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THE LEAD WITH JAKE TAPPER

Wall Street Soars; UPS Under Fire; Justin Bieber's Break; "Totally Abandoned and Forgotten"; Strategy Behind New Hostage Video; Obamacare Sign-Ups Surge; NSA Facing Legal Challenges in 2014?

Aired December 26, 2013 - 16:00   ET

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


JOE JOHNS, CNN ANCHOR: On this day after Christmas, we will gladly return Justin Bieber. How much is postage to Canada?

I'm Joe Johns. And this is THE LEAD.

The money lead. How can you exchange the gifts you don't want when they haven't even arrived yet? So many families still waiting for Christmas to happen because of a monumental backlog at UPS.

The world lead, a Christmas plea to the president from an American abducted by al Qaeda in Pakistan over two years ago -- what the White House is saying today.

And the pop lead. It's hard to take Justin Bieber seriously even in retirement. The singer breaks millions of little hearts by announcing he's taking a break. Hey, did you hear he has a new movie out?

I'm Joe Johns, in for Jake Tapper.

We begin with the money lead. We're not sure if an angel got his wings when the closing bell rang on Wall Street a few moments ago, but there are certainly some stock portfolios out there ready to take flight. The markets enjoyed a huge post-Christmas boost, setting the stage for a year-end rally.

CNN business correspondent Zain Asher joins us live from the New York Stock Exchange with more.

Zain, why does it always seem like investors end up on Santa's nice list this time of year?

(LAUGHTER)

ZAIN ASHER, CNN CORRESPONDENT: I know. December is traditionally a very good month for stocks, but, yes, this is the 50th record close that we have had so far this year, not necessarily a surprise, especially given the rally that we have seen in the last six trading days.

One thing to note, though, is that volume was certainly light today, given that it was the day after Christmas, roughly around 230 million shares traded. It does sound like a huge amount, but it's actually not that much in trading terms. So it means as though it's easier -- that it's easier for traders to kick the market around. In terms of headwinds, the only headwinds that I can see right now, having spoken to traders, is in January. That's when earnings season begins and all these retailers have sort of suffered very disappointing earnings or sales, I should say, this holiday season, up by more than 2.3 percent compared to last year, but only because of the discounts offered, which might affect profits.

In the meantime, though, people's 401(k)s certainly enjoying very healthy gains, S&P 500 and the Dow up by between 25 percent and 30 percent so far this year. On a normal year, Joe, it would only be up by roughly around 10 percent. So my anticipation is that for the meantime at least, this rally is set to continue -- Joe.

JOHNS: Certainly good news for everybody who has money in the market. Thanks for that, Zain Asher.

ASHER: Of course.

JOHNS: If it looked a little bare under your Christmas tree, don't worry. Your loved ones weren't necessarily being cheap. Santa had some delivery issues. UPS and FedEx had issues delivering the huge volume of packages in time for Christmas, and now they are under fire.

FedEx released a statement saying it was proud of its team's efforts and that they operated on -- quote -- "very high service levels."

UPS apologized and said, "We know how hard it is for everyone to receive their holiday packages and we're working around the clock to resolve this issue." Both companies say that the number of packages exceeded their projections for this time of year, but shouldn't they have been better prepared?

Joining me now is "Wall Street Journal" reporter Suzanne Kapner.

Suzanne, how did this happen? We know this holiday season had a smaller shopping window with Thanksgiving being so late in the year, that one analyst says holiday shopping last weekend was up 37 percent from the year before, but wouldn't these companies have been prepared for that?

SUZANNE KAPNER, "THE WALL STREET JOURNAL": Well, I think what's happening is there was a last-minute surge in online shopping.

I mean, there is normally a lull between Thanksgiving and Christmas, but, this year, things really slowed down in the middle and people just waited until the very last minute, in part because retailers really dropped prices the last weekend before Christmas, so that's when the best deals were.

Consumers know it. They have been trained to wait and they waited for those deals, and more shoppers than ever are buying online. Plus, a lot of retailers extended their window for delivery by Christmas. You could order as late as 11:00 p.m. Monday night and still have that so- called guarantee of a Christmas delivery, although, you know, that guarantee turned out to be worthless in a lot of cases. JOHNS: Now, this isn't totally uncommon. A Forrester Research analyst says about 15 percent of online shoppers who order items by the specified cutoff date set by the retailers don't get their packages by Christmas Eve. So, you think we're making too big of a deal of this?

KAPNER: Well, it's true this does happen every year. This does seem to be a bit of an exception, in part just because the number of people shopping online has grown.

It's not necessarily that the percentage of failed deliveries has grown. It's just that the numbers are getting bigger so they matter more. More people are getting affected. I think that's really what's happening this year.

JOHNS: What are these companies trying to do to make amends? Is an apology enough at this stage?

KAPNER: Well, you know, apologies are not going to, you know, fall very well at this stage, but Amazon, for instance, is offering $20 gift cards to a lot of customers. Most retailers are offering to refund the shipping charges.

But when you look, when we talk to customers, they are still upset. That doesn't make up for the fact that they didn't have that present to give their son or their daughter or their husband, and, you know, a lot of customers say, well, they said it was guaranteed. We thought it was guaranteed. If we knew there could be an issue, we would have just gone to the store and picked up the item.

So it does raise questions whether this will do damage to people's willingness to order online next year.

JOHNS: What about goodwill, the brand? Is this going to hurt the reputation of places like Amazon and Wal-Mart that people rely on?

KAPNER: Well, there is a lot of blame going around.

There's a lot of finger-pointing, which is somewhat interesting. Some of the retailers are blaming the shippers like UPS and FedEx. UPS in some cases sent customers e-mails saying, look, we didn't receive the package in time. It's not our fault. So there does seem to be plenty of blame going around, but, at the end of the day, I think the customer's really going to hold the retailer who they ordered from responsible.

JOHNS: And Target, they say there's no evidence of unencrypted pin data being compromised when 40 million credit and debit cards were stolen, but are we any closer to knowing who did it?

KAPNER: Well, it looks like we may be getting a little bit closer.

There is a blogger out there who tracks this. And he has identified a man in the Ukraine who he says is selling some of these credit card -- this credit card data on a Web site. And because this person may have had a forum run by some other Russian hackers, they exposed his identity.

So it doesn't mean that this person has -- stole the information, but he may know who -- he may be in contact with the actual thieves. So at least it seems like the loop is getting a little bit smaller in trying to figure out who is responsible.

JOHNS: Right. The guy bird-dogging that story is Brian Krebs. I actually talked to him online just today.

KAPNER: That's right.

JOHNS: But thanks so much for that, Suzanne Kapner.

KAPNER: Thank you.

JOHNS: A memo about fast food being unhealthy shouldn't exactly raise any eyebrows these days, unless, of course, it comes from one of the biggest fast food chains on the planet.

McDonald's is taking heat for yet another supersized blunder on its employee Web site. The site included a tip to workers to avoid unhealthy meals like a cheeseburger, fries and a soda, you know, the stuff McDonald's has built a billion dollar empire trying to push to the rest of us. The McResource line Web site instead advises employees to opt for healthier options like a sub, salad and water. This is a suggestion we're sure the folks at Subway must truly appreciate.

Joining us now live is CNN correspondent Sunlen Serfaty.

And thank you so much for coming in.

Has McDonald's figured out how to talk its way out of this one?

SUNLEN SERFATY, CNN CORRESPONDENT: They are trying, Joe.

They are trying very hard. They know they are in some McTrouble for this.

(LAUGHTER)

SERFATY: And they say that they are reevaluating how they're communicating with their employees.

And in a statement released today, they say -- quote -- "A combination of factors has led us to reevaluate. And we have directed the vendor to take down the Web site. Between links to the irrelevant or outdated information, along with outside groups taking elements out of context, this created unwarranted scrutiny and inappropriate commentary. None of this helps our McDonald's team members."

And that was the original goal of the Web site, to provide tips to the workers on how to live a healthy lifestyle, but this was such a big, ironic contradiction that it really did change the focus and put it on how unhealthy, unfortunately, fast food is for McDonald's.

JOHNS: Now, didn't this Web site have another problem this summer? Tell me about that.

SERFATY: They have had numerous problems. This Web site is run by a third-party vendor outside of McDonald's, but McDonald's, of course, contracts with the vendors.

And they have had problems in recent times. Recently, the Web site instructed McDonald's and workers how to find a second job, how to sell off possessions to get out of debt. And they provided a hot line on how to get food stamps, so this really just called more attention to really what the problem is and what many workers say the problem is working with McDonald's, these low wages, Joe.

Sunlen Serfaty, thanks so much. And happy holidays to you.

SERFATY: Thank you. You, too.

JOHNS: Coming up; He was abducted by al Qaeda over two years ago and now he's begging President Obama to negotiate with the terrorists for his release.

Plus, Hillary Clinton might be the odds-on favorite for the Democratic nomination in 2016, if she decides to run, of course. But how does she stack up against potential Republican competitor Chris Christie? Our brand-new polls coming up.

(COMMERCIAL BREAK)

JOHNS: Welcome back to THE LEAD.

The world lead, an American hostage says the same government he put his life in danger to help has abandoned him in his time of need. In a 13-minute, apparently coerced video released to "The Washington Post," kidnapped government contractor Warren Weinstein can be seen begging the Obama administration to help secure his release.

Weinstein was taken from his home in Pakistan by al Qaeda operatives back in 2011 and he hasn't been allowed to see his family since.

(BEGIN VIDEO CLIP)

WARREN WEINSTEIN, AMERICAN HELD CAPTIVE BY AL QAEDA: I have been cut off from my family, my wife, who is over 70, my two daughters, my two grandchildren, my son-in-law, and perhaps new members of the family whom I have never met.

Needless to say, I have been suffering deep anxiety every part of every day, not knowing what is happening to my family, not knowing how they are, and because I am not with them.

(END VIDEO CLIP)

JOHNS: Joining me now is CNN foreign affairs reporter Elise Labott.

Elise, what else can you tell us about this video?

ELISE LABOTT, CNN FOREIGN AFFAIRS CORRESPONDENT: Well, it's really interesting, Joe.

You can see over the last couple of years that he's been -- we have been seeing pictures of him. You can really see that the years have taken their toll on him. He says he's full of a lot of anxiety. He says that -- to President Obama, listen, this is your second term. You don't have to worry about reelection. You can take these hard decisions. He's really not only pleading with the president, but also the secretary of state, the public and the media.

He says he's really disappointed that we're not paying enough attention to his case. He's been serving his government his whole life and he's worried that he's being abandoned and forgotten.

JOHNS: State Department saying anything about this?

LABOTT: They're being very low-key about it, only to say that they're working to authenticate it. And I think that means that they're trying to see that this is a recent proof of life, but they're just saying that obviously they want to get him released as soon as possible, not talking about any type of negotiations.

If you look at what al Qaeda is looking for in return for his release, they are asking for the release of al Qaeda prisoners. They are asking for an end to drone strikes in Afghanistan, Pakistan, Somalia, Yemen. That's just not going to happen. They're not going to start bargaining with al Qaeda. That would just open up a huge bazaar for Americans on the black market.

JOHNS: Normally, situations like this tend to be handled quietly. Does this video change the dynamic?

LABOTT: I don't think so. You're right. These things are handled very quietly, very privately. The family hasn't said anything. The company hasn't said anything.

And note, he works for a private company, so it's very possible that this company has been working trying to bargain for, negotiate his type of release. But they don't want to say anything that, A., will antagonize al Qaeda and, if he seems to be alive, actually do anything to harm him.

And, B, they don't want to jeopardize any efforts. But you can bet that they're really looking at this video carefully and seeing if there's anything that they can figure out that gives them any clues that they can exploit.

JOHNS: When the State Department says they're trying to authenticate this, and we look at it and a lot of people will say, that's him, what else is there to authenticate, or is that just sort of a cop-out?

LABOTT: Well, I think they're looking, again, to see that it's a recent proof of life. How does this compare, you know, with experts that look at how much he might have aged, how his health is, what kind of condition he seems to be in?

You know, they are presumably cooperating with "The Washington Post" about this video, where did it come from, how was it sent? Those type of things that could give them any clue to what exact elements of al Qaeda are holding this gentleman. Are there any type of influence, any loyalties on the ground that they can work, that they can source with their contacts to see if there's anything they can do to help find him or help get him released?

JOHNS: Elise Labott, thanks so much. Good to see you today.

LABOTT: Good to see you.

JOHNS: This is the second video al Qaeda has released of Warren Weinstein since his kidnapping and the timing of this new one is likely no accident.

For more on that, let's go live to CNN national security analyst Bob Baer, who is also a former CIA operative.

Bob, your thoughts on why this video is being released now?

BOB BAER, CNN NATIONAL SECURITY ANALYST: Well, they want publicity and they're not getting any headway. I mean, nobody's talking to them. Nobody's offering them exchange. The U.S. government's not going to talk to them. The Pakistani government is probably not moved on this. And so, they are -- they just want to get traction on this thing and say we're still relevant, we've got an American hostage.

JOHNS: In the video, Weinstein makes a direct appeal to President Obama to help him. Here's what he said.

(BEGIN VIDEO CLIP)

WARREN WEINSTEIN, KIDNAPPED BY AL QAEDA MILITANTS: Mr. Obama, you're a family man, and so you understand the deep mental anxiety and anguish that I have been experiencing and therefore appealing to you on a humanitarian basis, if nothing else, and asking that you take the necessary actions to expedite my release.

(END VIDEO CLIP)

JOHNS: What effect does that have? How likely is it that the Obama administration will actually make moves to secure Weinstein's release?

BAER: Not too much. What they're going to do is send the ambassador in to see the foreign minister and say, hey, what's new on this guy, they're going to take the analysis from the tape. They will be able to tell you where it was filmed, probably in the tribal areas, just by the temperature of the video. You can see that.

And they'll say, what's new. The Pakistanis don't have great sources up there, either. They'll say, we're still looking.

I mean, this is -- this whole area, the tribal areas, nobody can get up there. There's going to be no rescue attempt. The CIA can't get up there.

So, you know, it's pretty much a stand-off at this point and just hope his health holds up because it's not the kind of place you want to be a captive.

JOHNS: Is there a backdoor on this? Does the administration have any other options at this point that don't involve negotiating with al Qaeda?

BAER: No. They want Omar Abdel-Rahman, the bomber, the mastermind supposedly of the 1993 bombing of the World Trade Center, stopping drone attacks. It's not something that's negotiable. It's not something that's going to be bought. What we can best hope for is a gesture on the part of these people is to release him with some message.

JOHNS: We've heard some comparisons between Weinstein's situation and that of the former FBI agent Robert Levinson, who was kidnapped in Iran. What do you see as the similarities and differences between the cases?

BAER: Joe, I think it's big. Levinson was undoubtedly taken by the Iranians, the government, at the beginning, on Kish Island, and he was most likely, this is speculation, turned over to a militant group. If anybody is able to follow this trail, it's the Iranian government. And I hope there is some sort of back channel to Tehran looking for this man.

So I think the possibility of his being released or his fate determined is a lot better than Weinstein.

JOHNS: Bob Baer, thanks for that.

When we come back, some people just have to wait until the last minute but those procrastinators surely left the president smiling today.

Plus, they flaunted their life on reality TV even though what they were doing was illegal until now. I'll talk to the "Sister Wives'" lawyer, next.

(COMMERCIAL BREAK)

JOHNS: Welcome back to THE LEAD.

Last-minute shoppers weren't only wrecking the malls before Christmas. They were cramming Web sites and jamming phone lines to sign up for Obamacare. Officials say sign-ups surged ahead of the deadline to qualify for coverage on January 1st. Healthcare.gov saw nearly 2 million page views, and the call center received more than a quarter million calls.

Athena Jones is live following the vacationing president in Hawaii.

And, Athena, a welcome Christmas present for the White House after a rough rollout. What's the administration saying?

ATHENA JONES, CNN CORRESPONDENT: Hi, Joe.

The administration has been touting that heavy traffic you just mentioned to Healthcare.gov earlier this week. Lots of people logging on to try to sign up for coverage. But we won't know in a real sense how many people were able to enroll until mid-January. That's when the administration is next due to release its next batch of enrollment figures. Those should be for the entire month of December.

Now, we do know that insurance companies had a conference call today with administration officials to talk about the shifting deadlines earlier this week. This is not entirely uncommon. Insurance companies have had regular contact with officials at HHS and at the Centers for Medicare and Medicaid Services. Those are the government officials most involved in this rollout.

We did hear from an insurance industry source who says that companies aren't yet seeing this big flood of enrollment applications, simply because it takes a few days to come through the exchanges and make their way over to the insurance companies themselves and of course, it's a holiday week so that could be a little bit delayed.

That same source, though, said the shift from Monday, December 23rd to the new deadline earlier this week of midnight on Christmas Eve isn't likely to have made a big impact on the number of applications they see coming in. I should tell you that administration officials have said as recently as last week that they expect there could be some problems that people face come January 1st, thinking that they signed up, that they successfully completed enrollment. They may show up at health care facilities or pharmacies only to find out that their applications weren't complete.

The administration says they have a strong contingency plan in place to deal with that. But, of course, we'll have to wait and see what actually happens next week, Joe.

JOHNS: Not necessarily over yet.

You've talked about the federal exchanges. What can you tell us about the state exchanges?

JONES: Well, state exchanges have also seen a big influx of people over the past several days, rushing to try to sign up for coverage.

I'll tell you about a few states.

Connecticut saw 6,700 people enroll on Monday, that's December 23rd. That was about twice or several times the number of people who usually sign up on a day like -- on a Monday.

Colorado also saw a record day on Monday. They said 5,354 people enrolled through that state's exchange.

And California by far the biggest number of enrollees, 103,000 people enrolled in California from Friday to Monday, bringing their total to 400,000.

So those are just some of the state figures we have. But again, we'll have to wait for a few more weeks until we get a real sense of just how big this influx was when it comes to the Healthcare.gov and the state exchanges -- Joe. JOHNS: Athena Jones live for us in Hawaii tonight -- thanks, Athena.

JONES: Thanks.

And while Obamacare faced some legal woes this year, the administration had an even bigger legal problem on its hands in 2013 with Edward Snowden and his leaks about the NSA's snooping practices.

A judge recently ruled there's a case to be made that some of these practices are unconstitutional. President Obama says he will make a statement next month about reforms to the NSA.

Snowden spent his Christmas in Russia gloating about it on television in a message.

(BEGIN VIDEO CLIP)

EDWARD SNOWDEN, NSA LEAKER: Together, we can find a better balance and mass surveillance, and remind the government that if it really wants to know how we feel, asking is always cheaper than spying.

(END VIDEO CLIP)

JOHNS: Let's talk about this and some other big legal stories of 2013 with Jonathan Turley. He's a legal scholar and law professor with the George Washington University. He joins me now live from Chicago.

Professor, I want to read part of the opinion by Judge Richard Leon, a Bush appointee, by the way.

"I have serious doubt about the efficacy of the metadata program as a means of conducting time-sensitive investigations in cases involving imminent threats of terrorism.'

So, how much impact do you see this ruling having and do you see NSA practices eventually being ruled unconstitutional? Do you think this is going to reach the Supreme Court?

JONATHAN TURLEY, GEORGE WASHINGTON UNIVERSITY: Well, Judge Leon's opinion is going to be appealed to the D.C. circuit and there, it will face judges that have been very supportive of the government, and there are certainly many on the Supreme Court that have been supportive of the government and the national security arguments that it normally makes.

But this is a conservative judge and, by the way, I think many constitutional scholars, including myself, agree with him, particularly when he says that the framers of the Constitution would be aghast at the very notion of the government collecting all of this metadata so that they can, you know, look at it if they feel they have or can show that they have a need.

JOHNS: Now, you've written and you think there's a case for the president to pardon Snowden. Why?

TURLEY: Well, Joe, I don't think that the president's going to do it but I do think people, as I said Sunday in the "L.A. Times", I think there is a better case for pardon than people suggest. If you look at the thousands of pardons that have come down, this is a program that was declared unconstitutional by a federal judge, as we just discussed. It's viewed as abusive by many civil libertarians but also, the president has admitted, the Congress has admitted that there were abuses.

There are two task forces issuing reforms, there's new laws being proposed. All of those are a result of these disclosures.

So when you pardon someone, you don't -- it's not saying that you approve of what they did, but presidents often use pardons to heal these types of divisive issues, to show they want to move forward on things like reform.

JOHNS: OK. Let's turn to some big Supreme Court cases this year, Proposition 8 and DOMA. The Supreme Court struck down part of the Defense of Marriage Act, clearing the way for same sex marriages in California to resume. And now, we have Utah officials asking the Supreme Court to put an emergency block on the same sex marriages now allowed in their state.

Do you think 2014 is going to be a big year for same sex legalization? Almost 20 states actually have it now.

TURLEY: I do. As you've noted, the trend here is to be more inclusive. The trend is towards recognition of same sex marriage. I think that is going to continue. That's sort of the general march of history, to be more tolerant and more inclusive.

This is a very conservative state, a very conservative judge, and he felt, Judge Shelby felt that he had no alternative. I do think that many judges will continue to support that view.

What the Supreme Court did with DOMA did not necessarily embrace the concept of constitutional protections for same sex marriage. It was a very carefully crafted opinion, but it's interesting that before Judge Shelby in Utah, both sides, the state and the couples, argued that the case supported them. It's not very clear in that sense.

But the courts themselves, if you look at all of the states, have tended to come down on the side of protecting same sex couples and guaranteeing this right.