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EARLY START WITH JOHN BERMAN AND ZORAIDA SAMBOLIN

Debt Ceiling Standoff Solution?; Death Benefits To Be Paid Again; Libyan Prime Minister "Arrested"

Aired October 10, 2013 - 05:00   ET

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


ZORAIDA SAMBOLIN, CNN ANCHOR: And the money is flowing again to military families whose loved ones made the ultimate sacrifice. Why a private foundation had to step in to add to this injustice.

JOHN BERMAN, CNN ANCHOR: That's shameful.

And breaking news overnight: Libya's prime minister taken from a hotel by an armed militia. We are live with the latest on these developments.

SAMBOLIN: Good morning to you and welcome to EARLY START. Happy you're with us. I'm Zoraida Sambolin.

BERMAN: And I'm John Berman.

A lot going on this morning. It is Thursday, October 10th, 5:00 a.m. in the East.

SAMBOLIN: And we may have good news or progress in Washington where CNN that learned top Republican leaders in the House are now working on a proposal to raise the debt ceiling at least temporarily -- perhaps for four to six weeks -- opening the door to negotiations on a longer term solution. Eighteen top Republicans are set to visit the White House today to meet with the president but it doesn't appear, at least at this hour, that the government shutdown is coming to an end.

The latest from senior White House correspondent Brianna Keilar.

(BEGIN VIDEOTAPE)

BRIANNA KEILAR, CNN SENIOR WHITE HOUSE CORRESPONDENT: Finally, they are talking. House Democrats met the president at the White House last night.

REP. NANCY PELOSI (D-CA), MINORITY LEADER: We just had a very positive meeting with the president of the United States.

KEILAR: President Obama's message, he is open to a short-term deal to increase the debt ceiling for six weeks, according to a lawmaker in the meeting.

Republicans are warming to the idea of a shorter deal, followed by negotiations with the president on reducing the debt and deficit. House Budget Committee Chairman Paul Ryan penned an op-ed in "The Wall Street Journal" that did not mention GOP demands to delay or fund Obamacare. But Tea Party-backed Republicans still want that fight after a brief debt ceiling increase and arguing against ending the government shutdown.

REP. RAUL LABRADOR (R), IDAHO: I would do a debt ceiling for six weeks so the president would negotiate with John Boehner and keep the fight on the continuing resolution and Obamacare.

KEILAR: In interviews with local news stations, President Obama was asked to explain his own vote against raising the debt ceiling in 2006.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I voted against a debt ceiling increase at the time because I had some concerns about what President Bush was doing.

KEILAR: Specifically, the Bush tax cuts. And he argued it's OK for certain Republicans to protest policies with a no vote, but he said there must be a vote.

OBAMA: There should never be a proposition where the speaker of the House is not willing to put those votes to the floor right now.

KEILAR: Congress isn't faring well in this budget fight. A new Gallup Poll shows Republicans with a 28 percent favorable rate, down 10 points since last month, the lowest for any party since 1992. Democrats slid four points to 43 percent.

Brianna Keilar, CNN, Washington.

(END VIDEOTAPE)

BERMAN: One issue that has been solved, at least temporarily is paying the military families the money they earn to cover the funerals of those killed in war. This is a unique arrangement from a private foundation.

Barbara Starr has more about this.

(BEGIN VIDEOTAPE)

BARBARA STARR, CNN PENTAGON CORRESPONDENT (voice-over): At Dover Air Force Base, 24-year old Army Ranger, Cody Paterson, came home to his family as Defense Secretary Chuck Hagel paid his respects.

Unbearable grief for families made much more because the government shutdown left them without death benefits.

Marine Lance Corporal Jeremiah Michael Collins remains were brought Monday to Dover. His mother Shannon says he was a great marine.

SHANNON COLLINS, MOTHER OF FALLEN SOLDIER: He became a marine to become somebody and he became a great marine.

STARR: The White House Wednesday promised a quick fix to a tragedy that had become a PR disaster. The president told WRC-TV, he acted as soon as he learned of the problem. OBAMA: When I heard about this story, I toll the Department Defense within our administrative powers we should be able to get that fixed.

STARR: As Hagel stood on the tarmac, top aides were urgently working on a solution. The Pentagon signed a contract with Fisher Foundation, a private foundation that helps war wounded.

Fisher House will pay the families' bills and $100,000 death benefit. The government will pay it back when the shutdown ends.

But for veterans, a looming disaster of the shutdown continues much longer. More than 3 million received disability checks that may not come on November 1st. Many new veterans from Iraq and Afghanistan still waiting to be approved for disability payments have to keep waiting.

SECY. ERIC SHINSEKI, U.S. DEPARTMENT OF VETERANS AFFAIRS: Roughly 1,400 veterans today are not receiving decisions on their disability compensation claims.

STARR: If the mess in Washington isn't solved, the V.A. will not be able to pay $6 billion due to more than 5 million people expecting checks, including veterans, their surviving spouses, and children, on November 1st.

Barbara Starr, CNN, the Pentagon.

(END VIDEOTAPE)

BERMAN: Treasury Secretary Jack Lew is headed to Capitol Hill this morning. He will testify before the Senate Finance Committee in less than four hours about the need to raise the nation's debt limit the next seven days. Lew, he's been warning Congress that the U.S. will not have enough cash to pay its bills after October 17th. He says if Congress cannot get a deal done, the nation will be in default for the first time ever.

SAMBOLIN: And we have breaking news now out of Libya.

Heavily armed rebels taking Prime Minister Ali Zeidan from a hotel in Tripoli. The group saying that they have arrested for crimes against the country. The government saying he has been kidnapped.

For the very latest, let's go to Libya and senior international correspondent Nic Robertson.

Nic, what can you tell us?

NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Zoraida, still very much a developing situation here. The government has been meeting. The council ministers have been meeting and we are expecting statements from various government ministers within the hour. Not clear what they will say.

The indications are that everyone is coming out against this armed militia that took the prime minister this morning. About 100 to 150 heavily armed militia men turned up in his hotel where he lives in the center at Tripoli here, a heavily secured hotel, went into the hotel and abducted him.

No shots fired, we're told, but they say they have done it on the pretext, on a legal pretext. The government, the justice minister saying that is absolutely rubbish, that no one has issued an arrested warrant for the prime minister. This is a case of an abduction. And it does appear in most people's minds here it seems to be linked to the U.S. arrest of the al Qaeda suspect, Abu Anas al Libi here over the weekend. Of course, he was suspected and involved in the bombings in 1998 in Tanzania in 1998.

So, this is an ongoing and fluid situation. Indications are, it may, I stress may come to an end soon but it is fluid and ongoing, Zoraida.

SAMBOLIN: And in the meantime, I know you were chatting with us earlier about this. The question is what is happening with the government there? Who is running things?

ROBERTSON: This is really an open question. This militia that took the prime minister is one that is sanctioned by the government, which raises the question in people's mind what is the government doing sanctioning these militias who really effectively taking control and held the country's development to hostage since the overthrow of Moammar Gadhafi two years ago.

When I spoke with the justice minister last night, just hours before this event took place, this kidnapping took place, I met with the prime minister as well. He seemed very relaxed. This was four hours before he was kidnapped. The justice minister told me that Libya is close to being a failed state and he was very worried about the knock- on effect of the arrest of Abu Anas al Libi at the weekend. He was concerned.

So, if other government ministers are concerned that groups, Islamist groups here are trying to take advantage of the situation, it seems what's happening to me at the moment, Zoraida.

SAMBOLIN: All right. Nic Robertson live for us. Thank you.

A bit excessive, right, 150, calling that an arrest -- 150 armed militia storming the hotel. Sounds like a kidnapping.

BERMAN: And talk about turmoil in the region there, with that happening in Libya, the U.S. also withdrawing some of its funding or cutting off some of its funding to Egypt right now. Some serious foreign policy issues for the U.S. government, to be sure.

SAMBOLIN: Right. So, we're going to have an update here perhaps what this is all about.

So, five days after his arrest in Tripoli, al Qaeda terror suspect, we were just talking about this, Abu Anas al Libi still has not been read his Miranda rights. He is being interrogated on a ship in the Mediterranean by a special team of agents from the CIA, the FBI and the Pentagon. Anything he tells them cannot be used in court. Al Libi will eventually be turned over to the Justice Department, he will be read his Miranda rights and the criminal prosecution will begin.

BERMAN: Back here at home. The likely new head of the Federal Reserve insisting there is still work to be done in restoring this country's economy. Janet Yellen says it is up to policymakers to safeguard the financial system and ensure that everyone has the opportunity to build a better life.

(BEGIN VIDEO CLIP)

JANET YELLEN, FEDERAL RESERVE NOMINEE: The mandate of the Federal Reserve is to serve all of the American people and too many Americans still can't find a job and worry how they will pay their bills and provide for their families. The Federal Reserve can help if it does its job effectively.

(END VIDEO CLIP)

BERMAN: Yellen is seen as holding some similar economic positions the current chairman, Ben Bernanke, believed to be likely to continue the central bank stimulus policies. And if confirmed by the Senate, she would be the first woman to head up the Fed.

SAMBOLIN: In other news this morning, for a dozen people at Universal Studios in Orlando, it was a ride that they will probably never forget. The roller coaster they were on, the Hollywood rip ride rocket, stalled, about 140 feet above ground and it took two hours to get everyone off. Park officials say they have had similar incidents before and they will keep the ride closed until they figure out what happened.

BERMAN: That might be a good idea.

SAMBOLIN: It's a really good idea, I would say so.

BERMAN: All right. Ten minutes after the hour here.

Coming up, kidnapped by the man who murdered her mother and brother, Hannah Anderson reveals how her life was threatened in a dangerous game.

SAMBOLIN: Plus, a stormy weekend expected for parts of the country.

BERMAN: You're smiling about that?

SAMBOLIN: Bearer of bad news --

BERMAN: You're smiling about that?

SAMBOLIN: Indra Petersons is going to break it all down for us!

BERMAN: And it is time for your morning rhyme. Tweet us. Tweet you now.

SAMBOLIN: And tweet us -- tweet us with something.

BERMAN: With your own originally. Send us a rhyme about anything. Just remember, #earlystart, or #morningrhyme. We will read the very best ones on the TV in our next half hour.

(COMMERCIAL BREAK)

SAMBOLIN: Welcome back to EARLY START. Fourteen minutes past the hour.

A kidnapped California teenager sharing startling new details about her ordeal. Hannah Anderson says the family friend would abducted her tried to make her play Russian roulette. The 16-year-old also tells NBC that James DiMaggio handcuffed her and bound her feet. Authorities say DiMaggio killed Anderson's mother and brother before taking her to Idaho. A week later, the FBI tracked them down, shooting and killing him.

BERMAN: We have a disturbing story out of Denver. Sixty-six-year-old Wayne Sperling is facing child abuse charge, along with the mother of his four children, 35-year-old Lorinda. The boys ages 2 to 6 were found malnourished, living in an apartment littered with human and animal feces. Police say the children aren't able to speak. They're toilet trained and they are now in state custody. Awful.

SAMBOLIN: Seven bikers are now under arrest for their alleged role in the attack on the SUV driver. The whole thing was caught on camera. One of them is a New York City police officer who prosecutors say was an active participant in the attack. His attorneys admit that he hit the car's back window but say it was broken already. The officer is free right now on bail right now.

BERMAN: Bradley Manning is not happy with what people think of him, apparently. The former Army private he leaked thousands of documents to WikiLeaks tells "The Guardian" newspaper the leak was motivated by a desire for more transparency and not an effort to influence people's opinion of wars. (INAUDIBLE) Manning, who now goes by Chelsea since August when he was sentenced to 35 years in military custody.

Julian Assange apparently is not happy of how he is being portrayed in new film. He wrote a letter to actor Benedict Cumberbatch calling the movie "The fifth estate distorted, even wretched," and begging the actor to reconsider his involvement. Cumberbatch asked to meet with Assange before playing him in the film, which is an offer that Assange declined.

Benedict Cumberbatch, by the way, Sherlock Holmes and great (INAUDIBLE) he also played.

SAMBOLIN: Which is the most important part of the story, right?

BERMAN: Yes, he is a really good actor which is the only thing that I keep thinking about there.

All right. Sixteen minutes after the hour right.

Let us get a check of the Thursday weather. Indra Petersons is with that.

INDRA PETERSONS, AMS METEOROLOGIST: I'm nervous already and I don't want to tell you how bad it is since I know you guys don't like rain.

You can see where the storm is and here is what you have to remember. It is going to linger. This guy is going to take its time. Right now we are seeing rain around D.C., kind of in Philly, and still south of New York. But again, as this low forms off the coastline, it's not going to be the only concern, meaning rain is not the only concern. We're going to be talking about wind as well.

The reason for that, going back to the basics, high pressure, winds go clockwise on a high and on a low counterclockwise and put them close together and get strong winds in between and talking about gusts as high as 45 miles per hour. So cool rainy and the pattern continues to slowly make its way even on Saturday you can see it's slow moving. We are still going to be dealing with this same pattern.

As far as how much rain? Look at this. You're talking about large amounts of rain, 3 to 5 inches of rain thanks to the moisture kind of fueling off the coastline. That's what happens every time it goes parallel to the coast. You get these slow heavy bands of rain. Unfortunately, that will be the story and we talked about the wind in the mix as well. You want to see a day-by-day. Here is what it looks like on Thursday.

(CROSSTALK)

BERMAN: Tomorrow, bad --

PETERSONS: Bad again? We're going to -- you're right. On the money, guys.

Saturday, still there. So, there you go. That is how you can plan your weekend right there.

As far as temperatures, below normal temperatures because we want to talk about even more horrible news.

So, cool, windy and rainy. Sorry.

SAMBOLIN: But at least you deliver it with a smile. Appreciate that. Thank you.

PETERSONS: You're welcome.

BERMAN: So, in most cities, you keep your dog on a leash which is a no-brainer, unless you're in a dog park, of course. But what about your cat?

Meet pooh bear. His back legs don't work so his owner got him a device so he can walk. She likes to take the cat to a public park in Melbourne, near Orlando, and her Chihuahua along also. Now, she's been cited for not having the animals on leashes, including the disabled cat.

(BEGIN VIDEO CLIP)

UNIDENTIFEID MALE: She had been warned it was not legal to do that. Basically, we have someone not getting the fact that you have to be in control of your animal when it's off your property.

YVONNE STEEL, CAT OWNER: That was my very first knowledge that cats could not be allowed off the leash. I wouldn't each know where to put the leash, to be quite honest.

(END VIDEO CLIP)

BERMAN: Police say the owner has a history of letting her dog run loose in public areas and this is an issue of public safety.

SAMBOLIN: I say that cat should be exempt. Follow the rules for the dog but the cat? The cat should be exempt, folks.

Nineteen minutes past the hour.

Coming up, new optimism. Seriously? That is a big word we are using this morning. The Washington gridlock could be coming to an end, maybe? And that has the markets happy. That's always good news. "Money Time" is coming up next.

BERMAN: We are following breaking news from Libya. Developing this morning: more than 150 armed gunmen taking Libya's prime minister from a hotel in Tripoli. We're going to have the latest on that report. Some officials in Libya calling it a kidnapping. It's coming up next.

(COMMERCIAL BREAK)

SAMBOLIN: Welcome back to EARLY START. It is money time and I know it's time typically for our morning rhymes but I thought you would appreciate this, Christine.

This comes from Julia (INAUDIBLE). It says, my government is still closed. Help me and my peeps is getting hosed!

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: I love that one. That is a very good rhyme.

Look, we have futures higher this morning because the hope there is some sort of a short-term deal. Even the whiff of a short-term deal, just kicking the can 15 inches down the road is good enough here to get the stocks higher and avert ago financial crisis by not raising the debt ceiling is what they are hoping for here.

Stock futures across the board gains right now. Look at the Dow, 92 points and if it keeps building a triple digit move higher.

Word that House GOP leaders will meet with President Obama for the first time since the shutdown began. The broad idea is that there might be a short term increase in the borrowing limit so the Republicans can push for a bigger deficit reduction deal.

And the debt ceiling is the central focus of the treasury secretary. You guys reported already this morning, he is going to appear before the Senate Finance Committee in less than three hours. He has already said he has exhausted all of the tricks in his bag to keep the government from defaulting and that October 17th, one week is the day when the government won't have enough cash to pay all of its bills. It's going to be interesting to see if he hinted at any wiggle room this morning for what some are calling the x-state.

But there's one part of the market that's clearly already showing stress about the debt ceiling deadlock and I want to show this. It's short-term treasuries. These T-bills, they are used by companies and banks to stash cash in the short-term basis and the rates on bills that are due for redemption around the middle of the month have spiked five-year highs. It's a sign that lenders are nervous about the prospects of the U.S. government.

Look, that chart you're seeing there might not look like much to you, people are just poring over this chart because they are worried it's showing the cracks in the financial system.

Also, headlines Wednesday that Fidelity was dumping all of its U.S. treasury bonds and bills due in late October and early November seem to send a chill through the credit markets.

And there was word the decision not to pull back on the Federal Reserve's $85 billion a month in bond purchases was very close. The minutes from the last Federal Reserve meeting showing the deciding factor was concern at the time over a government shutdown and debt ceiling battle, it shows you the economists know how to forecast, right?

That's something the second in command at the Fed and President Obama's new pick for fed chairman must have been closely involved in. Janet Yellen, there she is. If confirmed by the Senate, she will have her work cut out for her you guys when she starts early next year.

I can't tell you, you know, there's just so much going on that's counterproductive right now for our 401(k)s and for the economic recovery, and it's all manufactured in Washington and I just -- I don't mean to sound exasperated but even a little tiny deal like this, the fact the -- Dow futures are up so much on something that seems so miniscule, just a little bit of progress just shows you kind of like what a bad spot we are in.

BERMAN: Counterproductive is a nice way to do it. I mean, they are screwing with our money, is what they're doing.

ROMANS: They really are. They really are.

And, you know, when you talk to big, and I talk to a lot of people who move a lot of money and people who are big fund managers and bond fund managers, you know, they say this started as something that looked like a political battle with Obamacare, with a lot of politics attached and assumed the debt ceiling would be raised and it's morphed into something else, where there are grown-ups in Washington know how economy works, who know how we finance our government has sort of been pulled into this morass and it's been real.

(CROSSTALK)

SAMBOLIN: -- watching, right, real people are suffering. ROMANS: Yes.

BERMAN: Christine Romans, thank you so much.

Coming up, we do have a developing situation in Libya where the prime minister was taken from a hotel by armed gunmen. Officials say kidnapped. Nic Robertson is live in Tripoli with the very latest. We will have that right after the break.

(COMMERCIAL BREAK)