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EARLY START WITH JOHN BERMAN AND ZORAIDA SAMBOLIN

Fury Of Winter's First Big Storm; GOP Doesn't Back Boehner; NHL Cancels Games Through January 14; Michael Phelps: AP's Athlete Of The Year; Remembering Newtown; Businesses Bracing for Fiscal Cliff Fallout

Aired December 21, 2012 - 06:00   ET

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


JOHN BERMAN, CNN ANCHOR: So, you know, NASA has actually been flooded by calls of people wanting to know what to do. I guess, NASA is the place to call if you are afraid of the end of the world.

"The New York Post" is reporting that many people are stocking up on supplies and in New York apparently and elsewhere, there have been all kinds of big parties for people looking for one final fling. You know what I'm talking about there.

ZORAIDA SAMBOLIN, CNN ANCHOR: What was that?

BERMAN: One last final fling. You know what I'm talking about there. EARLY START continues right now.

SAMBOLIN: One last final fling. All right, that massive winter storm that hit the Midwest is now smacking into the northeast. We are tracking the storm for you, straight ahead.

BERMAN: Another day, another big fat no deal on the fiscal cliff, a big embarrassment for Speaker Boehner. We're going live to Washington with the details, coming up.

SAMBOLIN: Michael Phelps picked for the "Athlete of the Year." This may surprise some of you especially when you see who he beat out.

BERMAN: Enough for that guy. Enough, enough already.

SAMBOLIN: He has enough. Enough accolades. Good morning. Welcome to EARLY START. I'm Zoraida Sambolin.

BERMAN: And I'm John Berman. It is about 6:01 in the East Coast and talk about nightmare before Christmas, just nasty weather. The winter's first major storm is making holiday travel dangerous if not impossible in the upper Midwest.

Today, New England is expected to get slammed by this very same storm. At least seven traffic-related deaths in four states blamed now on severe weather as the storm barreled through the plains and into the Great Lakes.

More than a foot of wet, heavy snow fell in parts of Iowa and Wisconsin. Hundreds of flights canceled right at the height of holiday travel. You have to check this out. This is an amazing picture.

Just listen to it. The power lines sparking and snapping. The worst of the storm, 400,000 power customers in the region had no electricity. That's down to 103,030 right now, but it's still really bad. I can't get over the picture of that stuff sparking.

Meteorologist Rob Marciano is tracking it all for us from the CNN Weather Center in Atlanta. Good morning, Rob.

ROB MARCIANO, AMS METEOROLOGIST: Good morning, John. We not only had sparks on the ground because of power flashes, but a number of reports of thunder snow meaning lightning within the thunderstorm. That's when you know that there is a tremendous amount of lift within a snowstorm.

We had that throughout the day yesterday. The center of it, it's right about there, pretty much right over Toledo. The back side of it, obviously all cold, but a lot of wind with this as well and the front side of it is mostly warm, heavy rains are heading towards New York City.

Chicago, you finally have a little bit of snow to break your streak of snowless days. But the bulk of the heaviest snow is back into Wisconsin and into Iowa, where a foot, foot and a half of snow has fallen.

Snow coming down pretty good in Michigan right now and blowing sideways across parts of Ohio with wind chills that are in the teens and now the warm sector of the storm has obviously some rainfalls of heavy rain from Philadelphia up to Trenton, Newark, and through New York towards White Plains, Fairfield County and then back up to the I- 95 corridor.

But there's a lot of wind with this as well. So not only propounding on the roadways, but the winds are going to cause some air travel delays and serious wind advisories have been issued for a good chunk of real estate all the way from the Canadian border down through Dixie, 45 to 50-mile-an-hour winds.

Here is the verification of that yesterday, St. Louis had 67 mile-an- hour winds gusts and that's where (inaudible). And the snows will pile up again away from most of the big cities, but it will continue to pile up away.

BERMAN: All right, thanks -- Rob Marciano, thanks so much. It is nasty out there including in Ohio, a snow-packed start to the weekend in the northeastern part of that state. The area is bracing for 8 inches of snow over the next 24 hours.

The major concern though as you heard Rob talking about, 45-mile-an- hour wind gusts are possible. Victor Blackwell is weathering the storm in Cleveland. Victor, what's it like there right now?

VICTOR BLACKWELL, CNN CORRESPONDENT: Well, Rob was right. We're getting this sideways snow. You will see it in the shot that these gusts are kicking up now. There's no real accumulation of the snow, but overnight, it switched from a very cold rain and its consistent wind overnight into the flurries at about 2:30 we saw.

We know that this is not enough to cause any problems at Cleveland Hopkins International Airport, but Chicago O'Hare, one of the busiest airports in the country, reported last night, 350 flights canceled at that airport, another 150 at midway.

More than a quarter million travelers are expected to pass through those two airports today as they travel for Christmas. So, yes, great timing for the start of winter, terrible timing as people start their Christmas break.

Here in the city of Cleveland, the mayor says once the snow starts to accumulate and they expect that it will, that they are ready with more than 100 plow truck drivers working around the clock.

They are ready to stand by, more than 50 trucks and 22,000 tons of salt. We also know that this has been a deadly storm unfortunately in the Midwest. Seven deaths blamed on the storm across four states including two people who died on Wednesday in a blinding snowstorm on interstate just outside of Fort Dodge, Iowa.

Thirty-car pileup in that area, of course, this will continue throughout the day. No accumulation, but the winds are kicking up -- back to you.

BERMAN: All right, Victor Blackwell in Cleveland, bracing for a long, snowy day there. Thanks, Victor.

SAMBOLIN: It is 5 minutes past the hour. Severe weather in Alabama uprooted -- look at this. Come over to your TV. It uprooted a Mercedes dealership massive billboard and then it sent a crashing right into an SUV. Strong winds, downed power poles and other debris damaged some 50 vehicles on that lot. The offices were hammered as well, nearly every storm window at that dealership blown out.

BERMAN: You want to stay with us here on CNN. Don't get too far away from the TV. We'll keep you updated on the storm throughout the day. We will track it and keep you posted about a travel, everything else you need to know.

SAMBOLIN: Yes, be careful if you are hitting the roads, very scary out there.

So a blue Christmas for House Speaker John Boehner, forget about dealing with the president. His own party turned its back on him last night when he was forced to cancel a vote on his Plan "B," which would have extended the Bush-era tax cuts on incomes below $1 million.

House Republicans did not support it. They abandoned Boehner in droves. He ducked for cover in a statement that said, quote, "The House did not take up the tax measure today because it did not have sufficient support from our members to pass it."

Now it is up to the president to work with Senator Reid on legislation to avert the fiscal cliff with just 11 days to go. So let's get some perspective from CNN political editor, Paul Steinhauser. He is in Washington. So how bad of a defeat is this for John Boehner?

PAUL STEINHAUSER, CNN POLITICAL EDITOR: It's pretty bad. Call it a black eye, call it a slap in the face. I mean, Boehner put up Plan B as a way to save most Americans from having tax increases.

Let's be honest. This was a political move. That if negotiations to avert the fiscal failed, you know, this Plan B vote would have shifted the blame from congressional Republicans to the Democrats and to the president.

Well, John Boehner didn't get any of that at all and now his hand is definitely weakened in negotiations, further negotiations from here with the president because he couldn't even get his own caucus to agree to raise taxes on millionaires.

Congressman Steve Latourette of Ohio, he is a big Boehner backer. He spoke to our Ted Barrett last night after the failed vote. Take a listen.

(BEGIN VIDEO CLIP)

REP. STEVE LATOURETTE (R), OHIO: I think the entire Republican Party, continuing dumbing down of the Republican Party, and we are going to be seen more and more as a bunch of shams who can't get a majority of people to support our own policies we're putting forward. If you're not a governing majority, you won't be in power very long.

(END VIDEO CLIP)

STEINHAUSER: The House of Representatives now pretty much go on and they won't be back most likely until after Christmas -- Zoraida.

SAMBOLIN: So Boehner takes a big blow here now, right, but what about the American public in 11 days another big blow. What happens?

STEINHAUSER: That is the big question, what happens next. Boehner did tell a lot of members of his coalition last night that he hopes to continue negotiations with the president. We'll see if that happens. The other big questions, what does the Senate do now?

What does Senate Majority Leader Harry Reid do? Does he get involved? What about the top Republican in the Senate, Mitch McConnell? The White House put out this statement last night.

It says, the president's main priority is to ensure taxes don't go up on the 98 percent of Americans and 97 percent of small businesses in just a few short days. The president will work with Congress to get this done.

And we are hopeful that we will be able to find a bipartisan solution quick that will protects the middle class. We'll see if that gets done. The president may be going to Hawaii for a few days, but then probably right back here after Christmas.

SAMBOLIN: All right, Paul Steinhauser live in Washington, thank you. BERMAN: So if you are looking for relief from this fiscal cliff mess, do not look towards pro hockey. It does not look good for a season. The NHL has now canceled games through mid-January because of the labor dispute.

More than 600 games in scrap so far. That is half the league's whole schedule. Today, players could decide if they want to claim the lockout as illegal and sue the owner. This is just a big hot mess.

SAMBOLIN: So not that this guy needed a career cap. But Olympic swimming great Michael Phelps has been named "Male Athlete of the Year" by the Associated Press. Phelps edged out Lebron James. It is the second time he's been honored by the AP.

The 27-year-old Phelps retired after the London games this summer, where he won four gold medals, two silvers. He finished his career with 18 gold medals and 22 overall. That is more than any Olympian ever.

BERMAN: It is pretty impressive. But I have to say it is not the Olympic story that everyone has been talking about Twitter. It's going crazy last night. A three-time Olympian admits to doing a little escorting on the side. Find out who we're talking about coming up after this quick break.

(COMMERCIAL BREAK)

BERMAN: Welcome back to EARLY START, everyone. Just over three hours from now, at 9:30 a.m. Eastern Time, a moment of silence will be observed in Connecticut and in states across the country to honor the Newtown shooting victims.

Church bells will toll 26 times for the children and adults gunned down in the Sandy Hook Elementary School exactly one week ago. CNN's Poppy Harlow is live in Newtown this morning. Poppy, I can't believe it's just been a week.

POPPY HARLOW, CNNMONEY.COM CORRESPONDENT: You know, John, being here, it's hard to imagine or put into words what these families are going through, what today the one-week mark is going to mean for them. It's still so raw, so real. There are three more funerals today for the victims.

But they are trying to mark this day with as you said a moment of silence. A very important moment, when I think literally the world is going to be standing alongside this community saying we support you, we are with you and our hearts go out to you.

As you mentioned, church bells will toll for all of the victims across this town, across the country, and around the world. It will be a beautiful sound and we'll carry that live for you here on CNN. Governors across the country in 28 states, asking their residents to mark moments of silence, people wearing green today, the school color of Sandy Hook.

Also residents this morning will be greeted in their local paper in Newtown by a letter from First Lady Michelle Obama, just saying once again how much her heart goes out to all of the victims and their families here, John. So it's a very important day for this entire community.

BERMAN: Poppy, it really does seem that so many things have changed in just the last week so many things different. The world completely is different. One of the things that is different is this debate over gun control and the president weighing in again this morning on this issue. What's he saying?

HARLOW: He is. This video is just being released from the White House, the president making about a 2-1/2 minute address to the American people. He prefaced this by saying that he is a supporter of the Second Amendment, the right to bear arms.

And he noted, importantly I think, John, that most gun owners in this country are very responsible, but he also clearly outlined where he thinks we and Congress need to draw the line.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Here's what I think we should do. This week, I called on Congress to take up and pass common-sense legislation that has the support of the majority of the American people, including banning the sale of military-style assault weapons and high-capacity ammunition clips and making sure criminals can't take advantage of legal loopholes to get their hands on a gun.

(END VIDEO CLIP)

HARLOW: You can bet, though, even in the wake of this tragedy, John, that's going to be a fight. We are expecting to hear from the National Rifle Association at about 10:30 today in Washington, D.C. We will see what they have to say in this debate over gun control in this country will go on and on in the wake of Newtown.

BERMAN: All right. Poppy Harlow in Newtown, it certainly will. Thanks very much, Poppy.

SAMBOLIN: It is 15 minutes past the hour. Let's get you up-to-date. Here is Christine Romans with our top stories.

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Good morning, again.

Parts of New England preparing for a bitter start to the holiday weekend. The deadly winter blast heads to New England today. At least seven traffic-related deaths in four states are blamed on the storm. The severe weather also snarled air travel. Hundreds of flights canceled at the height of holiday travel.

Three-time Olympian Suzy Favor Hamilton says depression drove her to work as a $600 an hour prostitute. She says that was a huge mistake but says she never thought anyone would find out. Hamilton has admitted she fell on purpose in the homestretch of her 1,500-meter race in the 2000 Summer Games, you'll recall, when she realized she couldn't win the gold medal. A crowd waited to get a new pair of Air Jordans got so unruly, police responded with pepper spray. A crowd of about 100 people gathered in Alabama Madison Square Mall after it closed Wednesday night. When stores opened Thursday, the mob got out of control. Everyone reportedly refused medical treatment because they didn't want to lose their place in line. They didn't want to lose their place in line to get the $185 sneakers.

Two brothers from south Florida are being honored for taking quick action after a car slammed into a bus stop back in October. Eighteen- year-old twins Austin and Conrad Hines beat out 800 other Miami-Dade students to receive the Do the Right Thing Award. The brothers heard the crash, ran to the scene, they helped lift a car off a 16-year-old, Eric Quinn, who was pinned underneath the vehicle.

BERMAN: Good for them.

ROMANS: Yes.

A substitute teacher from northern California is now a millionaire after being declared the sole heir to gold coins. The coins much like these are worth $7.4 million. They were found in the Carson City, Nevada, home of the woman's cousin who died this summer. Arlene Magdanz isn't talking about her newfound wealth. The Carson City clerk that's been handling the case says she's gone into hiding and won't tell him where.

BERMAN: I have a lot of cousins, and none of them will give me $7.4 million for coins.

ROMANS: Santa One, you are clear for takeoff. The FAA has given the official go ahead for the reindeer powered sleigh in its annual Christmas Eve flight as it does every year. NORAD will be tracking St. Nick as he leaves to North Pole to deliver presents to children around the globe.

That's right. We personally at my house have been sending the elf Santa, every night. Every night, we're waiting with baited breath to see when he's going to be in our house.

SAMBOLIN: Do you know about this elf?

ROMANS: Oh, the elf, behavior modification at its finest.

All right. A run on guns. Why gun sales are soaring following the school shooting in Newtown, that's coming up.

(COMMERCIAL BREAK)

SAMBOLIN: Good morning, New York. How are you on this fine morning? It's a little foggy out there, a little rainy. But otherwise perfect in New York City. Good morning.

We're minding your business. We could see a sell-off in stocks when markets open a little later this morning. U.S. stock futures are down sharply, more than 1 percent for all three major indices. BERMAN: You can thank the fiscal cliff impasse for that. Merry Christmas, Washington. Christine Romans here with more on the business.

ROMANS: Merry cliff-mas, Washington. Merry fiscal cliff-mas.

(LAUGHTER)

ROMANS: For some reason, I have been launching this story for so long.

(CROSSTALK)

ROMANS: But fiscal cliff, when I finally don't have to say those words one day, it would like Christmas all over again.

Let's talk about what we think for stocks here. We're going to publish a triple digit decline for the Dow Jones Industrial Average.

I think you're going to see a major sell-off in part, because world markets are saying they are very concerned about what happens with the fiscal cliff. The fallout has already been felt in the economy. Tax refunds could be delayed. You got a lot of people could pay higher -- 30 million people are going to pay higher taxes if there's not an AMT patch. That's bad.

Payroll processors are furious and scrambling to figure out what to do. Gift giving has soared among people who are trying to get out of higher taxes next year, and early stock dividends payouts. Companies are paying early stock dividends because they think investment taxes are going to go up next year. So, they've been paying those out a little bit early.

Also watching here, the run on gun guns. This has against intensified. Now, there are reports that Wal-Mart is running out -- I think 1,200 locations they sell tactical rifles like the one used to kill the children and teachers in Connecticut, they are running out of them. And gun shops reporting huge demand for these sorts of guns.

Listen to one gun shop owner. This is a gun shop in Newtown, Connecticut. Listen.

(BEGIN VIDEO CLIP)

RON RANDO, RON'S GUN STORE OWNER: I could sell more if I had them. Sold all I had. There was a kid come in here yesterday, grabbed an AR- 15 off the shelf, walked over laid it down. I mean, that thing costs 1,200 bucks. He didn't hesitate.

(END VIDEO CLIP)

ROMANS: So, yesterday, I asked an analyst, a Wall Street analyst who covers the gun industry, the ammunition industry. I said what's the allure of this part -- the fastest growing part of the market? Is it offsetting traditional firearms?

(BEGIN VIDEO CLIP)

ROMMEL DIONISIO, SENIOR VP OF EQUITY RESEARCH AT WEDBUSH SECURITIES: More than offsetting, yes. There's been a sharp consumer preference shift in the last several years to tactical rifles, modern supporting rifles from the traditional bolt-action rifles, hunting rifles, yes, because of their -- they're lightweight, they're easy to shoot, ergonomically superior and they have a high capacity -- very same reason why the military uses these types of firearms. The consumer likes them as well.

(END VIDEO CLIP)

ROMANS: Also, one report has Mexican drug cartels, by the way, this is their second most preferred gun, the same kind of gun that the American public is running out to buy right now.

I want to tell you that we don't know how many guns people are buying. We don't track gun sales in America.

BERMAN: I was going to say why, because we're not allowed to track.

ROMANS: We don't track gun sales. But I want to show you, the firearm background checks. You can see how demand has grown over the past 10 years, 16.8 million background checks, not all of those are going to turn out to be purchases, of course, but 16.8 million -- that shows you the trend of purchases over the past 10 years.

And analysts told me that since November, since the election, you've seen huge, huge demand growth for gun purchases.

BERMAN: What's the one thing we need to know about our money?

ROMANS: Stocks, looking like an ugly day today, but 2012 has been a great year for stocks. The S&P 500, that's best indicator for stocks in the 401(k). It's up nearly 15 percent this year.

I encourage everyone now at the end of the year, to take a good look at how are you balanced, what your priorities are, your strategy, don't be selling out and getting in because of one day's move in the markets or even about the fiscal cliff. You need to make sure you're balanced properly and I'm going to tweet out, put on our Facebook pages a link to help you do that.

SAMBOLIN: Thank you.

BERMAN: Christine, thanks very much.

All right. Coming up, power lines spark and snap. Thousands of people in the dark, more stuck at the airport, or a motel somewhere. The latest on this blizzard, straight ahead.

Look at that.

SAMBOLIN: I never have heard anything like that.

(COMMERCIAL BREAK)