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Fiscall Cliff Countdown: 32 Days; Internet Dark in Syria; New Cars at LA Auto Show; VP Biden Visits DC Costco

Aired November 30, 2012 - 05:30   ET


CHRISTINE ROMANS, CNN ANCHOR: Fiscal split. The two sides, they seem farther than ever apart after round one of talks.

ZORAIDA SAMBOLIN, CNN ANCHOR: Asphalt eruption. The story behind this 30-foot geyser on a California street.

ROMANS: Reversal of fortune. A New Yorker hit by hurricane Sandy hits Powerball for a million bucks.

Welcome back to EARLY START. I'm Christine Romans in this Friday for John Berman.

SAMBOLIN: And I'm Zoraida Sambolin. Thirty-one minutes past the hour. We begin this half hour with big jitters for small business owners. And here is why. President Obama is calling for $1.6 trillion in tax hikes. And House speaker, John Boehner, is telling him to get serious.

ROMANS: So, with 32 days remaining before we reach the fiscal cliff, the two parties are trading insults with roughly 90 percent of Americans facing higher taxes next year. That includes millions of small business owners who desperately want answers from Washington. Our Poppy Harlow, she's been spending time with some of those small business owners. And what are they telling you? They're very nervous about this.

POPPY HARLOW, CNNMONEY.COM: Yes. They're very nervous, very frustrated, and they just have no idea what's ahead, and that uncertainty is the worst part. We went to Freehold, New Jersey to talk to owners of very different businesses who are equally frustrated that Washington just can't get it together.


BOB BELLAGAMBA, CEO, CONCORDE WORLDWIDE: Any company, any business did the method of accounting as our government does, we'd be in jail.

HARLOW: You sound like you've had it.

BELLAGAMBA: Yes, basically, I have.

HARLOW (voice-over): Debt is a cancer. That's what Bob Belegamba (ph) told me when we met him at his limousine company in Freehold, New Jersey. BELLAGAMBA: So, here's the reservations. Staffed 24 hours a day.

HARLOW: He started the business back in 1984. Today, he's got a staff of 75, 53 cars, and one big question.

BELLAGAMBA: I just want Congress to tell me to come up with what the boundaries are so I know -- I know how to run my business. I know how to plan.

HARLOW: He's laid of four employees in the last six months. He says the business made it through the stock market crash of 1987, the savings and loan crisis, and 9/11 with no decline in revenue until the financial crisis of 2008, and now this.

Could more layoffs be around the corner?

BELLAGAMBA: Absolutely. Depends on what happens.

HARLOW: Down the street, Charles Altiero is buying gold.

CHARLES ALTIERO, OWNER, FREEHOLD JEWELERS: People come in, they'll bring in just basic scrap.

HARLOW: He's a one man band in his jewelry shop, and business is so- so.

(on-camera) But the economy is supposed to be gradually getting better.

ALTIERO: It's what they tell us.

HARLOW: you don't buy it?

ALTIERO: I don't see it.

HARLOW (voice-over): Like just about everyone, he wants to see Congress act to avoid the fiscal cliff and the tax hikes that come with it.

(on-camera) What would tax increases mean for you in this business?

ALTIERO: On the gold mining, it might be good. More people are going to have to sell their gold to pay their taxes.

HARLOW: But he also knows it would hurt his customers buying power. Altiero certainly doesn't want to pay more in taxes, but he's open to them. Belegamba is adamant that not the solution.

BELLAGAMBA: The right deal to me means you got to spend less.

HARLOW: Two small businesses in the same small town staring at the same fiscal cliff, both with a message for Washington.

BELLAGAMBA: I'd love for them to come here and just spend a day, spend a week, just to know what small business goes through.

ALTIERO: Do your job. Make a decision.


HARLOW (on-camera): Clear message for Washington. So, with the exception of a few extra tax breaks, small business are really taxed just like us, just like individuals. So, that means if we fall of the fiscal cliff, they're going to see their taxes go up, but what's interesting, guys, what could hurt them even more is less money in their customers' pockets, and that's what experts are telling you.

That could be even worse than tax increases. One of the big questions we have was, how much our tax is going to go up for these small businesses if we fall off the cliff. No one knows, but the tax policy center has done some analysis. If you're sort of in the bottom quintile, making about $20,000 a year as an individual or small business, your taxes will go up about 600 bucks.

If you're in the top quintile, so $108,000 or more, your taxes would go up about $13,000 a year. So, it really depends where you fall.

ROMANS: And if in Washington they decide to raise taxes just on the top earners, that will be some of those small businesses.


HARLOW: Because if the top quintile is 108,000 or more, that's going to be a lot of those small businesses.

SAMBOLIN: And you know those small businesses, I talked to a woman the other day and she made your very exact same point. She said my customer base is a problem right now.


SAMBOLIN: We're headed into the holiday season and nobody wants to spend money because of the uncertainty.

HARLOW: And then you can't plan. I mean, he's had four layoffs already. More could be around the corner, because he cannot budget.


ROMANS: I mean, you look at the GDP report we had yesterday, it showed that companies spending money on equipment was down, was down big. And that's because companies aren't going to -- you're not going to do anything. You're going to --


ROMANS: If you don't know what Washington is doing, what the --

HARLOW: Absolutely. It's interesting. The business owner there, you saw Bob (INAUDIBLE) said Poppy, I might just sell my business, put it in a portfolio, and make 45 percent. If that's what I'm making now, what's the point?


HARLOW: What's the point of all this work? And those are jobs.

SAMBOLIN: We appreciate hearing those voices. So, thank you for that.

ROMANS: And it's just shame in Washington. It's a shameful situation.

All right. In other news, Syria has pulled the plug on the outside world. There are reports that nearly all access to the Internet has been cut off, landlines and cell phones affected as well. It could be the latest move by the embattled Assad regime against rebel forces which abuse the Internet to their advantage.

This development comes as Syrian security forces battle rebels in Damascus Airport. If rebels can capture the airport, it would be a severe blow to the Assad regime. All this as the death toll in Syria marches toward 40,000. That's according to (INAUDIBLE).

SAMBOLIN: He was accused of passing thousands of classified government documents to the online site, WikiLeaks. Army Private Bradley Manning is back in court today. Yesterday, he testified that he's been treated harshly while in military custody. The defense requested the hearing to ask that the charges against Manning be dismissed.

ROMANS: Mitt Romney and President Obama promising to stay in touch after a private lunch at the White House. The formal rivals spent about an hour discussing ideas for keeping America competitive. They dined on turkey chili and chicken salad. A source tells CNN there was no discussion about a possible role for Romney in the Obama administration. Just a civil lunch, talking about America's future.

SAMBOLIN: So, have you heard this one? A truck goes into a bar -- no, this is not the set up to a joke, folks. Take a look at the result. Police in San Diego say the driver of a snap-on tools truck lost control, knocked off a fire hydrant, then crashed right through a place called Pete's Cocktails.

It left an 11-foot wide hole in the wall. And you see water rocketing into the air. The good news is everyone was OK.

ROMANS: All right. After Sandy, a stroke of luck for a man who was affected by the superstorm. Joel Ditkowsky was heading to work when he stopped to check his Powerball ticket. The Kennedy Airport customs broker was one of 58 people who came up one number short of the big jackpot.


JOEL DITKOWSKY, LOTTERY WINNER: Put it in the machine. He said you're a winner. Not only that, you won a million dollars.



ROMANS: Several other lotto winners, including one New Yorker hit the $33 million Mega Millions has pledged to give to the recovery effort in their hometown.

SAMBOLIN: Oh, that's great. That's great. Thirty-eight minutes past the hour.

They are the cars of the future and we are getting a sneak peak for you. Coming up, we go live to Los Angeles to see some of the hottest wheels in the entire world.


ROMANS: The cars of the future going on display at the Los Angeles Auto Show. The show underway today runs through December 9th, and some familiar models like the Toyota Rav4 and the Ford Fiesta are getting a reboot. And several manufacturers will be showing off new electric and hybrid vehicles.

But with Congress at the risk of going over the fiscal cliff, will there be a market for many new vehicles? GM Dave Barthmuss says for now, things are looking good.


DAVE BARTHMUSS, GM: If you got the right kind of products, people are going to buy them. And that's the bottom line for us. We haven't seen -- I mean, we've had Chevrolet sales up 37 percent. Our sales are up globally. We sell a Chevrolet every six seconds. So, I think if we have the right kind of product mix right now, we've got the right kind of business model so that we can survive these kinds of economic ups and downs that, frankly, we really don't have any control over.


ROMANS: Casey Wian is live in Los Angeles for us at the car show. Some cool stuff there, Casey.

CASEY WIAN, CNN CORRESPONDENT: Yes, absolutely, Christine. You know, the L.A. Autho Show is about to get underway about eight hours from now. The public will start coming in and looking at these cars. And as you heard there from that General Motors executive, it really has been a gangbuster year for the auto industry. Sales up double digits, lot of pent-up demand after the recession, low interest rates.

They're forecasting that there's going to be maybe a little bit of a slowdown in that rate of growth next year. And even if there is this so-called fiscal cliff hit to the economy, the automakers say they're in much better position to survive it. Why? Because the industry has changed. Before the recession, the bread and butter were the SUVs, big cars.

Also, a lot of car enthusiasts and people like me love to look at expensive sports cars like these Chevrolet Camaros. But what the auto industry has switched to their product mix, what is selling really well now are very small cars like this 2013 Chevrolet Spark. And you can see the price tag here, very recession, post recession conscious, $15,000 for this car.

Now, among the new products being offered is an all-electric version of the Spark. It will only be sold in the states of California and Oregon, initially. Some of the innovations here, you'll be able to charge this car in 20 minutes, up to 80 percent of its charge. GM not saying how far it will go on the charge, but it will be somewhere in the neighborhood of under 100 miles or so.

This is definitely a commuter car, but this is the kind of product mix that more and more of these automakers are going to. Smaller cars, that's what's driving the industry right now, Christine.

ROMANS: So, Casey, does it appear to be business as usual in terms of potential new car buyers or how does the situation in Washington affect this year's auto show? I mean, a lot of people don't know what their tax rates are going to be next year, frankly.

WIAN: What the auto industry is saying is they can't really do anything about what's going on in Washington, what's going to happen if there is a dip back into a recession because of the fiscal cliff, car buying may be put off by some consumers by six months or so. They are going ahead, full speed ahead with new technological introductions.

For example, this Spark that we were talking about, you're going to be able to pair your Siri iPhone with this Spark. We also spoke with an executive from Sprint, which is putting together a package of technology that's going to be available in cars starting next year that will allow you to be a Wi-Fi hotspot in your car.

So, your passengers will be able to be on the internet in the car. You can even set it so if you didn't want your teenager to be able to text while they were driving. They wouldn't be able to do that. So, these technologies are still going full speed ahead, Christine.

ROMANS: Wow! And I thought power windows were cool.


ROMANS: Everything's changed so much since I got my driver's license. A change is more (ph) every year than it has the last 20. Casey Wian in L.A. Have a good time, Casey.

SAMBOLIN: Yes, lucky guy there. Lucky guy. All right. Thanks, Christine.

Stranded and alone. A young animal struggles against the ice and the cold. The rescue caught on camera. We have it for you coming up.


SAMBOLIN: Welcome back. Forty-nine minutes past the hour. Let's get you up to date on this morning's top stories. (BEGIN VIDEOTAPE)

SAMBOLIN (voice-over): Fiscal cliff talks getting nowhere fast. President Obama pitching a spending plan that includes $1.6 trillion in tax hikes and $50 billion in stimulus spending. He'll visit a Pennsylvania manufacturing plant today to sell it. House speaker, John Boehner, says he is not buying it. He says the president needs to get serious about spending cuts.

ROMANS (voice-over): Dominic Strauss-Kahn has reportedly reached a settlement with the New York City hotel maid who accused him of sexual assault. Details of the agreement have not been released. The former head of the International Monetary Fund still faces aggravated pimping charges in France for his alleged role in a prostitution ring in Europe.

SAMBOLIN: A deer that found himself stranded on an icy lake in Wisconsin for more than 24 hours is, oh, happily back in the wild again, I would imagine. Volunteer firefighters used a rescue sled to navigate around the ice-covered lake after slipping a rope around the deer's neck. It took rescuers about 45 minutes to lead the seven- point buck off the frozen lake and finally to safety.


ROMANS (on-camera): Right. A rough week for weather continues in the west. Meteorologist, Rob Marciano's, got that for us on this Friday morning. Good morning, Rob.

ROB MARCIANO, AMS METEOROLOGIST: Good morning, guys. Yes. Another punch of rain and wind across parts of California or in Washington. Here is the fire hose that's opened up, really tapping into the tropics. So, this is a warm rain, and the snow levels aren't entirely too high. So, flooding issues certainly abound. And also, a lot of wind energy with this. Eighty-mile-an-hour wind gust yesterday at Mt. Rose Ski area, that's near Lake Tahoe, Carson City on the other side of the lake, 72-mile-an-hour wind gust.

So, even at the lower lands were looking at winds that have been, in some cases, damaging. Rainfall already excessive. We're looking for a ton more to come through the area. Pine Crest California, over six inches, almost seven there in Cape Johnson, Oregon, 3.14. Here's the radar really filling in across San Francisco, almost getting all the way down to So Cal. Actually, a little bit of rain there.

And notice it only turns to snow at the highest elevation. So, this is the second of three waves. One came through yesterday. This one, the third one about to come through on Sunday, and actually, another one behind that on Tuesday. So, tremendous amount of rain with this. We could see over 10 inches in some spots. One to three feet of snow, but mostly about 7,000 feet.

So, that's not a huge help. Again, east of the Mississippi, we're looking pretty good today. A little bit chilly in upstate New York. Some snow across parts of Northern New England, elsewhere not too shabby. By the way, last day of hurricane season. Thank goodness. SAMBOLIN: Yes! That's a cause for celebration. Yes.

MARCIANO: Absolutely.

SAMBOLIN: All right. Rob, thank you. Appreciate that.

Fifty-one minutes past the hour. A packed hour ahead on EARLY START, including the wall before the fiscal cliff. A top Republican literally laughing at the White House plan saying it's big on taxes, sketchy on cuts. More on the deadlock that could cost all of us as those right as those holiday bills start coming in. We are talking to Republican Tim Huelskamp and Democratic -- or Democrat, that is, Sheila Jackson Lee.

ROMANS: Yes. And now, he's worth a fortune. One winner of the record Powerball jackpot has been identified. We are live in Dearborn, Missouri. I keep saying Dearborn, Michigan. It's Missouri. Dearborn, Missouri --


ROMANS: -- just like everyone else. Can you spare a couple hundred million dollars?

SAMBOLIN: No kidding.


SAMBOLIN: Plus, the man behind the invisible. Alina Cho is going to go one-on-one "Gangnam Style." Is she actually going to dance? I can't wait to see.

ROMANS: I cannot wait to hear this.

But first, a 26-pound tub of politics. The vice president shops in bulk at Costco and hilarity ensues.



SAMBOLIN: Welcome back. Fifty-six minutes past the hour here. We're taking a look at the top CNN trends on the web this morning. And Costco just opened its very first store in Washington, can you believe that? And guess who showed up for the grand opening? Vice President Biden, he actually went Christmas shopping there.

ROMANS: -- detectors to level 10. CNN's Jeanne Moos reports on what ended up in the VPs cart, not to mention what ended up in his mouth.



JEANNE MOOS, CNN NATIONAL CORRESPONDENT (voice-over): Say it ain't so, Joe. The vice president invades Costco. JOE BIDEN, VICE PRESIDENT OF THE UNITED STATES: We are going to cut through the liquor section.


MOOSE: Forget driving a sleigh. Joe Biden didn't drive his own cart. The Costco employees seem thrilled to do the honors. His consumer confidence was high as the VP flashed his Costco card. Instead of bells, Joe Biden had the press pack in tow.

UNIDENTIFIED MALE: You guys, if you'll keep walking backwards, please. You guys, just go to the bakery section, please. You guys, go that way.

MOOSE: Imagine shopping for a watch with the press watching from behind every counter as Vice President Biden called his daughter.

BIDEN: Getting some guidance.

MOOSE: He looked at a $1,200 watch, but we don't know if he bought any watches. We do know what he ate, every free sample in sight in the bakery section. He bought an apple pie.

(on-camera): It's a dilemma, do you want to shake hands or do you want to eat?

(voice-over): He shook and ate with a package of crackers in his cart. Costco cost the vice president a lot of calories. Vice President Biden came to promote extending middle class tax cuts, probably didn't hurt that the co-founder of Costco is a big Obama contributor.

Before he left, the VP used the phone of his cart driver, Ivy Stewart (ph), to call her grandmother and leave a message. Ivy was so moved by the whole experience, she wiped away tears.

BIDEN: Thanks for shopping with me. And I know you won't tell anybody What i bought for Christmas gifts.

MOOS: Here's a hint from Nat King Cole's classic --


MOOSE: The "Huffington Post" held a caption contest for Joe Biden's check-out photo, our favorite, stop by for some fire logs, went home with a flat screen TV, 32 inches.

Jeanne Moos, CNN.



SAMBOLIN: Did he buy the watch?

(LAUGHTER) SAMBOLIN: Did he buy the watch?

ROMANS: That tweet was so funny. The caption was so funny. One time, my brother-in-law went to a Sam's Club to come home with some fresh flowers, he came back with a palette of computers.


SAMBOLIN: That's what happens.

ROMANS: That's what happens.

SAMBOLIN: All right. EARLY START continues right now.


ROMANS (voice-over): Soundly rejected. The GOP snubs the White House's opening offer in fiscal cliff talks.

SAMBOLIN (voice-over): Battered and bruised. An exclusive look inside the Statue of Liberty still off limits to tourist after superstorm Sandy.

ROMANS: Rich and now famous. We know the identity of one of those lucky Powerball jackpot winners.


ROMANS (on-camera): Good morning. Welcome to EARLY START this Friday morning. I'm Christine Romans.

SAMBOLIN (on-camera): And I'm Zoraida Sambolin. John Berman is hosting "STARTING POINT." That's coming up at 7:00 so you can join them then. It is now 6:00 a.m. in the East.

It's getting personal. We begin the hour with insults, finger pointing, it's in the fiscal cliff debacle. In just 32 days, tax rates rise and spending gets slashed. And remember, Congress breaks for the holidays in 14 days. So, slash that number in half. And here's where things stand right now.