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Deficit Reduction Realities; Protests at Michigan State Capitol Building; John McAfee Arrested and Hospitalized in Guatemala

Aired December 6, 2012 - 15:30   ET


BROOKE BALDWIN, ANCHOR, "CNN NEWSROOM": Starbucks CEO says going over the fiscal cliff will be a bitter brew for the global economy.

Ali Velshi is back. He has more on that. Plus, is it time for you to buy Apple stock? He's next.


ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: Democrats need to own up to taxes because they can't have their cake and eat it, too.

From the CNN Money newsroom, I'm Ali Velshi. This is "Your Money."

In the next five minutes, I'm going to tell you what others won't about the fiscal cliff.

The head of Starbucks says it will be damaging to America's financial reputation, more on taxes and shenanigans from Democrats on Capitol Hill and, if you had a cool 500 bucks to spend, should you use them now to buy a share in Apple?

On the money menu, Apple says it's going to start build some of its iconic Mac computers in the U.S. Right now, Macs are assembled in China.

Listen to what Apple CEO Tim Cook said to NBC's Brian Williams.


TIM COOK, CEO, APPLE: And, so, we've been working for years on doing more and more in the United States. Next year, we will do one of our existing Mac lines in the United States.


VELSHI: But Apple stock has been singing the blues for a few months. The share prices plummeted 25 percent off its all-high and it took a beating this week, 6.5 percent lower yesterday.

Apple is up more than a percent today, currently trading around $544 a share. So, is now a good time to get in? You're all asking me this.

I'm asking Katie Stockton. She's a market analyst at MKM Partners in Connecticut. Katie, is Apple stock down off its high, a phenomenally successful stock to hold for so many investors. We're going to show them the chart again.

You look at technical trading patterns in the stock. Do they tell you that it's time to buy, sell or hold this stock?

KATIE STOCKTON, MANAGING DIRECTOR, MKM PARTNERS: They tell you it's time to buy and I say that because we really need to keep the pullback from yesterday of about 6.4 percent into perspective where it follows a relief rally of about 17.5 percent.

So, because of that, it actually has not generated any kind of breakdown in the stock. In fact, Apple came back down and tested a level that it reached at the March -- or I'm sorry -- the May low and that's an area where it has seen buying pressure in the past.

So, it would be a natural level for buyers to come back in to Apple and momentum is really not as bad as it felt yesterday from the longer-term perspective. The longer-term uptrend for Apple is still very much intact here.

VELSHI: All right. So, while we got you, if it's at 445 bucks -- 545 bucks -- and you're thinking it might still be an opportunity to get in, is there a number where it should be a time to get out?

STOCKTON: Certainly. The initial resistance as we call it is around $600. That's where Apple has met selling pressure pretty recently.

I think that's a conservative upside target for the intermediate term. It's about 10 percent above current levels and, beyond that, if we see a breakout above that level, I think we could look at $700 again which is where we peaked in September.

VELSHI: Katie, I don't know how you get work done during the day because if people actually think you know something about Apple, they ask. I don't know anything about it and all they do is ask me whether they should buy the stock.

Thank you for telling our viewers what you think. Katie Stockton joining us now.

Listen, Americans could be singing the blues if Congress doesn't act to avert the fiscal cliff. For instance, the longer Congress waits the more complicated for businesses to figure out how much to pay workers early next year.

The confusion could cost employers money, especially small businesses which use payroll software which takes time away from running their business.

Now, Starbucks' CEO Howard Schultz agrees. He told Poppy Harlow on Wednesday that the fiscal cliff will be seismic and significant.


HOWARD SCHULTZ, CEO, STARBUCKS: This single issue has a seismic effect on the rest of the world that we have never been as connected and the domino effect of a bad outcome here will have significant negative consequences, domestically and around the world.


VELSHI: Negative consequences, seismic or not, none of that is stopping Starbucks' plans to open 1,500 more cafes across America next year and just as many around the world, but we get his point.

Speaking of the fiscal cliff, we all know what the parameters of a deal in Congress will look like, right? On taxes, Republicans will give in on raising taxes on the wealthiest 2 percent and Democrats will agree to rein in tax breaks, right?

Well, except the Democrats on Capitol Hill are fighting hard to preserve the tax deduction for state and local taxes. That costs the federal budget more than $80 billion a year. Why? Because 7 of the 8 states where taxpayers use the deductions the most are "blue" or Democratic states.

Take a look. New York, New Jersey, Pennsylvania, all solidly blue with some of the highest state and local taxes taken out there, including property taxes. The tax deductions on them tend to benefit higher-income taxpayers, by the way, in states that consistently deliver for the Democrats.

I get the politics of this, but Democrats need to own up. They can't have their cake and eat it, too. In the end, we are all going to pay more or we're going to get less if we're serious about the fiscal house in order.

If Dems are serious about getting Republicans to break with ideology and their party base, to vote for higher tax rates, Democrats have to be willing to do the same and break with their base.

Both sides can go back to their politics after they get this right and avert a fiscal cliff before January 1st. So, quit scrapping. Get the work done now, Congress.

All right, finally, something you may not know. According to a new study, gay people earn more than other Americans.

A survey of a thousand gay people by Prudential reported that annual incomes were more than $11,000 higher than the national median income of $50,000 a year.

What's more, the survey shows that gays carry less debt than other Americans do, $4,000 less than the national average. Prudential said they're more likely to have a job, to save money and to build up more equity in their homes.

Why? Well, Prudential suggest that the uncertainty of the future of gay rights over the years may have prompted them to be more prudent with their money. Interesting.

All right, that's it from the CNN Money newsroom in New York. I'm Ali Velshi. That's what you need to know. If, however, you want to know more, watch "Your Money," this weekend, Saturday at 1:00, Sunday at 3:00 Eastern. I'm out. Same time tomorrow.


BALDWIN: All right, I want to take you back out to Michigan where these massive protests have basically shut down the state capitol building in Lansing. At least, by our latest count, eight people have been arrested.

Jim Kiertzner, let me go to you. You are live amidst this melee from our affiliate, WXYZ. Tell me what you're seeing and explain to all of us this right to work legislation, perhaps nearing a vote.

What specifically are people protesting about that?

JIM KIERTZNER, WXYZ REPORTER: Brooke, this is part of the Republican conservative trend that has been sweeping through some states. Michigan may be the newest state on the map to wipe out decades of closed-shop union stronghold turning Michigan in to a right-to-work state.

We have seen union protesters here by the hundreds. In fact, they're inside the state capitol here in Lansing, Michigan, as we speak, as this legislation is being taken up in both the house and senate chambers today.

It is on a fast track. This was being written when this day started. We had a news conference earlier this morning from Michigan Governor Rick Snyder, a Republican. The Republicans also control the house and the senate here in Michigan.

They're calling this "workplace fairness," "equality in the workplace." It is for public and private sector employees, but it does not include police and firefighters.

They're excluded because they have their own special place in Michigan law. Public Act 312 that requires binding arbitration when they have any kind of a labor dispute.

And the governor here also says they want to follow Indiana. Indiana passed this earlier this year and they don't want to see businesses locate next door in Indiana by steering away from Michigan.


BALDWIN: Jim, let me ask you about the pictures we were just looking at. We saw people inside the rotunda, inside the capitol.

From what I understand, the capitol closes in about an hour and a half from now. What happens to the people if they choose to remain?

KIERTZNER: If the house and the senate are still in session, they would have to keep the doors open. In fact, Democrats announced a couple of hours ago here that they went to court with a lawsuit forcing them to open all the doors and to let all the people inside.

You can't see beyond this trailer right here, but there is still a couple hundred protesters out here on the east side of the capitol who cannot get in. They've been kept outside because they said the fire marshal said that they had reached capacity with people inside.

But if they're still in session, they have to keep the doors open.

BALDWIN: Jim Kiertzner, thank you so much. We'll be watching what happens through the rest of the day with our CNN affiliate, WXYZ, out of Detroit. Thank you, sir. Appreciate it.

We are following another breaking story here out of Guatemala on the health of software pioneer Jim McAfee. He is under arrest. Now, he's been rushed to the hospital.

We're going to talk to our correspondent who's just landed now in Guatemala City on the ground. We'll talk to him about McAfee's condition, next.


BALDWIN: Want to take you now live to Guatemala City where we have correspondent, Martin Savidge, who's now on the ground. Martin was the one who, through a very circuitous route and through passwords, initially got this interview with this pioneer software guy, John McAfee, just a couple of days ago.

We now know he's been arrested and now we're learning he's in the hospital.

So, Martin, if you're with me here on the phone, tell me what you know about his medical condition right now.

MARTIN SAVIDGE, CNN CORRESPONDENT: Yeah, Brooke. This happened about an hour and a half ago according to authorities here in Guatemala City and he was transported from the facility where he was being held by Interpol to what's now described as the national police hospital that is in downtown Guatemala City and he's in the emergency room currently and he's being evaluated.

Now, his attorney paints a different picture than what was first described. Originally, we were told it was something maybe pertaining to convulsions, but now his attorney says, no, it's something to do with his heart.

He says it's cardiac and that it was a problem that began surfacing last night that, as you know you were reading the blogs of him, John McAfee's been putting out inside the prison cell, he sounded absolutely fine. In fact, he made life sound terrific in there.

But his attorney says, no, actually these health problems began then. He's been rushed to the hospital and he's being evaluated now.

BALDWIN: So, he's in the hospital. We know he was arrested. He was arrested in Guatemala for entering this country illegally. But this all goes back, he was missing for about a month in Belize after the death of his neighbor there. What are the chances he'll be taken back to Belize and possibly face charges?

SAVIDGE: Well, it sounds like his chances could be very good because the president of this country himself who apparently came out with a ruling denying the asylum request.

Yesterday, when you and I spoke, we thought it seemed pretty ridiculous on what grounds that John McAfee could ask for it and apparently the president of Guatemala agreed. And he said, no, there's no reason to grant asylum. He needs to go back to Belize.

I've spoken to the authorities in Belize and they are anxiously awaiting the return of John McAfee. And they say when he lands in their country, they will take him in for questioning in police custody.

BALDWIN: OK. Martin Savidge in Guatemala City. Martin, thank you.

Back after this.


BALDWIN: "On the Case" today, how's this for manslaughter, 10 years of church. Yep, you heard me right.

This is what an Oklahoma City judge sentenced 17-year-old Tyler Alred to as a condition for his probation. Alred pleaded guilty for driving under the influence after causing a deadly crash that killed his friend last year.

He was convicted of manslaughter, sentenced to 10 years probation and he must attend church every week, not two, not five years, 10 years.

ACLU, now, they're stepping in. They filed a complaint says the sentence blatantly violates his First Amendment rights of freedom of religion.

I want to bring in our legal analyst, Joey Jackson, with me in the studio.


BALDWIN: Hello, hello.

Obviously, the question is, did the judge violate his rights, reportedly doesn't even -- it's actually legal?

JACKSON: Well, let me say this. First of all, most of my clients, Brooke, would love to be sentenced to 10 years of church instead of jail.


JACKSON: Now, on that basis, knowing that and understanding that, if the defendant consented to the sentence, it's not a violation of the defendant's rights.

If the defendant did not, it becomes problematic. Here's why. First Amendment, separation between church and state. You have the right, the establishment clause, the free exercise clause.

We can establish a religion of our choosing. We can practice a religion of our choosing. And, as a result of that separation, a judge and court cannot impose upon you that you have to go to any church at all, irrespective of your faith.

BALDWIN: So, then can the ACLU step in like this?

JACKSON: Well, here's the problem for the ACLU. Two problems. One of which I just, the issue of consent. If the defendant consented, it's all good.

The second issue, however, is a very technical issue, Brooke, and that is standing. The person who sues has to be aggrieved, has to be affected, has to be damaged by the suit.

And if the ACLU is not in and you have itself aggrieved, then they have no standing legally to move forward.

So, they have to get this person's consent, but they might get it, Brooke, and here's why. Enforcement. Say for example he doesn't show up for a few weeks of church and all of a sudden it becomes a condition of a probation violation.

Enforcing it's going to be problematic because the judge can't say you didn't go to church after all and then it becomes a problem. Then he's going to say, ACLU, I'm in trouble. Can you help me?

BALDWIN: Can I ask, how many years have you been in law?

JACKSON: Sixteen.

BALDWIN: Have you ever heard of someone being sentenced to church?

JACKSON: Never ever ever.

BALDWIN: OK, just, I haven't either. But I just wanted to ask you. Just curious.

Next case, a lot of people write all kinds of mean things online, right? So, here's this case.

This D.C. contracting firm is suing this Fairfax woman for $700,000 here for her negative remarks about the firm on Yelp.

Jane Perez says hired her old high school classmate's firm to do some work on her house. She alleges she was left with damage to her property and missing jewelry.

So what do people do when they aren't exactly happy about a service they received? You go online, places like Yelp, places like Angie's List and you write whatever you want to. You blast the company so others don't make the same mistake and now the firm is suing her saying it lost $300,000 in business and, apparently, the judge ordered the woman to remove the allegations and everything, to remove all the ugly words, right, off this website.

Generally your opinions are protected with the First Amendment, but online ...

JACKSON: Bullies ...

BALDWIN: ... people are mean online, aren't they?

JACKSON: They could be. But they're still protected and here's the issue, Brooke.

BALDWIN: You are protected?

JACKSON: You are protected. You still have your protections no matter where.

But here's the issue, right? The Amendment and the Constitution, it protects you against factual misrepresentations. There's a distinction between fact on the one hand and opinions on the other.

Now, arguably you could say that there were some facts in the things that she wrote online. However, here's where you get it, Brooke. An absolute defense to defamation is the truth and, so, therefore if her statements were true, she's protected.

I think the underlying goal of this company is to chill this in the future, meaning, if other people want to write things about them, true or not, they're going to say wasn't that woman sued for all of this money? I'm not going to express my opinion.

And that I think is the ultimate goal, but defamation cases, very, very tough to prove.

BALDWIN: But can businesses, they really can't protect themselves then from whatever somebody chooses to do online.

JACKSON: Do good work.

BALDWIN: Right. Simply do good work. But not everyone does good work. Hello? You know?

JACKSON: Right. I think, ultimately, businesses can protect themselves, but here's the problem. The problem is, is that, look, everyone has an opinion and, obviously, if you do something that's not up to par, it doesn't meet quality, it's shoddy, people are going to do what? Write nasty things about you.

And, so, as a result of that, you have to hold people accountable if they misrepresent factually those things and if in that factual misrepresentation it causes damage injury to the business.

And, so, therefore, moral of the story, A, on the one hand, businesses, do what you're supposed to do. And on the other hand, if you're the consumer, just be careful in the way that you express what they've done to you.

BALDWIN: Be careful. Be careful.

JACKSON: Avoid those lawsuits.

BALDWIN: Joey, thank you so much.

JACKSON: A pleasure, Brooke.

BALDWIN: Thank you so much for being with me here. I'm Brooke Baldwin in Atlanta.

Now, to Washington, Wolf Blitzer and "THE SITUATION ROOM." Wolf?

WOLF BLITZER, CNN: Brooke, thanks very much.