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U.S. to Hit Debt Ceiling on Monday; EPA Administrator Stepping Down; Russia to Ban Adoptions by Americans; Obama Cuts Vacation Short to Deal with Fiscal Cliff.

Aired December 27, 2012 - 13:30   ET

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


(COMMERCIAL BREAK)

SUZANNE MALVEAUX, CNN ANCHOR: Well, the talk has been about the fiscal cliff, but there's something else to worry about come next week. That's the debt ceiling. Treasury Secretary Timothy Geithner says the U.S. is going to hit its legal borrowing limit on Monday.

Alison Kosik is in New York.

Alison, what are the possible consequences if tat happens?

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: It would cause a whole host of domino-affect consequences if we do reach the debt ceiling and go through it. So, yes. I mean, what afternoon happens here, we often talk about the debt ceiling and people's eyes glaze over. I want to talk about what the debt ceiling is. What the debt ceiling is, is it's a cap, set by Congress, the amount of money that if federal government can borrow. The current ceiling is at $16.3 trillion. And what Secretary Treasurer Tim Geithner said earlier this week is we could hit it on Monday, meaning New Year's Eve. And what the treasury will start doing is what it calls using extraordinary measuring to keep the government from going over the limits.

So let's say, for example, you're a government worker. That could mean that the government could go into your pension could be suspended. But the thing is, that won't even buy much time. Then the next logical question is, what could happen if we do go through the ceiling? Well, the treasury won't be able to pay the country's bills in full or on time, and that means the U.S. could default on some obligations. It would cripple the economy. It would send markets into the tail spin. That could hit retirement savings and anything you have in the marketplace, plus it would make it more difficult for banks the give out loans for things you're looking to get like cars or student loans. Then pile on top of that, government benefits could be disrupted. I'm talking about Social Security checks and military payments.

Who could forget what happens last summer when lawmakers raised the debt ceiling last summer but not until the last minute. That caused a credit downgrade for the U.S. and a huge selloff for the market. The thing is, Suzanne, it could come down to the wire once again. Yet, another nail-biter --Suzanne?

MALVEAUX: Alison, the secretary does say there is some wiggle room, right? It could at least for a couple of months the ability to borrow more, is that right?

KOSIK: Yes, but it would cause a ripple effect through the markets. The markets won't take that well. It's more of the saying, kicking the can down the road. It's like the fiscal cliff. If there's band- aid measure that goes in, that's not what the market is going to necessarily see. They want to see something stronger, a lot stronger with the fiscal cliff, and a lot stronger with the debt ceiling as well. And it seems that everything is sort of being held hostage in the whole fiscal cliff discussions, and the debt ceiling has become part of that discussion as well -- Suzanne?

MALVEAUX: The president is saying he's not going to allow that to happen.

Alison, thank you very much. Appreciate it.

There are other headlines we're keeping our eye on for this Thursday.

The number of people filing unemployment benefits for the first time actually went down last week. There were 350,000 of them. That's 12,000 fewer than the week before. That's the lowest level in more than four years. The drop was bigger than economists had predicted.

Home prices posted their biggest annual jump in more than two years. This chart shows home prices -- the gains, rather, clearly trending higher, rising more than 4 percent since October.

Toyota has agreed to pay $1.1 billion to settle a class-action lawsuit over sudden-acceleration issues. So about 16 million vehicles are going to be covered by the settlement. The model years range from 1998 to 2010. Under the plan, Toyota is going to install a brake override system in those affected cars. It's going to set up a fund to compensate formers owners for their cars' reduced value due to all the bad publicity.

And President Obama is going to have another cabinet position to fill in the New Year. The head of the Environmental Protection Agency. We have learned today that the EPA administrator, Lisa Jackson, will step down after the president's "State of the Union" speech in January.

Had a chance to talk with Jackson last month about her role in the department and how she sees her future.

(BEGIN VIDEO CLIP)

LISA JACKSON, ADMINISTRATOR, EPA: And if you ask the average American, talk about stripping the politics away, are you for it, what does it mean to live in America, part of what they'll say is, I have clean water, clean air to breath and I have a right to go to my government if I think there's contamination in my community and have it cleaned up.

MALVEAUX: In light of all those points, you still have folks, like Newt Gingrich, who says, the EPA -- get rid of the EPA. These are job killers, these are regulators, this is bad for business. How do you confront Republicans like Newt Gingrich who still put that out there by say, I don't think that should exist.

JACKSON: I start by disagreeing and saying that's not where the American people are. You know, moms across the country are speaking up right now saying we need stronger stands for soot in our country because we're in the process of saying that. We did a mercury standard last year. It was 21 years into the making of the Clean Air Act. The results were overwhelming. We did a proposed rule to deal with greenhouse gases from new power plant. We got three million comments, largely in favor. So I think it's easy to say, I think right now the American people rightfully want their government to be efficient. They don't want it to waste money. They want to know that they're getting something. When you have a regulatory agency, we should regulate smartly. We shouldn't be oppressive. We should be smart about it but we shouldn't go away.

MALVEAUX: How do you attract businesses and money and private investment into climate change and protecting the environment?

JACKSON: They need certainty. What I hear from businesses is -- and I've been doing this almost 23 years -- is we need certainty. We want to invest our money, but we want to know the rules aren't going to change. If carbon's the bag thing, which we know we need to control it, that I'm not going to be disadvantaged if I'm clean. In fact, it would be great if I'm advantages. Don't put me on a playing field that makes it harder for me to compete.

MALVEAUX: What's your plan for the second term? Are you sticking around?

JACKSON: What I can say is that I'm very committed to these issues. It's been 23 years since I started as a staff-level scientist, and we have so much work to do.

(END VIDEOTAPE)

MALVEAUX: We'll see what she ends up doing next.

In a statement, President Obama says Jackson has shown an unwavering commitment to the health of our families and our children.

So Russia may soon ban adoptions by Americans. Many are opposing the ban, including this young woman, who tells me her own inspiring story about her adoption.

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MALVEAUX: Americans trying to adopt children from Russia are understandably on edge after President Vladimir Putin indicated today he'll sign a bill banning all U.S. adoptions. The country's parliament has already approved the measure. Reuters reports that President Putin plans to study the final text of the adoption ban, but right now sees no reason why he would not sign this.

Earlier, I talked with a woman who was adopted from a Russian orphanage when she was just 6 years old. Tatyana McFadden is urging President Putin to scrap the adoption ban. (BEGIN VIDEO CLIP)

TATYANA MCFADDEN, ADOPTED FROM RUSSIA: If this bill is passed, I can't imagine how many lives would be ruined. I'm so blessed for mine. And I'm here to speak for those who can't, for the voices who can't speak. And it's -- I have no words to describe this. I mean, my life has changed drastically because of just one adoption.

(END VIDEO CLIP)

MALVEAUX: If President Putin signs the law, it's going to go into effect January 1st.

Stories that affect your bottom line, from the Facebook offering to the new Apple boss and the fiscal cliff. We're going to take look at the biggest money stories of the year.

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UNIDENTIFIED MALE: Over the next 50 years we need more food produced than in the last 10,000 years combined. It's staggering to think, where is it going to come from.

We're pushing all the food on land and we already seeing food shortages in some parts of the world. So we need to really pick up the pace, I think.

And really take it to the next level off shore and kind of open up new frontiers for farming.

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ANNOUNCER: Three, two, one, and liftoff. Lift off of the space shuttle --

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MALVEAUX: May, 2012, SpaceX launched a rocket. Became the first commercial company to dock a space craft at the international space station. It marked a new beginning, private companies instead of NASA sending cargo and eventually humans to the station. It was one of the space industry's top accomplishments and one of the top scientific and technological breakthroughs of 2012.

Some might say 2012 was the year of Washington versus the rest of us -- unemployment, home prices, stock markets, all up even as our nation's lawmakers failed to get their act together.

Here are the top-10 stories that caught the attention of CNN business correspondent, Christine Romans, and our chief business correspondent, Ali Velshi.

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CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Number 10, Apple. The first year without Steve Jobs and the company is trying to prove, with a new CEO, that it can still invent things we didn't know we needed that we would buy faster than anything that's been sold in personal technology before.

Number nine, the U.S. stock market. Despite all those worries about the fiscal cliff and maybe slower growth in the U.S. economy, the stock market has had a great year. Too bad you missed out. The smart money's been in the market. The rest of us have been worried about the fiscal cliff.

ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: Number eight, Facebook's IPO. Hundreds of millions of people like Facebook, but investors did not on its first day as a public company. Trading glitches at the NASDAQ and questions about the company's ability to make money on mobile users pummeled the stock, which has yet to climb its way back to its IPO price.

ROMANS: Number seven, Mother Meyer, the new CEO of Yahoo!, who announced that she was just going to take a two-week maternity leave as she tried to turn the company around. 37 years old. Looks like a mother's touch is just exactly what Yahoo! needed.

VELSHI: Number six, Mother Nature. An intense drought in the Midwest that scorched the soy and corn crop, sending prices sky high. And who could forget Superstorm Sandy? Neighborhoods along the northeast swept away. millions without power and damages as high as $50 billion, raising lots of questions about U.S. infrastructure and whether we should be spending some money to fix it.

ROMANS: Number five, China. Is China slowing, or is China leading the world? We do know that China will be the biggest economy in the world by 2020, for sure, by 2030.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: China.

MITT ROMNEY, (R), FORMER MASSACHUSETTS GOVERNOR & PRESIDENTIAL CANDIDATE: China.

OBAMA: China.

ROMNEY: China.

OBAMA: China.

ROMANS: China also getting more than a few mentions during the presidential campaign, probably because it's pretty clear that China is both a competitor and a partner.

VELSHI: Number four, Europe. The European Union was fractured by too much debt and the austerity plans to fix it. That saga is far from over.

Number three, the housing market finally bottomed out. The combination of low home prices and continued record low mortgage rates set off a building and buying spree. Well-heeled investors began buying entire neighborhoods but first-time buyers were also able to get a home of their own for the first time in years, as long as they had a hefty down payment.

ROMANS: Number two --

WOLF BLITZER, HOST, THE SITUATION ROOM: CNN projects that Barack Obama will be reelected president of the United States.

ROMANS: The election. More than just about Obama and Romney. It was about socialism and capitalism, about what kind of role government should have in your life.

VELSHI: Number one is the fiscal cliff. Lawmakers saw it coming but didn't bother to pay any attention to it until after the election. Had they put politics aside and dealt with it earlier, who knows how strong the U.S. economy would be right now.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

MALVEAUX: We want to go directly to the White House. Our CNN chief White House correspondent, Jessica Yellin, has new reporting.

Jessica, we know the president returned from his vacation early from Hawaii to work on possible negotiations of winning the fiscal cliff. What do we know about what will take place today?

JESSICA YELLIN, CNN CHIEF WHITE HOUSE CORRESPONDENT: Hi, Suzanne. I can tell you the White House said the president does not plan to send up any kind of proposal, a new proposal to Capitol Hill today. He is not intending to outline his scaled-back agreement for averting the fiscal cliff in an effort to get the two sides to pass something before the end of the week, and we cross the threshold and enter the New Year.

We do know that the outlines of what the Democrats believe can pass are pretty clear. Dana Bash has have reported on this extensively and she made it well-known that the Senate side believes what they are likely to be able to propose would be a sort of measure that includes extending tax cuts for people below $250,000 and extending the patch that makes it clear that people who have the ATM, the minimum tax patch, some sort of fix, extension of unemployment benefits, and a sweetener for the Republicans that would include an estate tax provision. We don't know. It's not the president's style to write anything down and send up a bill. So White House officials making it clear he was not going to break with tradition and start doing that today. We will see, Suzanne, if there was a way to un-stick things and get an agreement in the next few days -- Suzanne?

MALVEAUX: All right, Jess, keep up the excellent reporting, you and Dana. Obviously, this is incremental, but as long as it's towards resolving this, that is what everybody is looking for.

Thank you again, Jess.

We want to bring another story here. Take a look at this.

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MALVEAUX: Crazy. Chaos at a California mall. We will tell you why all of this happened.

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MALVEAUX: Officials in Nicaragua are not taking any chances. They're ordering people who live near an erupting volcano to evacuate their homes. But British news reports about 1500 farmers are refusing to leave. Troops are being deployed to the area to try to change the farmers' minds.

And take a look at this volcanic eruption. It's on the border of Argentina and Chile. On Sunday, officials issued a red alert, the most severe warning, fearing the volcano would have a major eruption.

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(SHOUTING)

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MALVEAUX: This looks crazy. People running through a Sacramento mall. This happened after police say a brawl involving 20 people broke out in the food court. Three teens were arrested. The stores went into lockdown. The mall reopened about an hour later.

Check out the reaction of this Alabama football fan to his Christmas gift. He thinks it's a hat, but the real present is what is inside.

(BEGIN VIDEO CLIP)

UNIDENTIFIED BOY: Grandmama -- (INAUDIBLE)

UNIDENTIFIED MALE: We are going to the game, Pop! We are going to the game!

(LAUGHER)

(END VIDEO CLIP)

MALVEAUX: I love this. They are going to the national championship game between Alabama and Notre Dame. Those tickets are not cheap. Look at that guy's face. The game is sold out. And if you find something on the resale market, you will pay at least $1,000 for a nosebleed seat. Good for him. He is just ecstatic.

(LAUGHTER)

I love it.

CNN NEWSROOM continues right now with Don Lemon.

Hi, Don.