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First Trading Day of 2013; Interview with Congressman Peter Welch of Vermont; Paparazzo Killed in Traffic; Polar Plunge has Newtown Tribute; Markets up on Fiscal Cliff Deal; House Approves Cliff Deal; Obama Lands in Honolulu; Northern Illinois, no match for FSU

Aired January 2, 2013 - 09:30   ET


ALISON KOSIK, CNN BUSINESS CORRESPONDENT: 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.

The bigger question, though, will this rally last? Stocks are more of this forward-looking indicator. Negotiations over spending cuts and the debt ceiling get chaotic again, as they have last year, the market really could be in for rough days ahead.

And it's really these early days of the year that are important, a strong first five days of January almost always leads to gains for the year. It certainly held true in 2012. The S&P 500 gained about 2 percent in the first five days of January, and then gained more 13 percent for the year. So we should only hope to see strong gains in the first five days of January.

As the day goes on, looking at an 82-point gain on the Dow for now -- Victor.

VICTOR BLACKWELL, CNN ANCHOR: All right. Alison, we'll stay close to you and stand by. We'll check what the market is doing over the next 90 minutes.

It doesn't matter what side of the aisle you're on. This fiscal cliff solution is making a lot of people unhappy.

Congressman Peter Welch from Vermont voted for the bill last night. He joins us now.

And, Congressman, it's good to have you.


BLACKWELL: There's something you said yesterday just before the vote, that you said, "As a fiscal package going forward to stabilize this country, this deal falls well short." Are you confident that as we move over to the next two months and we start talking about the sequestration and the debt ceiling, considering all of the infighting we saw over the last few months, that we will get to a fiscal package that stabilizes this country?

WELCH: No, it's going to be very rough. I mean, that's the undone work. So anyone who tries to claim this as a huge victory is overselling it.

What is significant is a couple of things. One, and I give Speaker Boehner credit for this. He put this on the floor when he knew a majority of the caucus would vote no, but a majority of Democrats would vote yes. So, we actually have a bipartisan deal that is helpful in the short run.

Secondly, revenues did go up on the top 2 percent and we kept taxes low on 98 percent.

And then, third, after the dust settles, this framework of finding a way where both sides are going to be able to vote on the floor is the only way we're going to get to be able to resolve some of these big issues that lay ahead for us.

BLACKWELL: So considering the $16.8 trillion or so debt and the growing deficit, you're getting about, what, $620 billion from this bump in taxes for the top 2 percent. How close does that get us to where we need to be really at the end of the day in all of the discussion?

WELCH: Nowhere near where we need to be. I mean, we have to have revenues as part of this, but we do have to have cuts. The Pentagon's got to be part of that.

And health care, this is where it's tough for the Democrats. Health care has to be part of this. Now, that's not Medicare benefit cuts. There's a lot of things we can do to deal with the very high cost of health care in this country that goes up two or three times the rate of inflation. It's not sustainable.

So, things like having prescription drug price negotiations, that would save $160 billion, moving away from fee for service to more of a performance-based system, things that we can make progress on that allow the American people to have access to health care but have it be affordable and sustainable but that's tough.

BLACKWELL: All of the low-hanging fruit is gone. I mean, if they were easy to do, Congress would have done it by now. So --

WELCH: Well, that's right.

BLACKWELL: Go ahead.

WELCH: It's true. The things that lay ahead that are really a challenge, largely is health care because that cost in the whole economy, not just Medicare, is going up faster than we can afford. That's really the bottom line.

So how do we reform our health care system and bring the cost in line so it's sustainable? Those are very difficult issues.

The Republicans in general have wanted to cut benefits, seeing that as a way to control costs. The Democrats in general wanted to have system reform and, you know, we've got to find a way to work together on that. The other thing is that some of the tactics like threatening to default on our bills, and that was the debt ceiling showdown that we had last August, that's unfortunately very damaging. It's an effective tactic but it has such negative collateral consequences for the economy that ideally we would have a truce on that and acknowledge that America has to pay its bills, and there's no shortcut to the fiscal reform that we need.

BLACKWELL: I don't know if we're necessarily going to hear or use the word "truce" over the next few months but I'm sure there are a lot of people at home wondering why when there's something important to be done, every time we have to get down to literally the 11th hour with Congress. Why, and should we just expect this here on out?

WELCH: No. I mean, American people I think are quite entitled to expect more from their Congress. They should have confidence that on New Year's Eve, they have a Congress that's done its job and we hadn't done it.

So, this brinksmanship is negative for the whole process, but it does reflect how divided we are.

I mean, you know, President Obama won the election. He said he wanted to raise revenues, but the Republicans who ran the districts ran on the platform of lowering taxes.

So this was a tough situation for them. They had to do something they knew the country validated with that election, but their own constituents said no. So there is a polar tug-of-war here that's going to continue.

BLACKWELL: All right. Congressman Peter Welch, thank you for speaking with us today.

WELCH: Thank you.

BLACKWELL: Coming up in an hour, we'll talk with Republican Senator John Barrasso from Wyoming about what he thinks about this deal.

And big city mayor applauds Congress for reaching a fiscal cliff deal but urges lawmakers to do more. We're going to talk to Philadelphia's Mayor Michael Nutter.


UNIDENTIFIED MALE: Art is what can't be proven mathematically, where science ends, the part that makes you feel good but you don't know why, the way the object feels and looks, and you can almost if it's perfectly created explain it to somebody else afterwards, but in the creation part you can't.

You can see how the glass is constantly moving. My job is to basically shape it. And balance it at the same time. You do that, you get these wonderful shapes. Glass really rewards the risk.

A lot of times with glass you're waiting for the piece to cool down and temperature to adjust and split seconds where you've got, you know, literally a fraction of a second to make a particular move in a particular way, and you don't get to repeat it if could you it wrong. So there's a performance to it. It's sort of like dancing.

You can't really think about it and do it really. You just have to do it enough that it becomes sort of mechanical, and then you can sort of free your mind to design.



BLACKWELL: A member of the paparazzi is dead after he was hit by a car while trying to photograph Justin Bieber's Ferrari. Bieber wasn't even there.

CNN's Nischelle Turner is in Los Angeles.

This tragic story, but, you know, from what we hear this guy was running across the street to take a photograph and he wasn't -- Bieber wasn't even in it.

NISCHELLE TURNER, CNN ENTERTAINMENT CORRESPONDENT: Yes, tragic, senseless -- all those words you can come up with, Victor.

You know, photographs, though, of Justin Bieber pretty big deal, particularly if it's another incident involving Justin Bieber getting pulled over in a sports car.

And the paparazzi are known for and -- I guess the only way to say it nice here -- pushing the boundaries to try to get their pictures but certainly it is tragic to see someone dying over just trying to get a photo. Now, particularly when Justin Bieber, like you said wasn't even in the car.

CNN has learned that it was actually a friend of his behind the wheel of his Ferrari but Bieber did react to all of this in a statement to CNN, saying, "While I was not present nor directly involved with this tragic accident, my thoughts and prayers are with the family of the victim. Hopefully this tragedy will finally inspire meaningful legislation and whatever other necessary steps to protect the lives and safety of celebrities, police officers, innocent public bystanders and the photographs themselves."

And, Victor, this one, it's a little bit of kind of a weird situation because the photographer was not killed trying to get the photo, like you said. He was killed when he was trying to cross back over a busy freeway.

And if you know that area where this is here in Los Angeles, it's the 405 Freeway near the Sepulveda Pass and the Getty Center, and this is an area that's windy, there's a lot of blind spots there, and it's a high traffic area. So it just wasn't a good decision to try and cross the road there. There aren't any, you know, walkways for a pedestrian to cross.

So, it's just -- it was just a really bad decision.

BLACKWELL: That's unfortunate. Stars have been calling for that legislation since the death of Princess Diana, and will continue to call for legislation.

But Bieber has had a history of problems with the paparazzi, right?

TURNER: Yes. You know, he's been the target for years of the paparazzi because he's so big and famous. You know, he called the police after a high-speed chase with the paparazzi on a Los Angeles freeway a short time ago. Certainly, that incident does bring to mind like you said the death of Princess Diana, which was caused by a paparazzi car chase.

Now, there are laws on the books here in Los Angeles which are meant to prevent these high-speed chases of celebrities by paparazzi. If convicted, they bring up to a year in prison and a $5,000 fine for each count of breaking traffic laws while pursuing a celebrity.

But the problem with this, Victor, is it's not necessarily not having the law, it's the enforcement of those laws and, you know, being out here covering entertainment, we see these kind of things happen every single day where paparazzi are chasing celebrities and surrounding them just to get a photo.

BLACKWELL: And it's not worth it especially when you're putting your life on the line.

Nischelle Turner --

TURNER: Absolutely.

BLACKWELL: -- out in L.A. for us -- thank you.


BLACKWELL: Nischelle will be back next hour to talk about how the fiscal cliff of all things will help Hollywood save millions of dollars.

Philadelphia Mayor Michael Nutter applauds Congress for reaching a fiscal cliff deal but urges lawmakers to do even more.


VICTOR BLACKWELL, CNN ANCHOR: Fifteen minutes before the top of the hour.

"Top Stories" now. In about three hours Pennsylvania's governor will announce a lawsuit against the NCAA over stiff sanctions it opposed -- imposed rather on Penn State University. It follows the child sex abuse scandal involving the school's former assistant football coach Jerry Sandusky. The NCAA fined Penn State $60 million and stripped the football program of 14 seasons of victories.



BLACKWELL: Well a fun New Year's tradition but with serious overtones, about 200 people took part in a polar plunge in North Carolina, the event raised funds for a local charity but also touched on the shooting tragedy in Newtown, Connecticut. The "polar bears" as they are known signed a large card to send to the town.

Secretary of State Hillary Clinton is still in a New York hospital this morning after doctors discovered a blood clot between her brain and skull right behind her right ear. She is being treated with blood thinners and expected to be released after doctors set her medication dosage.

Her daughter Chelsea tweeted a thank you to all of those wishing her mom a speedy recovery. She said, "Thank you to all for sending good thoughts my mom's way. Grateful to all her doctors and that she'll make a full recovery."

Four masked and armed robbers hit an Apple store in central Paris, making off with as much as $1.3 million of merchandise. Now the robbers entered the store afterhours on New Year's Eve while police were focusing on areas with revelers, people celebrating. The robbers loaded iPhones, iPads and laptops in a van and sped away.

We are keeping an eye on this rally that we're seeing on Wall Street of up 222 points -- if I'm looking at the board correctly -- after the deal on fiscal cliff. And Philadelphia Mayor Michael Nutter has been a strong supporter of President Obama during the recent presidential campaign and on the President's plan to deal with the fiscal cliff.

Well now with Congress reaching that deal, Mr. Obama is sending out a warning to those lawmakers. Michael Nutter joins me now. Welcome, sir.

MAYOR MICHAEL NUTTER (D), PHILADELPHIA: Victor, thank you. Happy New Year to you.

BLACKWELL: Happy New Year to you. You applauded Congress to action there but also urged them to do more. What worries you most about the next two months as we move into this phase of talking about the sequestration and the debt ceiling?

NUTTER: Well, Victor, as much as it's recognized that Congress did ultimately take an action that was necessary, I mean this has been kind of one heck of a start to this year, it raises concerns about how they deal with the rest of the business still at hand. The President made clear, stuck to his principles and for the first time in two decades we see placed into law that tax rates will go up for millionaires and billionaires.

The President said he would do that during the course of the campaign. It wasn't just about a campaign. It was about a fundamental principle and he got that accomplished and at the same time ensured that middle class taxpayers would not see their taxes go up, and possibly send this economy into another recession.

And so certainly those are important points and the President should be recognized for getting it done and sticking to his principles about that. This was past the 11th hour, if you will, in terms of work that need -- needed to have been done a good while ago.

The President also made it very clear, crystal clear that he will not negotiate something that is as straightforward as raising the debt ceiling limit. The bills have already been incurred. The United States has to stand behind decisions that were already made.

And so the President is not going to allow this kind of nonsense from the summer of 2011 that we saw go on as the debt ceiling issue moves forward.

But we still have the sequestration cuts that were put off for two months.



NUTTER: Go ahead.

BLACKWELL: That's wishful thinking that the President is not going to negotiate with Congress on the debt ceiling. I mean, that is going to inevitably happen and probably is starting today, right? So for the President to say I'm not going to negotiate with the Congress --

NUTTER: Well, I think the people will try, well I think the President has been very, very clear about that. Certainly that won't prevent people from trying. I mean, you know it's the United States. People can say and do pretty much whatever they want, but I think he has been strong on this particular issue.

Look, the debt ceiling has been raised I think 30-plus times going back to when Ronald Reagan was president. There were no big dramatic negotiations. You know if people need drama, they should just watch a little more television. This is people's lives.

And so it was about unemployment insurance. Two million Americans who lost their jobs through no fault of their own, their benefits will stay in place. The members of Congress are not worried about -- for themselves unemployment insurance. They have jobs. They have health care.

And so these are serious matters that affect people. The President kept in place tax credits for people to be able to send their children to college and benefit companies for research and development.

But we still need to also make investments in infrastructure, in research, in education and certainly taking steps to make sure that our children are safe. So this was important to get done. There's much more work that needs to get done. We need it done in a business- like fashion, straightforward, a little less politics, a lot more policy and work on behalf of America, not just party philosophy or jockeying for future position, mid terms in '14 or who is running for president in 2016.

Americans are still hurting right now. And the Congress has the responsibility to take on these great challenges.


NUTTER: Do it in a straightforward manner that people can understand what in the world is going on.

BLACKWELL: All right. Philadelphia Mayor Michael Nutter, we will see how this continues over the next few months as we go through the debt ceiling and sequestration.


NUTTER: Absolutely.

BLACKWELL: -- and that continuing budget resolution. Thank you, sir.

NUTTER: We will all be watching. Thank you.

BLACKWELL: All right. At Northern Illinois, doubters are saying, "I told you so". Florida State runs away with the Orange Bowl game. We're going to talk about that.


BLACKWELL: This just in to CNN, President Obama has just landed in Hawaii. He headed to the island right after a deal was sealed on the fiscal cliff late last night. And you heard the President speak late last evening from the White House. It's just before 5:00 a.m. there. We're still waiting to find out actually when the President will sign the bill that was passed to the House last night.

Also our Dan Lothian was on Air Force One with the President, again there it landed in Honolulu. We're expecting to speak with him living coming up in our next hour.

Well, Cinderella did not show up at the Orange Bowl last night. The underdog that did, Northern Illinois, kept the game with Florida State close for most of the first half before the Seminoles took charge and won 31-10. NPR's sports correspondent Mike Pesca joins us. Hey, mike.


BLACKWELL: From the time the bowl invitations went out, there was a huge outcry that northern Illinois was not ready for BCS primetime. Did we just see proof of that?

PESCA: Yes, they said northern Illinois wasn't athletic enough, just didn't have the -- didn't have the horses to compete with a big-time team. The stuff they ran in the MAC wouldn't work against the big time team and everything they said was right. Northern Illinois actually played with a lot of heart and savvy, all that. But it doesn't matter when you're facing athletes who are just that much better than you.

And you know their trick plays worked, they had a fourth down fake punt that worked, they had an on flight take (ph) that worked, their coaching was good. They just simply you know of the 22 guys on the field at any one time, the 20 best would be Florida State players. It's a formula for losing.

BLACKWELL: Let's talk about Stanford, big day for them because they won their first Rose Bowl game in 41 years. I guess really no huge deed for Andrew Luck, right?

PESCA: Well it maybe with Andrew Luck they could be the national champion, that's how good how Andrew Luck is. But this is a good game; Wisconsin a very ground-oriented team. You maybe wondered when they fell behind early, would they be able to run and keep up with Stanford and they were. They turned it into a good game and interception they clinched it for the Cardinals.

BLACKWELL: We don't have the overnight ratings yet, but we do know the ratings have been -- have been down recently in recent year for New Year's games. Why are -- why are we seeing this drop-off? Are they just too many now?

PESCA: Well there are a lot of bowl games so there are certainly a glut but even if the ratings for New Year's itself is down, you know the BCS championship game is going to get a huge rating and even though that NIU versus Florida State game was bad. There was a very good game in the Outback Bowl. The Rose Bowl was pretty good.

So I think the people who are programming these bowl games just like having what in television is called an inventory. It's like a whole season and everything is gravy. You know they're not paying that much for the rights to some of the lesser games. They're just happy to be on TV and whatever advertising dollars they could get from that, they're happy to rake in.

It's sort of everyone wins except for the schools who sometimes have to pay the top price for tickets. So schools are sometimes committed to buying 11,000 tickets of like $75 each when you could go on stubhubbing and can get the same tickets for literally $5 each in some cases.

BLACKWELL: We will see how those ratings work for the BCS championship Mike Pesca, thank you.

PESCA: That will be good you're welcome.

BLACKWELL: The next hour of CNN NEWSROOM begins in two minutes.