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Ambassador Rice Faces Lawmakers; Fiscal Cliff Campaign and CEO Motives; Another Big Gain for Home Prices; Yasser Arafat's Body Exhumed; Obama to Meet with President-Elect Nieto of Mexico; Harsh Immigration Laws Debated; China Angers Neighbors with New Passport

Aired November 27, 2012 - 09:00   ET


CAROL COSTELLO, CNN ANCHOR: Thank you and good morning.

Stories we're watching right now in the NEWSROOM. Teargas in Cairo near the U.S. embassy as the fight for democracy goes on.

Face to face. Susan Rice and John McCain, the man who wanted Watergate-style hearings, meet. And only CNN catches up with McCain before the big meeting.


UNIDENTIFIED REPORTER: What do you have to learn today from Miss Rice?

SEN. JOHN MCCAIN (R), ARIZONA: Whatever Ambassador Rice wants to tell me. She's the one that asked for the meeting. I didn't.


COSTELLO: Wouldn't you like to be a fly on the wall?

Spyfall, a real-life Bond movie. Yasser Arafat's body was exhumed. Was the Palestinian leader poisoned by Israeli spies?

Plus this.


JON CRYER, ACTOR, "ALAN HARPER": Thanks for coming, Brigette.

UNIDENTIFIED FEMALE: Well, you said Walden was in trouble.

UNIDENTIFIED FEMALE: Hi. I'm the trouble Walden has been in, repeatedly.


COSTELLO: He calls it filth. The half in "Two and a Half Men" begs you not to watch his show.

NEWSROOM starts now.

And good morning to you. Thank you so much for being with us. I'm Carol Costello.

We begin with a high stakes meeting just minutes from now. This hour, the U.S. ambassador to the United Nations will muster all of her diplomatic skills and tiptoe through a political mine field.

Susan Rice meets with Republican Senator John McCain. As you know, McCain had vehemently opposed her likely nomination as secretary of state. But bow he shows signs of softening.

At issue, that deadly attack on the U.S. consulate in Libya. Was Rice playing politics when she said initially that terrorists were not to blame for the killing of four Americans?

Just minutes ago, we caught up to Senator McCain for these exclusive comments.


UNIDENTIFIED REPORTER: What do you have to learn today from Miss Rice?

MCCAIN: Whatever Ambassador Rice wants to tell me. She's the one that asked for the meeting. I didn't.

UNIDENTIFIED REPORTER: Do you trust her to be Secretary of State?

MCCAIN: This issue needs to be resolved, clearly. It needs to be resolved before -- I don't make a judgment as to whether she should be Secretary of State or not until she's been nominated.

UNIDENTIFIED REPORTER: You put more blame on the President or Miss Rice?

MCCAIN: The President is the one that's ultimately responsible.


COSTELLO: CNN's Dan Lothian first reported this morning's meeting of Rice and McCain. He joins us now from the White House.

So, Dan, Rice has not been nominated, not yet. So how important are these meetings today?

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: Well, you know, it's very important because Republicans have been very concerned about the narrative that she put out there shortly after those Benghazi attacks. They have a lot of questions and don't feel that this White House and this administration has been very transparent in the process. So they have been very critical of her.

And as you heard the senator point out there, it was Ambassador Rice who asked for these meetings. She will be accompanied by acting CIA director Mike Morel.

And, you know, what's interesting about all of this is that what we've seen over the last few days is some of the harshest criticism has been sort of toned down as we heard there from Senator John McCain.


LOTHIAN (voice-over): From threatening to block her nomination as possible secretary of state to a willingness to hear her out, Senator John McCain seems to be dialing back his public opposition to Ambassador Susan Rice.

MCCAIN: I think she deserves the ability and the opportunity to explain herself and her position.

LOTHIAN: Another vocal critic, Senator Lindsey Graham, is still expressing doubts about her but avoided answering whether he would still stand in the way of a Rice nomination.

SEN. LINDSEY GRAHAM (R), SOUTH CAROLINA: When she comes over, if she does, there will be a lot of questions asked of her about this event and others.

LOTHIAN: Whether this apparent new tone is a real shift in thinking prompted by political pressure or more nuance language, the White House is all ears.

JAY CARNEY, WHITE HOUSE PRESS SECRETARY: Certainly saw those comments and appreciate them as the president has said and I and others have said. Ambassador Rice has done an excellent job at the United Nations and is highly qualified for any number of positions in the foreign policy arena.

UNIDENTIFIED REPORTER: Does the President plan to nominate her?

CARNEY: I have no announcements to make on personnel.

LOTHIAN: She hasn't been nominated but she's widely believed to be at the top of the list to replace Secretary of State Hillary Clinton, who has said she will not stay for a second term.

Ambassador Rice came under fire for suggesting the Benghazi attack that killed four Americans was a spontaneous event.

SUSAN RICE, U.S. AMBASSADOR TO UNITED NATIONS: There was a hateful video that was disseminated on the internet. That sparked violence in various parts of the world, including violence directed against western facilities, including our embassies and consulate.

LOTHIAN: Much later the administration labeled it a terrorist attack. Even though officials pointed to early language the president used referencing, quote, "acts of terror."

Republicans pounced, focusing on the possible nomination of Rice as secretary of state.

MCCAIN: We will do whatever is necessary to block the nomination.

GRAHAM: I am dead set on making sure we don't promote anybody that was an essential player in the Benghazi debacle. (END VIDEO CLIP)

LOTHIAN: Now, Carol, what's interesting is that that interview that you played earlier, Senator McCain was asked if he was softening his stance, and he said, no, no, not that I know of. But clearly when you hear the words of that earlier remarks that the senator made and then you hear what he's saying now, that he doesn't want to really make any judgment at all, there's clearly some softening of the rhetoric from Senator McCain. Unclear, though, what's behind it all.

COSTELLO: Well, you're going to stick around for that meeting. We'll see what happens.

Dan Lothian reporting live from the White House.

From Capitol Hill to the corporate boardroom, there's a lot of hammering over the fiscal cliff as lawmakers debate how to avert the crisis some 35 days away now. Business leaders are calling for action. Listen to this plea from the group the business roundtable.


UNIDENTIFIED MALE: America's CEOs have a message for Washington.

JORGE BENITEZ, ACCENTURE: The top priority for us is to advance policies that will get the U.S. economy growing again.

GARY LOVEMAN, CAESARS ENTERTAINMENT CORPORATION: The country has to have a higher rate of growth. That begins with addressing the fiscal cliff issue.


COSTELLO: So bipartisan bottom line, right? Well, not quite. You see those business leaders have a vested interest in which spending should be cut and which loopholes closed. And let's just say what's old is new again.

Alison Kosik is at the New York Stock Exchange with a closer look.

So, put this into common language for us. And language we can understand as people who are not CEOs.

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: OK. So many of these high- level CEOs, Carol, are part of this movement, this campaign to fix the debt that, you know, we've been hearing so much about. And this includes some of the biggest heads of business that are out there. And some have been more outspoken than others when it comes to what needs to get done to get a handle on the deficit. But you know what, it's also got a lot of people saying hey, wait a minute because some of these decisions can really impact -- and not a good way -- have a huge impact on the poor and the elderly.

For one, Goldman Sachs CEO Lloyd Blankfein, what he did -- he did an interview over the weekend with CBS and he made the case that the social -- the social safety net programs need to be scaled back like Medicare, Medicaid and Social Security. He says people need to lower their expectations of those entitlements.

Easy for him to say. He made about $12 million last year. But I digress. Give this Blankfein, he did concede that eventually the logical way to raise revenue will be for the wealthy to pay a higher tax rate. Now that's something we haven't heard from many high earners.

Also CEO of Honeywell, David Cote, is also talking about addressing the entitlement issue but he goes on to say he wants a corporate tax rate of zero. So no doubt that would create huge outrage. Bu he says, you know what, that's the most effective way to create jobs in the U.S. since it frees up so much money for companies to hire. And many would probably agree that's important, too.

So you know what, you can see both sides of the story there, Carol. One more extreme than the other, of course.

COSTELLO: Of course. We'll see what happens.

Alison Kosik at the New York Stock Exchange.

Just into us this morning. Good news for the housing market as home prices rise across the country with the biggest quarterly jump in two years.

Christine Romans is in New York to tell us more.

'Morning, Christine.

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Good morning, Carol. More evidence that the housing market is healing. We've seen sort of report after report on this. And you're right, it's the biggest quarterly gain in two years.

This is the S&P Case-Shiller report on home prices. And it found that home prices rose for the sixth consecutive months, as well, when you look at the 20-city home prices six months in a row for the average at the top 20 cities and the national home prices up 3 percent, 3.6 percent in the third quarter.

Can I show you the cities with the biggest gains? Because, Carol, as you know, all real estate is local. And some of the bounce back is coming in areas that were really beaten down badly.

Carol, look at Phoenix. The one-year change in home prices up 20 percent. Minneapolis, up 8 percent. Detroit, up almost 8 percent. San Francisco, up 7.5 percent. So this is pretty key. Many of these cities have not gotten back even close to peak levels. But you're seeing this healing overall in home prices.

When I look at home sales from other data that I've been looking at, other monthly reports that we get, Carol, you can see a lot of these deals are cash deals. About a third of all existing home sales are cash deals. So some of this is investors. Some of this is first-time homebuyers. But clearly it's more evidence that the housing market is healing. And one of the reasons it is healing is because mortgage rates continue to be very low. Prices have been beaten and mortgage rates are low.

Can I show you the most recent mortgage rates? Anybody out there interested in refinancing? Look at this, 30-year fixed rate, 3.31 percent, 15-year.

Carol, you know that's the popular refinancing tool, 2.63 percent.


ROMANS: Yes. Those are low mortgage rates.


COSTELLO: I never thought I'd see them that low in my lifetime but I did.

ROMANS: Me either. There you go.

COSTELLO: Christine Romans, live in New York. Thank you so much.

Happening now in Cairo, protesters flock to Tahrir Square to rage against the new president. A short time ago riot police fired teargas to disperse demonstrators.

Many Egyptians say Mohamed Morsi betrayed the democratic intention of Arab spring when he granted himself sweeping new powers last week.

We'll keep an eye on Cairo and bring you developments as they happen.

As early today, we could hear from the U.S. soldier accused of leaking thousands of military and diplomatic secrets to WikiLeaks. Former Army intelligence analyst Bradley Manning says military jailers mistreated him for nearly a year. If his attorneys can prove that, his case could be dismissed. If not, Manning could face life in prison if convicted.

Also this morning, forensic experts have what they need to determine if former Palestinian leader Yasser Arafat may have been poisoned eight years ago. Just hours ago, they exhumed his body, took samples from the remains and then reburied him.

Fred Pleitgen has been following the -- the developments from the West Bank.

'Morning, Fred.

FREDERIK PLEITGEN, CNN INTERNATIONAL CORRESPONDENT: Good morning, Carol. Yes, the process only lasted a few hours. What happens is that early in the morning hours, the grave, the tomb of Yasser Arafat was opened, all of this closed off to the public. All we saw was a big blue tarpaulin behind that. Of course the experts were working.

These are forensic teams that come from Russia, Switzerland and France, and, Carol, what they did is they opened the grave. They didn't actually have to remove the body but they removed samples from the body and then closed the grave again.

All that we saw out here was a ceremony, a very solemn one, that took place afterwards where Palestinian leaders laid flowers to commemorate the late Palestinian leader Yasser Arafat.

Of course, what they're looking for, as you said quite rightly, is a poison. And specifically they're looking for polonium 2010, which is a poison that's been used, a radioactive substance that's been used in the past, in assassination attempt.

The Palestinians, of course, have long accused Israel of poisoning Yasser Arafat. The Israelis not willing to comment on that. But now the Palestinians say they hope that this investigation will get them some clarity -- Carol.

COSTELLO: We'll see. Fred Pleitgen, reporting live from the West Bank this morning.

New Jersey Governor Chris Christie says he's finally able to look beyond the devastation unleashed on his state by superstorm Sandy and says the long recovery ahead has helped convinced him to run for re- election next year.

Christie says storm victims have been asking about his plans.


GOV. CHRIS CHRISTIE (R), NEW JERSEY: This weekend, Mary Pat and I, the kids, had an opportunity just to kind of have a few minutes to ourselves. And we talked about it. And we've decided we're going to seek re-election. And we're wanting to get that going today. And so I instructed my campaign treasurer to file papers with the Election Law Enforcement Commission to seek re-election. And so --


COSTELLO: There you have it. Christie has been extremely hands on in dealing with the storm damage. And that's helped fuel a huge spike in his approval ratings which now hover near 80 percent.

How's this for deciding an election. In Dewitt County, Illinois, the two candidates were accounted. Board seats reluctantly agreed to a coin flip 14 days after their election ended in a tie. Incumbent Terry Ferguson called tails. But when the quarter landed on heads, George (INAUDIBLE) was on the scene, still upset, though, saying the Decisive coin flip was more like gambling than democracy.

Scary moments right in the heart of Sidney. A crane on fire starts to collapse with hundreds of people standing below. Now we're learning about a connection between that crane and another crane that buckled in New York after superstorm Sandy.

(COMMERCIAL BREAK) COSTELLO: Just days before he takes the oath of office, the new President of Mexico will visit the White House. President-Elect Enrique Pena Nieto will meet with President Obama later today. The new leader wants to talk about reshuffling the priorities between the two countries, to include more than just drugs and security.

Wolf Blitzer will sit down with the President-elect Nieto and you'll hear that interview later today on CNN.

Now, one of the topics the two leaders will likely discuss is immigration. It's a hot button issue between the United States and Mexico. Immigration laws in the United States have gotten tougher. Yes, tougher -- so tough more families are now returning to Mexico from the United States because of those laws.

Rafael Romo explains.


RAFAEL ROMO, CNN SENIOR LATIN AMERICAN AFFAIRS EDITOR (voice-over): In remote town in northern Mexico, a 10-year-old boy is struggling with his homework.

Oscar Castellanos is getting extra help from his father because he's having trouble adjusting to his new school.

(on camera): When you left you were in, what, fourth grade?


ROMO (voice-over): The fifth grader is technically a foreigner in his father's land. He was born in Arizona and is a U.S. citizen.

(on camera): Do you know "The Pledge of Allegiance"? Can you say it --

O. CASTELLANOS: I pledge allegiance to the flag and to the United States of America.

ROMO (voice-over): His family moved back to Mexico after Arizona approved the toughest immigration law in the United States.

(on camera): Has it been difficult for you to be here in Mexico?


ROMO: Why?

O. CASTELLANOS: Because I have to speak another language.

ROMO (voice-over): Oscar's 6-year-old sister, Angie, also is an American citizen.

She says she misses American stores, bigger houses, and parks.

Their parents, Oscar and Maria Castellanos lived in Arizona for 13 years as undocumented immigrants.

MARIA CASTELLANOS, MOTHER (through translator): We would feel persecuted and harassed. We felt bad. It was nerve-racking, especially when we had to go out to go to work.

UNIDENTIFIED MALE (through translator): It was difficult because we had everything there. We had to leave everything behind and return to Mexico. It was difficult.

ROMO: Castellanos said they endured years of fear living in the U.S. Public sentiment was growing against undocumented Mexicans. So, shortly after the strict Arizona immigration law passed in 2010, they moved back to Mexico. According to the Pew Hispanic Center, net migration from Mexico to the United States fell to zero or less from 2005 to 2010.

This means the number of immigrants coming into the country is likely equal or smaller than the number of those leaving, although the study said some left the U.S. unwillingly. They were deported.

Back in Mexico, Angie Castellanos sings her ABCs in English.

ANGIE CASTELLANOS, AMERICAN CITIZEN: A, b, c, d, e, f, g, h, i --

ROMO: She has yet to learn them in Spanish.


COSTELLO: Rafael Romo joins us now.

How common are stories like this?

ROMO: They are very common. You're talking about states like -- not only Arizona but also Georgia and Alabama, which have passed immigration laws. There are a number of immigrants who have decided to move to other states within the United States, but there are many families like the Castellanos family who decided, you know, for the mental sanity of myself and my children, I just have to move back to Mexico.

COSTELLO: Well, it does make you wonder what the new Mexican president will say to President Obama about this issue.

ROMO: Well, what the new Mexican president is probably here to say is that both countries need to look at the issue of immigration as a shared responsibility. Mexico sends a lot of people to the United States every year. But the reality is that the United States also benefits from the labor that those Mexicans provide.

So it is a shared problem. And the argument on both sides of the border had been it should also be a shared responsibility.

COSTELLO: Rafael Romo, thanks so much for being with us. We appreciate it.

A shocker from Asia to tell you about this morning. China claiming territory that -- well, isn't exactly theirs.

Zain Verjee is tracking the story.

Good morning, Zain.


Something strange is on page eight of the new Chinese passport and it is making people in the region really mad. I'll tell you what it is after the break.


COSTELLO: China is ticking off its neighbors with a new passport it's giving to its citizens. It basically shows China claiming territory it doesn't actually own. Confused?

Zain Verjee is here to sort it all out for us.

Good morning, Zain.

VERJEE: Good morning.

Well, what's in a map, Carol? This is what it is. China basically is having disputes with a bunch of countries around Asia and specifically in some places in the sea known as the South China Sea. What they've decided to do is on page eight of the new passport, just stamp a water mark map where you stick visas on and things like that and basically claim all the disputed territories in the entire region as its own and that's that.

And it's making a lot of people in the region really mad because these are serious historical and political issues. China doesn't care because it's on page eight.

COSTELLO: So, any retaliation from those countries who are ticked off at China?

VERJEE: Yes. Yes, actually. They're pretty mad and making threats of their own. It's causing an international and diplomatic dispute in the whole region.

Taiwan is saying, look, we're not part of China. They have said this map shows the ignorance of reality on China's part.

Vietnam has said they're not even going to stamp the passport. What they're going to do is just issue these separate pages and then issue different stamps.

And India is saying they're going to put their own stamp of their own territory over the Chinese passport.

They're all going to have a big meeting and try to figure this out.

It's not clear if China is even invited or what passport they'll choose to use. COSTELLO: Very strange. Zain Verjee, reporting live for us this morning -- thank you.

Now is your chance to talk back on one of the big stories of the day. The question for you this morning -- should Susan Rice be considered for Secretary of State? Susan Rice, John McCain, face to face. Maybe the tryptophan in the turkey chilled everyone out.


REPORTER: What do you have to learn today from Ms. Rice?

SEN. JOHN MCCAIN (R), ARIZONA: Whatever Ambassador Rice wants to tell me. She's the one that asked for the meeting. I didn't.


COSTELLO: Don't think so. The embattled U.N. Ambassador is sitting down with the Senator who accused her of being incompetent and deceptive and called for Watergate-style hearings on Libya.


MCCAIN: She gave deceptive information to the American people when there was clearly counter information that affirmed that this was a terrorist attack orchestrated by an al Qaeda affiliated organization.


COSTELLO: By now you know the story. Rice intimated a cheesy anti- Islam film caused the murderous rampage at the consulate in Benghazi, Libya. Not true. But her assertion on several Sunday talk shows was OK'd by the intelligence community and caused one great big partisan brawl.

Soon, Democrats piled on, accusing Republicans of racism.


REP. MARCIA FUDGE (D), OHIO: Susan Rice's comments didn't send us to Iraq and Afghanistan. Somebody else's did. But you're not angry with them.

I would just say, in closing, that it is a shame that any time something goes wrong, they pick on women and minorities. I have a real issue with that.


COSTELLO: Yet when asked about McCain, Rice was conciliatory.


SUSAN RICE, U.S. AMBASSADOR TO THE U.N.: I have great respect for Senator McCain and his service to our country. I always have and I always will. I do think that some of the statements he made about me have been unfounded. But I look forward to having the opportunity at the appropriate time to discuss all of this with him.


COSTELLO: So, after McCain saying he would do whatever it takes to block Rice's nomination, he now appears to be softening and says Rice deserves the chance to explain her actions.

Talk back for you today, though: Should Susan Rice be considered for secretary of state in light of all of this?, Your comments later this hour.