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EARLY START WITH JOHN BERMAN AND ZORAIDA SAMBOLIN

Obama Orders NSA Review; Obamacare Website Back Online; Graham Vows to Block Nominations; Hurricane Force Batters Europe; One Year After Sandy; Two Escaped Inmates Captured

Aired October 29, 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: Spying on America's friends. What did the president know and what is he going to do about it? The new plans this morning that could dramatically change U.S. intelligence operations.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Evidently, there is design flaw in it. You get in the shower and climb up, climb over and get out.

(END VIDEO CLIP)

JOHN BERMAN, CNN ANCHOR: A frantic manhunt. Two inmates who broke out of a Oklahoma jail back behind bars but two more are still on the loose this morning, this as we learn more about how they made their daring escape.

SAMBOLIN: That is a community that is very concerned.

And a major milestone of recovery nearly one year after superstorm Sandy.

BERMAN: What a year.

SAMBOLIN: Yes.

BERMAN: Good morning, everyone. Great to see you this morning. Welcome to EARLY START. I'm John Berman.

ZORAIDA SAMBOLIN, CNN ANCHOR: And I'm Zoraida Sambolin. It is Tuesday, October 29th. It is 5:00 a.m. in the East.

BERMAN: And we're going to start with a question that has so many people perplexed this morning -- is it really possible the U.S. was eavesdropping on ally world leaders for years and President Obama didn't know? No one told him? Phone conversations from U.S. friends like German Chancellor Angela Merkel.

The administration insists the president did not know. Now, he is ordering a full review of the NSA surveillance operations and the foreign relations fallout.

Let's get more now from our chief national security correspondent Jim Sciutto. (BEGIN VIDEOTAPE)

JIM SCIUTTO, CNN CHIEF NATIONAL SECURITY CORRESPONENT (voice-over): President Obama would not confirm the NSA was spying on the phone calls of U.S. allies like Germany's Chancellor Angela Merkel.

But in an interview with the new cable network Fusion, he both defended U.S. intelligence activities --

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The national security operations generally have one purpose and that is to make sure that the American people are safe.

SCIUTTO: -- and he conceded that maybe they've gone too far.

OBAMA: I'm initiating now a review to make sure that what they're able to do doesn't necessarily mean what they should be doing.

SCIUTTO: Senior administration officials tell CNN President Obama did not know about the NSA surveillance of Merkel and other allies until earlier this year. And when he found out, he ordered a stop to some of the programs.

But the Democratic chairman of the Senate Intelligence Community, Dianne Feinstein, usually an ally of the White House, says that's not good enough and wants a, quote, "total review of all U.S. intelligence programs."

European lawmakers are in Washington this week, pressing the case for limits. The head of the E.U. delegation told me E.U. citizens find spying disturbing.

CLAUDE MORAES, CHAIR OF EUROPEAN PARLIAMENT CIVIL LIBERTIES DELEGATION: They feel very uneasy. They don't know why it's happening, why our strongest ally is doing it.

SCIUTTO: Amid reports the U.S. surveillance of leaders of allies began back in 2002, well before the Obama administration, former Vice President Cheney gave CNN's Jake Tapper.

DICK CHENEY, FORMER VICE PRESIDENT: We are vulnerable as was shown on 9/11. And you never know what you're going to need when you need it. The fact is we do collect a lot of intelligence, without speaking about any particular target or group of targets. That intelligence capability is enormously important to the United States, to our conduct for foreign policy to defense matters, economic matters, and I'm a strong supporter of it.

SCIUTTO: Jim Sciutto, CNN, Washington.

(END VIDEOTAPE)

SAMBOLIN: Our thanks to Jim.

Three minutes past the hour. Healthcare.gov apparently is off life support this morning. The Obamacare Web site back online after suffering a nationwide network outage over the weekend. Later this morning, Marilyn Tavenner will testify at the congressional hearing investigating the failed Obamacare rollout. She's an administrator for Medicare and Medicaid services.

About 325,000 people have now been able to sign up for private insurance through Obamacare state-run marketplaces. And CNN has learned Health and Human Services Secretary Kathleen Sebelius missed an extended deadline set by House committee to turn over documents about the healthcare.gov Web site. That could trigger a congressional subpoena from Republicans.

BERMAN: South Carolina Senator Lindsey Graham is threatening to hold up all nominations for federal positions until survivors of the attack on the U.S. outpost in Benghazi appear before Congress. The State Department says it already sent an employee who was there on the night of the attack to be the post on Capitol Hill. The White House is accusing Republicans of playing politics with the issue.

Among the key figures awaiting Senate confirmation, Janet Yellen for chair of the Federal Reserve and Jeh Johnson for secretary of homeland security.

SAMBOLIN: Secretary of State John Kerry may travel to Egypt. This we hear in the coming weeks. It would be his first trip there since President Mohamed Morsy was ousted by the military last summer.

Ties between Washington and Cairo have been strained since then. The U.S. recently withholding $260 million in cash aid and military weapons, pending Egypt's progress on democracy and on human rights.

BERMAN: They are picking up the pieces this morning after one of the most powerful storms in years, which has battered Great Britain and Western Europe. At least 13 people were killed. Pretty amazing pictures here. Hundreds of thousands left without power.

This paralyzing storm forcing the cancellation of trains, planes, ferries Monday because of winds reaching hurricane force.

SAMBOLIN: Look at that!

BERMAN: Crazy, right?

SAMBOLIN: You don't usually see this type of thing in Western Europe.

They get it once every 20 years or so. Gusts of 99 miles per hour were reported in the South of England. This is in Brussels here, in Belgium.

Copenhagen saw a record gust of up 120 miles an hour -- clearly, the people there not used to it and not sure what to do. But you can see the power of the storm.

SAMBOLIN: That was great everybody was helping each other, though, too. You can't get across the street. It was throwing people all over the place.

BERMAN: Maybe not the best day to be out for a bike ride either.

SAMBOLIN: No.

BERMAN: Just saying.

SAMBOLIN: Or holding an umbrella.

BERMAN: All right. That's the storm going on in Eastern European right now.

SAMBOLIN: Wow.

BERMAN: There is cause for celebration here on the East Coast, one year after superstorm Sandy. Ellis Island is back. It is open. America's gateway for millions of immigrants reopen Monday, just shy of the storm's one year anniversary.

(BEGIN VIDEO CLIP)

DAVID LUCHSINGER, SUPERINTENDENT, STATUE OF LIBERTY NATIONAL MONUMENT: Yes, we are shy a little bit on exhibits and artifacts, but we are not shy on character at all.

(END VIDEO CLIP)

SAMBOLIN: That guy David Luchsinger, he is actually retiring. So, congratulations on your retirement. And the grand reopening was doubly special. It happened on the Statue of Liberty's 127th birthday. Did you know that?

BERMAN: Happy birthday.

SAMBOLIN: Happy birthday.

BERMAN: I forgot to give her a present.

SAMBOLIN: I forgot to say happy birthday.

For more in the Sandy recovery, we're going to go to Indra Petersons. She is in Seaside Heights, New Jersey. Its boardwalk that was devastated by the superstorm and then scorched by a fire just last month.

Good morning, Indra.

INDRA PETERSONS, AMS METEOROLOGIST: Yes, good morning.

It really is hard to believe, it's already been a year since this devastating storm. Remember, this storm affected a hundred million people. I actually brought up a satellite view to remind you how large this storm was. I mean, we are talking about extending from Maine down through Florida, and even extending all the way back through Michigan. That is the massive size of this storm to remind you about 5 million people lost power. Hundreds of thousands of homes were impacted and, of course, superstorm fashion it was about the timing. It had a nine- foot storm surge. It combined with high tide so we talked about a record breaking 13.88 storm surge really when the two came in and inundated the area with water.

Now, this morning, I'm standing in front of the jet star roller coaster used to be and it was torn down in May. No longer do we see that symbol of this iconic pier here this morning. And you can see to my right, they are rebuilding and it's going to take some time. The good news the boardwalk is up this morning. The bottom level here of Casino Pier, that was open the summer to slow, slow business this summer.

You can tell they're going to continue to rebuild. In fact, they're also going to try and build another rollercoaster and it looks like next summer, they're hoping to have it open but it may take another year. The good news, 90 percent of the businesses are open.

I want to talk about the impact, what it was. Well, actually, I have not been able to show you, you can actually see that Sandy came and completely perpendicular to the coast and that is the reason that storm surge was so high.

I want to take you into some maps across the country. We have another system that's pretty important to talk about. Big system bringing heavy snow today from Wyoming, even in through Colorado, even portions of Nevada. You're looking at the storm system making its way through, about 10 inches of snow possible.

Good news for ski resorts. There's a good 10 inches possible there and good news for opening season here for a lot of our local resorts.

Now, the system, though, unfortunately, is going to clash, all that cold air, with the warm air in the South. So we have a severe weather threat today in through portions of Texas. That same system will make its way to the east so anywhere from the Ohio Valley into the Northeast, it looks like we will be looking at heavy rain for Halloween. Tough to say.

BERMAN: Yikes. Bummer there. Amazing pictures behind you of just one year ago. Today, so much devastation. Thanks so much.

Coming up for us next: manhunt. Two inmates who escaped an Oklahoma jail captured, but two more on the loose right now, and what local law enforcement is saying about the jail break. Got to say, this is going to surprise you.

And Chris Brown set free from jail after getting a big break in court.

BERMAN: I'll say.

Plus, it is time for the morning rhyme. Tweet us with your own original verse. It can be about anything. The hashtags are #Earlystart, #Morningrhyme. We will read the best ones on the air in the next half hour.

(COMMERCIAL BREAK)

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

Two of the four Oklahoma inmates who broke out of jail by busting through a shower ceiling are back behind bars this morning. The other two men are still on the loose, leaving a lot of locals on edge this morning.

And also this morning, we are getting a clearer picture of exactly how the convicts managed to pull off their daring escape. Those are the two that were caught.

Here is George Howell.

(BEGIN VIDEOTAPE)

GEORGE HOWELL, CNN CORRESPONDENT (voice-over): Police searched throughout the night looking for two remaining Caddo County jail inmates who have been on the run since Sunday. Anthony Mendonca and Triston Cheadle remain at large, both considered armed and dangerous.

(on camera): Should people be worried that these men are on the streets?

SHERIFF GENE CAIN, CADDO COUNTY SHERIFF: Oh, yes, anytime, you know, people breaks out of prison, you should be more cautious and be more secure around your surroundings.

HOWELL: Mendonca and Cheadle escaped with two other inmates, who ended up back where they started from, inside the walls that failed to confine them. Dylan Three Irons and Prime Brown were both arrested Monday afternoon in nearby Chickasha, Oklahoma, less than 20 miles away from the jail.

Many around town are most troubled by the simple fact that this jail break even happen.

MARCY LEE, ANADARKO, CALIFORNIA RESIDENT: Kind of frightening to think that it happened so easily. It just makes me nervous to think that it's not built better.

UNIDENTIFIED MALE: Evidently, there's a design flaw in it, where you get in the shower, climb up, climb over, and get out.

HOWELL: And that is exactly how it went down. According to officials, the men busted through a maintenance hatch above the shower in the jail. They crawled through a pipe space right beneath the roof where the air-conditioning and plumbing sit. Then, they knocked out a cement block to get to another room. That took them directly to an unlocked side door which they simply pushed open to freedom.

CAIN: I don't think it was a design flaw, no. I mean, it's something we will have to investigate, but the jail was well-built.

HOWELL: Our camera caught contractors back on the job repairing the damage created by the jail break.

But could this sort of thing happen? Not even the sheriff could say for certain.

CAIN: There's lots of ways, you know, that people escape jails. I can't say it won't happen again. We hope it don't happen again.

HOWELL: George Howell, CNN, Anadarko, Oklahoma.

(END VIDEOTAPE)

BERMAN: I think a lot of people hope it doesn't happen again out there.

SAMBOLIN: Wow.

BERMAN: All right. Fourteen minutes after the hour right now.

Not a reprieve but another day of freedom for Jesse Jackie, Jr. A paper work snagged has delayed his 30-month prison term for misusing $750,000 in campaign funds. His sentence was supposed to begin Monday at a federal correctional facility. His wife Sandy was sentenced to a year in prison for falsifying tax returns. She was ordered to report to prison 30 days after her husband. That was to lessen the impact on their two children.

SAMBOLIN: A big break for singer Chris Brown in his recent assault case. A felony charge has just been reduced now to a misdemeanor and Brown was released without bail.

(BEGIN VIDEO CLIP)

DANNY ONORATO, ATTORNEY FOR CHRIS BROWN: We are confident that Mr. Brown will be exonerated of any wrongdoing.

(END VIDEO CLIP)

SAMBOLIN: Brown was arrested early Sunday morning after an altercation outside a Washington, D.C. hotel. The singer is required to stay 100 yards away from the victim identified as 20-year-old Isaac Parker.

BERMAN: This story is nuts. Celebrity chef Guy Fieri testifying in a case involving his stolen Lamborghini and attempted murder. Fieri took the stand in a Marin County, California, courtroom, in the case against 19-year-old Max Wade. Prosecutors accuse Wade of stealing Fieri's Lamborghini in 2011 in order to impress a girl who he later attempted to murder along with her boyfriend!

Follow -- it's crazy.

Wade was arrested in a storage where police also found the stolen Lamborghini.

(BEGIN VIDEO CLIP) GUY FIERI, CELEBRITY CHEF: I was in Chicago shooting "Diners, Drive- Ins and Dives" and actually because the cameras were running when I answered the phone, I thought somebody is messing with me. You know, this is a bad joke -- but it wasn't a bad joke and it was very surprising, you know, that it went down the way it went down.

(END VIDEOTAPE)

BERMAN: Fieri managed to get a plug-in for his show, during commenting on this attempted murder trial. Wade is also on trial for auto theft and faces two counts of attempted murder. Jury deliberations begin later today.

SAMBOLIN: Such a cookie story. I had to read it twice try to really understand what was --- insane. Insane.

All right. I'm going to let you talk about the Red Sox.

BERMAN: So, it turns out the Red Sox won last night. They beat the Cardinals. I'm not going to jinx anything to say how close they may or may not be to winning the whole thing, but it was an impressive game last night and Andy Scholes joins us now with "The Bleacher Report."

SAMBOLIN: Congratulations, congratulations.

BERMAN: Good morning, Andy.

ANDY SCHOLES, THE BLEACHER REPORT: Yes, congratulations, John. I'm so happy for you.

All right. You know, there was no wacky ending in game five last night. It was just an old-fashioned pitcher's duel between the Red Sox Jon Lester and the Cardinals Adam Wainwright.

Now, Big Papi who is absolutely on fire right now got things going in Boston's first inning. He doubles in Dustin Pedroia to make it 1-0. The game would be tied at 1, all the way into the seventh inning. That's when David Ross doubles in a run. That would be enough for Lester and Koji Uehara.

They combine to give up only one run on four hits and the Red Sox win game five 3-1. They now will look to close out their first World Series title at Fenway Park since 1918.

All right. Less than a mile away from where the World Series is being played last night, the Rams were hosting the Seattle Seahawks on Monday night football. St. Louis, it's a baseball town. As you can imagine, this wasn't a full house.

The big play in the game became the third quarter. Russell Wilson hooks up with Golden Tate. And check out Tate. He's going to wave good-bye to the cornerbacks as he goes in for the 80-yard touchdown. He received a taunting penalty for that. Rams had the chance to win this game on the game's final play, but this pass will fall incomplete. Seahawks win 14-9, to improve to 7-1 on the season. Turning on BleacherReport.com today. Wonder how LeBron has been training this season? Well, check out his exercise routine and his new ad for Nike. It's a full-on triathlon from his house in Miami to South Beach to the arena. He's biking, swimming and running. It looks like he's joined by what looks like the whole city of Miami.

Now, LeBron and the Heat tip off tonight with a big double-header in our sister network TNT. Miami and Chicago get things started at 8:00 Eastern on TNT.

Zoraida, I know you're excited for the return of Derrick Rose tonight.

SAMBOLIN: And he is looking good.

SCHOLES: He is looking good. Let's see what he has in store for LeBron and the Heat tonight. That game is followed by the Clippers and Lakers at 10:30.

All right. Kansas City Chiefs fans, they couldn't be happier with their new head coach Andy Reid. The team is off to an 8-0 start. And we all love trendy Halloween costumes and this could be the best ever.

BERMAN: Oh, wow!

SCHOLES: Meet baby Andy Reid.

SAMBOLIN: He is so cute.

SCHOLES: Graham Lepur (ph) is this baby's name. His dad came up with the idea for him to be baby Andy Reid. He got the Walrus mustache from a stuffed animal and the resemblance, guys.

SAMBOLIN: It's crazy.

SCHOLES: Stunning.

BERMAN: The baby is clock management, so there is a little bit of a difference. Is that really?

SCHOLES: He is not doing too bad this year, guys, right?

BERMAN: No. That costume is awesome.

Andy, great to see you.

SAMBOLIN: Thank you.

All right. Coming up, bad news for Apple, leaving investors worried this morning. What is going so wrong with that computer giant? "Money Time" next.

(COMMERCIAL BREAK)

SAMBOLIN: Welcome back. Twenty-three minutes past the hour.

It is "Money Time." Christine Romans is here. CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: Good morning, you guys.

The world's most valuable company, what is it? It's Apple, and a little something for everyone not to like is its latest earnings report. I was telling you that was coming out after the bell. We're going to watch this -- look at that after hours dip.

The mixed feelings could be seen after the close with Apple saying and rebounding when the CFO said on the conference call that margins would have been better if not for an accounting change. Stock right now down just a little bit. We will watch this and see what happens when the opening bell rings this morning.

But the upbeat takeaway from the earnings is that iPhone sales were up sharply, thanks to the CEO Tim Cook's introduction of those new models last month.

Cook also said he expects a strong holiday season. Apple sold nearly 34 million iPhones in the fourth quarter. Up 26 percent from last year, right? Revenue from iPhone rose 17 percent from a year ago. It was more than half of Apple's quarterly sales, but the average price of an iPhone declined 6.6 percent from a year ago.

On the negative side, iPhone sales were plat and Mac sails showed a 7 percent decline from a year ago. Overall, it was Apple's third consecutive decline quarter of declining profits. That's a big concern.

Remember, we're talking about Apple. And then the other tech companies would be thrilled to have Apple's financials. But there is fierce competition. There's a lot of competition around the world for what's going to fill this space. You know, the tablet space, phone space, and Apple has an awful lot of competition. So, we'll watch that.

Another record day on the S&P. It wasn't very much, you guys, but there's a little bit. The S&P 500 gained two points to put it over Friday's all-time high. The S&P has been up for eight of the last nine sessions. The NASDAQ and Dow both closed lower slightly lower on Monday.

You know, I always like to --

BERMAN: You got to do it again, I love it.

ROMANS: Let me give it to you. The Dow up 19 percent -- this is for the year. This is unbelievable. The NASDAQ up 30 percent, the S&P 500 up 24 percent.

You know, fund managers -- they try to be up like 8 percent, or 10 percent for the year. I mean, look at that, just the averages doing all the work for you.

The world's largest retailer at America's biggest employer says it plans to promote more than 25,000 of its roughly 1.3 million U.S. employees by the end of the year. It's Wal-Mart. The promotions will affect both hourly and management workers. Wal-Mart says they will come with higher pay.

The announcement comes just days after a Washington lawmaker criticized Wal-Mart's executives calling them welfare kings citing the store's average full-time hourly wage of $12.83, roughly $26,000 a year.

This is roughly the same number of promotions it did last year, only this time, they're letting you know about it and I'm interviewing Wal- Mart CEO Bill Simon later on this morning. That interview is going to begin airing on CNN starting at 9:00, but I'm going to ask him, you know, what are they doing to change this perception they have the majority of their workers making $26,000 a year or less?

You know, last week, when there was that kerfuffle over the Wal-Mart welfare king's comment, the company said, look, a lot of people who work for us were part-time by choice. They work part-time because they want to work part-time. Obviously, they're not going to make $26,000 a year if they are working part-time. So, we'll talk a little bit about, you know, what the pay structure looks like this.

And also, I'm going to ask him about the pulse. They have their finger on the pulse of the consumer, to o find out what is happening there.

BERMAN: A big, big interview with the Wal-Mart CEO. Excerpts coming soon. Good luck on that. Thanks, Christine.

ROMANS: You're welcome.

SAMBOLIN: Thank you.

BERMAN: Coming up for us, terror attack. This is a disturbing trend. Terror attacks reaching record highs, and why civilians have become the new targets. We'll tell you all about this, coming up next.

(COMMERCIAL BREAK)

BERMAN: Spy game fallout. America's closest allies are so angry over eavesdropping. And this morning, the White House set to announce major changes to the controversial NSA surveillance.