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EARLY START WITH JOHN BERMAN AND ZORAIDA SAMBOLIN
Fiscal Deal Done; Iran Claims Test Missiles Successful; Sandy Hook Kids Back to School Tomorrow; The Healthy Spending Pyramid; One Pound Fish: The 2013 Gangnam Style?
Aired January 2, 2013 - 05:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CHRISTINE ROMANS, CNN ANCHOR: Down to the wire but the deal is done. The end of the fiscal cliff is here, but will won't find a lot of happy campers on either side of the aisle this morning. But will you be happy?
ZORAIDA SAMBOLIN, CNN ANCHOR: And back on the air -- Hannah Storm returns to television after sustaining second degree burns in a horrific accident.
ROMANS: And armed police officers in every public school. One New Jersey mayor's bold new plan begins today.
SAMBOLIN: Welcome back to EARLY START. Thanks for being with us this morning. I'm Zoraida Sambolin.
ROMANS: I'm Christine Romans. It's 31 past the hour. A giant collective exhale this morning for millions of American taxpayers and small business owners. The House temporarily bringing us back from the abyss by passing the fiscal cliff Senate bill. The final vote last night, 257 for, 167 against. Among the yes votes, House Speaker John Boehner.
Here's what the deal means. No tax hikes for couples earning less than $450,000 a year. Couples making more than $300,000 a year get their itemized deductions capped. Two million Americans will see unemployment benefits extended for a year. And that frustrating, costly, irritating, horrible alternative minimum tax gets adjusted permanently for inflation.
SAMBOLIN: That's a lot of adjectives in there. So the deal does not address spending cuts. In typical Washington fashion, that has been kicked down the road for two months. So there will be a lot more bickering. And then there's the $18.4 trillion debt ceiling, as well. We broke through at this week, the treasury taking emergency steps to keep the government running right now. And the president says he's in no mood for another nasty showdown.
(BEGIN VIDEO CLIP)
OBAMA: The one thing that I think hopefully in the new year we'll focus on is seeing if we can put a package like this together with a little bit less drama, a little less brinksmanship. Not to scare the heck out of folks quite as much.
(END VIDEO CLIP)
SAMBOLIN: Less drama. White House correspondent Brianna Keilar joining us live from Washington this morning. Can you elaborate for us what are we getting in this deal, what got done, what didn't get done? It's a long list for you know, Brianna, I know.
BRIANNA KEILAR, CNN WHITE HOUSE CORRESPONDNET: It is, but there's also some very key things, Zoraida, and those tax cuts are very important for the $450,000 for couples, $400,000 for individuals. The really significant thing, one of the really significant things here, is that they are permanently extended. This this isn't some stop gap measure. So the fact that they're permanently extended certainly adds some I guess you could say certainty there.
But what didn't get dealt with was what the fiscal cliff was supposed to be an incentive to deal with and that is the long term fiscal health of the country. Entitlement reform, reforming Social Security and Medicare so that they cost less over time. That obviously something Republicans really want. And tax reform, trying to get obviously some more revenue is what Democrats would like to see so that they can deal with the deficit.
Those things are not tackled. And also as you mentioned, the spending cuts are only dealt with for a couple of months. So that gets kicked down the road and not even that far. And then the debt limit which is set to expire here late February/early March. So that debt limit and those spending cuts will really be, I guess could you say, what is that dirty word? The "trigger" for dealing with the other stuff.
SAMBOLIN: All right, so a lot of winners and losers here. A lot of op-ed pieces talking about who won, who lost the first fiscal cliff fight as we're calling it now.
KEILAR: That's right, the first one. And I think the next one will start pretty soon.
Losers. Those obviously who are paying more taxes. Some of them who would consider they don't want to be paying more in taxes and not just the $450,000 threshold, the $400,000 threshold for individuals, but also those who itemize their deductions -- $300,000, that is the threshold for that.
Winners, and there's quite a few and maybe some you haven't heard of, milk, sugar, peanut producers, they will continue to have a tax subsidy so they won't see that go up. The long term unemployed, they'll see their extensions - their benefits extended for a while. And also doctors, because they would have seen their payments, their Medicare payments reduced.
And also, as you saw Christine mentioning, Zoraida, the middle class. The alternative minimum tax, which I have to tell you, covering Washington, you're always talking about the AMT fix. It's always something they deal with on a short-term basis; it has been fixed permanently so that it doesn't hit the middle class. And that is significant.
SAMBOLIN: So that's one fight that won't continue into the future. Brianna Keilar, live in Washington for us, thank you.
It is now 35 past the hour. Iran's military claims it successfully test fired several Iranian made missiles near the Strait of Hormuz through which much of the world's oil supply passes. Officials say they also tested defense missiles designed to shoot down fighter jet and drones. Iran says this is all part of a naval exercise to show how well it can defend its coastal borders. One U.S. military expert says Iran is trying to send a message to any country that is thinking of striking its nuclear facilities.
North Korean leader Kim Jong-Un take as new year's concert with his wife, meets diplomats and makes a major policy statement, calling for an end to confrontation with South Korea. A major change in tone about its neighbor. He said he wants to honor and implement North/South joint declarations signed in 2000 and 2007 which called for reconciliation and economic cooperation.
ROMANS: Hannah Storm is working again less than a month after a propane grill outside her home blew up in her face. The sportscaster suffered serious burns and lost her eyebrows, eyelashes, a lot of her hair. Storm turned ABC News that the flame on the grill was out, but she didn't realize that there was propane still in the air. So when she tried to relight the flame, it set off a huge explosion and set her on fire. She told ABC that she yelled to her 15-year-old daughter who was in the kitchen, "Mommy's on fire, you have to call 911." But yesterday she got some false eyelash, hair extensions, and back to work hosting the Rose Parade.
SAMBOLIN: Very brave of her to share those pictures, as well. She looked great. I watched because there was a lot of buzz about her coming back. And she looked great, sounded great. Good for her.
All right, students from Sandy Hook Elementary will be going back to school tomorrow for the first time since the shooting nearly three weeks ago, folks. The kids won't be at the same school in Newtown, though. They will attend class a few miles away in an old middle school; it's in Monroe, Connecticut. Workers have tried to make the new classrooms look just like the old ones, right down to the crayons on the kids' desks. They even revamped the bathrooms so they can accommodate grade schoolers.
There will be an open house today so kids and their parents can actually see the new set-up. Boy, we wish them well.
ROMANS: We sure do. The Newtown shootings inspired a security change in Marlboro township, New Jersey. Starting today, there will be police officers in uniform and armed at every school while the kids are there.
(BEGIN VIDEO CLIP)
MAYOR JONATHAN HORNIK, MARLBORO TOWNSHIP, NEW JERSEY: My job is to keep the jurisdiction and the people in Marlboro safe. There's 8,000 students in Marlboro township. And right now, based on advice of my police department, it's safer to have our trained police officers in the schools than not.
(END VIDEO CLIP)
ROMANS: Marlboro leaders say cops in all the schools will be the new normal until they come up with a permanent plan for better security at the facilities.
SAMBOLIN: 37 minutes past the hour. Last night's fiscal cliff vote means new rules and new taxes.
ROMANS: Sure does. Up next, what you need to know so there are no surprises come tax time. Stay right there.
SAMBOLIN: Welcome back. It is 41 past the hour. The House passes a fiscal cliff deal 257 to 167, averting of a avalanche of tax hikes for working Americans. So how can you make sure that Congress' last minute deal doesn't knock you off your own personal financial cliff?
Manisha Thakor is a personal finance expert and the author of, I love the title of your book, "Get Financially Naked". So thanks for joining us this morning. We really appreciate it. So you say that the most important thing that we can all do with our money in 2013 is something that Washington has definitely not done very well, and that's to know what healthy spending looks like. So you can walk us through that?
MANISHA THAKOR, PERSONAL FINANCE EXPERT: Zoraida, absolutely. So for most of us, it's been so frustrating, as Christine earlier highlighted in describing the AMT tax, to watch what's been going on in Washington. But there is something you can control and that is whether or not you're spending in a healthy manner.
Most of us know when it comes to eating what healthy eating looks like because of the food pyramid. But very few of us were ever given a healthy spending pyramid. My favorite formula is 50-30-20. It comes from a book Elizabeth Warren wrote with her daughter back in the early 1990s, and that means 50 percent of your take-home pay goes to needs, 30 percent to want, 20 percent, Zoraida, to savings and debt pay down. Follow that formula and you will not get financial indigestion.
SAMBOLIN: Now I love that, because you can actually see that in a pyramid form. That's great advice.
So Congress' current deal allows a 2 percent payroll tax break to expire. So most Americans will actually going to see a loss of income, right, in 2013. So let's put that in perspective. If you make $30,000 a year, your monthly paychecks will go down $50. And if you make $113,700, your monthly paycheck will go down $189.50. So what are we supposed to do in order to compensate for that loss?
THAKOR: So Zoraida, I think that most important thing is to take a look at your own personal spending habits. Most of us have some weak spot. It might be electronics for the home; it might be cute clothes for a newborn. Whatever it is, identify your weakness and be really clear: either set a dollar amount each month or each year and then, very importantly, you want to set it in a segregated account.
I like the new Blue Bird account by American Express and Wal-Mart, a great way with premium features and no hidden fees to essentially create a digital envelope system like we used to have in the old days, so you quite literally cannot spend more in that trouble area than you have put in that segregated account without reloading it.
So save yourself from yourself is a very important thing because you're losing that wiggle room that you had prior to that 2 percent expiration.
SAMBOLIN: That's really hard, because people are making less money. So to be able to say I'm actually going to commit to this is a very complicated thing.
THAKOR: It is. And that's why having a segregated account is so vital. Because then it becomes really clear when the money is gone, you can't spend more in that troublesome area for you.
SAMBOLIN: Yes, some of us really need that. So we have a little bit of good news for 2013. It has to do with retirement savings. Could you explain that to us?
THAKOR: Yes, I'm so excited to actually end on a high note. This year we can all save $500 more in our employer based retirement plans, things like 401(k), 403(b), thrift saving plans. If you're under 50, you can save $17,500 this year. Again, $500 more than last year. If you're over 50, of course, there are catch up contributions.
And outside of the workplace, also in your IRA, this year you can save $500 more, $5500 if you're under 50. And you may be thinking what the heck is $500 going to do for me? But, Zoraida, if you're 25 and you save an extra $500 a year every year until you're 70, and that money grows at a 7 percent rate, that $500 a year translates into $142,000 over that time frame. So that is something to smile about.
SAMBOLIN: Absolutely. Something to celebrate. And how old did you say? If you're 25 and you start doing that now?
THAKOR: If you're 25 and you start doing that every year until age 70, it's the power of compounding, it is one magical force if you can get it working in your direction.
SAMBOLIN: All right. Manisha Thakor, personal financial expert. Thanks for being with us this morning. Appreciate you.
Christine, back to you.
ROMANS: All right, a Hollywood paparazzo is dead this morning just after snapping a shot of Justin Bieber's Ferrari. We're getting new details on this very bizarre story. That's next.
(COMMERCIAL BREAK) SAMBOLIN: Forty-eight past the hour. Welcome back to EARLY START. Let's get you up-to-date here.
Back from the brink. Late last night, the House voted to avoid going over that fiscal cliff. It approved the bill passed in the Senate just hours before raising income taxes on the wealthiest 2 percent of Americans, but maintaining tax cuts for most people. The deal also delays automatic spending cuts that were supposed to start kicking in today. After the vote, President Obama thanked Democrats and Republicans in Congress, then he boarded Air Force One. He's off to Hawaii to finish his vacation with his family. He's expected to stay there through the weekend.
Venezuelan president Hugo Chavez's health is said to be in a delicate state. This is three weeks after he had cancer surgery. His vice president and successor Nicolas Maduro says complications have emerged from a respiratory infection and Chavez's recovery is actually slow going.
ROMANS: In Los Angeles, a photographer was killed last night try a to go get a shot of Justin Bieber. Police say the man snapped pictures of a sports car that he thought the pop star was in. He was struck and killed while crossing a freeway to return to his own car. In a statement, Bieber said he was not in that sports car.
This time tomorrow morning will be the best time to look up in the sky and see the Quadranted Meteor Shower. NASA says that's anywhere from 60 to 200 meters; they'll flash across the sky, although the light of the moon could interfere, we're told, with some of the visibility.
Before we enjoy the meteor shower, we have to deal with commuting again on the first business day of the new year. Meteorologist Karen Maginnis with a look at the weather across the country. Good morning, dear.
KAREN MAGINNIS, AMS METEOROLOGIST: Good morning to you too as well, Christine. Yes, we were kind of testing out Quadranted Meteor Showers this morning, as well. And just before dawn, it should be the most lively.
And for the Eastern Seaboard, we might see a few showers here. Yesterday in Galveston, they saw over four inches of rainfall. It was a daily record. Now, typically for the entire month of January, they see just a little over four inches. So they've seen a month's worth already.
Well, all the way from Houston to Atlanta to Washington, D.C., this is where we're seeing the messiest weather. So for travelers, if you're going anywhere out of Houston's international airport, you'll have to dodge the showers. But right now, we're not looking at delays there. Most of the precipitation in the form of ice or maybe some snow is really not making it to the ground. Occasionally you might see a little of that right around Washington, D.C. extending on over towards Delaware, but for the most part, that's moving out fairly quickly.
And then the deeply cold air can be found across northern New England. Take a look at these temperatures. Right now we're looking at Caribou, Maine, with minus 20 degrees. That's not the windchill factor.
All right, current temperatures outside in New York City, 23 degrees. Buffalo is 20. Washington, D.C. a little bit of the frost is gone maybe, 37 degrees being reported there right now. Now highs today expected in Washington only about 38. So you're not going to see much movement as far as the mercury is concerned. And if you're wondering who will see the coldest temperatures across the northern tier where those temperatures are still only in the teens and twenties, and now we're looking at very high winds in southern California, as well.
So enjoy the day. Christine, Zoraida, back to you.
ROMANS: Thank you, Karen.
A packed hour ahead on EARLY START, including reaction to the late night House vote that pulled us back from the fiscal cliff. The middle class spared a major tax hike, but many in Washington united in their dislike for this deal. We're going to talk to one Republican who voted against it.
SAMBOLIN: Plus a pilot spots something sketchy on the ground. A guy trying to break into his home. The whole thing leading to one of the most bizarre hot pursuits ever.
ROMANS: All right, first, everyone can relax. We found the song you'll be sick of by the end of this year. The EARLY START premiere of "One Pound Fish" is next.
SAMBOLIN: It is 55 past the hour. Welcome back to EARLY START. I'm Zoraida Sambolin along with Ms. Christine Romans and we're taking a look at the top CNN trends on the web this morning.
ROMANS: Good morning, everyone. OK, one small fib for Neil?
(BEGIN VIDEO CLIP)
VOICE OF NEIL ARMSTRONG, ASTRONAUT: That's one small step for man, one giant leap for man kind.
(END VIDEO CLIP)
ROMANS: A new documentary suggests that Neil Armstrong might have lied when he said he ad-libbed that famous line when he became the first mane to step foot on the moon. In a recent interview, Armstrong's brother claimed that he thought of the famous speech months before the July 1969 Apollo 11 mission and that he was supposed to say "a man", not just man. Armstrong once admitted he came up with the line a few hours after landing. But that's it.
SAMBOLIN: A great line nonetheless. Big deal.
OK, "Gangnam Style", so 2012. Will 2013 be the year of the "One Pound Fish"?
(VIDEO CLIP PLAYING)
Thirty-one-year-old Muhammad Nazir has catapulted to fame in his native Pakistan with this viral hit, "One Pound Fish". And now with 11 million hits, it's spreading around the world as well. Folks here are dancing. Nazair came up with this song while he was hocking frozen snapper and mackerel for one British pound at the Queens Market in London.
ROMANS: Can he do the swim and ride a horse at the same time? That's the question. Coming up with 100,000 roses for his wife, the best moment of yesterday's Rose Parade in Pasaden. It's going to bring a tear to your eye.
SAMBOLIN: An army sergeant who was deployed to Afghanistan stepped off the parade float but surprised his wife and little boys three months early. The military was in on it. It took a lot of planning. Army Sergeant First Class Eric Pazz had to tell his wife that she won a contest for an all-expense paid trip to the parade through the army. She traveled from home base in Germany to get there. And that right there, folks, is the result.
ROMANS: You can just stay on that for a while? Isn't that sweet?
A private moment, public forever.
SAMBOLIN: A private moment that you and I are sappily weeping at the beginning of the year.
ROMANS: I love it.
SAMBOLIN: You take your fiscal cliff and shove it. I want to watch this.
All right. To check out other top CNN trends, head to CNN.com/trends.
And the next hour of EARLY START begins right now.