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Congress Averts Fiscal Cliff; No Vote on Superstorm Sandy Aid; First Day of Trade in 2013; Biden Brokers Deal, Raises Stature; A GOP Divided; Fired for Not Getting the Flu Shot

Aired January 2, 2013 - 09:00   ET


BROOKE BALDWIN, CNN ANCHOR: Let's go to Victor Blackwell now because "CNN NEWSROOM" continues with him.

Victor, good morning.

VICTOR BLACKWELL, CNN ANCHOR: Good morning, guys. Thank you very much.

Happening now in the NEWSROOM, dodging the fiscal cliff crisis at least for now. But with all this talk about spending less why are lawmakers giving millions of dollars to businesses that are already thriving? We'll show you who's cashing in.

Party crashers, Republicans split over the tax deal and the core values of the GOP, and that strained unity faces an even bigger test as a new deadline looms over spending cuts.

But while the GOP licks its wounds, Wall Street gets ready to celebrate. U.S. stocks set to open higher as markets around the world trade higher on the deal.

And they told us to basically drop dead. That's how one New Yorker is reportedly characterizing the House after ending the session without sending any Sandy relief to the northeast.


REP. PETER KING (R), NEW YORK: Everybody played by the rules, except tonight, when the rug was pulled out from under us. Absolutely inexcusable, absolutely indefensible.


BLACKWELL: NEWSROOM starts right now.

Good morning, I'm Victor Blackwell sitting in for Carol Costello.

Eleventh hour drama. Congress swerves away from the dreaded fiscal cliff, but on this morning after the enthusiasm is tepid at best and the anger is simmering.

First your bottom line. No tax rate increase for more than 98 percent of Americans, that is couples earning less than $450,000 a year. The middle class also gets relief from the alternative minimum tax. It will now be adjusted for inflation.

And remember those massive spending cuts that could have plunged the country back into recession? Yes, well they're merely on hold for a couple of months. So lawmakers face even tougher decisions and dwindling patience from the public, and that includes some powerful voices in Washington.

Check out this tweet from a leader of the Tea Party Express. Amy Kremer says, "I'm extremely disgusted with what happened in the House tonight. There will be consequences."

We're covering all the angles and Alison Kosik shows us how investors are reacting to the crisis that has been avoided at least for now, and Christine Romans gets out the magnifying glass and exposes some of these pet projects that are getting huge amounts of your tax dollars.

So let's now take a look at some of the big winners contained in the fine print. First up, Hollywood. $430 million in tax breaks to foster TV and film production in the U.S. Also cashing in, railroads to the tune of $331 million. The tax credit is tied to maintenance of the tracks. Puerto Rico and the Virgin Islands, listen to this, they'll see more than $220 million in tax dollars returned, they were collected on rum produced there, and imported to the mainland. And that iconic American sport NASCAR racing will get a windfall of $70 million.

Christine Romans is here to break it down for us.

Christine, these sorts of business incentives are not new, but what's the argument for providing them and putting them in this bill?

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Well, I mean one man's pork is another man's job creator, right? I mean, the point here is that some of these are extenders, some of these are business sweeteners meant to help them continue to do business and to thrive and to actually stay in this country. I mean, some of the film and TV productions staying in the United States got a tax break, for example.

Also a tax break for the area or special tax status, I should say, for the area around the World Trade Center site. I mean, you go through the list and as we always have in very big legislation and important legislation, these things get tucked in there because they guarantee easier passage and some of them, quite frankly, are just extended, they're just almost like carbon copy extenders of things that we have done before that have been languishing this year without a budget so the fiscal cliff bill, like all legislation, packed with these -- with these goodies.

There's one thing in there that the business community is very, very interested in, and I'd like to point out that to you, extension of modification of something called bonus depreciation. And this means if businesses can write off immediately half the value of their new investments, it's known as the 50 percent bonus depreciation. This is something that got business people -- it raised their attention.

I want you to listen to what Ned Riley had to say about this. (BEGIN VIDEO CLIP)

NED RILEY, CHAIRMAN, RILEY ASSET MANAGEMENT: Businesses have been holding off and waiting for the uncertainty of the fiscal cliff. We saw a nice bonus depreciation thrown in this bill that I did not anticipate and I don't know how extensive it is yet but that hopefully will get capital goods spending moving along again.


ROMANS: You know, so one person could say that's pork and another person would say hey, wait, maybe that's going to do something to get business spending money and going to make them feel more -- so, you know, you can argue, you know, pork, perks, tax sweeteners, whatever they are, they are in there.

One thing that's not in there, there is no pork for Congress, Victor, because they will not get a cost of living adjustment to their pay. So they didn't get any pork, Congress didn't.

BLACKWELL: I think the concern for a lot of people is that, this is -- when we hear about these things.


BLACKWELL: Not in the discussion on the House floor but after it's already passed and headed to the president to be signed.

ROMANS: Absolutely, and that's what's so confounding about pork in and of itself, the way that it can get in there and the process and the -- in the dark of night, the way it does. No question. I mean you go through the list, we can talk about them, we will talk about how much money they generate or how much money they cost taxpayers, but remember our tax code is full of thousands and thousands of pages of givebacks and giveaways and sweeteners and goodies, and economic incentives for certain kinds of behavior and certain kinds of business. That's the way the whole thing is set up, quite frankly.

BLACKWELL: All right. Christine Romans with the magnifying glass out for us this morning, thank you for that. We'll check back.

The House adjourned last night without voting on a bill that would have sent billions of dollars to help Superstorm Sandy recovery efforts across the northeast. The Senate approved a $60 billion bill last -- $60 billion bill last week but the House decided not to bring up any other legislation and that enraged House lawmakers from New York.


KING: Everybody played by the rules, except tonight, when the rug was pulled out from under us. Absolutely inexcusable, absolutely indefensible. We have a moral obligation to hold this vote, the people out of their homes, the people who are cold, the people who are without food, the people who have lost their jobs, they don't have the time to wait. REP. NITA LOWEY (D), NEW YORK: Disaster knows no boundaries. This body has acted with speed and compassion to help Americans throughout the country in disaster after disaster.

Dysfunction, Mr. Speaker, and this Congress shouldn't result in punishing victims of Sandy in New York, New Jersey, Connecticut and Pennsylvania. This is a sad day.


BLACKWELL: The delegations of those states are angry. The new Congress starts tomorrow, and all bills start from scratch, but House Appropriation chairman Hal Rogers is not concerned about quickly getting money to the area. The Kentucky Republican says the Federal Emergency Management Agency, FEMA, quote, "has enough money to last until at least late February or March anyway."

And coming up in about 50 minutes Congressman Peter King will join me to talk more about the inaction in the House on Superstorm Sandy relief.

All right. We may have avoided the fiscal cliff, but our paychecks will still feel that sting. The payroll tax holiday is now over, so in the new year, your wallet is getting squeezed.

According to the Tax Policy Center if you make $25,000 you're going to pay 42 extra bucks a month. If you make $50,000 you'll lose about 83 bucks a month, 125 if you make 75 grand a year and if you make 100 grand you'll see 167 fewer dollars each month.

Now over on Wall Street the first day of trading of the new year starts less than 30 minutes from now and it's also the first day of trading after Congress struck that deal on the fiscal cliff. Markets are set to rally on this news.

Let's bring in Alison Kosik over on the floor of the New York Stock Exchange.

Alison, what is the mood of traders?

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: You know what, Victor, you can call it the fiscal cliff rally, you can call it whatever you want, but it's definitely going to be something that's big. When the market opens in less than a half an hour from now, we're expecting to see triple-digit gains on the Dow, we're seeing markets overseas, they've already weighed in, Asian markets up big, the major averages in Europe, they're all gaining more than 2 percent.

Now the bigger question, though, is will this kind of rally last? Wall Street is concerned that the next chapter could be a volatile one. One Bank of America analyst puts it this way. He says the twin peaks are left for the new year, meaning Congress still has to deal with the issue of spending cuts which they pushed off for another two -- two months, and they've also got to deal with the debt ceiling and some analysts, Victor, are predicting another credit rating downgrade if the debt ceiling negotiations get chaotic again. Another analyst says this, with the debt ceiling negotiations in just 60 days, the smart money knows the bullish sentiment here will be short-lived, that the lesson for investors is buyer beware -- Victor?

BLACKWELL: All right. Markets open 9:30 Eastern. We'll see you in about 20 minutes at the ringing of the bell. Thank you, Alison.

KOSIK: Sure.

BLACKWELL: There may be no clear-cut winners in the fiscal cliff deal but both sides say they got less than they wanted. But Vice President Joe Biden clearly has reason to smile. He brokered the deal with the minority leader Mitch McConnell and then convinced his fellow Democrats to support it. And Biden's rising stature could be critical in those painful spending cut negotiations that loom down the road, just two months away.

Let's bring in White House correspondent Brianna Keilar and bring back business correspondent Christine Romans.

Brianna, first to you, we're calling this the Biden bump. Is this -- does this have staying power?

BRIANNA KEILAR, CNN WHITE HOUSE CORRESPONDENT: You know, it's hard to tell. I think that he definitely proved his worth in these negotiations that it seemed like they had really come to stall in the Senate over the weekend, and he did step in to negotiate something with Mitch McConnell and did so somewhat expeditiously.

He sometimes get criticized for saying -- I guess could you say speaking truthfully sometimes and saying things perhaps that are not politically what he might want to say, but he proved that what he brings to the table is an institutional knowledge of Congress and decades long relationships that really paid off in these negotiations, that he was obviously seen as a partner to be had with Senate Republicans on these negotiations because, as you know, President Obama was in the Senate but he wasn't there very long and so that's something certainly that Vice President Biden has as an advantage over him, but really an advantage to the president since he was the proxy in these negotiations.

BLACKWELL: Yes, Christine, that was part of the argument back in 2008 to put Joe Biden on the ticket, that he would be the liaison with Capitol Hill and be as he's been called for a couple of years now the closer.

ROMANS: And he's going to need to close some more deals or someone is going to have to -- to close some more deals in the days and months ahead, as Brianna well knows. I mean we have more deadlines here. You've got the automatic federal spending cuts that have now been pushed off for two months. You have a continuing budget resolution which has to be handled by the end of March, and then you have the debt ceiling negotiations.

So you're seeing a Congress here that needs some real closers and some real leadership to try to figure out how to get over these very, very big important fiscal challenges ahead. You've heard a lot of people say that we are -- we're out of this era of the grand bargain, the era of the grand bargain is dead. You're going to have fist fights one after the other over narrow parts of legislation and that's going to mean all the political chaps of every person in Congress are going to be tested, I think, over the coming weeks and months.

BLACKWELL: And Brianna, we know that, as Christine just reminded us, that we've got three big deals that will happen going into February and March. Does it look like this will be the play for the White House as we move forward? I mean are we going to start in the same place that we started 11 months ago with the debt ceiling with Boehner and the president trying and then sending Joe Biden in at the last minute to close?

KEILAR: Well, I don't know if we're going to be seeing that. And certainly the White House isn't saying that. I think what we know we can say we will see is some drama over this. Spending cuts have to dealt with. They were only deferred for two months, the debt ceiling has to be dealt with.

President Obama has said that he does want to deal with long-term things that affect the deficit in a negative way. Entitlements and tax reform and Republicans, of course, want to see entitlement reform and tax reform as well, so those things perhaps the negotiations, those things will definitely be attached to the spending cuts and the debt ceiling which have this extreme deadline I guess you could say.

I think, though, the president was taking a different tack that we will see again. When he was negotiating with the debt ceiling, I think he tried to portray himself as the reasonable grownup in the room and this time we saw him really take, especially in his comments before the deal came to really be, he took a really hard line against Republicans. I think the White House felt that that worked, I think that we'll be seeing that again in these coming negotiations.

BLACKWELL: The president also last night said that he's not going to negotiate with Congress on the U.S. paying its bills. We'll see if that happens. It's very unlikely that he will not have that argument. We'll see that in the next few months.

Brianna Keilar and Christine Romans, thank you, we'll check back.

Chaos on a frozen lake when a sledder crashes through the ice. Watch.

And this is not the end of this, because one person after another false in trying to save this guy, but believe it or not, this story has a happy ending.


BLACKWELL: Sixteen after the hour. Let's check top stories now.

The Coast Guard says there's no sign of any leaks from an oil drill barge that was washed ashore on an Alaskan island. The rig is carrying more than 150,000 gallons of fuel. A ship was towing it to Seattle when a powerful storm forced the crew to cut it free. The rig drifted 10 hours before running aground.

In business news, rental car company Avis-Budget agrees to buy Zip Car for about $500 million. Now, if you're not familiar with Zip Car, this is a car-sharing network. This deal could benefit customers who want a Zip Car on just the weekends maybe. Shareholders still need to approve the deal.

And watch this -- a man was sledding across a frozen lake when he fell through the ice and into the water. Now, people are going to run over to try to save this guy, they scrambled but would-be rescuers then fell through the ice themselves, one by one. Look. You see people here just slipping through the ice, it's thin everywhere.

This happened Christmas Day in Wrightwood, California, just west of L.A.

Can you imagine this? People on the shore tossed in ropes and inner tubes to help including the man and his wife who shot this video.


MICKEY HERMAN, HELPED RESCUE PEOPLE FROM ICY WATER: I ran up to the car, got the rope, ran back down, uncoiled it, threw it out and I was coming up about seven feet short from getting the rope to the guy. At that point, at that point, other people started running over the cargo straps tying them to the rope and they began throwing the rope and I ran up to the top of the hill and called 911.


BLACKWELL: It took almost nine minutes. That's an eternity when you were in a frozen lake.

But everyone was pulled to safety. Officials say the lake will be closed until April.

Commercial spots for the Super Bowl are reportedly almost sold out and they're selling for more cash than ever before. A CBS executive says there's only about two slots left maybe and 30-second slots sold for a record $3.8 million apiece. But some advertisers paid more because several commercials will be a minute or longer.

Back now to our top story of the morning: the narrowly avoided fiscal cliff. Last night, President Obama declared victory on a campaign promise to raise taxes on the wealthiest Americans, but he made clear his distaste for the drama and partisan brinkmanship in this deal.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: While I will negotiate over many things, I will not have another debate with this Congress over whether or not they should pay the bills that they've already wracked up through the laws that they passed. Let me repeat -- we can't not pay bills that we've already incurred. If Congress refuses to give the United States government the ability to pay these bills on time, the consequences for the entire global economy would be catastrophic, far worse than the impact of a fiscal cliff.

People will remember back in 2011, the last time this course of action was threatened, our entire recovery was put at risk, consumer confidence plunged, business investment plunged, the growth dropped. We can't go down that path again.


BLACKWELL: While the president says that he won't negotiate, there is another battle brewing in Washington. It's between the GOP and its far right Tea Party members. Republicans breaking ranks with their House Majority Leader Eric cantor to vote for a plan, 85 House Republicans voted for the deal, 151 Republicans voted against the deal, including Cantor, and that didn't sit well with the Tea Party.

Amy Kremer, chairman of the Tea Party Express, tweeted this, "I'm extremely disgusted with what happened in the House tonight. There will be consequences."

And if you scan any of the big national paper this is morning, the headline might be that yes a deal was reached but how we got there is also making news. "The Los Angeles Times" proclaimed, "A fiscal cliff plan cleared but with the House GOP divided."

And "The New York Post" called the deal with a "leap of faith," with Republicans breaking ranks to pass bill.

This morning, Tea Party movement member, Representative Jeff Landry was on CNN's "EARLY START", and he acknowledged this party tension.


REP. JEFF LANDRY (R), LOUISIANA: We have to have a fight inside our party to determine what Republicans actually stand for now. I think that -- I think that what you saw November 6th was the fact that the Republican establishment can't figure out what they stand for.


BLACKWELL: Well, over the next two months we could see a lot more political tension, that's for sure. The deal still has not addressed the debt ceiling fight.

CNN has reached out to Tea Party Express Chairman Amy Kremer regarding her message on that but we have not yet heard back.

Fired for refusing flu shots. Listen to this: the controversial call by an Indiana hospital that has a lot of people angry.


BLACKWELL: Consider this: should you be fired for not getting a flu shot? Well, several health care workers in Indiana are out of a job after saying no to the flu shots. The parent company of Goshen Hospital outside of South Bend made flu shots mandatory. There are some exceptions for religious and personal beliefs, but not everyone was given a pass.

Sue Schrock is a hospice nurse whose strong beliefs led her to skip the shot and now, she's out of a job.


SUE SCHROCK, FIRED HOSPICE NURSE: I just feel like it's a toxin I don't want in my body. There are side effects with that. There are no guarantees it's going to protect you.


BLACKWELL: The hospital says the health and safety of the patients is their top priority.

Elizabeth Cohen is our senior medical correspondent.

Elizabeth, good to see you.


BLACKWELL: So, this nurse, she treats some of the sickest patients and if they get the flu there could be some serious health consequences.

COHEN: Right, I mean, if you or I get the flu, it's unpleasant, we're out of work for a couple of days or maybe a week. We don't feel well. But we're probably not going to die.

But when someone is that sick in the hospital or in a hospice, if they get the flu, they could die, and in fact 36,000 people a year die from the flu. So it's a serious thing for these patients.

BLACKWELL: So this hospital has this mandatory policy. Is this becoming more common?

COHEN: It is becoming more common because the only protection really for these very sick patients, of course, they get the flu shot themselves, but it's so surround them with people who have also been vaccinated. So before, around 2005, hospitals didn't really care so much, they didn't really push this.

But then they started to push it and look at these numbers. It really tells you something. So in 2002, only 38 percent of health care workers in hospitals were vaccinated. Then they started pushing it in 2005 and telling people to get the shot, went up to 49 percent, and then more recently 67 percent as they started to get more aggressive and tell workers, look, you have a right to practice your religion and have your own beliefs.


COHEN: But if you want to work here, you've got to get a flu shot and protect the patients.

BLACKWELL: Now, there are some for religious reasons and personal beliefs they do not want the flu shot, what's the alternative? Are there alternatives?

COHEN: There are -- sometimes the alternative is you lose your job. Some hospitals have played around with the idea you have to wear a mask, day in and day out, eight hours a day when you're on the job. That doesn't work so well.

First of all, it doesn't protect patients as well. And, second of all, can you imagine working eight hours a day with a mask on?

BLACKWELL: It's tough.

COHEN: It's tough and so, people take them off. There really isn't a good alternative to the flu shot.

BLACKWELL: OK. So we'll see what happens with this and if there's any recourse for this woman who lost her job.

Elizabeth Cohen --

COHEN: My guess is there won't be.

BLACKWELL: There won't be?

COHEN: There won't be. I mean, she's a health care worker. She has obligations to her patients and the hospital has obligations to the patients as well.

She can practice her religion and have her personal beliefs -- that doesn't mean she gets to work there.


COHEN: She maybe should find other work.

BLACKWELL: All right. We'll see. Elizabeth Cohen, thank you.

COHEN: Thanks.

BLACKWELL: So, after months and months and months of talking about it, we have avoided the fiscal cliff. Now what? No one is really happy about the solution, including the men and women who voted for it.


BLACKWELL: In about 30 seconds, the opening bell will ring on Wall Street. Markets opening for trade for the first time in 2013, also the first day of trading after Washington's late night fiscal cliff deal.

Let's bring Alison Kosik back at the New York stock exchange.

We see here some applause and that may be echoed around the floor because we're expecting a rally, right?

KOSIK: That is the expectation. Here we go, the opening bell ringing now.

You know what? Get ready to call this a fiscal cliff relief rally. As soon as those numbers start rolling, expect to see a triple-digit gain on the Dow.