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CNN NEWSROOM

Fiscal Cliff Talks Examined; Jovan Belcher's Suicide Detailed; Chicago Crime Cutting Funds Misused?

Aired December 3, 2012 - 15:30   ET

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


DREW GRIFFIN, CNN INVESTIGATIVE CORRESPONDENT: It was one of 160 community, church and civic groups that got the NRI money from the state. Now, most of the money has run out.

Homicides are up and questions are being raised about just what the NRI was really for, to cut crime or save an election?

What we do know is the money was spread out on Chicago's south and southwest sides. The idea? Get communities involved to stop the violence.

How? On this chilly afternoon, teenagers across Chicago's south side are paid to hand out flyers --

UNIDENTIFIED FEMALE: You have a nice day, sir.

GRIFFIN: -- and spread a message of non-violence.

The NRI is credited with creating about 350 temporary jobs, mentoring youth and parents, providing re-entry services and counseling in schools.

But our four-month investigation found the jobs not only included handing out those flyers, but also attending yoga class, taking museum field trips, even marching with the governor in a parade. The jobs are now gone.

CNN has taken an extensive look at where the money went, what it did and, most importantly the timing of how the program was rolled out.

The Neighborhood Recovery Initiative began sending money to tough neighborhoods in the city of Chicago, right before Chicago voters went to the polls.

According to these minutes from a state meeting, a member of the governor's staff promised, quote, "allocating some of the funds for this initiative immediately, the rest after the election."

GOVERNOR PAT QUINN (D), ILLINOIS: I'm happy to say that I'm always honest.

GRIFFIN: In October 2010, then Lieutenant Governor Pat Quinn was struggling to be elected to the job he assumed after former Governor Rod Blagojevich was removed from office for corruption and misconduct. Quinn, a Democrat, needed a huge turnout in Chicago's heavily Democratic districts on the south side. That's where critics say the NRI money ended up.

The governor won that election by less than 1 percentage point, but the results on reducing crime? So far there has been 484 murders this year, up 21 percent from 2011.

MATT MURPHY, ILLINOIS STATE SENATE: On its face, it appears to be a waste.

GRIFFIN: Illinois Republican State Senator Matt Murphy.

MURPHY: About a month before the election, at a time when reports everywhere were showing a diminished interest in the election in the governor's base and, lo and behold, here he comes with a new state program and millions of dollars to get people interested.

QUINN: It's a lot of baloney. You know, they know that. Matter of fact, people make those charges were running against me. You know, it's all politics.

GRIFFIN: In an early November interview, Governor Quinn insisted to CNN the murder rate was so high in the summer of 2010, he had to do something.

QUINN: The city of Chicago is the third largest city in America. I live in Chicago. I live on the west side. I live in a violent neighborhood and I know, firsthand, you better -- government do something about the violence because that's what the people want.

GRIFFIN: But the murder rate is up 25 percent. Are you saying the murder rate would be up 30 percent, 35 percent without this program?

QUINN: You take it one year at a time and try and evaluate the programs and find out what is working, what isn't working so well and you focus on the things that work well, but you don't just say we're not going to do anything.

GRIFFIN: Even a member of Quinn's own party, though, Democratic State Representative Thaddeus Jones, has questions, asking where are the audits, administration costs, and oversight of the many organizations?

We can show you what the Neighborhood Recovery Initiative did that is proof, say organizers, the money was well spent, teaching teens to change behaviors.

And for $8.75 an hour this is how the teens worked to reduce Chicago's murder rate.

UNIDENTIFIED MALE: This week we're talking about seeking inner peace.

UNIDENTIFIED FEMALE: How do you deal with stress?

UNIDENTIFIED FEMALE: My topic this month is about being healthy?

UNIDENTIFIED FEMALE: Governor Quinn does not miss this parade ever.

GRIFFIN: And, yes, the state confirmed, part of promoting positive messages included paying teens to march with the governor in the annual Bud Billiken parade.

Is in the type of thing you think leads to long-term employment or long-term reduction in violence?

MURPHY: It is another way of providing welfare.

GRIFFIN: The director of one of the agencies that received more than $2 million concedes NRI was rushed out without much of a plan.

MACHAEL SHAVER, COO, CHILDREN'S HOME AND AID: Actually the -- there was a fast and furious nature to it.

There was a -- certainly from the time that the governor who was running for re-election announced it, the timeframes, to actually put the money in the community.

GRIFFIN: Mike Shaver says the program, modeled in part after a now defunct Philadelphia initiative, did hand out a lot of money, but spent little time determining if it was effective.

SHAVER: I have not seen anything that has been produced by the Illinois Violent Prevention Authority that would make a compelling case that this array of programs based upon the model in Philadelphia worked.

GRIFFIN: As we began asking questions of agencies who got the money, we have been getting more and more "no comments."

You can't talk?

And remember the Woodlawn Organization which received $1.2 million? Anybody here? Hello? The leader of that group isn't talking either.

An audit by the state agency that ran the program could explain the silence. The state found questionable expenses, a lack of clear accounting, a $10,700 check written to a part-time staff member supposedly to pay a utility bill that they didn't prove was paid.

The state shut down all funding for the organization. The group's attorney tells CNN all documents will be provided to show it did nothing wrong.

I just want to get back to the point of did this program work, Governor? As well intentioned as it was, did it work?

QUINN: Yes, it did. It did work. If it saves one life, it worked.

GRIFFIN: Chicago remains on track to approach 500 murders this year.

(END VIDEOTAPE)

BROOKE BALDWIN, ANCHOR, "CNN NEWSROOM": Drew Griffin joins me now. Wow, I just can't believe you could walk in there and you said you saw the piles and piles of bills.

Let me ask you about this. The city's police superintendent is defending his department. He's saying, when you look at the murder rate, it's dropped over a couple of months. How did it change?

GRIFFIN: First of all, he's accurate. Earlier this year, if you can believe it, the murder rate was up 66 percent at one time.

What he did was he put more cops on street, he started arresting gang members, and tearing down vacant buildings. That strategy of focusing on the bad guys has helped bring down the pace of the murders.

But as we have reported, it is still 21 percent higher than last year, than -- this year than last year and last year was bad.

BALDWIN: So, then what about the program? Just quickly, is it done?

GRIFFIN: The program is not done. It is surviving, minimal cash involved, and they say they're going to really look at what they're doing.

Any kind of employment is not going to involve handing out flyers or yoga classes. It's going to be more traditional employment.

BALDWIN: No more yoga classes.

Drew griffin, four-month investigation, thank you. Appreciate it.

Corporate profits hitting a record high while the wages of Americans are plummeting to a record low. Why is this happening?

Ali Velshi is keeping a watch on "Your Money" and, of course, the breaking news on the Republicans' counterproposal on the fiscal cliff. Stay right here.

(COMMERCIAL BREAK)

ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: I'm Ali Velshi. This is "Your Money."

House Speaker John Boehner called White House efforts to make a deal preposterous. The Republican counter we are now hearing about which extends the Bush tax cuts for everybody including the wealthiest Americans won't get Washington any closer to a deal.

Washington's reckless behavior is already having serious economic consequences. I'm going to show you how and make sure you understand the truth about what raising taxes would mean for the economy, but first, set aside the doom and gloom of the fiscal cliff for a moment. Let's take look at today's money menu.

Check out auto sales, up big in November. Sales of GM cars were up 3.4 percent. Ford saw a 6.5 percent jump in sales and Chrysler shot up 14 percent. U.S. autos are on track to see their best sales month, nationwide, since February of 2008 as the big three continues to put that auto bailout in the rear view mirror.

By the way, Ford never took the bailout money from the government.

What's behind the surge in auto sales? Well, the usual fixes for the economy, no short cuts. The jobs outlook is looking better. Access to finance is improving if you want to buy a car. You combine that with the increasing demand from folks who had put off buying a car in a down economy, you now have earlier evidence of success in the U.S. auto industry.

Unfortunately U.S. manufacturing as a whole is telling a different story. It is another sign that Washington has gone from being just simply benign to actually threatening the American economy.

I've been warning you for months about the fiscal cliff, the economic storm of our own making. Today, we saw a report indicating that U.S. manufacturing essentially ground to a halt in November.

One of the culprits was clearly the uncertainty for business that has been created by this fiscal cliff threat. Orders for new goods are flat. Factories are cutting workers.

This can be fixed. It's reversible. But the signs are clear that the damage is being done.

Quite a different story, by the way, over in China where manufacturing output, which had been slowing, picked up in November. It had had months of slowdown.

Now, back to Washington, what are the chances that lawmakers in Washington will act in time to avert the fiscal cliff? Well, if you go by what both sides are saying right now, not great.

(BEGIN VIDEO CLIP)

TIMOTHY GEITHNER, TREASURY SECRETARY: What we're not going to do is extend the tax cuts for the wealthiest Americans.

Remember, those cost a trillion dollars over ten years and there is no possibility that we're going to find a way to get our fiscal house in order without the tax rates going back up.

REPRESENTATIVE JOHN BOEHNER (R), HOUSE SPEAKER: Nobody wants to go over the cliff. That's why the day after the election I tried to speed this process up by making the concession to put revenues on the table and it is unfortunate that the White House has spent three weeks doing basically nothing.

(END VIDEO CLIP)

VELSHI: Now, the Republican counterproposal that we just heard about still includes those Bush-era tax cuts staying in place for everybody, which President Obama has called a nonstarter.

So, what if we raised taxes a little bit? It would still be much lower than what Americans paid just a generation ago. In 1980, the wealthiest Americans paid a marginal tax rate of 70 percent of their income to Uncle Sam. Now, tax reform under President Reagan reduced that rate to 50 percent, in 1981, and closer to current levels in 1986.

Today, President Obama wants to let the Bush-era tax cuts expire for wealthy Americans only, taking up their marginal federal tax rate from 36 percent to 39.6 percent.

Now, we're talking about a 3.6 percentage point uptick for households making more than $250,000 a year, only on every dollar they make above the $250,000 amount. Starts at $251,000. That's why it's called a "marginal tax rate." It is on the money you make on the margin.

Now, while I totally agree that every penny counts when it comes to your money, when you compare that to the taxes most Americans paid out in past decades when there was phenomenal economic growth, I just don't get why Republicans are screaming bloody murder about this 3.6 percent.

What if we were all to chip in a little more? The issue is less what the rate is than a widespread and fair frustration that we all have that our tax dollars aren't spent as efficiently as we'd hoped they could be.

But we need taxes. We need government programs, particularly the ones that use the scale and scope of government to get better deals and greater efficiency than the private enterprise can achieve.

Now, despite what you're being told, taxes as they stand are not an impediment to our long-term economic growth. Not getting a grip on government spending will be an impediment. The solution can be found by looking for smartly targeted spending cuts in conjunction with increased tax revenue.

Finally, we're setting record -- we're seeing record corporate profits in the third quarter, four years after the worst shock to the economy since the great depression.

So, is that good news for workers' wages? The argument being more profits means more investments which leads to higher workers wages.

That's not what is happening. According to a government report released yesterday, today actually, total worker wages fell as a percentage of the economy to a record low.

Look at these two charts. Growth in jobs and wages has been slower than growth in corporate profits.

One reason is that technology allows companies to produce more profitable goods with fewer workers.

Outsourcing is a part of this, too. American companies can use cheaper overseas labor to make goods that are then imported and sold in the United States.

Bottom line, record high corporate profits, but record low wages.

All right, take a look at -- tune in with "Your Money." I'm Ali Velshi. Take a look at "Your Money" on the weekends, Saturday at 1:00 p.m. Eastern and Sunday at 3:00.

(COMMERCIAL BREAK)

BALDWIN: We have just gotten some new video in from the White House. You will see President Obama meeting with the prime minister of Bulgaria. Take a look.

(BEGIN VIDEO CLIP)

PRESIDENT BARACK OBAMA: Obviously, there are very strong bonds between our two countries, including many Bulgarian Americans in my hometown of Chicago, that reminds us of the strong people-to-people relationship between the United States and Bulgaria.

(END VIDEO CLIP)

BALDWIN: And just quickly, a couple of reporters actually shouted some questions out after the president finished speaking on fiscal cliff. The president did not answer.

An NFL player murders his girlfriend, kills himself, and leaves their infant daughter without a mom or a dad.

As investigators are searching for the -- to answer the question, why, could the Chiefs, the football team he played for, be held accountable for Jovan Belcher's actions? We're "On the Case" with Joey Jackson, next.

(COMMERCIAL BREAK)

BALDWIN: The question on everyone's mind today is why. Why did Kansas City Chiefs linebacker Jovan Belcher shoot and kill his girlfriend and then kill himself outside the Chiefs' practice facility on Saturday?

Two people are dead, a little baby girl left without parents. His girlfriend's family just released this statement. Let me read part of it for you.

Quote, "We appreciate the outpouring of love and concern for our Kasandra 'Kasi' Perkins. Our hearts are truly broken for Kasi. She was a beloved daughter, granddaughter, sister, mother, cousin and friend."

I want to bring in defense attorney Joey Jackson here. Horrible story.

JOEY JACKSON, DEFENSE ATTORNEY: It is, Brooke.

BALDWIN: I keep thinking of the little girl. That's all I think about.

JACKSON: Who lost a mother and a father.

BALDWIN: When you think about the legal angle of this case, there's no criminal prosecution, right? But could there be a civil case?

JACKSON: You know, potentially there could be. And, as you mentioned, Brooke, there's no criminal prosecution. Why? Because he took her life and then his own, so there would be very little to prosecute unless they looked at where he got the gun.

Where did it originate from? Reports are out today, Brooke, that it was a legally owned gun and, so, you're right. The prosecution would not be there.

What you then look at is what you talk about is civil liability and, if so, who would be responsible?

It would seem the family of the descendant in this case could pursue what's called a "wrongful death action" against him or his estate, actually, for this tragic loss and that loss -- the wrongful death action would, of course, mean that he took her life, it was an intentional act.

They'd have to establish that, at his hands, as a direct result of his consult, she was dead and her family has been damaged as a result.

BALDWIN: What about the team? What about the Kansas City Chiefs, possibly the NFL? Could there be a case there?

JACKSON: You know, the only issue with that, Brooke, is there's a standard saying in civil laws and it says the risk perceived is the duty defined.

What does that mean in English? It means what's foreseeable, what can you and I foresee as likely, as probable?

And in this particular case, what did the Chiefs know? It seems to be a random act. It seems to be a person who, for whatever reason -- and all indications are he was a great person but just acted, I don't know, a fit of rage. There are reports out that maybe there was some traumatic brain injury.

And, so, it would seem remote to hold the Chiefs responsible unless they knew something that we don't know that they knew.

BALDWIN: OK, Joey Jackson, thank you.

JACKSON: A pleasure, Brooke.

BALDWIN: And we'll be right back.

(COMMERCIAL BREAK)

BALDWIN: Big news, there is a royal baby on the way. England's Prince William and his wife, Catherine, expecting their first child.

Royal correspondent Max Foster is in London outside the hospital where the duchess is being treated for some pretty tough bout of morning sickness. How's she doing?

MAX FOSTER, ROYAL CORRESPONDENT: Well, she's doing OK, I think. Prince William drove up with her from Bucklebury. They're staying at the Middletons' family home in Berkshire today and they were clearly concerned today.

They drove up to London to the hospital behind me. He's just left the hospital, though. It does suggest they're not overly concerned. Palace sources said they're not overly concerned, but there must have been a certain sense of concern because, at less than 12 weeks, she's in the hospital.

This acute morning sickness can be extremely uncomfortable for anyone suffering from it and she's up here in hospital.

They weren't planned to announce this at this point. They certainly wanted to wait until they had reached 12 weeks, but they had been forced into an announcement. The news is now out.

I can tell you, Brooke, Prince Charles and the Queen didn't even know until today that she was pregnant, so they tried to keep it quiet, but they couldn't because of this.

So, she's in hospital. She's resting, she's getting nutrients and she's being treated for hydration. So, she's in the best hands, I can say.

BALDWIN: Max Foster now on the royal baby beat for the next six months. Max, thank you very much.

Thank you for being with me. I'm Brooke Baldwin.

To Wolf Blitzer we go. Hey, Wolf.

WOLF BLITZER, CNN: Brooke, thanks very much.