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Government Shutdown Continues; Debt Ceiling Looms; Janet Yellen to be Nominated Federal Reserve Chairman; Salmonella Outbreak; Missing Hospital Patient Found Dead, Family Questions

Aired October 9, 2013 - 07:00   ET

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


CHRIS CUOMO, CNN ANCHOR: Boston thrown into turmoil. Why? School bus drivers there staged a surprise strike. Some 30,000 students were stranded. Worse yet, parents and kids may be in trouble again this afternoon. We'll tell you what's going on. We have a reporter on.

KATE BOLDUAN, CNN ANCHOR: And how did a woman's body end up in a stairwell at a San Francisco hospital? A shocked and understandably outraged family is looking for answers. Details ahead.

Disneyland and Disneyworld no longer allow visitors with disabilities instant rides, access to rides. Why? Well, it turns out a few bad apples are ruining it for the rest of us. We're going to meet one family that will suffer because of this change coming up.

CUOMO: But first, the latest with the shutdown. It's no grand bargain but it could be a start. There is a hint of compromise that could end the shutdown and debt ceiling standoff for now, anyway. President Obama has opened the door, some say, for a short-term debt limit increase. But the devil could well be in the details. Senior White House correspondent Brianna Keilar following developments for us. What do we think here?

BRIANNA KEILAR, CNN WHITE HOUSE CORRESPONDENT: Chris, good morning. I will caution you, it's unclear this is a breakthrough, but maybe a way possibly an opening to a short-term way to fund the government and avoid default.

(BEGIN VIDEOTAPE)

KEILAR: Day nine, the government shutdown is getting real. For families of troops killed in combat, they will not get automatic death benefits during the shutdown -- $100,000 to help cover funeral costs and travel to Dover Air Force Base to witness the dignified transfer of their loved ones remains. In North Carolina, food assistance for poor women and children cut off.

CROWD: Furlough Congress!

KEILAR: And 27,000 furloughed government workers have signed up for unemployment as they go without pay. Just eight days until the United States could default, President Obama phoned House Speaker John Boehner, both sides indicating the divide is as deep as ever.

BARACK OBAMA, (D) PRESIDENT OF THE UNITED STATES: We have got to stop repeating this pattern.

KEILAR: But later President Obama appeared in the White House briefing room, opening the door to negotiations if Republicans agree to a short-term solution to re-open the government and increase the debt ceiling.

OBAMA: If there's a way to solve this, it has to include reopening the government and saying America is not going to default, we're going to pay our bills.

KEILAR: How long might a short-term measure last? Four to six weeks one GOP source tells CNN. Republicans may agree if the president promises to negotiate. But it's far from a breakthrough. Without some sort of concession like a cut in spending, a stop gap measure may not clear the House.

REP. JOHN BOEHNER, (R) HOUSE SPEAKER: The long and short of it is there will be a negotiation here. We can't raise the debt ceiling without doing something about what's driving us to borrow more money and to live beyond our means.

KEILAR: The House voted Tuesday to create a Congressional committee on government spending and the debt limit as well as pay federal employees currently working without pay. But the Obama administration threatened vetoes. A stalemate still, and the clock is ticking louder and louder.

(END VIDEOTAPE)

KEILAR: If the debt limit is breached next week as expected, not only is the U.S.'s credit rating at stake, but there are tens of billions of dollars in payments due on November 1, Social security, disability, Medicare, and to active military, things that really affect millions and millions of Americans. Kate?

BOLDUAN: There you go, laying out how it really is impacting millions of Americans. Brianna, thanks so much starting us off this morning.

There is a lot of confusion about what will happen if Congress doesn't raise the nation's borrowing limit by next Thursday. We want to dig into it to see what could happen. If this unprecedented event does happen, how bad would it be? Joining us now to figure it out, Christine Romans host of "YOUR MONEY" and Rana Foroohar, CNN's global economic analyst and assistant managing editor for "TIME" magazine. Good morning, good morning.

There is a lot of confusion. And it's difficult maybe sometimes to separate fact from fiction, but I think in this circumstance we can at least try to do that. Rana, first off, what would the economic impact be of a short-term debt ceiling extension if they can pull it off?

RANA FOROOHAR, ASSISTANT MANAGING EDITOR, "TIME" MAGAZINE: I think you would see still a lot of market reaction. I mean, frankly, the fact that we've pushed it this far to the edge we've already seen the market reaction. Stocks are down each day. More and more interest rates are double on short-term treasury bills. If interest rates start to rise, thing about the effect that has on anybody that has borrowed money, people who own homes, own cars, looking at mortgages. This has a big impact on the overall economy.

BOLDUAN: We talk about the markets and how short-term borrowing for the treasury department, twice as expensive now. Put that in plain English. What does that mean? Why does that matter?

CHRISTINE ROMANS, CNN ANCHOR: We're starting to see the cracks in the financial system of Wall Street realizing that Congress could be stupid enough to actually do this. For a long time, when you talk to people on Wall Street, they would never do something like that. But now you're starting to hear what I call the debt ceiling deniers who are saying it wouldn't be bad. We don't need to raise the debt ceiling, it wouldn't be a problem. We could just prioritize our bills, something that the brainiacs are saying is not really that feasible. You pay your bonds. You going to give grandma an IOU, not pay the military?

BOLDUAN: We've got one side is saying catastrophic chaos if we default, if we go past this deadline. The other side is saying just that, they don't believe it, the other side being some conservative Republican specifically in the House. They don't think it will be as bad as expected, part of the things -- part of it is the fact that this is unprecedented.

ROMANS: I don't think they believe it. They do not believe it. They know if they don't raise the debt ceiling we have serious problems.

BOLDUAN: Just to be clear, who's right?

FOROOHAR: I think that anybody that says that this is a major event in the markets is right. We don't know how big it's going to be. We don't know exactly when things will happen. There is a small cushion in the treasury to cover some bills, probably until the end of the month. But really, do you want to play chicken when three large bills come due at the end of October, early November, with the country's credit and trust?

BOLDUAN: Here's another question, our Capitol Hill unit is reporting something really interesting, that White House officials are reaching out to business leaders, CEOs, asking them to contact and call Republican leaders to try to push them to negotiate. What do you make of that?

ROMANS: What I make of that, it's remarkable. It shows you that you've got business completely agreeing that this is a really bad idea not to raise the debt ceiling. It also shows that the GOP is losing its status as the party of business, the party that understands how the economy works.

FOROOHAR: My favorite comment was the head of Alcoa calling the debt ceiling a giant taser on the economy, freezing up confidence and spending. You're seeing CEOs --

BOLDUAN: Let's talk about Janet Yellen. We'll see if people, cooler heads prevail as they keep hoping will happen before the debt ceiling. But let's talk about other topics really quick. Janet Yellen, first woman, if she's confirmed, to be Fed chairman. Do you think there will be problems with confirmation?

FOROOHAR: I don't think so, because so many people are really rooting for her. I think that the president knew he would have a problem trying to get Larry Summers through, and Yellen is a consensus builder, well liked, a brilliant economist, an early warning sign on the housing bubble. She's someone that the people at the Fed like. And she has been a steady, calm, brilliant hand for a long time.

BOLDUAN: Question on this, what's the big challenge she'll be facing if, when she comes on the job? And the question of Larry Summers, so publicly there was speculation that he was the front-runner, the president's first choice. Does that somehow cast a shadow on her tenure?

FOROOHAR: I don't think it does. Most of the economic community was always in favor of Yellen. She's arguably the most experienced person coming in. I don't think she'll have a problem with Senate confirmation. Her biggest challenge is going to be when to stop the Fed's program of asset buying. The Fed is pumping about $85 billion a month into markets and one of the reasons they've been doing that is because of political chaos. The fed is the economic stimulator of last resort.

BOLDUAN: True.

FOROOHAR: But a lot of people worry that market bubbles are brewing because of that. That will be her big challenge, how to get us out of that.

FOROOHAR: That's what I would consider a huge challenge, especially when you know what we've been talking about all day. Christine, Rana, thank you.

CUOMO: Over here a very different version of this discussion when I talk to Senator Coburn. I also want to tell you about a developing story out of Boston. The good news, most of Boston school bus drivers are back on the road after a surprise strike. The bad news, it left 30,000 students stranded and parents in the lurch. CNN's Pamela Brown is falling developments for us, live in Boston. What do we know now, Pamela?

PAMELA BROWN, CNN CORRESPONDENT: We know that according to the mayor's office that normal bus service has resumed this morning. But parents are encouraged to keep an eye on the situation, because even though buses are back on the roads, we simply don't know how long that's going to last. The bus and public school system sending out a cautionary tweet this morning saying that while it's an encouraging sign that service is resuming this morning, some drivers are signaling they have not yet decided about the afternoon.

Now, robo calls were sent out this morning notifying tens of thousands of families that their kids were able to take the bus to school this morning. Still these families had to put a contingency plan in place just in case a strike went on for a second day in a row, because yesterday the unannounced walkout of 600 bus drivers left 33,000 kids stranded. At the heart of this dispute, grievances over a new company, a new vendor called Violia. We've learned that the company and school officials have been in touch with the union's local chapter trying to work out a resolution. No word yet on whether a resolution has been reached. We'll keep an eye on this developing situation. Kate?

BOLDUAN: Bottom line, it sounds like a confusing day for families and school is just about to start for them.

We have a lot of other things we're watching. Let's get straight to Michaela for the headlines.

MICHAELA PEREIRA, CNN ANCHOR: CNN has learned that the Obama administration is preparing to announce a cut of military aid to Egypt, this decision coming months after a military coup ousted president Mohamed Morsi. Some military assistance to Egypt will continue, including funds to help the country uphold its peace treaty with Israel. The U.S. has been providing Egypt with more than $1 million in aid until now.

A watchdog group suggesting the U.S. intelligence community missed an Al Qaeda plot one year before the 9/11 attacks. The conservative nonpartisan Judicial Watch says a defense intelligence agency report showed that Al Qaeda planned to hijack the plane leaving Germany's Frankfurt international airport sometime between March and August of 2000.

Getting to the source of the Obamacare website glitches, a federal official says a specific software component crashed, causing those issues. The component apparently couldn't handle the high volume of visitors last week. So the users who tried to enroll couldn't get very far. An outside analyst found a poorly written code and apparently out of date web applications.

A detective with the New York City police department is under arrest in connection with last week's beating of an SUV driver. Officials say Wojciech Braszczok was part of the group of bikers who went after the driver. Another man was also arrested last night, Clint Caldwell. He is the fifth person charged in that incident.

With apologies to Indra, quite a site coming down from the clouds in the Florida Keys. A giant rain storm formed a funnel over Biscayne Bay Tuesday afternoon. People got out their camera phones and said, wow, check this out. That's an amazing site. Mother Nature is really terrific.

BOLDUAN: From a distance. Let's get to Indra.

INDRA PETERSONS, AMS METEOROLOGIST: I'm still sticking with this cold for a while because it's going to be getting colder. We're talking about frost and freeze advisories, 30s in Vermont, Montpellier, below freezing. Philadelphia 58. D.C. currently 58 degrees. Enjoy that. Your high in D.C. only expected to be 63. But by tomorrow morning, even more cold air fills in, that low you're feeling this morning will be your afternoon high. Notice your highs tomorrow, just into the 50s, into the northeast, low 60s. That's the chill we'll be feeling below normal temperatures even for fall here into the northeast.

The other story will be the wind. It's not just cold. The winds will pick up, again, all the way up and down the east coast. We're looking at those winds, maybe 15, 25 miles per hour. Not that bad except it's kind of chilly as well. If that's not bad enough, we throw rain into the mix, too. It's all about watching this one low, making its way up the coastline, which means by the end of your weekend, rain into the northeast as well. That's the guy we'll be watching.

The west coast they're actually talking about snow, maybe around Mammoth. I know you and I are here, Michaela. I don't have a winter jacket yet. I'm stressing out. We need to go shopping. Do you start with a moderate jacket?

PEREIRA: You layer. It's called seasons.

PETERSONS: Take her shopping, Kate.

CUOMO: Layers, it's all about layers.

PETERSONS: You teach me.

CUOMO: Coming up on NEW DAY, we have this mystery for you at a San Francisco hospital. A body is found, and where will shock you. We have a live report, straight ahead.

BOLDUAN: Plus, hundreds sickened in the salmonella outbreak spread across 18 states. Find out why this strain in particular is dangerous.

(COMMERCIAL BREAK)

BOLDUAN: Welcome back to NEW DAY. New details this morning about a widespread salmonella outbreak. It stretches across 18 states with nearly 300 people sickened. Now officials say they might know why it's making so many people so sick. Senior medical correspondent Elizabeth Cohen is at the CNN center with the latest this morning. Good morning, Elizabeth.

ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT: Kate, the problem here is that many antibiotics just won't work against this strain of salmonella.

(BEGIN VIDEOTAPE)

COHEN: Salmonella is a common problem with uncooked chicken. On average, the CDC says about 1 out of every 250 broiler chickens has the bacteria. But this recent strain known as salmonella Heidelberg seems to be made up of multiple antibiotic resistant strains, making it harder to treat.

UNIDENTIFIED FEMALE: It's a new thing we're able to track now is the salmonella that's making people sick, is that bug going to respond to the antibiotics you would use to treat it? And it's happened more often recently. COHEN: According to the CDC, nearly half of the patients who contracted the strain have been hospitalized, which is a high percentage. Although no deaths have been reported from this bacteria, the strain packs a real punch and can make you very sick.

Complicating the investigation into this outbreak is the government shutdown. The CDC has furloughed many of its scientists who track food-borne pathogens. Some have since been brought back in but there was a delay in the exchange of information about the outbreak.

The USDA says many of these packages could still be in consumer's freezers. If you have chicken from Foster Farm, look for these numbers on the package, P-6137 P-6137a and P-6372.

And believe it or not, you don't have to throw it away; the USDA says you just need to prepare it properly, making sure you cook it thoroughly to an internal temperature of 165 degrees, which should be checked with a food thermometer.

(END VIDEOTAPE)

COHEN: Now, I know it's counterintuitive; we're saying it's a dangerous bacteria, yet there's been no recall. Here's the reason why. The USDA, the government, they don't recall food when it comes to meat and poultry, instead, companies have to recall it. This company has been very clear. They said we're not recalling our product. If you handle it and cook it properly you'll be just fine. Chris?

CUOMO: All right, Elizabeth. Appreciate the update on that. We'll have to watch it. It seems like it could move around, that story.

Here's another one for you. A patient goes missing at a hospital in San Francisco in September, and was found at the hospital yesterday, dead. Her name is Lynne Spalding. Law enforcement is wondering how this could happen. Dan Simon picks up the story from San Francisco. Dan?

DAN SIMON, CNN CORRESPONDENT: Well, good morning, Chris.

The medical examiner's office still needs to officially identify the body, but our law enforcement says there appears to be a match at this early stage of the investigation. How the woman wound up in an outdoor stairwell remains a mystery, but either way, the hospital it seems has some serious explaining to do.

(BEGIN VIDEOTAPE)

SIMON: This area of San Francisco General Hospital is being treated as a crime scene after a body is found outside on a fire escape. It's the same hospital where this woman, 57-year-old Lynne Spalding went missing on September 21st. Ever since, the search had been on to find Spalding, a mother of two who had been admitted for a serious infection.

DAVID PERRY, FAMILY SPOKESMAN: No stone has been left unturned by her friends and family. And the SFPD to find her.

SIMON: David Perry is a friend and family spokesperson.

PERRY: We have a lot of questions as her, you know, family and friends. Did anyone see her leave the room? Did she leave alone? Is there videotape of Lynne leaving the hospital or wandering the halls?

SIMON: Authorities went to virtually every corner of the city to try and locate Spalding who some thought may have been dazed from powerful medication.

After she went missing did the hospital conduct a thorough search of its own property to see if she might be found?

PERRY: I think it's a good question for San Francisco General, and how one would define the word thorough. If indeed her body was found here on site at San Francisco General, I think using the word thorough would be a wild exaggeration.

SIMON: The hospital says an employee found the body, but it's unclear how it could have gone undetected for any length of time.

RACHAEL KAGAN, SF GENERAL HOSPITAL SPOKESPERSON: That is all being investigated, both by the sheriffs with assistance from the police and then of course the medical examiner's examination will provide more information.

(END VIDEOTAPE)

SIMON: A spokesperson also says they're distressed about all this. They say they did conduct a search of the campus but as for that stairwell in question, they say it's rarely used. Perhaps that explains why it took so long for anyone to discover the body. Chris and Kate, back to you.

BOLDUAN: A lot to follow up on that. Thank you so much.

Coming up next on NEW DAY, maybe they should look up the word negotiate. The president says he's willing to talk but the house speaker says that's not what he was told. Will they ever come to an agreement on the shutdown? Almost an impossible question to answer, but we will try.

CUOMO: That is like a bad movie. Another story is playing out like a great movie. Remember "Catch Me If You Can?" Seems like that 9-year- old that snuck on the plane is living that movie. This is just the latest entry on his already full resume of capers. What else has he done? Why? We'll tell you.

(COMMERCIAL BREAK)

ANNOUNCER: You're watching NEW DAY with Chris Cuomo, Kate Bolduan and Michaela Pereira.

CUOMO: Michael Jackson help out here on hump day. Welcome back to NEW DAY, it's Wednesday, October 9th. Coming up in the show, the father of that 9-year-old plane stowaway is speaking out about his troubled young son. The boy managed to slip through airport security in Minneapolis, got on a flight to Las Vegas, just last week. Turns out this is only his latest caper. We'll tell you the full story.

BOLDUAN: Plus, Disney backlash after its theme parks make some changes to a policy that accommodates disabled visitors. Are they being punished for the mistakes of a few? What's going on.

PEREIRA: And, we want to give you the latest on the very latest headlines and news. Let's take a look at those now.

Open the government, then we'll talk. That is the message from President Obama to House Speaker John Boehner, but a compromise could be emerging as a way out of the budget standoff. The president says he's willing to negotiate with Republicans if they agree to a short- term increase to the debt limit and end to the government shutdown.

Shattering the glass ceiling at the Fed, President Obama later today will nominate Janet Yellen as the next chair of the Federal Reserve. If confirmed by the Senate, Yellen would become the first woman to head the central bank. She's currently vice-chair. Yellen is said to hold similar views on the economy as current chair, Ben Bernanke, who is stepping down in January.

An Ohio school district official charged in connection with a notorious rape case expected to appear in court today. William Rhinaman, the Steubenville high school director of technology is accused of evidence tampering, beginning on the night two football players raped a 16-year-old girl. He's the first adult to be charged in connection with that rape case.

The FBI offering a $25,000 reward for information on who attacked three power grids in central Arkansas, leaving tens of thousands in the dark. Those incidences in Loanoke County date back to August, when someone took down a high voltage transmission line. Last month, a fire was reported at a different substation, then yesterday, two power poles were cut, causing that massive outage.

And after 22 years of marriage, Kris and Bruce Jenner separating. The "Keeping up with the Kardashians" stars managed to keep the split under wraps for a year. They say they're much happier living apart. The pair says they are still best friends and their family remains a top priority for the pair. The Jenners have two daughters together, both have four children from previous marriages.

Just in case you needed to know before you headed out for the day.

CUOMO: Even with the matching Vespas, couldn't make it work.

PEREIRA: Couldn't make it work. Matching Vespas are not the glue that holds together a marriage.

CUOMO: Who knew? Thank you for that.

Let's get back to the battle in Washington over the partial shutdown and looming debt ceiling deadline. Could there be a way out? BOLDUAN: Let's hope.

CUOMO: That's the question. Let's try and get some answers, joining us, CNN political commentator, Republican strategist Ana Navarro and Mr. Mark Lamont Hill, host of "Huffpost Live." It's good to have both of you here, joining us at the table. We are ganging up on you because that's how important it is.

(CROSSTALK)

(LAUGHTER)

BOLDUAN: We're taking it out on you.

(CROSSTALK)

CUOMO: Let me ask you why, Ana, here's what it is. The Republicans are saying got to sit at the table, got to compromise, got to compromise. The president comes out and says I'll take short term, which he hadn't said before. Has to be clean, don't condition it on anything. I'll even take short term. The response from Leader Boehner is, this is unconditional surrender or nothing. Is that fair?

ANA NAVARRO, CNN POLITICAL COMMENTATOR: No.

CUOMO: Is that the right way? You say compromise, Boehner says he wants to compromise. It seems like at least there's a little something and it seems like a slap in the face.

NAVARRO: Okay, so let's give it 24 hours, right? One thing is, the immediate reaction, let's give it 24 hours. I'm sure he's hearing from his caucus. I'm sure they're looking at what President Obama said. I saw a little give in what he said.