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Stock Market Update; Boehner Slams Obama's Minimum Wage Plan; American Dream; How Can Obama Measure the Middle Class?; 83-Year-Old Nun Faces Life in Prison; Queen Latifah to Sing at the Super Bowl

Aired January 28, 2014 - 09:30   ET

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


CAROL COSTELLO, CNN ANCHOR: Good morning. I'm Carol Costello. Thank you so much for joining me.

Stories we're watching right now in the NEWSROOM.

We're just moments away - oh, there's the opening bell. It's just ringing. It was a big day for Apple yesterday actually after announcing it sold a record 51 million iPhones during the holiday season. But that wasn't enough to send Apple stocks soaring. Shares fell more than 8 percent in afterhours trading. So is Apple's iPhone run over? Seems impossible because they beat expectations, Alison Kosik.

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Oh, yes. But you know how Wall Street is, Carol. Wall Street shows no mercy, especially where Apple is concerned. The funny thing is, is that Apple has never sold this many iPhones in a quarter. It sold 51 million in the latest quarter. But here's the thing, Wall Street said, uh-uh, it wanted to see more. It expected to see 57 million, and that is what's sending shares lower. Plus, the company says its sales in the current quarter are expected to be much lower than what analysts are expecting.

But it wasn't all bad news. Lots of people bought Macs. Almost 5 million people. Apple sold a record 26 million iPads during the quarter as well. But its shares, oh, taking a huge beating, down more than 8 percent right now.

As for the broader markets, going to be a busy day today. Company earnings continue to pour in. The Dow and S&P 500 will try to make a comeback despite a lousy reading on orders for big ticket items. Orders fell more than 4 percent in December, showing momentum slowed down at the end of last we're.

Today, Carol, is also the kickoff of the Federal Reserve first policy meeting of the year and the last with Ben Bernanke as chairman. He hands the baton to Janet Yellen next month.

Carol.

COSTELLO: All right, thanks Alison Kosik.

A winter storm is bringing a rare hit of snow and ice to the Deep South and causing problems for air travelers nationwide. A state of emergency now in effect for New Orleans. And up to four inches of snow could fall in Mississippi. Flightaware.com reports more than 2,800 airline cancellations are already in place due to weather or mechanical problems.

With around 650 passengers and crew members sick, a Royal Caribbean Cruise is heading home early. The ship is now due to dock in New Jersey tomorrow, two days earlier than scheduled. Those sickened have symptoms similar to norovirus, which spreads easily and can lead to really bad stomach problems. Royal Caribbean plans to give passengers a 50 percent refund and 50 percent future cruise credit.

On Capitol Hill, news conferences rule the day and press releases control the message even more tightly. So, there may be something downright nostalgic about a House speaker sitting down with some reporters and breaking bread. House Speaker John Boehner hosts the breakfast every year before the president's State of the Union. Our chief congressional correspondent Dana Bash was there. Did he say anything interesting? I hear he did.

DANA BASH, CNN CHIEF CONGRESSIONAL CORRESPONDENT: He said a lot of interesting things, but I want to bring you kind of the headline because it has to do with the news of the morning, which is what the president is going to announce tonight with regard to an executive order raising the minimum wage for new federal contractors. And here's what the speaker said about that.

He said, "the idea that he's just going to go it alone, I have to remind him we do have a Constitution. And the congress writes the laws, and the president's job is to execute the laws faithfully. And if he tries to ignore this he's going to run into a brick wall." And, Carol, later in the conversation, he added this. He said, "we're just not going to sit here and let the president trample all over us."

So, pretty strong words from the speaker. But, obviously, I think he understands that there's little he can do when the president and the White House has decided that they're going to use their executive order power in the limited way that they can. He also reminded though that there are at least one or two issues regarding executive power now before the Supreme Court, so that could help determine whether or not he'll be successful.

The other point on the issue that the speaker brought up, Carol, is emphasizing the fact that this is about new federal contractors. So he actually said that this is going to affect zero - zero people right now which is effectively true, but for people after this executive order is signed who do fit this category of new federal workers, they could see an increase and will see an increase in their pay.

COSTELLO: Well, here are two things. A recent poll came out. Seventy- three percent of Americans think the minimum wage should be raised for all workers. Another poll came out, an ABC poll, that said that 52 percent of Americans are actually in favor of the president issuing executive orders. So what would Mr. Boehner have to say about those numbers?

BASH: Look, this is an issue that really does, in large part, divide on party lines. Not all Republicans are against raising the minimum wage. Many are for it. But some also really fundamentally believe that it just -- when look at the economics of it, that it will hurt businesses, particularly small business because, obviously, they have to pay more to their workers. That is a debate that has gone on forever and it will continue to go on.

It's interesting that the speaker didn't specifically talk in this breakfast this morning about the substance of raising the minimum wage. He was much more focused on the constitutional idea of the president using his executive power and not dealing with Congress. So very interesting on that.

One other thing I wanted to point out is, over the next couple of weeks, there's going to be a big fight once again on raising the debt ceiling, making sure that the country doesn't default on its loans. You know that Republicans, particularly in the House, particularly those who are the most conservative, have argued that they don't want to do anything without getting some concession from the White House. The speaker was once again very, very clear that he wants this to be over and done with. He doesn't want to have a prolonged fight at all. And he's going to be talking about this with his members at a retreat, in addition to immigration reform, I should tell you, that starts tomorrow in Maryland.

Carol.

COSTELLO: Dana Bash, great reporting, as always. Thanks so much.

Still to come in the NEWSROOM, the American dream, work hard and you get rewarded. But does that still ring true in today's economy? We'll take a look at that, next.

(COMMERCIAL BREAK)

COSTELLO: The fame of President Obama's State of the Union will be optimism and action. Well, that's a pretty tough sell these days. A new NBC/"Wall Street Journal" poll shows 68 percent of Americans say the country is either stagnant or worse since the president took office. The president is trying. He plans to issue an executive order to raise the minimum wage for federal contract workers. But most would agree that's not nearly enough.

(BEGIN VIDEOTAPE)

COSTELLO (voice-over): The American dream, 1950s style.

UNIDENTIFIED MALE: And we'll have the living room right in here.

COSTELLO: Middle class America seemed to have it all then, a nice home, a car, economic security. Sixty years later, the Bindners and many in the middle class are struggling. And some say it's thanks in part to Uncle Sam. I talked with the Bindners two years ago

COSTELLO (on camera): Do you think government is broken?

MOIRA BINDNER, TRANSPORTATION DEMAND (ph) MGT. SPECIALIST, WELLS (ph) & ASSOCIATES: No, but I think it's bruised. UNIDENTIFIED MALE: Yes. That's a good term.

M. BINDNER: I think it's bruised.

COSTELLO (voice-over): The Bindners had hoped then that Congress and the president would learn to work together for the good of the middle class. If any of that happened, middle class America doesn't feel it. What's worse, many Americans say they no longer feel hard work is enough. A "USA Today"/Pew Research poll shows 51 percent say people got rich more because he or she had more advantages than others, just 38 percent said it was more because he or she worked harder than others.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: There are a lot of countries that have folk at the top who are doing real well and a bunch of folks at the bottom, but part of what set America apart was ordinary folks, if they worked hard, they could do well.

COSTELLO: When the president talks about the state of the nation tonight, much of the middle class will be listening for solutions, well aware their piece of the American pie isn't getting any bigger. The country's annual economic output is higher than ever, some $15.8 trillion a year, yet corporations record profits take the largest slice of that pie. The income gap is widening. Key economists who study income equality say the richest 1 percent are benefitting the most from the economic recovery. From 2009 to 2012, they received 95 percent of gains and income. And the job market, well, it's still weak. From its peak in early 2008, to it's low in 2010, the U.S. economy lost 8.7 million jobs, half of those in manufacturing and construction.

(END VIDEOTAPE)

COSTELLO: So, let's bring in Moira Bindner, who lives in Arlington, Virginia. I met Moira and her husband two years ago. Then she had lost her job, found a temporary job and is now under employed. She considers herself an exhausted citizen. John Avlon is a CNN political commentator and executive editor for "The Daily Beast" and Larry Sabato is the director for the University of Virginia's Center for Politics.

Welcome to all of you.

MOIRA BINDNER, TRANSPORTATION DEMAND MGT. SPECIALIST, WELLS & ASSOCIATES: Good morning, Carol.

COSTELLO: Good morning.

LARRY SABATO, DIRECTOR, CENTER FOR POLITICS, UNIVERSITY OF VIRGINIA: Thank you.

COSTELLO: Moira, it's nice to see you again.

BINDNER: Thank you.

COSTELLO: And your story sounds like so many others. Two years ago you told me our government was to blame. It was bruised. Has your opinion changed?

BINDNER: Not really. I think the American dream has, for many of us, has become the American bad dream and that it's become harder and harder to put one foot in front of the other and that the poor and -- have become more vulnerable, the working class have become more vulnerable. And all it takes is one layoff, one medical crisis, which we've had both of those situations. And I will correct something. I was underemployed. I just recently got a new job. And so I would consider myself fully employed and excited about it.

COSTELLO: Oh, that's awesome. I am so happy. But it took you two years. It was crazy. You are --

BINDNER: And it took -- my husband is still under - he's still unemployed basically. He's working a part time job at the movie theater at minimum wage because the unemployment ran out. So we are struggling every single day.

COSTELLO: But you guys are survivors. You're amazing.

Larry, what can the president say to Moira and to others in the middle class to make them feel that the government is working for them and things will get better?

SABATO: Well, Carol, first, I think any president is better off when he levels with the American public and says the truth. Those polls you mentioned earlier have been repeated many, many times. I think the president, he'll never do it, but he ought to open the State of the Union Address by saying the state of the union is depressed, because it is. And actually it's a kind of - you'll remember that old phrase, irrational exuberance. Well, this is irrational pessimism because we are actually doing much better than we were at the depths of that deep depression. So help people to understand how things are improving and how they could get better still. The president will do some of that, but you have to establish your credibility first.

COSTELLO: Well, John, the president will issue an executive order to raise the minimum wage for federal contract workers. So, in light of what Larry said, is that a good start?

JOHN AVLON, CNN POLITICAL ANALYST: It's a start but it's a mistake to complate (ph) federal contract workers with the middle class.

I mean I think the fundamental argument the president is going to - sounds like he's going to make tonight is, first of all, that the dysfunction in Washington is leading him to say, look, what can I do on my own? If we can't find a way to work together, I'm not going to sit by and see the middle class continue to get squeezed. That's a powerful argument because there's a division between the two parties on the role of government with regard to the middle class.

But he's got to do more and he's got to point out in a lot of areas there used to be bipartisan agreement, but because of the polarization, all of a sudden Republican obstruction seems to be the order of the day. But that gap you talked about, where the 1 percent has gained 95 percent of the gains in this economy under an allegedly socialist president, that is what is really hurting the economy and people's pessimism in this squeezed American class. (INAUDIBLE).

COSTELLO: So, Moira, I'll pose the next question to you. You say financial instability has become a way of life for your family, yet you still value the democratic process. Tell us why.

BINDNER: Well, my father taught me to -- this is the system we've got and this is what we have to work with. And so I'd rather work within the system than outside of it. I would make one suggestion to the president. I know he's done a really good job of putting military families and military veterans back to work. If they could do something for the long term unemployed, those that have been out for a year and a half, two year, who've run out of their unemployment. We can't even get interviews when you are out that long. And if there could be some sort of incentive for employers to hire people who have just given up so that they could at least try. My husband has a one percent chance of actually getting an interview now because he's been out of work so long.

COSTELLO: So Larry, what do you do about that? I mean what do you do?

LARRY SABATO, EDITOR, "BARACK OBAMA AND THE NEW AMERICA": Well here's the fundamental problem. But I think that was a good point. But the fundamental problem is as John was suggesting you have a Democratic President, a Democratic Senate but Republican House of Representatives. And the truth is this State of the Union address is going to be nothing more than a wish list. And most of those wishes, the vast majority will not be granted by Congress. And the President has to somehow find ways through executive orders and other executive actions to get things done with the recalcitrant Congress. It's never easy.

And the bad news for the President is, this time next year, it's probably going to be worse. There are going to be more Republicans in both Houses of Congress. So he has to work on coming up with an alternative now while he at least controls one -- one side of Capitol Hill.

COSTELLO: Ok. So John, less we all jump off a bridge.

AVLON: Yes.

COSTELLO: Give us some hope.

AVLON: Give us some hope. Keep hope alive. Look, I think fundamentally you know while the poll system is deeply polarized and so are the parties you know there is a reset. Republicans including leadership realizes that something like immigration reform is in their political interest as well as the national interests.

The problem is they're scared to death of the primaries. So they're talk about -- maybe will back some different another form of immigration reform in the house after the Republican primaries. That is some reason for hope. There is still the possibility of reason together. The problem is the governing Republicans, the people who want to take responsibility for governing are right now scared to death of radicals on the extremes that we're going to primary them and that is styming progress and ability to pass the bills in Congress.

All right Moira Bindner thank you so much for coming back. And congratulations on your job. I'm so happy for your family.

BINDNER: Thanks Carol.

COSTELLO: Larry Sabato and John Avlon, thanks to both of you.

Stay tuned to CNN for the most complete coverage and analysis of the President's State of the Union. Coverage begins at 7:00 p.m. Eastern tonight.

(COMMERCIAL BREAK)

COSTELLO: This morning, an elderly nun learns whether or not she'll spend the rest of her life in prison. This is Sister Megan Rice. She turns 84 years old on Friday. Last year she joined two nuclear weapon activists and armed with only wire cutters and flashlights they cut fences and broke into what was supposed to be the most secure uranium processing and storage facility in the country.

CNN's Joe Johns is live in Washington with more on this story. Good morning.

JOE JOHNS, CNN SENIOR WASHINGTON CORRESPONDENT: Good morning Carol.

This is a story that's shocking no matter what side of the nuclear weapons debates you're on. We're not talking about teenage anarchist here. Sister Megan Rice is 84 years old, a Catholic nun. Her accomplices in this break-in at the Y-12 Nuclear Weapons facility in Tennessee are 57 years old and 63 years old respectively. They are essentially anti-war activists who say they did this to draw attention to what they see as the unlawful production of nuclear weapons.

In July of 2012, they cut through security fences, sprayed peace signs on one of the secure buildings. And Sister Rice could get a sentence that lands her behind bars for the rest of her life up to 30 years.

The first question of course is how did they get in? The security at Y-12 is unbelievably tight. In fact I have been stopped on the outside of Y-12 with a camera crew just driving around the perimeter not even trying to get inside.

But somehow, these three people were able to get all the way in and an inspector general investigation has said there was a level of ineptitude involved in that just allowing the breach of the facility. But even beyond that, there is a question of whether Sister Rice should get 30 years for this. Her lawyers have argued that she should get leniency because she is a nuclear protester and not a terrorist.

Now the government is arguing that these protesters should get a tough sentence because of the disruption they caused to a secure government facility. And the terrorists would actually get even more time, Carol.

COSTELLO: Joe Johns reporting live from Washington, thank you.

With President Obama delivering the State of the Union tonight we are looking back at the promises he made in his 2013 State of the Union which promises were kept, which were broken and which stalled. Here's CNN's Tom Foreman.

(BEGIN VIDEO CLIP)

TOM FOREMAN, CNN CORRESPONDENT: The president underlined the rising cost of medical care for senior citizens as a serious worry and promised big changes to Medicare.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: We will bring down costs by changing the way our government pays for Medicare, because our medical bills shouldn't be based on the number of tests ordered or days spent in the hospital. They should be based on the quality of care that our seniors receive.

FOREMAN: He unveiled several proposals to cut costs, make wealthier seniors pay more and encourage better care, but the Republicans had their own ideas about improving Medicare.

The two plans collided in Congress. Neither could overcome the opposition, and this is a measure that has effectively stalled.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

COSTELLO: Fresh off marrying 33 couples at the Grammys, Queen Latifah is getting ready to perform before an even bigger audience at the Super Bowl this Sunday.

(MUSIC)

COSTELLO: This is Queen Latifah singing, "I'm Going to Live Until I Die" on her new talk show. But on Sunday, she will perform "America the Beautiful".

CNN entertainment correspondent Nischelle Turner, live in New York -- there're so many artists performing --

NISCHELLE TURNER, CNN ENTERTAINMENT CORRESPONDENT: Yes.

COSTELLO: -- in the Super Bowl this year.

TURNER: Yes, but it's almost like what can Queen Latifah not do, Carol, you know. I mean she started as a rapper. She sings the classics. She has a TV talk show. She is now an officiate, and now she's performing at the Super Bowl.

And it's not her first time performing at the big game, you know. She performed "America the Beautiful" also in 2010 at Super Bowl XLIV with the Colts and the Saints. It was a really good rendition. She had this choir of kids backing her up. People were saying, you know, she brought a little church to the big game. She has also performed "The Star-Spangled Banner" before at the NFL's opening game in 2012.

Now yes, this is pre-game but this is still a really big deal because the pre-game show including "The National Anthem" and "America the Beautiful" will be broadcast worldwide so it's a really big audience for her.

You know, the league likes her. And you know this is going to be fun for her because she is a big football fan. In fact, on a flight from New Orleans to Los Angeles with her and I sat next to each other and we talked football the entire time. She is a big football fan.

I have to tell you, this is really an interesting choice for them too Carol because there was a little bit of scuttlebutt, a little bit of talk about the fact that Bruno Mars was playing the halftime show. Some people were wondering, why didn't they get Jersey talents to do this like Springsteen or Bon Jovi or Queen Latifah. So now that Queen Latifah is being brought in as part of, you know, the festivities, it's really an interesting choice.

COSTELLO: Well, it's interesting you should say that because, you know, the Super Bowl will be held in New Jersey but all of the literature depicts New York City. New Jersey is not very happy about that.

TURNER: Well, I just saw Alexandra Field do an interview with the mayor of Hoboken, I think it was. No, it wasn't Hoboken. It was the mayor of East Rutherford. He said that he felt a little bit left out of all of it. They had to buy their own sign. So New Jersey is feeling a little bit left out. It will be good to bring some Jersey flavor to the festivities.

COSTELLO: The most cutting part is, New Jersey is footing the bill for security and maintenance and all that and it's not getting any pub out of it.

TURNER: Yes, you know, I mean they have been billing this as a New York Super Bowl. But we do know that MetLife is in New Jersey. So it would be nice to include but, you know. If they can -- New York City, you know how --

COSTELLO: I know.