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EARLY START

Crisis in Ukraine; Another Storm Brewing; Budget Called "Irresponsible"; Blade Runner Murder Trial

Aired March 5, 2014 - 05:00   ET

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


JOHN BERMAN, CNN ANCHOR: Breaking news overnight. High-stakes talk to end the tense, tense armed standoff in Ukraine. Secretary of State John Kerry meeting with officials from Russia and Ukraine. Is there a way out of this impasse? We'll bring you live team coverage on the very latest.

CHRISTINE ROMANS, CNN ANCHOR: Dramatic testimony causing an Olympic hero to break down in tears. The details of his girlfriend's death too hard to hear. Happening right now, the Blade Runner back in court on trial for murder. We're live with who's on the witness stand at this moment.

BERMAN: The deep freeze, it is ending. Temperatures this morning finally on their way back up. But it's not all good news. There's another snowstorm brewing. Indra Petersons is tracking the very latest for us.

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

ROMANS: And I'm Christine Romans. It's Wednesday, March 5th. It's 5 a.m. in the East.

There's a lot going on around the world. Let's begin in Ukraine where tensions in the east and west are escalating this morning with little sign right now of a resolution. The Secretary of State John Kerry this morning sitting down with his Ukrainian counterpart. Later today, he'll talk with Russia's foreign minister, amid fears Russia could be preparing to send more forces into Crimea and other parts of the country.

Now, Vladimir Putin insists those armed men around Crimean military installations aren't soldiers but local militia members he has no control over. Drawing scoffs from the U.S. and others.

Anna Coren is live for us this morning in Crimea and joins us now on the phone.

Anna, what's happening on the ground right now where you are?

ANNA COREN, CNN CORRESPONDENT (via telephone): Well, Christine, we are standing outside of the government building in Simferopol, Crimea, which is the capitol of this peninsula. I can tell you, looking at the building right now, it's the Russian flag that is flying next to the Crimean flag. The Ukrainian flag has been taken away. This city is staunchly pro-Russian. We had a woman talk to us a little bit earlier, in the square telling us how much she despises the West, despises Europe.

You know, there are very strong historical and cultural ties between Crimea and Russia. Obviously, you see ties to the Soviet Union until 1954 when it was given to Ukraine. And then when the Soviet Union broke up in 1991, it stayed with Ukraine.

It is an autonomous state within Ukraine, but now the new prime minister who is also very pro-Russia, he's now calling a referendum to decide whether Crimea breaking away altogether from Ukraine, with independence. And, Christine, if that happens it's a foregone conclusion that Crimea will become part of Russia.

ROMANS: The complicated history of Crimea at the heart really of these tensions between the U.S., Europe, Ukraine and Russia.

Anna Coren, thank you so much.

BERMAN: As for the Russians, Vladimir Putin not showing any signs of backing down. The Russians turned aside a formal investigation for international talks, one on one with Ukraine in Paris today. This as Vladimir Putin remains steadfast that he has every right to intervene in Ukraine.

Our Phil Black is in Moscow with that part of the story.

Phil, one of the Russians saying this morning, I understand they're taking a tough stance on sanctions?

PHIL BLACK, CNN INTERNATIONAL CORRESPONDENT: Yes, John, that's right. You've got the foreign minister meeting with some European officials today effectively maintaining a safe position saying you heard President Putin. There aren't any Russian troops in Crimea. Ethnic Russians are under attack, we reserve the right to help them out militarily.

Here in Moscow, members of the upper house of the parliament, effectively the senate, are coming up with legislation on how to respond if the European Union and the United States follow through with their threat of economic sanctions. And the draft law, as it stands, according to Russian state media would allow the Russian government to confiscate property, assets, accounts from American and European companies.

It sounds extreme but this is how Russia responds when it believes its sovereignty is under threat. Russian officials like to talk about an asymmetrical response to these sorts of sanctions.

To give you an example, late 2012, the U.S. Congress passed what was known as the Magnitsky Act, a law designed to punish, sanction people accused of abusing human rights in Russia. Russia has outright said that the U.S. is meddling and responded with a law that banned American families from adopting Russian orphans. There were many cases where the process had begun, met the children, were never allowed to take them home.

That's what Russia means by asymmetrical response, to have something much bigger, to have something coming at the other side from a completely different angle. If the West follows through with its threats, you can absolutely expect something like that from Russia, John.

BERMAN: Phil, one of the in vogue terms in diplomacy is "off ramp." what it means is giving the Russians a chance to deescalate and get off the path they're currently on in Crimea. President Obama has been talking with Angela Merkel, they've been talking about an off-ramp that might get Russia to pull back its troops in Crimea.

Give us the details of that proposal right now and any chance that Vladimir Putin would ever agree to it?

BLACK: Well, the key to the off-ramp idea is sending in observers that can determine whether or not Vladimir Putin's concerns about threats to ethnic Russians are real. Whether or not there are these gangs of armed nationalists threatening ethnic Russians in a way that Putin claims would justify Russia's military action.

Today, we heard from the Russian foreign minister who said it's not an issue for Russia to decide. It's not a question for Russia but it's not Russian territory. It is up to the Ukrainian people and the relative authorities whether in Kiev or in Crimea to decide whether or not they want to invite foreign powers on to their soil to observe this.

So, that would seem to put something of a significant obstacle, a road block, if you like in the way of this proposed diplomatic offering, John.

BERMAN: A lot of diplomatic legalistic language, games being played right now with armed men are staring each other in the face right now in Ukraine, and on the Crimean peninsula.

Phil Black in Moscow for us this morning -- thanks very much.

ROMANS: This morning, Republicans are calling the president's proposed budget irresponsible and dead on arrival. The President Obama's nearly $4 trillion budget now presented to Congress, that budget calls for increased spending on education. It extends tax cuts to lower-income Americans including expanding the earned income tax credit, making permanent some of these tax credits for expenses of going to college.

House Speaker John Boehner is the one who called it irresponsible. He says the budget does nothing to curb entitlement spending and will hike taxes. Remember, there has not been a budget passed by Congress since 2009.

BERMAN: President Obama today heads to Connecticut, continuing his push to raise the minimum wage with a speech at Central Connecticut State University. He'll be joined by four New England governors, all of whom supporting increasing the minimum wage. The president will then head to Boston for a private close door big money fundraising.

ROMANS: If you like your health plan, you may be able to keep it a little longer. "The Washington Post" says the Obama administration is rewriting Affordable Care Act rules again to let Americans keep their plans for up to three more years, even if those plans no longer comply with the law.

Last fall, the White House gave states the option of letting policy still be sold in the short term even if they were technically illegal.

BERMAN: Happening today, the House is set to vote for the 50th time on a modification to Obamacare. This one would effectively push back the individual mandate by or one year, by reducing the penalty for not buying insurance. It will make that penalty zero.

This is the first such vote since the law took effect January 1st. This is not likely to be taken up in the Senate.

ROMANS: Also in the House today, the question is, will she or won't she testify? An attorney for Lois Lerner denies claims by Republican lawmaker that she'll open up at a hearing today about the IRS' alleged targeting of conservative groups for extra scrutiny.

Lerner resigned as IRS director of tax exempt organizations and took the fifth at a hearing last year.

BERMAN: Edward Snowden is on schedule for South by Southwest. The former NSA-contractor-turned-leaker, he will speak at the music and digital festival in Austin next week. He won't be in Austin. It will be a video conference from Russia. And he will take questions from the audience. Organizers say Snowden will talk about how to protect user privacy. One of many sessions that will be focused on that topic.

ROMANS: All right. It has been very cold here in the east for days, weeks now, months now. The good news --

BERMAN: I can't remember when it wasn't cold.

ROMANS: Spring may finally be in the air. Indra Petersons has a look at your forecast.

You know, I stopped counting the major storms, Indra. I just stopped.

INDRA PETERSONS, AMS METEOROLOGIST: That's a very good idea. You're definitely talking about yes, seeing some changes out there. It's been such a horrible winter. Once again, look at the temperatures this morning, feeling a lot better, nice difference from yesterday, Indianapolis about 18, Detroit, 18.

Remember, yesterday we were talking about below zero temperatures at this time. So, finally, yes, it looks good. Here it looks even better. We're talking about temperatures really going upward, 25 goes to 40s for Chicago, where we've been calling them Chiberia all winter long. So, definitely a lot better. Columbus going from 30 to 50. So, above normal.

That's just the Midwest. Let's check the Northeast, shall we? Same thing, especially as you go towards the weekend, conditions could potentially go at normal or above normal. Even normal is good at this point, as long as we are not below normal.

Just keep in mind, even though temperatures are warmer, it doesn't mean we're not going to see some changes. Notice in the Southeast, there are a few days we start to go cool a little bit. So, maybe especially around the Carolinas, the reason for that, yes, we're going to have some snow and even some rain. Very light, the cold air from the warm air, so above it, we're going to have snow, we have the cold air, and below it, we're going to talk about rain over the next several days.

But light, we're not talking anything major, just a dusting. And down in the Southeast, we are going to be watching this low. It could bring them several inches of rain, the bulk of it offshore. But whether or not it can kind of cruises up the coast and we'll see some snow here by Thursday and Friday. The Northeast again right now, light, that is what we're going to be watching over the next several days.

Guys, this is good news. I mean, we're talking temperatures warming up. A little snow and rain moon cares about that, right?

BERMAN: She's working so hard to make us feel better. I appreciate it.

PETERSONS: Give it to me, John.

BERMAN: Thanks, Indra.

PETERSONS: Sure.

ROMANS: All right. We're basically one headline away from violent market swings at any moment. Let's be honest here, markets keeping a very close eye in developments in the Ukraine and Russia crisis.

We got Asian markets closing mixed. You've got stocks from Japan gaining more than a percent, following what we saw here in the U.S. Hong Kong, though, closed lower.

You know, investors in Europe, they're looking over this information this morning, the data that growth in the eurozone picked up faster than expected. Eurozone's economy expanding not seen since mid-2011, which is why all of this is terrible timing for Europe, all of this that's happening with Russia.

U.S. futures flat right now in the early going. But look at yesterday, look at that close at 4:00 a.m. Eastern Time. The largest point in percentage --

BERMAN: Wow.

ROMANS: -- gain for the year for the Dow. It's a fourth 1 percent rally this year. And record high for the S&P 500.

The S&P 500, amid all of this tension, higher than it has ever been. Four record highs so far. The five-year bull mark is still charging despite everything you're seeing from Ukraine, Russia, Europe.

But, remember, I can't say it enough -- we are one headline away from violent swings one way or the other. So, you've been warned.

BERMAN: Volatility is the key word over the next few days.

All right. Eleven minutes after the hour.

Higher costs could mean big changes at the restaurant chain Chipotle. The company warning if prices keep going up, it could stop serving guacamole in some salsas. Chipotle says its costs shot up last year and could go even higher this year, thanks to the drought out West and freeze in the East and other weather issues. The company says it may decide to stop serving items rather than pass on the costs.

Chipotle always tries to be innovative in a lot of things. It's one innovative way of not raising prices. Just start taking away stuff.

ROMANS: File that under holy guacamole. That's for sure.

BERMAN: Oh, I wish you hadn't said that.

ROMANS: Yes, I'll say it again when we do the story next hour.

Happening now, emotional testimony inside the trial of an Olympic hero accused of murdering his model girlfriend. Witnesses claiming they've been threatened. They've been harassed. The Blade Runner breaking down in tears at one point. We are live as all of this drama unfolds.

BERMAN: A high school cheerleader leaves home and then sues her parents for support.

ROMANS: This story is so wild.

BERMAN: Should they be forced to pay her college tuition? A judge now weighing in. We'll tell you the story, next.

(COMMERCIAL BREAK)

BERMAN: All right. Happening right now: the murder trial of Olympic Blade Runner Oscar Pistorius. A neighbor is back on the stand talking about the screams he heard the night that Reeva Steenkamp was killed and how he's been threatened for testifying.

Nic Robertson is in Pretoria this morning.

Nic, give us a sense of what this neighbor is saying.

NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Yes, what he's saying that his phone number was read out in court on Tuesday, and that number has immediately started ringing. He's closed the phone off. But he received a message that I picked up later from the phone saying, "What are you doing, man? Everyone knows that Oscar is innocent." And he's taking that as intimidation, as a threat that he shouldn't be on the stand.

Today, the defense attorney gave real specifics on timing and really begun to see how he's going to allow this argument. He said to this witness, you call security at 3:16 a.m., and that call lasted 58 seconds. Then you got to your balcony to continue to witness what was happening at 3:17. Oskar Pistorius at 3:19:50, you get the idea how precise the timings are becoming now, called for help after he had broken the door down.

So, what the defense is saying now to this witness is you didn't hear gunshots, you heard Oskar Pistorius breaking down the bathroom door with a cricket bat when he realized that Reeva Steenkamp, his girlfriend was shot or wounded at least inside.

And we've also interesting testimony from the fourth witness taking the stand, a professional boxer, friend of Oskar Pistorius, looked up to him because he was helping him with his diet for his training. Talking about how they were in a restaurant just over a year ago. Oscar Pistorius passed a pistol under the table. He was told there was a bullet in it. The bullet discharged, hit the floor, Oscar asking a friend to take the blame for that.

This is also one of the counts that it does appear here that the prosecution wanting to build something about Oscar Pistorius' character. A huge number of really fascinating details here, John.

BERMAN: You have precision and emotion this morning in the courtroom in Pretoria. Nic Robertson, thanks for being there for us. Appreciate it.

ROMANS: Breaking overnight, a deadly shooting in New Orleans, just as Mardi Gras festivities were coming to an end. Police say two men, a 25 and 28-year-old were killed in a parking lot not far from Mardi Gras World. That's an event space where a rap concert had just ended. No motive has yet been released. Police aren't disclosing if they have yet a suspect.

BERMAN: In New Jersey, dozens of people are hopeful they might be able to get back into their homes after a terrifying explosion at a townhouse complex not far from Trenton, that left one woman dead and at least seven other people hurt. Crews had been trying to repair a damaged gas line when it ignited, sending a huge blast through the community.

(BEGIN VIDEO CLIP)

UNIDENTIIFED MALE: Just a loud, loud explosion. Felt -- I was pushed back from the pressure of it.

UNIDENTIFIED MALE: Like a bomb hit the whole area. I could see nothing but fire. Homes were blown out. Windows were blown out.

(END VIDEO CLIP) BERMAN: Some of those heard that and said to be thrown by the force of the explosion, literally thrown. At least 10 homes were destroyed, dozens more were damaged.

ROMANS: Also in New Jersey, a family court battle a step closer to being over. Now that the judge has ruled the parents of Rachel Canning don't owe her child support or money to pay her high school tuition bills. Canning is the 18-year-old who claimed her parents were abusive and kicked her out as soon as she became a legal adult. The parents say is she was spoiled, wouldn't follow their rules and she left the house willingly.

The judge said letting Canning get money now sets a dangerous precedent.

(BEGIN VIDEO CLIP)

JUDGE: Are we going to condone or open the gates for a 12-year-old to sue for an Xbox? A 13-year-old to sue for an iPhone? Everyone else has one. Why can't I? Or how about a 15-year-old asking for a 60- inch flat TV?

(END VIDEO CLIP)

ROMANS: A follow up hearing is set for April when the judge will decide if Canning's parents will pay her college tuition. They say they have money set aside for her. They just want their daughter to come home. And you can see how emotional it has been for the parents. They say, look, they just want her to come home.

She's been living with a family friend and said she wants nothing do with her parents.

(MUSIC)

ROMANS: In today's "Road Warriors", there are some unlikely deductions you might be able to take on your taxes it you're a frequent traveler. It's the airfare, of course. It's lodging. Yes, you can write off your power lunches. You can also write off the cost of shipping items for trade shows or to show off to a client.

Get this, if you run a business from a house trailer or RV, Uncle Sam says it's OK to write it off as an office on wheels. Of course, it's very important you check your company's travel policies, review the IRS rule us and consult with your accountant before claiming everything on your taxes. But don't overlook that free money.

I say that every year this time. Don't overlook the free money. You can also write off the cost of trying to get a new job. That's something that's really important to remember, too. If you're looking for a new job, you can try to write off the costs of looking for a new job. You can definitely check the IRS guidelines, the Web site, for how to do that.

BERMAN: And tax preparation software, you can write that off also.

ROMANS: Yes.

BERMAN: All sorts of fun things.

Stay with us. We'll give you more exciting tips on EARLY START.

Meanwhile, is LeBron James running out of gas? The Miami Heat king perhaps just a prince last night. Meanwhile, this guy, Kevin Durant, he was on fire!

Joe Carter breaks all the drama down for us in the "Bleacher Report." Everything you missed while you were sleeping -- next.

(COMMERCIAL BREAK)

BERMAN: LeBron James, Kevin Durant, Christine Romans, all in the middle of a very tight race for most valuable player.

ROMANS: Why me? I am the most valuable player.

BERMAN: You bring big games. LeBron James scores 61 points the other night, but I think you were a little better.

Kevin Durant, though, may have topped it all last night.

Joe Carter with the "Bleacher Report."

Hey, Joe.

JOE CARTER, BLEACHER REPORT: When it comes to taxes, Christine Romans is the MVP. She is the tax lady.

Guys, we've got about 20 games left in the NBA regular season. And I'll say that LeBron is winning the sprint. He's really turned it on as of late in the last few weeks.

But Kevin Durant is winning the marathon. He's put together a solid season. Again last night against the Sixers, the guy put up great numbers. He scored 42 points and he didn't even play in the fourth quarter.

Now, so far this season, Durant has scored over 40 points in 10 games. You compare that against LeBron. LeBron has scored over 40 points, twice this season. But of course, one of those was a very big one, 61 points on Monday night.

Last night, LeBron James came back down to earth. He only scored 22 points. And he didn't make a basket in the fourth quarter which really hurt the Heat. It was a game that many believe could have been an NBA finals preview. The Houston Rockets edged out the Heat by 3.

Also happening overnight, Syracuse lost again at home. This time to a bad Georgia Tech team. You know, a month, Syracuse was on top of the world, unbeaten, ranks number one. But since they've lost four of the last five, the slide continues.

Also happening overnight, Michigan may have lost two players to the NBA and preseason all-American to injury. But they still managed to win the big ten regular season title outright. It happened last night. It's the program's first outright conference title since 1996.

Reminder, guys, the NCAA tournament officially starts in 13 days.

Also happening today, the U.S. men's soccer team, they play Ukraine today at 2:00 p.m. Eastern. The match was moved from Ukraine to Cyprus earlier in the week. The men didn't know if they were going to play as of yesterday. But they said when they got off the plane and they saw the Ukraine team playing on the tarmac, they knew there would soccer team sometime today, guys.

BERMAN: And those players on the American team say they do understand there will be a lot going on in the minds of Ukrainian players across the pitch.

All right. Joe, thanks so much. Great to see you this morning.

CARTER: You, too, guys.

BERMAN: We do have breaking news overnight. Big move from high- stakes diplomacy to stop war from breaking out in Ukraine. We have live team coverage. We have that.

Plus, all your top headlines right after the break.

(COMMERCIAL BREAK)