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Northeast Slammed by Winter Storm; Tornado Terror; Five Days Left; Hopes of Fiscal Cliff Deal Dwindling

Aired December 27, 2012 - 05:00   ET


ALINA CHO, CNN ANCHOR: Going nowhere. Holiday travel on hold as a wet and nasty winter storm slams the Northeast and strands thousands of airline passengers.

DREW GRIFFIN, CNN ANCHOR: And tornado terror. This Christmas twister's fury captured on camera as it tosses a pickup truck like a toy.

CHO: And just five days until the fiscal cliff. President Obama catching a flight back to Washington where there's doubt that a deal can get done in time.

Good morning, everybody, for a Thursday morning. Very early, 5:00 a.m. on the East Coast. Welcome to EARLY START. I'm Alina Cho.

GRIFFIN: I'm Drew Griffin. John and Zoraida are off today. It is 5:00 a.m. here in the East, and a very rainy day in New York.

And, right now, a deadly winter storm system slamming the Northeast after hammering the nation's heartland.

This is not the white Christmas everybody dreamed up. Just look at this radar, system serious snowmaker. It's packing destructive winds.

Six states under winter storm warnings right now -- Pennsylvania, New York, Massachusetts, New Hampshire, Vermont and Maine -- all could see a foot of snow or more. More than 200,000 customers spanning several states already without power, 1,700-plus flights canceled yesterday. Imagine that. Hundreds more already taken off the board this morning.

There are six deaths being blamed on the weather since Tuesday and the threat hasn't passed yesterday.

Bonnie Schneider, meteorologist, checking the system from the CNN Center in Atlanta.

But, first, let's go to Ines Ferre, standing by, live, miserable, in snowy Syracuse, New York. It's a pretty picture, Ines.

INES FERRE, CNN CORRESPONDENT: (INAUDIBLE) snow. And you can still see the snowfall here. And this area is expected to get anywhere from nine to 13 inches here in Syracuse and in some other areas of New York, up to 18 inches. And I'll tell you that the snowplows have been working 12-hour shifts throughout the day yesterday and evening. They were spreading salt before the storm in anticipation of the storm. This area is used to getting a lot of snowstorm. Two years ago, they got almost 180 inches of snowfall.

And so, this time, they're saying, look, we're used to getting snow. The challenge is this amount of snow in such a short period of time, it's been almost two years since Syracuse has seen one foot of snow all in one shot, Drew.

GRIFFIN: It is incredibly pretty pictures from my nice, warm studio here, Ines. We really appreciate you getting up this morning and getting in it. Thanks a lot.

CHO: And here's the sign of just how severe the storm is in the Midwest -- the NBA's Indiana Pacers were actually forced to postpone last night's home game against the Chicago Bulls. That's a real rarity.

Take a look at these pictures. Getting around the country today and the rest of the week will be a challenge.

Let's get right to the CNN weather center in Atlanta. Meteorologist Bonnie Schneider tracking the system for us. So, Bonnie, good morning.


CHO: What is the latest? It's a huge mess out there.

SCHNEIDER: It is. It's hitting the Northeast hard because you have that heavy rain across New York and Long Island, across the Connecticut sound and really heavy downpours into Boston and then just drive a little further north and it's all snow. That combined with strong wind is making for a very messy day today. And so many people are out and about, trying to enjoy holiday time or maybe just heading back to work or to the stores to return gifts.

But unfortunately, we're seeing heavy downpours into Bridgeport, Connecticut and once you start heading to Upstate New York, it's all snow in Kingston. So, we're looking at accumulation. We're talking about a foot or more in Upstate New York, and across interior New England, three to six inches for places like western Massachusetts, including Worcester and then heading back towards the Berkshires.

And if you look further off to the south and westwards, the Pocono Mountains, you'll also see areas of about six inches of snow, and then into northwestern New Jersey, you're still looking at snow as well. So, this is a strong area of low pressure, it will work its way across the Northeast. The cold air that's coming in behind it will really help enhance the heaviest snow right along the Great Lakes and extreme northern New England.

Just to mention, we're also experiencing some bitterly cold temperatures right here in the South. This morning, it's 35 in Atlanta, 33 in Birmingham. That cold air is here. For Southerners, this is a big deal. We're not used to this cold weather.

Back to you.

CHO: None of us are. All right. Bonnie Schneider, thanks so much.

GRIFFIN: You know, the storm has already done considerable damage in those southern states. Take a look at incredible video we have from a surveillance camera. This is at a Walgreens in Mobile, Alabama.

The tornado tossing cars in the parking lot as the winds were topping 100 miles an hour, clearing all store shelves, well, faster than a holiday sale ever could. That's for sure.


JOSH HOLMAN, ASSISTANT STORE MANAGER: I've never been in a war zone but I'm sure it's what it looks like. There's a bunch of tin, all the stuff that was lifted off the buildings here was just laying on the parking lot. I was just thankful I was alive. If it would have been 100 yards the other way, it would have ripped through the middle of the store.


GRIFFIN: Tornadoes also tore parts of Pearl River County, Mississippi. Look at this, two dozen homes damaged, destroyed, at least 25 people hurt, more on the storms. We'll have that in the next half hour.

CHO: For those of you getting back into your morning routines today, we are just five days away now from going over the fiscal cliff. Happy New Year.

And here's what you might have missed. President Barack Obama has left Hawaii. He left last night, arriving in D.C. early this morning.

The Senate is also coming back from its Christmas vacation to work on a deal today. And sources tell us Majority Leader Harry Reid will be pushing a scaled back version of the fiscal cliff package that President Obama laid out last week. It moved the tax hike needle to $400,000 per household.

No word yet on when the House might come back with time ticking away. Democrats are hoping that a scaled back plan could get through the House, Senate and White House before that big ball drops on 2013. That would be sometime on December 30th or even on New Year's Eve.

All right. We want to bring in Jonathan Allen. He's a senior Washington correspondent for "Politico". So, Jonathan, good morning to you.

The top headline on "Politico" this morning is fiscal cliff deal increasingly unlikely. I think a lot of people are feeling that pessimism right now. So, what are you hearing?

JONATHAN ALLEN, POLITICO: Well, I think what you've got here, Alina, is a Nash equilibrium to borrow from economic theory and game theory. Basically, each of the players believe they are pursuing their optimal strategies given the strategies of the other players and there's no reason to change it.

You know, I think as observers of this, the American public, you can say there's a real reason to change it. But in terms of the politicians, I think they're pursuing their best strategy right now and that leads us inexorably toward that cliff.

Unless something changes in the next couple of days, most folks now believe that any fix will happen after January 1st.

CHO: Jonathan, the House GOP leadership put out a statement yesterday. I want to read part of it for you. It says in part, "The House has acted on two bills which collectively would avert the entire fiscal cliff if enacted. Those bills await action by the Senate. If the Senate will not approve, and send them to the president to be signed into law in their current form, they must be amended and returned to the House. The Senate first must act."

Now, the House Leader John Boehner says he will give House members 48 hours before he calls them back. That means the earliest they'll be back is on Saturday. So, are they just passing the buck to the Senate?

ALLEN: I think that's what's happening in both chambers right now. You saw a return statement from Senate Majority Leader Harry Reid's spokesman yesterday talking about the incompetence of the House leaders, saying that the Senate had passed its version of a bill. It was up to the House to pick up that Senate version and pass it.

So, basically, these two sides are just pointing fingers at each other. And that goes back to what I was saying before, you've got a situation now where these guys are completely confident or at least confident enough that their strategies are the right ones for them that they're not moving off the ball at all. And without any sort of movement, that's why you hear so much pessimism.

CHO: Well, I think part of it is they're afraid of spooking the markets, right? So, no GOP senator wants to sign -- wants to vote for tax increases if the bill's not going to pass. That looks bad to their constituents.

And as one Democratic source told our Dana Bash, this will be the last train we have and there is no sense in it leaving the station before we have assurance it will get through.

But, procedurally, Jonathan, is there still time?

ALLEN: Procedurally, there's still time. It certainly depends on how complicated the fix is. If it's something very simple, it can be drawn up in a few lines and perhaps there's time. If they end up trying to get complicated, there may not be time.

Of course, if there's somebody in the Senate bent on stopping this from happening because the Senate rules, you can se there being a problem in terms of getting it done before January 1st. It really all depends on the level of consensus. When there's consensus in Congress, things move very fast. Sometimes in the blink of an eye trillions of dollars can go out the door. At other times if people want to hold up the process, it can take several weeks to get done.

CHO: One senior Wall Street economist actually talked about bungee jumping off the cliff, saying we will actually go off the cliff so that an easier bill will come after January 1st, that everyone will vote for. Sounds like a likely scenario. We'll have to see if that happens.

Jonathan Allen, senior Washington correspondent for "Politico" -- thanks so much.

ALLEN: Take care, Alina.

GRIFFIN: The health of former President George H.W. Bush has taken a turn for the worst. He was moved into intensive care at a Houston hospital yesterday, because of an elevated fever. The nation's 41st president is now on a liquid diet. His condition listed as guarded. The 88-year-old coping with Christmas in the hospital by -- well, he says he's determined not to be grumpy about all of this.

CHO: Toyota has agreed to pay a $1.1 billion settlement. That would be to settle a class-action suit over sudden acceleration issues. Under the agreement, Toyota will install a break override system in affected cars. It will set up a fund of $250 million for former Toyota owners who sold their cars from September of 2009 through all of 2010.

Now, that would go to compensate owners for their car's reduced value because of bad publicity. Also, Toyota's attorneys say a separate fund of $250 million will also be established to compensate current owners whose vehicles aren't eligible for that break override system.

GRIFFIN: Well, in this terrible weather, rescuers are racing to save that giant sick beached whale off Breezy Point in Queens. If that sounds familiar, it was one of the areas leveled by hurricane Sandy and a fire sparked by the storm.

The 50-foot long whale is believed to be a female hump back. Experts say the likelihood of it surviving isn't good. The whale appears to be very skinny and weak.

CHO: This afternoon, rather, the late Senator Daniel Inouye's successor will be sworn in. Hawaii Governor Neil Abercrombie appointed his lieutenant governor, Brian Schatz, to fill the seat. And a White House official says he's flying to D.C. with President Obama. Abercrombie was widely expected to appoint Congresswoman Colleen Hanabusa to take over. Before he died, Inouye named as his preferred successor.

GRIFFIN: Well, coming up, more talk of today of arming educators in the wake of the Newtown school targeted, with an actual plan being considered in one state.

CHO: Plus, a day at the office with one of the richest men in the world. A look at what's on Warren Buffett's desk. That's just ahead.


CHO: Fifteen minutes after the hour. Welcome back to EARLY START.

Well, it's not every day you get a tour of the office of one of the richest men on the planet and arguably the best investor of our time. Well, Warren Buffett gave our Poppy Harlow just that, showing her around his modest office in Berkshire Hathaway's Omaha, Nebraska, headquarters. What she found and didn't, just may surprise you.


WARREN BUFFETT, BILLIONAIRE INVESTOR: I've been in this building 50 years. They moved me around a little bit.

POPPY HARLOW, CNN CORRESPONDENT (voice-over): History on the walls legendary investor Warren Buffett's office.

BUFFETT: I formed my first partnership in May of 1956. This was a year-end balance sheet which I typed myself. In fact, there's probably a few typos in it. And these are my partners I had at the time. This was my father-in-law. That was my roommate in college, his mother, that's my Aunt Alice, my sister Doris and her husband Truman.

HARLOW (on camera): And you.

BUFFETT: That was the gang. Yes.

If they -- if they kept the $10,000 investment and when I liquidated the partnership re-invested that in Berkshire Hathaway, they would now have about $500 million.

I did very well with small amounts of money back in 1964. When a panic happens with a really good company, I like to buy.

HARLOW (voice-over): Buffett's M.O. for investing. This 1901 "New York Times" article reminds him daily of an important lesson.

BUFFETT: We never go out on a limb. We always have lots of money. We never borrow a lot of money.

First, campaign I got active in is when I was 10 years old in 1940 and Willkie was running against Roosevelt. My dad thought if Roosevelt got elected, there would never be another election.

HARLOW: A vocal Republican in his earlier years, Buffett now leans left and is a big Obama supporter.

BUFFETT: We were talking about the economy and --

HARLOW (on camera): What else?

BUFFETT: -- I brought along figures I thought would be of interest to him. That was when the presidential Medal of Freedom. HARLOW (voice-over): He's never had political ambitions like his father.

BUFFETT: That's my dad's campaign picture when he was 39 years old running for Congress the first time in 1942. This is my dad's desk. He sat on his desk when I was a kid, when I was 10 years old. I always admired it.

HARLOW (on camera): This is my favorite thing in your office. I need one of those -- the "too hard" box.

BUFFETT: Right. There's a lot of things that's going in there. The real problem is if they're in there and I don't realize it.

HARLOW (voice-over): Then there are the fun things, like the model mars rover, given to him by students at Cal Tech.

BUFFETT: That beats getting a t-shirt, though.

HARLOW: And the mock "Sports Illustrated" cover.

BUFFETT: If they ever bring me out, it will be as water boy.

HARLOW: No fancy flat screen TV, just an old tube.

BUFFETT: No, no computer.

HARLOW: That means no e-mail, perhaps the secret to Buffett's success.

Poppy Harlow, CNN, Omaha, Nebraska.


CHO: I'm going to put a "too hard" box in my office, too. It's going to full up there.

GRIFFIN: You need a big box for that.

CHO: All right.

GRIFFIN: Seventeen minutes after the hour. Let's get you up to date with the morning's top stories. Six states in the Northeast under this winter storm warning. You can see why. Heavy snow, damaging winds targeting folks from Pennsylvania to Maine. Holiday travel a mess, 1,700 flights canceled yesterday. More of the same expected today.

Nelson Mandela is out of the hospital but he's going to keep getting medical treatment at home. South Africa's former president has had a couple of health problems this month, including a lung infection and gall stone surgery. He's 94 years old. He hasn't at appeared in public in more than two years.

CHO: Well, so many gifts have poured into Newtown, Connecticut, that officials are now asking people to stop sending them, at least for now. Newtown has been swamped with things like toys, flowers and school supplies ever since the school shootings. Community leaders say they're grateful for the support and they will talk about best ways to help the town very soon.

GRIFFIN: Just about 19 after the hour. We're going to give you "Early Reads", the local news making national headlines.

We begin with a story from Arizona's "Human Sun" newspaper, where in the wake of the Newtown killings, the states attorney general is proposing a plan to arm one educator in each school. Under that plan, each public school would designate a person, either a principal or teacher to keep the gun in a secured, locked location. It would be a voluntary program.

The attorney general says state law would need to be amended before that plan could move forward.

CHO: And happy New Year, Chicago. Beginning January 1st, Chicago's parking meters will be the most expensive in North America. A 75 cents jump doesn't sound like a lot. But listen to this. The price will then be $6.50 per hour downtown. That is more expensive than San Francisco and even New York. And even leaps over Vancouver for most expensive on the continent.

For an expanded look at all of our top stories, just head to our blog, You can also follow us on Twitter and Facebook. Just search for us, EarlyStartCNN.

GRIFFIN: This is a big headline for Toyota owners, one of the largest settlements of its kind. Coming up, Toyota paying billions to customers past and present, impacted by those stuck accelerators.


CHO: Minding your business this morning at 23 past the hour.

Stock markets worldwide are in a holding pattern awaiting the results of fiscal cliff negotiations in Washington. U.S. stock futures pretty flat this morning indicating that markets will open little change today. Stocks could take a big hit next week if Congress does not make a decision in time.

That, of course, adding to concerns, Treasury Secretary Geithner also warned Congress in a letter yesterday that we will reach the nation's debt ceiling on Monday. That's when the government reaches its legal borrowing limit. Treasury can delay a debt crisis for a couple of weeks until February or March using emergency measures to keep the government operating until Congress acts to fix this problem, too.

GRIFFIN: Big news from Toyota. They are announcing a record $1.1 billion settlement over that unintended accelerator issue which they say does not exist. Remember, Toyota has always said it's been floor malts, stuck gas pedals and operator error but they're going to settle these cases to put it behind them.

The bulk of the money, according to Toyota, will go directly to its customers past and present. Under the agreement, Toyota is going to install brake override systems for all vehicles identified by Toyota as having a problem with the floor mats getting stuck. Toyota also set aside $250 million to compensate owners who sold their cars while their sales were plummeting over the bad P.R. and a separate $250 million will be used to compensate owners who don't qualify for that brake override system.

Finally, all 16 million current Toyota owners are going to be eligible for a warranty on certain parts related to sudden unintended acceleration. They last between three and 10 years. Toyota, again, maintains it does not have a problem with unintended acceleration in its vehicles. They say those problems involve floor mats, gas pedals and drivers mistakenly hitting the gas instead of the brake. That's the bulk.

So, why did they settle? Toyota's legal officer released a statement saying this, "It was a difficult decision, especially since reliable scientific evidence and multiple independent evaluations have confirmed the safety of Toyota's electronic throttle control systems. However, we concluded turning the page on this legacy legal issue through the positive steps we are taking is in the best interest of the company, our employees, our dealers and most of all, our customers."

The fact is that court trials over these issues were beginning to creep up on Toyota. A lot of lawyers were asking for a lot of documents and depositions. The settlement will keep a lot of those Toyota records out of the public eye and also a settlement can get these lawyers off the company's back and put the entire episode behind Toyota.

Shares of the company are up about a quarter of a percent ahead of the opening bell this morning.

CHO: And we have more good news for the housing market. Home prices posted their biggest annual jump in two years in October. Now, later this morning, we will get more fresh data on new home sales for November. That's expected to also show some strength in that part of the housing market.

Good news if you don't own a home.

GRIFFIN: That's right.

Of all the holiday exchanges going on the day after Christmas, this one had the most firepower. More coming up.

CHO: Plus, the biggest celebrity scandal of 2012. Lindsay Lohan never disappoints. We'll tell you more about them, coming up.