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EARLY START WITH JOHN BERMAN AND ZORAIDA SAMBOLIN

Tracking the Storm; U.S. Intelligence Agencies Mining Data; IRS Under Fire on Capitol Hill

Aired June 7, 2013 - 05:00   ET

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


CHRISTINE ROMANS, CNN ANCHOR: Rain, rain and then more rain. Tropical storm Andrea swamped a huge swath of the East Coast after slamming Florida with tornadoes and flood. We'll tell you who is in the bull's-eye today.

JOHN BERMAN, CNN ANCHOR: Millions of phone calls, emails, videos, you name it, new details of the massive government surveillance. Just how much did they know and what they might have on you?

ROMANS: And wait a second? They didn't keep the receipt. The IRS in the hot seat accused of wasting millions of your dollars.

BERMAN: The supreme, infuriating irony of it all.

Good morning, everyone. Welcome to EARLY START. I'm John Berman.

ROMANS: And I'm Christie roman. It's Friday. That's the good news. It's Friday, June 7.

BERMAN: Let's just stop right there.

ROMANS: It's 5:00 a.m. in the East.

BERMAN: We begin with a looming major rainmaker -- the kind the East Coast has not seen since hurricane Sandy. In other words, forget those weekend plans. Tropical Storm Andrea has already walloped Florida, seriously injuring one woman. It made its way through Georgia overnight and today it's expected to churn up the Eastern Seaboard, bringing with it rain, flooding and the possibility of heavy tornadoes.

Nick Valencia is in Wrightsville Beach, North Carolina.

Nick, what do conditions look like right now?

NICK VALENCIA, CNN CORRESPONDENT: Good morning, John.

The wind is really starting to pick up here as you mentioned in the last few minutes. As you mentioned, Tropical Storm Andrea caused a mess in Florida and now, it's making its way up the Eastern Seaboard.

(BEGIN VIDEOTAPE)

VALENCIA (voice-over): Rain, rain and more rain. The fast-moving Tropical Storm Andrea is making her presence known up and down the Eastern Seaboard. The first storm of the hurricane season will dump rain through the weekend in every state from Florida to Maine.

Parts of the Northeast seeing rain totals they haven't seen since Superstorm Sandy last October. In roadways all across the South, downed trees and closed streets, making it challenging to get around.

UNIDENTIFIED FEMALE: It's pretty bad. And the flooding around here is getting worse and worse.

VALENCIA: In Florida, Andrea spawned multiple tornadoes. One twister near Palm Beach flipping a 28-foot boat, blowing cars off of driveways and snapping trees in half.

UNIDENTIFIED MALE: I didn't hear it coming.

VALENCIA: Another reported a tornado near this Fernandina Beach, Florida, tearing apart this roof.

UNIDENTIFIED FEMALE: As soon as I put the phone down, a huge gush of wind and I looked out the window and it was literally like it was coming off the ocean. And I got so frightened I screamed.

VALENCIA: The Sunshine State pummeled with rain for two days as the flood threat now spreads up the East Coast. Forecasters predict some areas could see as much as six inches of rain.

And as you see in this picture taken in Florida after Andrea, brighter days will come after this long wet weekend.

And, John, there's no evacuation orders issued so far here for Wrightsville Beach, North Carolina. In fact, some residents have gotten out of town ahead of the wet weather. But other residents I have spoken to, they aren't too excited about this wet weather.

One man I spoke to went through Hurricane Hazel back in the 1950s. Now, that completely wiped out Wrightsville Beach. He said this is going to be nothing compared to that -- John.

BERMAN: No, maybe not that dangerous but certainly exceedingly unpleasant. Nick Valencia for us in North Carolina, appreciate it.

ROMANS: Let's look at where Tropical Storm Andrea is now and where it's headed.

Meteorologist Alexandra Steele tracking the treat for us this morning.

Good morning.

ALEXANDRA STEELE, AMS METEOROLOGIST: All right. Well, the good news, it is racing north and eastward at 28 miles per hour.

So, here are the stats on it. It's moving incredibly quickly and will only pick up in speed. So, that is the good news. Maximum sustained winds near the core of the center, 45 miles per hour. Some gusts to 60 miles per hour. And actually tropical storm force winds extend from the center at 140 miles. Here's the current radar, heaviest rain you can see here in eastern North Carolina and in Virginia. And that's for the threat of tornadoes are today. Coastal areas of North Carolina and into Virginia, although it's not a huge threat. Biggest threat with this in the calling card will be the incredible amounts of rain.

This is the rain we have seen in Florida, three to five, four to six inches in southeast Georgia. And what we're going to see in the aggregate for the next 48 hours, really this thing moves out by Saturday night. Two to four inches here and then, the SWAT right along the coastal areas of Northeast and New England, two to four inches. Locally, you could see more than that, even.

That's why flood threats, you can see delineated here in the green along the coast, all the way from Providence, even into Maine with this thing. So, it speeds and moves northeastward and drops rain as it goes, isolated tornadoes today, North Carolina into Virginia. But you can see by tonight, Boston, New York, you're wet. Tomorrow morning you already clear out.

There's the rain, guys, in Maine, way into Saturday morning and by Saturday night, the fait accompli as the winds behind it will settle as well.

ROMANS: All right. We have a friend from Boulder. They're spending the weekend in New York City and going to Maine. So I told them, wear your slickers and bring your umbrellas.

BERMAN: You're a great friend.

ROMANS: I know. Alexandra Steele, thanks.

STEELE: Sure.

BERMAN: All right. The question, is national security or a sinister case of snooping? There are new reports this morning that U.S. intelligence agencies have been accessing the central servers of the country's biggest technology firms for years. The question is, does this your Facebook post and Gmail messages may have been mined?

According to "The Washington Post" and "The Guardian" newspaper, nine Internet giants are caught up in the government intelligence operation known as PRISM. Microsoft, Apple and Facebook are all denying the reports, claiming no one had direct access to their systems.

Let's get more now on this developing controversy from CNN's Barbara Starr.

(BEGIN VIDEOTAPE)

BARBARA STARR, CNN PENTAGON CORRESPONDENT (voice-over): A potentially explosive disclosure about how easily the government can collect information online.

"The Washington Post" and the British newspaper "The Guardian" are reporting that the NSA and the FBI are tapping directly into the servers of nine leading Internet companies, including Microsoft, Yahoo!, Google, Facebook, AOL, Skype, YouTube and Apple. That's according to a top secret NSA presentation. Intercepting data like video, photographs and e-mails flowing online.

GLENN GREENWALD, REPORTER, THE GUARDIAN: What this program enables the national security agency to do is to reach directly into the servers of the largest Internet companies in the world, things that put virtually every human being in the Western world now uses to communicate with one another.

STARR: The program appears to be intended to grab non-U.S. intercepts, many of which flow through the robust U.S. Internet. One slide in the NSA presentation explains your targets communications could easily be flowing into and through the U.S.

CNN has not confirmed the authenticity of the documents. Several of the companies reportedly cooperating with the government issued denials of involvement.

This follows the stunning news that a secret federal court order directed Verizon to hand over phone records of millions of Americans.

Former intelligence officials and privacy advocates say it's reasonable to presume other telephone companies got similar orders.

STEVE AFTERGOOD, FEDERATION OF AMERICAN SCIENTISTS, SECRERY AND INTELLIGENCE: If this is an open-ended and indiscriminate collection process as it seems to be, then logically one would expect it to be much bigger than Verizon business.

STARR: And it all leaves the administration needing to explain this exchange in March.

SEN. RON WYDEN (D), OREGON: Does the NSA collect any type of data at all and millions or hundreds of millions of Americans?

JAMES R. CLAPPER, DNI: No, sir.

WYDEN: It does not?

CLAPPER: Not wittingly.

STARR: That Verizon program, lawmakers say, having access to that data helped law enforcement stop terrorist plots from being carried out.

Barbara Starr, CNN, the Pentagon.

(END VIDEOTAPE)

BERMAN: So late last night, this statement from the director of national intelligence, James Clapper. He says, "The Guardian" and "The Washington Post" articles contained numerous inaccuracies and he insists the authorized disclosure of information about this important and entirely legal program is reprehensible and risks important protections for the security of Americans. He goes on to say that the program cannot be used to intentionally target any one U.S. citizen, any other U.S. person, or anyone located within the United States.

Now, the key word is "intentionally". What he doesn't seem to cover in that statement is the possibility of other data about you getting swept up in an investigation about a foreign national.

ROMANS: Not wittingly comment to Senator Wyden is interesting.

BERMAN: Part of the careful language dictionary being used right now.

ROMANS: I have seen more careful language out of the White House on this in the last few days, or the administration in the last couple of days than I have for a long time.

All right. This morning, the White House is defending the surveillance program, calling it an effective weapon in the war of terror while at the same time dealing with the political fallout.

CNN's Dan Lothian with that part of the story.

(BEGIN VIDEOTAPE)

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT (voice-over): This morning, President Obama is waking up in California as a political firestorm over the government's collection of phone and Internet data intensifies.

SEN. BERNIE SANDERS (I), VERMONT: The bottom line is that the United States government now has phone records and other records of tens and tens and tens of millions of American who have nothing, absolutely nothing to do with terrorism.

LOTHIAN: The political fallout after news that the NSA was collecting Americans' phone records from Verizon was quick. Public privacy advocates are already taking form online.

UNIDENTIFIED MALE: Can you hear me now?

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Yes, we can.

UNIDENTIFIED MALE: Can you hear me now?

UNIDENTIFIED MALE: Your call goes through.

UNIDENTIFIED MALE: Can you hear me now?

OBAMA: Yes, we can.

LOTHIAN: A stinging editorial in "The New York Times" proclaims President Obama's dragnet and says the administration has now lost all credibility.

And the letter to Attorney General Eric Holder from the author of the Patriot Act, Representative Jim Sensenbrenner, who writes he's extremely disturbed by what appears to be an overbroad interpretation of the fact.

Even the president's liberal base piled on, "The Huffington Post" ran a photo on its cover page showing Obama morphing into George W. Bush.

But the program has its defender.

REP. MIKE ROGERS (R-MI), INTELLIGENCE CMTE. CHAIRMAN: This program was used to stop a program, excuse me, stop a terrorist attack in the United States. We know that.

LOTHIAN: The White House says these types of orders include data, not phone call, and have been a critical tool in protecting the nation from terror threats.

But some lawmakers want more answers and Attorney General Holder, already under pressure for snooping on reporters, is on the hot seat again.

SEN. MARK KIRK (R), ILLINOIS: Could you assure to us that no phones inside the capitol were monitored of members of Congress?

ERIC HOLDER, ATTORNEY GENERAL: With all drew respect, Senator, I don't think this is an appropriate setting for me to discuss that issue.

LOTHIAN: Dan Lothian, CNN, Washington.

(END VIDEOTAPE)

BERMAN: President Obama is in California today for his highly- anticipated two-day meeting with China's new president. He arrived on the West Coast last night and will meet this afternoon with President Xi Jinping near Palm Springs, at the estate of the late publishing magnate Walter Annenberg.

The summit is designed to be informal. They're not even calling it the summit. So the two leaders can get to know each other.

ROMANS: Today is the deadline for the State Department to respond to a subpoena for e-mails discussing the Obama administration's talking points following the attacks in Benghazi, Libya. House Oversight Committee Chairman Darrell Issa is demanding all Benghazi related documents and e-mails from 10 current and former State Department officials. That list includes Victoria Nuland, who was the department's spokesperson at the time.

BERMAN: After two days of public and private tributes, the late New Jersey Senator Frank Lautenberg is being laid to rest today. Lautenberg will be buried at Arlington National Cemetery.

Meantime, New Jersey Governor Chris Christie moving quickly to fill Lautenberg's seat. He's appointed the state's attorney general, the Republican Jeff Chiesa. But his time in the Senate, Chiesa will be brief. Special election will be held in October, of course, just days before the actual general election. ROMANS: The search for victims is over this morning and the mayor of Philadelphia is promising a wide-ranging investigation to find out the cause of a building collapse that killed six people Wednesday on a busy market street. The first civil lawsuit in the case has been filed by a woman trapped in the rubble that survived. Her attorney claims the demolition contractor working at the site violated safety regulations.

BERMAN: "The New York Post" is facing a defamation lawsuit over a cover portraying two men as suspects in the Boston marathon bombings. This front page ran three days after the attack showing Yasin Zaney (ph), he's the one in black, and Salah Barhum (ph), in blue, standing near the marathon course. The headline ran "Bag Men", because they were carrying knapsacks. They had nothing to do with the attacks and say running the headline over their picture opened them up to scorn, hatred and contempt. It'd be an interesting case.

All right. LeBron James may be king, but it is Tony Parker who rules so far in the NBA finals. Game one, it was a good one, the Heat versus the Spurs in Miami. And San Antonio superstar point guard, the French Tony Parker, put on quite a show down the stretch, including this circus, circus wild off-balance jumper with five seconds remaining that help lift the Spurs to a thrilling 92-88 victory.

They had to watch that a whole bunch of times to see if he got it shot off before the shot clock. He'd been knock down the ground like twice. He kept his dribble. That was a crazy, crazy shot.

The Spurs are looking for their fifth NBA title. Game two is this weekend in Miami.

ROMANS: And if John Berman starts falling asleep during the broadcast, then you know why, because clearly, you're up watching --

BERMAN: You know, I wish I could claim that I was. No, but as soon as I woke up, I check the score -- everyone was talking about the Tony Parker shot. I had to watch it 10 times. That was crazy good.

ROMANS: Awesome.

All right. Coming up, that was fast -- Michele Bachmann back in the ring? Is the congresswoman considering running again?

BERMAN: And is it anti-social media? Is Facebook the digital equivalent of a cold shower? A new warning that the social network could be a romance killer.

(COMMERCIAL BREAK)

ROMANS: Welcome back. Good morning.

The Internal Revenue Service under fire. The top official testified at a congressional hearing yesterday about a 2010 IRS conference that cost taxpayers more than $4 million. Part of that money was spent on so-called training videos.

Here's chief congressional correspondent Dana Bash.

(BEGIN VIDEOTAPE)

DANA BASH, CNN CHIEF CONGRESSIONAL CORRESPONDENT (voice-over): The star witness was the star of this now infamous IRS "Star Trek" video, Spock.

FARIS FINK, IRS OFFICIAL: Total anarchy will occur in 1111 hours.

UNIDENTIFIED MALE: What were you thinking?

FINK: Those videos were at the time they were made were an attempt to -- in a well-intentioned way, use humor. The fact of the matter is, it's embarrassing. And I apologize.

BASH: Faris Fink is now commissioner of the IRS division that held a lavish $4 million conference in Anaheim, California, where parody videos estimated to cost $50,000 were played. The committee's top Democrat was outraged.

REP. ELIJAH CUMMINGS (D), MARYLAND: I live in a block where most people don't even make $50,000 a year. But yet still we can produce a video that has no redeeming value. None.

BASH: During the conference, Fink, a 32-year IRS veteran, stayed in an upgraded hotel suite like this.

Fink didn't know how or why millions of taxpayer dollars were spent at this conference.

REP. JASON CHAFFETZ (R), UTAH: You're totally ignorant in -- of the expenses?

FINK: I was not involved in the planning and the execution.

CHAFFETZ: Who was?

BASH: Lawmakers repeatedly blasted Fink for IRS hypocrisy, requiring taxpayers to save receipts did not save its own documents.

That $4 million conference may have cost millions more.

UNIDENTIFIED MALE: Could it be $6 million? Think carefully. You're under oath.

FINK: Yes.

UNIDENTIFIED MALE: Could it be $6 million?

FINK: There's no way that I know that.

BASH (on camera): Two IRS employees were placed on administrative leave this week for accepting free food at the 2010 conference. But part of the problem was most of the lavish spending was allowed under IRS rules then. Since, they have been changed.

Dana Bash, CNN, Capitol Hill.

(END VIDEOTAPE)

BERMAN: Could it be Bachmann in 2016? She's not ruling it out. In her first interview since announcing she's leaving Congress, the Minnesota Republican Michelle Bachmann tells FOX News she's not retiring and not going silent. As for another run for the White House, Michele Bachmann says, quote, "I'm not taking it off the table."

ROMANS: Facebook and other social networking sites get props for revolutionizing how people create and keep friendships, but a University of Missouri study found excessive Facebook use isn't so good for your love life.

Surprise, surprise. The survey of users ranging in age from 18 to 82 found people who logged on frequently are far more likely to experience conflict with their romantic partners, which could then lead to emotional and physical cheating, breakups and divorce.

BERMAN: Both emotional and physical cheating. Running the full gamut.

ROMANS: I had to think about that for a second.

BERMAN: Exactly, I'm like, wait a second, I don't feel like it.

Coming up, so did the hiring happen in May? Eyes are on the all- important jobs report out this morning.

(COMMERCIAL BREAK)

ROMANS: Welcome back to EARLY START. Minding your business this morning, just a few hours away from the May jobs report. That report sending Dow futures down about 20 points right now, our nervousness ahead of that report.

It's always an important report. This week is very significant because of one thing, the Federal Reserve. Investors want to know, will policymakers keep pumping money into the economy?

Lately, economic reports have been mixed. So, with no clear answers the stocks have been selling off. The May jobs report could provide clarity.

Here's what we are expecting: 158,000 jobs added, 7.5 percent unemployment, 158,000 jobs is that the economy is in a soft patch. Over the past year, the economy has been averaging more than 173,000 positions a month. You know, that's kind of the average.

That's not great. Don't get me wrong. At that pace, analysts say it will take five more years to get back to where we were before the recession, five more years.

And this forecast is for something a little softer than that average. We are also watching out for more government and construction job losses because of the forced spending cuts and hiring manufacturing has come to a standstill. So ,we'll be looking very closely at those manufacturing jobs.

BERMAN: We'll bring you those jobs report live.

ROMANS: Right, at 8:30. You could see the market move on. You'll see a lot of people kind of position themselves politically and in the stock market about what this jobs report is going to mean for me.

All right. Feeling richer? Americans' net worth hit a record high, $70 trillion.

BERMAN: Which Americans?

ROMANS: That's not you or me, that's all of us together.

And that tops the previous record set back in 2007 just before the recession. So we have regained that number. People benefiting from this rally in the stock market. Despite the recent pullback, the S&P 500 is still up about 14 percent this year. Also helping, rising home values. But you're saying, hey, how can it possibly be that we are as good as we were in 2007?

Well, factoring in inflation and population growth, net worth is still below pre-recession levels. So, that's the catch. Cigarette ads are returning to TV, sort of. Ad Age says R.J. Reynolds plans to launch their Vuse next month complete with commercials and print ads. The cigarette commercials were banned in 1970. So far, it doesn't apply to electronic cigarettes.

BERMAN: Interesting.

(CROSSTALK)

ROMANS: Kind of a different product even, you know? Interesting.

BERMAN: It is 26 minutes after the hour.

Coming up, I've got to tell you, this is a little scary. A little girl takes a field trip to a farm and she falls down a well. We'll tell you what it took rescuers to set her free.

(COMMERCIAL BREAK)

BERMAN: Rain rampage.