humble tea store, where he sells 1,000 cups a day for 5 cents each. He says it's not the price. Tea is a habit in India. Plus, it just tastes better than coffee.

Mallika Kapur, CNN, Mumbai.

(END VIDEOTAPE)

MALVEAUX: Public awareness campaign in South Australia certainly getting people's attention. Check it out. A closer look. This is a wrecked car, but it is actually 17 painted men and women stacked on top of each other. It is part of an awareness campaign to get drivers to slow down. The underlying message is that when cars crash, it is really people who pay the price. Pretty cool.

Well, with the election behind him, of course, president getting down to business. He's got less than two months to find a compromise with this Republican counterpart before the country goes off the fiscal cliff. And, of course, are taxes likely to go up? We're going to hear from the president live in just a few moments.

(COMMERCIAL BREAK)

MALVEAUX: It's a financial disaster in the making that could send the U.S. economy plunging back into recession. We're talking about the so- called fiscal cliff. It is a combination of automatic spending cuts to the tune of $1.2 trillion over the next 10 years in tax increases for 90 percent of Americans. We're going to hear from the president shortly about the economy and the fiscal cliff. He is scheduled to speak at 1:05 Eastern. We're going bring you the remarks live, of course. But right now correspondents here for some pregame analysis. We've got Ali Velshi and Christine Romans in the house, our money team. We've got Wolf Blitzer and chief political analyst Gloria Borger in Washington. Also, chief White House correspondent Jessica Yellin. She is actually at the White House making her way into the East Room where she is going to be covering that statement.

Wolf, I want to start off with you and Gloria, first of all. This event in the East Room, there are going to be middle class folks behind him. About 15 or so, we are told. And these are the folks that would be impacted by a tax increase. He's not taking any questions.

So, they already won. This is not a campaign event here. If this is really about governing, why do you think we are seeing this kind of setup here, which really looks more like a rally and not necessarily a press conference?

WOLF BLITZER, ANCHOR, "THE SITUATION ROOM": Well, it's part of the posturing that's going to be going on. It's going to be really intense over the next six, seven weeks because the deadline is December 31st. If Congress doesn't pass legislation and the president doesn't sign it into law, the economic situation will deteriorate. There will be this fiscal cliff situation that will unfold.

So you saw John Boehner, the House speaker. He was out this morning. He was at a news conference. He was laying out his opening position in general terms. The president presumably will do the same thing with his statement today. It's -- and then it's going to be crunch time. Their respective aides are going to get into these negotiations. The budget director, the White House chief of staff, the treasury secretary, there will be all the leading Republicans and Democrats on The Hill.

They had to get Democrats on board too because certain things the president might be amenable too, but liberals on The Hill might not want to do. So this is going to be really intense, but the stakes are enormous. If they don't do anything, as you point out, Suzanne, tax rates are going to go up for everyone and the sequestration will go forward. These automatic spending cuts for domestic programs and for defense spending. They will go into effect as well. So it's a big issue.

MALVEAUX: Gloria, I want to bring you into the conversation. We're looking at pictures. Obviously the East Room getting set up there for this statement. It is not a press conference. It is simply going to be a statement here. I guess they'll do the tough negotiating behind the scenes, if you will, and not tip their hands either way publically.

But we did hear from Speaker John Boehner just within the last hour or so making his case for why it is that wealthy Americans should not have their taxes go up. Here's what he said.

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER (R), SPEAKER OF THE HOUSE: The number one issue in the election was about the economy and jobs. Everyone wants to get our economy moving again. Everyone wants to get more Americans back to work again. Raising tax rates will slow down our ability to create the jobs that everyone says they want.

(END VIDEO CLIP)

MALVEAUX: So, Gloria, there was something that stood out that he said. And I don't know if we're -- if I'm making too much a big deal about it, so let me know here. He says that everything on the revenue side and on the spending side has to be looked at. So is that a window? Is he opening up an opportunity here for compromise and for negotiations?

GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: Sure. I think he is. I mean, these two men have had a grand bargain almost once before, and I think that what John Boehner is saying is, look, let's not rule anything out except -- except what he is saying is the top rate cannot go above 35 percent.

And, for example, today, Chuck Schumer, senator from New York, floated an idea in "The New York Times," which would say, well, maybe we could keep that rate at 35 percent if, in tax reform, we cap deductions for the wealthy so that we knew in tax reform the wealthy would end up paying more and we could get the revenue there. So again, Suzanne, I think each side is set on the tax rate, but I am seeing a little bit of wiggle room early on, and that's because they know they have to get this done. MALVEAUX: Got to get it done. Let's bring in Christine Romans.

Christine, explain to us why it is so important that they've got to get this thing done. What is this fiscal cliff that folks are talking about?

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Well, it's a lot of different things that are, frankly, staggered over the year. But it begins at the beginning part of the year with, you know, an expiration of the Bush tax cuts. I mean that means taxes rise for everyone. It's spending cuts. The so-called sequester. I mean that's going to be 8 to 10 percent off of the budget of just about every agency you could imagine. The CDC, border patrol. I mean every agency head is trying to figure out what it would mean for them.

Defense sector (ph) cuts. The alternative minimum tax. The payroll tax holiday. I mean one thing after another. Just about every kind of financial thing that affects you and your family. All kinds of tax breaks that expire or get scaled back to sort of, you know, the levels of four or five years ago. So you would feel it. And you'd start to feel it right away.

Now, you're going to hear, Suzanne, some people curiously on the left, the progressives, who are saying, don't who about. It's a slope. It's not really a cliff like that. It's a slope. Well, the thing is, is that the rest of the world, investors, people need certainty. Companies --

MALVEAUX: Right.

ROMANS: Companies are much less likely to be hiring if they're just waiting to see how Congress is going to fix the fiscal cliff. Whether it's a slope or a fiscal step or a fiscal, you know, casm (ph), whatever it is, it's not good.

MALVEAUX: I want to bring in Ali, because this is one of my favorite subjects, actually, the big picture. When you look at these pictures, right, that we saw this week out of Greece, where you got riots in the streets over these austerity measures for them to get their act in order, to get the loan money, you see the markets tanking over the last two days or so, how much does it really matter, Ali, what the president does and what his policies are when it comes to our economy, or is it the rest of the world that's calling the shots?

ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: Well, this is a really good question because we are not Greece right now. With all sort of people who say with our debt problems we're headed toward Greece, we're not headed towards Greece. But I'll tell you what happens. If we let -- if we go over the fiscal cliff -- and let's be clear, most people don't think we will. The danger is if we do. Then all of a sudden you plunk growth from plus 2 percent right now, GDP growth, to minus 1.5 percent, puts you in a recession. But then you're in a hole that's very hard to get out of. So the bet is that that will stimulate economic growth.

But that's not -- if you let some of these taxes -- if you have lower taxes, that's not necessarily the case. The problem Greece has right now is if you are a 25-year-old Greek citizen, it's not clear that in five years or 10 years things will be better, because you've got yourself into a rut. That's the danger that the U.S. has to not go into.

So, the danger is that we're toying with something that is so potentially catastrophic. It's not that we'll likely get there. It's that we're toying with it, and that makes investors around the world very nervous about America, because, by the way, when this happened with the debt limit, we also thought it wouldn't be bad and for a little while it was.

MALVEAUX: All right. Ali, everybody is watching what is taking place here.