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STARTING POINT WITH SOLEDAD O'BRIEN

Northeast Slammed By Winter Storm; Nelson Mandela Released From Hospital; Newtown: Thanks But No More Gifts, Please; Arizona May Arm Teachers; Starbucks To D.C.: "Come Together"; Tebow Says He's Good Teammate; Five Days Until Fiscal Cliff; Breezy Point Beached Whale; Guns For Groceries; "Make Me Asian"; "Capitol Hell" In D.C.

Aired December 27, 2012 - 07:30   ET

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


ALI VELSHI, CNN ANCHOR: -- he has a beautiful tie on and an entire bird in his pocket.

ROLAND MARTIN, CNN CONTRIBUTOR: Trust me, I personally think Ron Brownstein needs -- come on, right here, baby.

UNIDENTIFIED FEMALE: Is that a flower?

ON BROWNSTEIN, CNN SENIOR POLITICAL ANALYST: Am I allergic to this?

MARTIN: This totally changes Ron's whole look.

VELSHI: We've gone over an entirely new -- we've got a STARTING POINT cliff we just went over.

MARTIN: You need some color over here.

VELSHI: Now we're making color jokes about Will Cain. Before we get to all of that, let's get some news in here. Alina Cho, the beautiful Alina Cho.

ALINA CHO, CNN CORRESPONDENT: You expect me to do the news right now? Good morning. Good morning, gentlemen, and lady. Good morning, everybody. Let's talk about the weather. Six states from Pennsylvania to Maine getting slammed by that massive winter storm this morning.

Up to two feet of snow in the forecast for Central Maine, more than 1,700 flights had to be canceled yesterday because of the weather, and if you have holiday travel plans today, expect more of the same.

Nelson Mandela out of the hospital, but he will keep getting medical treatment at home. South Africa's former president had a rough December, a lung infection and gallstone surgery. Mandela is 94 years old. He has not appeared in public in more than two years.

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 toys, cards, and flowers ever since the school shootings. Community leaders say they're grateful for the support and they will soon talk about the best ways to help the town. In the wake of the Newtown tragedy, Arizona's attorney general is proposing a plan to arm one educator in each school. He told a Phoenix TV station it's a compromise between two extremes.

(BEGIN VIDEO CLIP)

TOM HORNE, ARIZONA ATTORNEY GENERAL: On the one hand, you have people proposing that any teacher wants to bring a gun to school. I think that would create more danger than it would solve and I'm opposed to that.

You have other people who don't want to do anything as far as defense in the schools and I think we could regret that if there were another incident that might have been prevented.

(END VIDEO CLIP)

CHO: Surely a big debate about that. Under the plan each public school would designate one person either a principal or a teacher to keep the gun in a secure, locked location. It would be a voluntary program. The attorney general says state law would need to be amended before that plan can move forward.

Customers at Starbucks this morning reacting to CEO Howard Schultz's plan telling workers in the Washington, D.C., stores to write the words "come together" on coffee cups.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: "Come together." A nice Beatles quote there. I think it's kind of a cool idea, but I -- you know, I don't know that the politicians really care.

UNIDENTIFIED MALE: Well, I think it means that people are basically tired that Congress can't come to a compromise or actually agree on anything, if we're talking about something as huge as like, you know, taxes that's going to affect taxes that affect everybody else in the United States, it's indicative of the kind of deadlock that we're at in the system right now.

(END VIDEO CLIP)

CHO: It's all about the fiscal cliff, guys. Schultz says this is a way to, quote, "send our elected officials a respectful but potent message." Interesting way to do it.

MARTIN: The problem with the Starbucks, they'll cut a deal.

CHO: Let's talk about sports, shall we? Call him a bad quarterback, but do not call him a bad teammate. Tim Tebow firing back after a report that said he asked to sit out some offensive plays on Sunday after being snubbed for the Jets starting quarterback job.

ESPN says Tebow was so upset with the perception that he quit on the team that it dampened his Christmas. As for Tebow, he will likely be out of New York by next year, headed to presumably the Jacksonville Jaguars, his home team. But you know what this is, world's smallest violin. You think I feel sorry for him?

MARTIN: Especially with $5 million after being traded from Denver. Come on, Tim, you're terrible.

VELSHI: He's got a lot to say.

Back to the dinner topic right now, as we have told you, President Obama lands in Washington today, back from Hawaii to take part in negotiations over the fiscal cliff, but it seems increasingly unlikely that we are going to have a plan that Congress can vote on before January 1st.

It is just five days away. By the way that budget mess that got us into the fiscal cliff situation in the first place, the debt ceiling, remember that in August of 2010, it's back, and Treasury Secretary Tim Geithner says we're about to hit it Monday in fact.

Doreen Mogavero is the president of Mogavero, Lee And Company, a brokerage firm here in New York. She is a member of the New York Stock Exchange. Doreen, think back, September 30th of 2008. TARP was supposed to be done that day, it didn't get done. The Dow dropped 770 points, the biggest point drop in history. By that Friday, the deal was done. Markets may be the last place to have influence here.

DOREEN MOGAVERO, PRESIDENT, MOGAVERO, LEE AND COMPANY: Well, I'm not sure about that. I think we saw after the election, you saw a 1,000- point drop in the Dow right away and I think that was in anticipation of what we think is going to happen. I think it was fairly obvious then that we were not going to get a deal here out of Washington and unfortunately it's even more obvious today.

WILL CAIN, CNN CONTRIBUTOR: So markets are already pricing this in. Come January 1, no surprise you're saying?

VELSHI: While you all speak, let's put up a chart of what the S&P 500, which is what many of your 401(k)s may look like has done this year. In fact, just look at that extreme right edge where you see this drop in the last few days. This thing is up 12, almost 13 percent this year. Not a bad year.

MOGAVERO: No, it's not a bad year, but it's a huge disconnect between reality and what's going on in the market. You know, people use the markets very differently than they used to. There are a lot more -- a lot more money is going into short-term instruments like ETFs and options.

A lot more money is coming out of listed equities to go into those things. So I think there are a different market structure and a different way people are using the markets.

BROWNSTEIN: Just to be clear, your view is that the market will not be the enforcer of last resort. If the two sides cannot make a deal, we go over the cliff in January, there will not be a dramatic market reaction that will force them to reconsider or do you think there will be?

MOGAVERO: I think there will be, but maybe not as dramatic as you might expect.

MARTIN: But Congress, though, also operates based upon public perception. What happens is when the markets drop all of a sudden there's intense media coverage. People look at their savings and go, my God, what happened. Pressure then goes on them. So the public perception drives their action as well.

MOGAVERO: Public perception is also that the market is going up so the economy is good. That's not so. The economy is not good. The underlying fundamentals are not good. People are taking money out of mutual funds and putting them into other places, into housing, into metals, into commodities, all into different places. So the market is being driven by professional traders more so than it is by investors.

CAIN: Can I just get some clarity on what you and Ron were talking about. Would you define for me dramatic?

MOGAVERO: The 2,500 points for the Dow. For the Dow I would say is dramatic, 2,500 points in the Dow.

BROWNSTEIN: You do or you do not expect that.

MOGAVERO: I do not expect that.

VELSHI: That's catastrophic, that's not dramatic, that's catastrophic.

BROWNSTEIN: How big a difference would a deal make? If there is a deal, how much of a boost is that for the economy?

MOGAVERO: I'm not sure that it's a huge boost. I think it will be a continuing rise and you'll see a floor. I don't think you're going to see this huge spike. You might day one but it's not going to hold.

VELSHI: For all of Congress messing us around, we're in a very good economy. In 2013, because of natural gas, because of oil, because of housing and the fact that maybe somewhere along the line we might actually build some infrastructure, we're in a good place.

CHO: I'm curious to know what you think about this Bank of America economist, Michelle Myer coming out and talking about a bungee jump over the cliff. Meaning we'll go over the cliff and bounce right back because there will be an easier vote on the other side. What do you think about that?

MOGAVERO: Well, I think it depends on the debt ceiling. That's coming up in February. There's a bunch of events that could really back-to-back throw us in one direction in a very bad way.

VELSHI: Geithner came out and said we hit the debt ceiling on Monday, but they can fiddle with things and pay some things and he may be stretching it out.

MOGAVERO: They seem to be fiddling with everything these days.

VELSHI: I want to ask you this question. Is it worth pulling your money out, if you're the average investor, pulling your money out of the market now and putting it back after the situation is resolved?

MOGAVERO: You mean today?

VELSHI: Yes, correct, pulling it out today or tomorrow.

MOGAVERO: Well, I think a lot of people did that. I think that's what the 1,000-point drop after the election was all about. I think we've had a huge -- we're almost back to where we started pre-2008, right.

So there are a lot of people that can't afford to have this happen again and they have been slowly taking their money out and trying to reap some of the profits that they were getting back, not that there are profits.

MARTIN: So much of our economy is driven by consumer confidence. You take this action and go over the cliff that directly impacts the confidence that people have in markets, in what's going to happen in the future.

MOGAVERO: You're making the assumption that we have confidence. We don't have any confidence. Recently --

MARTIN: Our confidence has improved.

MOGAVERO: Recently, it has dropped again, though. Recently it has dropped again.

MARTIN: But it was higher than it was 12 months ago.

MOGAVERO: Well, yes. That wasn't hard to do.

MARTIN: I'm saying that's the whole point. Confidence goes up.

MOGAVERO: Well, yes, everything goes up from the bottom. There's nowhere else to go.

MARTIN: You can go down now. You can go down.

VELSHI: I want to remind people who are watching this, if you want to pull your money out and investing it afterwards, there are some tax implications. So check with somebody before you do that. You naturally lose more money than you --

MARTIN: Capital gains taxes are going up.

VELSHI: There you go. All right, coming up -- thank you, Doreen. Great to see you, great conversation.

Coming up ahead on STARTING POINT, an app called "Make Me Asian" is causing a big uproar this morning, despite the fact that Will downloaded it. The creator says it's all for fun, but is it racist?

(COMMERCIAL BREAK)

CHO: Welcome back to STARTING POINT. It's 44 minutes after the hour. A quick check of your top stories.

Rescuers are racing to save a giant and clearly very sick beached whale off Breezy Point in Queens, New York. The 50-foot long whale is believed to be a female humpback. Experts say the likelihood of it surviving just aren't good. The whale appears to be very skinny and also very weak.

Los Angeles officials say the city's gun buyback brought in more weapons than last year. The mayor moved the annual event from Mother's Day to yesterday in the wake of Connecticut school shootings. People exchanged their guns for up to $200 worth of grocery store gift cards.

Listen to this one. A new app available for download on Google Play has some Asian-Americans outraged. Take a look at this. It's called "Make Me Asian" and it lets users change the way they look by reshaping their eyes or adding Fu Manchu mustaches and rice paddy hats to their picture.

Google says it's a fun app that can make you look Chinese, Japanese or Korean. But Asian-American groups say it's sensitive and racist. Google tells CNN they will pull the app if it is determined that it violates policies against hate speech. I want to know how that got through in the first place.

VELSHI: I did make a comment that Will had downloaded the app. Will has nothing to do with this. I was teasing Will.

CAIN: Thank you. Thank you.

VELSHI: Just to be clear.

CHO: We were making the reference of you going to the south during the election campaign putting on a cowboy hat and Will joking with you --

VELSHI: He thought I might be mocking folks. No, I was just getting into it like I thought that was fun. Will does not want to get baited into this conversation.

MARTIN: You know what's interesting --

VELSHI: You felt that I was mocking people.

MARTIN: You wore a Texas longhorn T-shirt. That was offensive to me as your friend being an aggie. People say it's racist and then you say offensive. I think we make a mistake when you go all the way and say it's either racist or not racist. It could be offensive to some and fun to others. That's the mistake that we make whenever these sorts of topics come up.

VELSHI: You were pointing out, Will, it's just bad taste.

CAIN: But I think the person with the most perspective on this is Alina and you say you did find it offensive or did you say racist? CHO: I find it offensive. I mean, I find it a bit racist. I think that if -- I think the bottom line is this, that it plays into stereotypes. You put a rice paddy hat on somebody. I think it plays into stereotyping.

BROWNSTEIN: So what if the app just changed features?

VELSHI: I was going to say that.

BROWNSTEIN: Still, you're still dealing with the stereotype.

CHO: I agree.

MARTIN: But here's the deal. You have apps that also change your features, say, OK, this is how you're going to look the as an old person.

VELSHI: This is if you were 50 pounds heavier or skinnier.

CHO: I think I would have less of a problem with that. I'd have less of a problem with that.

VELSHI: There is a make me Indian app as well.

CHO: It makes me feel a little bit uncomfortable, to be honest with you.

MARTIN: The assumption is there are certain characteristics that make you look ex. So how about this here, you get the Michael Jackson black or white video --

BROWNSTEIN: Not everybody fits that.

MARTIN: Michael Jackson video black or white where literally there are people who are white and they then went to black. Was that offensive?

VELSHI: That's an interesting conversation, undecided. The jury will be back on this one later.

Coming up ahead on STARTING POINT, "The Devil Wears Prada" meets Washington, D.C. Alina is all excited.

CHO: That was great.

VELSHI: We're talking about a juicy new novel about a young girl working for a demanding new senator, the authors of "Capitol Hell" up next.

(COMMERCIAL BREAK)

VELSHI: OK, so they're calling it the "Devil Wears Prada Meets Washington D.C." -- a young naive girl goes to work for a demanding boss and gets in way over her head, except this time the young girl is working for a newly elected senator who is a rising political star. That's the story of a new novel dishing about life in D.C., the authors of "Capitol Hell."

MARTIN: Great title.

VELSHI: Excellent title. Our two former Capitol Hill staffers who both worked for former Republican Senator Norm Coleman of Minnesota, Alicia Long and Joan Jones join us now. Welcome to both of you. Is this about Coleman?

UNIDENTIFIED FEMALE: It's a fictional spin, a senator from Minnesota who runs for president.

MARTIN: Walter Mondale. I've got a lovely -- funeral home fans using capitol hell.

VELSHI: I didn't hear an absolute for sure no, how much of the book is real about the stuff that you describe is real or at least based on a lot of real isn't it.

ALICIA LONG, AUTHOR, "CAPITOL HELL": We like to say a good girl never kisses and tells, but we will see we both worked on the Hill for a number of years and had tons of friends who did the same so we picked and pulled a bunch of different stories.

BROWNSTEIN: What is the most important thing you learned about Capitol Hill that you did not know when you got there?

LONG: For me number one which I think will come in handy is always wear flats when walking because the high heels get stuck in the sidewalks.

MARTIN: "The Devil Wears Prada," that place has no fashion whatsoever. Come on seriously it has none, khaki pants, blue blazers.

LONG: We tried to bring in some pink and funky funk color.

UNIDENTIFIED FEMALE: Alison was the only one on the Hill hot.

VELSHI: Just to give our viewers some flavor from the book. Here is a quote from the book, there's a story where a young staffer, Alison, is on a date and gets an urgent call from the senator she's working for.

And the senator says, I need you to put my laundry in the dryer before it molds over the weekend ordered the senator, do it tonight and make you use extra dryer sheets. I don't like static cling.

LONG: Who likes static cling? No one likes static cling.

MARTIN: To help you out I know some members of Congress, male and female let's say who have terrible reputations, Charles Barkley, terrible reputations when it comes to using the staff. Does that happen?

LONG: That kind of stuff I think happens all the time. You'll see staffers walk in. Dogs are on the capitol complex.

UNIDENTIFIED FEMALE: Carrying purses around.

LONG: I think a lot of people don't realize. We wanted to capitalize on the tasks.

MARTIN: What's the worst, dealing with the spouse, come on, out with it.

UNIDENTIFIED FEMALE: You get asked interesting requests. Staffers, fellow colleagues might not be there for a reason. We came from a campaign because we believed in Minnesota, maybe folks are looking at their reputation versus everything else.

MARTIN: That was a Potomac two-step like that. You see how she danced around that question.

CAIN: Look I know why people bought "The Devil Wears Prada." they got behind the scenes stuff there. You're saying it's not about Norm Coleman. What percentage of your book is real, what percentage is fiction?

LONG: I would say it's hard to give, to quantify. Some takes pieces of things that are true and some of it is completely made up so I will say this, part of the fun is reading the book and trying to figure out who you think you recognize in the book and what traits do you think you see.

MARTIN: The piece of advice that someone who wants to go to work on Capitol Hill would get out of the book.

UNIDENTIFIED MALE: Do it until you're 30. We're extremely thankful to Senator Coleman for giving us that opportunity to learn and to serve, but do it until you're 30.

CAIN: Have you spoke on it Senator Coleman since the book?

LONG: Yes.

CAIN: Has he read it?

LONG: I don't know if he's read it or not.

BROWNSTEIN: I know Norm Coleman. He's a friend of mine. Norm Coleman is no Wintower.

VELSHI: If you know Norm Coleman tell him to call us and tell us whether you've read the book. We should tell you Jane is getting married on New Year's Eve, a fiscal cliff wedding.

UNIDENTIFIED FEMALE: Yes, New Year's Eve, back stage is my 14-year- old future stepdaughter, Stephanie, counting down, 48 hours.

VELSHI: Welcome to STARTING POINT, the love boat edition. The fiscal cliff is falling into the hands of the Senate after the House walks away with no deal. Can the Senate do any better?

Maybe we should ask our two guests, Connecticut Senator Richard Blumenthal is with us at the top of the hour. Plus the airline pilot caught on tape ripping his bosses as he apologizes to passengers. You're going to want to hear this and probably applaud.

(COMMERCIAL BREAK)

VELSHI: Good morning. I'm Ali Velshi in for Soledad. Our STARTING POINT, Holiday travel horror, state by state, people soaked with snow and winds that will knock you over, the northeast getting the worst of it right now.

We are tracking the storm and back to Washington with five days to go, President Obama returns to D.C. to hammer out a deal with the Senate, but there may be another problem, a more threatening problem to deal with before the New Year, and he's a mean one, no, not Roland Martin, the Grinch.

MARTIN: That's Will. He is the Grinch.

VELSHI: That might be, from the new musical.

MARTIN: Look at him.

VELSHI: Will, go outside and get your costume on.

It is Thursday, December 27th. "STARTING POINT" begins right now. All right, Roland Martin joins us. He is the host of "Washington Watch." "Washington Watch With Roland Martin," a little hot this morning.

Ron Brownstein is the editorial director at "National Journal." Will Cain in addition to be playing the Grinch, as a conservative holding up the fiscal cliff deal. He is also an analyst for the Blaze.