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EARLY START WITH JOHN BERMAN AND ZORAIDA SAMBOLIN

Tornado Warning In Mobile, Alabama; Fiscal Cliff Stalemate; Fallout From Benghazi Report; More Victims Laid To Rest; Global Gun Control; Fiscal Cliff and Your Taxes; The Business of Guns

Aired December 20, 2012 - 06:00   ET

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


ANNOUNCER: This is CNN breaking news.

JOHN BERMAN, CNN ANCHOR: Good morning, everyone. Here John Berman along with Zoraida Sambolin. We do have breaking news to tell you about. It's about the weather right now, a tornado warning in Mobile, Alabama.

There is a major weather front there. Let's go right to Alexandra Steele on our weather center to tell us more about this. Hi, Alexandra.

ALEXANDRA STEELE, AMS METEOROLOGIST: Good morning, guys. You know, this is all part of the same blizzard that we're seeing, of course, through Iowa and Wisconsin. On the southern side of this incredibly energetic system we have severe weather and the threat of it through the day.

Here's where that tornado warning is. You can see this is the cell, this very strong thunderstorm capable of producing a tornado. The cell moving northeast at 45 miles per hour with its sights set on Nobile so again, this cell moving northeast 45 miles per hour, tornado warning for Mobile County.

But actually in the whole southeast, we do have a threat and we do have a tornado watch posted through noon this afternoon so again, in the southeast, this very voracious system. But on the northern tier of it, of course, we saw the video and have seen it throughout the day, yesterday what happened in Colorado.

The storm system now is moving east. Here's where the really quadrant of concern is. Iowa, you can see right I-80 through Des Moines, biggest cities impacted today, Des Moines, Madison, Green Bay and then Chicago late tonight.

The swath where the heaviest snow will be, you can see it here delineated in the purple between about 10 and 12 inches of snow. So this is really phase two of this storm. We saw the snow. Today, we'll see more snow. We saw the winds yesterday and last night. We'll see stronger winds today.

So it's kind of even energizing further still. Here's the radar picture, the northern tier, but of course where the snow is and the blizzard conditions. This is the swath of that. We do have blizzard warnings in six states meaning the snow is coming down, but it's the invisibility and incredibly strong winds that make this a perilous scenario today.

Chicago, just rain for you until 7:00 tonight, changes over the snow and then the winds kick in. There's that severe side from Chicago all the way down to St. Louis. Again, Green Bay to Des Moines, that's where we'll see a foot of snow today coupled with incredible winds that we'll see throughout the day pick up in earnest through tonight in Chicago.

ZORAIDA SAMBOLIN, CNN ANCHOR: All right, Alexandra, all that snow coming down is actually taking down power lines as well. There are 36,000 people without power in Iowa this morning. Thank you for that. We're going to continue checking back in with you.

BERMAN: And the weather system is so big. Again, it is causing a tornado warning in Mobile, Alabama. So guys, if you are down there, stay alert.

All right, 2 minutes after the hour right now. Other news, President Obama and House Speaker John Boehner butting heads over the fiscal cliff negotiations, only 12 days to go now and it seems like a political stalemate has set in.

The president has challenged Republicans to, quote, "take the deal and stop finding ways to say no to him." Meantime the speaker intends to put his Plan B up to a vote in the House today. This would extend the Bush-era tax cuts on incomes up to $100 million.

If it passes and Senate Democrats block it, which they will, Boehner says the president will become responsible for the tax hikes when the nation goes over the fiscal cliff. That's what Boehner is trying to suggest here. The president suggests otherwise.

CNN political editor, Paul Steinhauser is in Washington this morning. Paul, it really does seem like both sides are digging in their heels whatever progress we had seemed to have stopped short.

PAUL STEINHAUSER, CNN POLITICAL EDITOR: Yes, the optimism from earlier this week, John, really seems to have gone away and both men it seems playing a political game of chicken. The president making his fiscal cliff comments after announcing some gun control efforts.

John Boehner is coming in front of cameras two hours later. He spoke for 56 seconds before leaving. Here's a taste of what both men said.

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER (R-OH), HOUSE SPEAKER: The president's offer of $1.3 trillion in revenues and $850 billion in spending reductions fails to meet the test that the president promised the American people, a balanced approach. And I hope the president will get serious soon about providing and working with us on a balanced approach. BARACK OBAMA, PRESIDENT OF THE UNITED STATES OF AMERICA: You know, at some point there's got to be, I think, a recognition on the part of my Republican friends that -- take the deal. You know, they will be able to claim that they have worked with me over the last two years to reduce the deficit more than any other deficit reduction package.

(END VIDEO CLIP)

STEINHAUSER: The big question for today, of course, does John Boehner have enough support from his own party to pass his Plan B and will Plan B basically side track negotiations for a larger settlement.

John, as you know, if there's no agreement by the end of the year, that means basically tax cut increases or tax increases for almost all Americans and massive spending cuts.

BERMAN: Paul, it is an open question whether Boehner has the votes. Yesterday, Representative Paul Brown from Georgia told me he was leaning against voting for it. He is a very conservative Republican.

However, the speaker may have some cover from Grover Norquist who says that Republicans can go ahead and vote for it if they want. On the subject of public opinion, though, we have some brand spanking new poll numbers to talk about how Americans feel about all this.

STEINHAUSER: We do. Just out about an hour ago and these numbers from CNN/ORC are interesting and they also kind of indicate that Americans seem to be backing the Democrats more or at least feel more in favor of what the Democrats are doing than Republicans. Take a look at this first number.

Which party should compromise more to get partisan solutions? And it seems more Americans say the Republicans should compromise rather than the Democratic Party. Also who would be more responsible if there's no deal to avert the fiscal cliff? More people would blame the Republicans in Congress, 48 percent, only 37 percent blaming the president, about one in ten blaming both sides -- John.

BERMAN: All right, Paul Steinhauser, our political editor live in Washington this morning. Again, if you're looking ahead to the big events today, it is this House vote on Speaker Boehner's Plan B. Thanks a lot, Paul.

SAMBOLIN: It's 5 minutes past the hour. Today, the fallout from that damning report on Benghazi, one State Department official has resigned, three others on disciplinary administrative leave, this after an independent review examining September's attack cited systemic failures in leadership and management deficiencies. Two State Department officials are set to testify before House and Senate committees at 8:00 a.m. Eastern. That is happening this morning.

And we know next month Secretary of State Hillary Clinton will testify before the House Foreign Affairs Committee about the attacks in Benghazi. That's what one of her advisers told the chairwoman of the panel. Clinton is said to be feeling better after suffering a concussion and a fainting spell. BERMAN: Less than a week after the Newtown school shooting tragedy, President Obama is declaring gun control a central issue of his second term. The president is pledging to bring sweeping new gun control proposals before Congress by next month. Once again promising he will use all the powers of his presidency to enact meaningful reforms with the vice president leading the charge.

(BEGIN VIDEO CLIP)

PRESIDENT OBAMA: This is not some Washington commission. This is a team that has a very specific task, to pull together real reforms right now.

(END VIDEO CLIP)

BERMAN: The president's team consists of officials from the Justice Department, Homeland Security, Health and Human Services and the Department of Education.

Detectives investigating the Newtown school shooting retracing the steps now of the gunman's mother in the days right before the attack. What they found coming up.

BERMAN: Plus gun violence and the tale of two different societies. One reporter shares her unique perspective. It will make you stop and think. That's just ahead.

(COMMERCIAL BREAK)

SAMBOLIN: New details coming to light about the days leading up to the Newtown massacre. Friends of Nancy Lanza, the shooter's mother, saying she was in New Hampshire taking a vacation at a hotel.

That's about a four-hour drive from Newtown. They say she felt comfortable enough to leave him alone for three days. The morning after her return is when she was found dead.

Take a look at this photo. All but one of the students in this first grade class picture were killed. The little girl in the middle played dead, another reminder of the enormity of this tragedy.

And there's no end to the outpouring of support, some 3,000 people gathering at Western Connecticut State University to mourn and to honor all of the victims. Sandra Endo is in Newtown and she is following all of the developments for us. Good morning to you, Sandra.

SANDRA ENDO, CNN CORRESPONDENT: Good morning, Zoraida. Five more funerals here today in Newtown, three children and two teachers, 6- year-old Allison Wyatt, 6-year-old Benjamin Wheeler, 6-year-old Catherine Hubbard, Lauren Rousseau and Anne Marie Murphy, the two teachers, they all will be laid to rest here.

Last night, we saw lines wrapped around churches in the freezing cold, people waiting in line to say their final goodbyes and that, unfortunately, has become the daily ritual here in Newtown, Zoraida and a lot of people still wondering why, searching for answers.

We know from the Connecticut State Police, they say that the full and complete state police report won't be completed for months because they have to go through the pain staking task of interviewing all the victims. That means the survivors and the children that witnessed the shooting as well.

That's certainly going to take some time. It's a very delicate situation, according to law enforcement officials here are and so they want to make sure they go through the thorough task of interviewing everybody. So that will take several months to come -- Zoraida.

SAMBOLIN: Sandra, tomorrow 9:30 a.m., one week since this tragedy happened. I would imagine that they have something planned to commemorate this. Can you tell us about that?

ENDO: Absolutely, 9:30 is when the gunshots rang out here in Newtown at Sandy Hook Elementary, and the governor here calling for a moment of silence. Not just here in Connecticut, but across the country in terms of support for the victims and the victims' families.

He's also asking area churches to ring their bells 26 times for the victims so certainly a very important and poignant time for residents here in Newtown tomorrow at 9:30.

SAMBOLIN: Sandra, I cannot tell you how grateful we are to have you out there. Thank you for that -- John.

BERMAN: All right, these are some statistics that a lot of people of talking about this week. In 2008, Japan had just 11 gun-related murders. The U.S., 12,000 so should America look to other countries' gun policies now? We have someone with a unique perspective on this. CNN's own Kyung Lah.

(BEGIN VIDEOTAPE)

KYUNG LAH, CNN CORRESPONDENT: I moved back to the U.S. this summer. For the last five years, I was living in Japan as CNN's Tokyo correspondent. In that entire time, I never covered a shooting. There weren't any. This is my third mass shooting I've covered in just six months.

WOLF BLITZER, CNN HOST, "THE SITUATION ROOM": CNN's Kyung Lah is on the scene for us at that apartment complex. She's got more on this part of the investigation.

LAH: In this brief time, I've heard this question again and again by those victimized, most recently from a frustrated Newtown resident.

LEE SHULL, NEWTOWN RESIDENT: Why are we so different than the industrialized countries that have so little gun violence and we are -- what makes us we so different? Why is that?

LAH: I don't have the answer. But I can compare Japan and the U.S. In Japan, there are almost no guns. The average person just can't get one. And I have to tell you, it's the safest place I've ever lived. Here in the U.S., gun ownership is considered normal. Forty percent of Americans own one. There are enough guns here to arm every single man, women, and child, about 300 million firearms.

But these mass shootings, which are now a part of our American narrative, follow the familiar pattern, the shock, national outrage, memorials and funerals. Then the conversation fades. The rest of the world wonders why.

MIKE AMOR, 7 NEWS AUSTRALIA: I have seen too many of these massacres. I have been here for 12 years and there is never anything more than a brief conversation. People outside of America can't understand that.

LAH (voice-over): But it's not all about guns. Remember Japan's tsunami. In the wake of the disaster, people lined up for food and water.

There was never any violence, no rioting, no crime. It's about society. Individual rights are second to the community's needs in Japan.

(on camera): Here in the United States, the Constitution, including the Second Amendment, is considered sacrosanct. We as Americans prize freedom, the good and the bad.

UNIDENTIFIED MALE: It's about freedom. Freedom works both ways, you know. If Americans would waive their freedom to buy any kind of guns any time, anywhere in any situation, then that would have given these kids at the elementary school the freedom to live.

LAH (voice-over): I met these three men who fought for freedom in Iraq and Afghanistan. These men of war were so disturbed by the Newtown shootings that they came here on their day off to donate Christmas trees at the town hall. They wonder what is this national security that they're fighting so hard for.

SPECIALIST JAMES WATTERS, U.S. ARMY: To come home to what you think is safe and to experience the same thing here, it's troubling and it's -- it brings such sorrow to everyone, the whole Army.

LAH (on camera): None of us have the answer, but maybe the deaths of the shooter's mother, 20 innocent children and their brave teachers will this time keep a vital American conversation going.

Kyung Lah, CNN, Newtown, Connecticut.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Welcome back. Right now, the season's first major winter storm is dumping up to a foot of snow in the Midwest and Great Plains. This blizzard has knocked out power to tens of thousands in Iowa this morning. A blizzard warning is in effect in half a dozen states, and 36,000 people are already without power waking up in the Des Moines area this morning. A wannabe terrorist who didn't have the cash or the bomb. A 20-year- old Florida man in jail on terror charges this morning. Federal prosecutors say Raees Qazi wanted to attack a landmark in New York to avenge deaths in Afghanistan, but he didn't have the money or the materials to make it happen. Qazi is a U.S. citizen who was born in Pakistan who's brother was also arrested.

There are stronger privacy protection this morning for children who go online. The Federal Trade Commission updated privacy rules to make it harder for companies to collect personal data when children use Web sites, mobile phones, apps, smartphones and tablets. The rule gives parents have greater control over their children's information.

It's show time for UPS. The carrier says today's peak shipping day will be the busiest in its history. The men and women in brown will deliver 28 million packages in the U.S. that's about 300 every second. Tomorrow is the deadline to make sure your gifts arrive by Christmas Eve.

Sometimes, a horse just wants to take a little dip. Of course getting him out of the pool, well, that's another story. Firefighters in Palm Beach County, Florida, had quite a challenge after a horse named Andy jumped a fence and wound up in the pool. After the 30-year-old horse was given a sedative, firefighters used a harness and tow truck to pull him out of the water. Andy is just fine.

A second-grade teacher in Rhode Island said school officials didn't let him speak at a meeting, so he spoke through YouTube.

(BEGIN VIDEO CLIP)

STEPHEN ROUND, SECOND GRADE TEACHER: I've had it. I quit. I would rather leave my secure $70,000 job with benefits and tutoring Connecticut for free.

(END VIDEO CLIP)

ROMANS: That's Stephen Round. He said the Providence school system is turning students into good test takers instead of long-life learners. And he'd rather tutor in Connecticut for free than keep working under this condition.

(BEGIN VIDEO CLIP)

ROUND: I think the video explains it all. It was purely frustration. It just got to the point where I can't stand by and watch kids not learn, you know? And I have the key to help them and the administration won't let me use it.

(END VIDEO CLIP)

ROMANS: Providence school officials say they're sorry that he wasn't satisfied but they didn't comment on the specifics of that resignation.

EARLY START is back in 60 seconds. (COMMERCIAL BREAK)

BERMAN: New York, New York.

SAMBOLIN: Good morning. How are you this morning?

BERMAN: The Big Apple, the financial center of the universe.

We are minding your business this morning. And after two strong days of gains, U.S. markets closed lower yesterday and stock futures are flat again this morning as these fiscal cliff talks in Washington seem to be going nowhere.

SAMBOLIN: Aren't you tired of it? A hundred million people could see a delay in getting their tax refunds unless Congress moves on the fiscal cliff soon. Christine has the details.

ROMANS: The urgency is felt among small business owners, big business owners, payroll software companies, the IRS, anybody who has to handle a paycheck or a tax return for next year.

Look, the tax season starts in just a few weeks and we don't know if there's going to be another AMT patch, the alternative minimum tax. This will affect millions and millions of people.

What is that AMT? This was a tax designed to make sure that wealthier people paid a minimum amount of tax. Because of the way Congress designed it so poorly, every year, it has to be patched to make sure middle class people don't have to pay a bunch of taxes.

Thirty million more people would pay the AMT if that AMT patch goes away and 100 million tax refunds could be delayed in this crazy tax scramble to figure out what to do after we either go over the cliff or we go over the cliff for a little bit and then the cliff gets fixed.

So this is a very big deal. The IRS acting director Steven Miller has sent a letter to the House and Senate tax writers saying, look, there could be lengthy delays of tax refunds and unexpectedly higher taxes for everyone. So, that's still a very big problem.

AMT patch, the drama is just killing me.

BERMAN: I'm shaking my head because I don't think these things are factoring into the negotiations. I simply don't think the politicians are weighing these considerations right now.

ROMANS: No. I mean, I've been calling it congressional malpractice. I mean they write these laws that are crazy that we have to patch every year anyway, and now, they can't fix the problem that -- don't get me started.

BERMAN: All right. Since we know you know better, tell us the one thing we need to know about our money.

ROMANS: Home values, you guys, home values are up. This is -- I'm going to leave you on a bright note. Home values are up more than 5 percent this year -- the best year for home prices since 2006.

This is Zillow. It says the last time home values stood where they are right now, May 2004. We're going to get existing home sales data at 10:00 a.m. Eastern today. But here's what you need to know about home prices: places like Phoenix, San Francisco, San Jose, very -- Denver, very good year for home prices. Double-digit price increases. Phoenix is up 20 percent on home prices.

SAMBOLIN: That's because they fell so low.

ROMANS: Philly, Atlanta, New York, Chicago -- these places saw either flat or slightly lower home prices over the last year.

SAMBOLIN: I want to switch gears here in light of what happened in Newtown. You've been working really hard on guns.

ROMANS: I have. I've been looking into the industry.

SAMBOLIN: A lot of money.

ROMANS: Look, a billion dollar industry. Like $3.5 billion in sales, a billion dollars in profit in this industry. Fastest growing part of the industry are these tactical rifles, modern hunting rifles. The things like the AR-15 style weapon that was used to kill teachers and children in that school.

Just a little hint about how pervasive the industry is in our lives. There are more gun dealers in America than there are supermarkets and McDonald's combined.

BERMAN: It's crazy.

ROMANS: We buy guns, we have guns, we have the highest number of guns, we have the most gun violence, and the cost of guns, the CDC has actually tried to figure out how much guns cost. The medical costs of treating fatal gun injuries and the economic damage cost to lives. CDC said 2005 was $37 billion, $37 billion.

Stocks of those gun makers I told you how they have been down for three days. They were all up yesterday. Investors are saying, look, people want to buy guns, we're armed to the teeth in this country, there's huge demand for it and so investors yesterday were saying that that sell-off in the stocks is over done.

So, we'll watch the stocks today.

SAMBOLIN: Right. It's one of those stories that's so difficult to come up with a really good conclusion here. Kyung Lah had this really great piece on the heels of that.

ROMANS: And, you know, an analyst who -- a Wall Street analyst who covers the gun industry told us there is a hipness and coolness factor to these big magazines and to these what I would call a military-style big, you know, semiautomatic rifle. There's a big demand for that kind of gun. Americans -- regular Americans want to own those guns because it's cool. BERMAN: All right. Christine Romans, thanks very much.

Now, another big story that we're following at this very moment is the weather. I can tell you this, we were telling you about tornado warnings in Mobile, Alabama. Those have expired or are expiring at this point.

But we're looking at right now pictures from Milwaukee, Wisconsin, where there is snow on the ground and people covering snow on the ground, as you can see. It's going to get much, much worse there today. We'll tell you how much worse and where else is going to be affected coming up next.

(COMMERCIAL BREAK)