the north carolina woman tells cnn her husband is not a terrorist. and daniel boyd and six other raleigh men are accused of plotting attacks abroad. president obama due to land in north carolina this hour. he will hold another town hall on health care reform. remember last summer's fuelishness? yes, the government tries to head off another streak of run-away gas prices by cracking down on speculators. i'm tony harris and you are in the "cnn newsroom."

first, this hour, homeland security secretary janet napolitano outlining the obama administration's strategy to prevent the next 9/11. it's not a wholesale revision of bush policies rather tweaks for instance napolitano announced a program to improve communication between federal, state and local authorities. it would close information gaps by bringing bureaucrats together under one roof. napolitano calls them fusion centers. she wants 70 of them nationwide. the secretary spoke at the council on foreign relations in new york. >> the threats we face are, by their very nature, a symmetrical. terrorism has become privatized violen violence. not rely on links to an army or a sovereign state. we often hear that this is what our globalized era looks like, but what is most salient about today's environment is that it is also networked and in a

network world, information true and false moves everywhere all the time. >> well, president obama has overturned some bush policies announcing plans to close the gitmo prison, for example. former vice president dick cheney has criticized the obama approach as pre-9/11 mindset and views views. seven other men are in custody in north carolina, charged with plotting jihad in pakistan. here is cnn homeland security correspondent jeanne meserve in raleigh. wrrt tony, prosecutors allege that daniel boyd, the son of a marine, conspired to wage jihad overseas. he recruited, among others, his two sons. the mother of those boys is offering explanation for the accusations being made by the government. daniel boyd fought in

afghanistan in the early 1990s, but had settled in willow spring, north carolina. he and his two sons were among seven people arrested monday on terrorism charges. his wife sabrina tells cnn they are innocent. >> i know that my husband and my son are free of guilt and i'm hopeful that the truth will come to light. >> reporter: in court documents, the government says the group stockpiled a cache of high-powered weapons. they were only responding to news reports that guns and ammunition were becoming scarce. >> i will say that we do own guns in our home as our constitutional right allows us. and i don't think there is a crime in that. >> reporter: the group trained for jihad in northern north carolina. but her husband was just helping his boy scout sons with

meritship. >> one of the merits they use to become a scout and it wouldn't be beyond the pale for him to take them out and do target practice. >> reporter: boyd and one of his sons traveled to israel to wage holy war, but boyd's wife said they just wanted to pray in jerusalem for another son who died in a car crash. since the arrest, she has not been able to talk to her husband or older son and the strain is showing. >> i just want to say that i am very proud to be muslim and i'm very proud to be married to daniel boyd and i'm very proud of my children. >> reporter: sabrina boyd alleges that the fbi played what she is calling a dirty trick. she said on monday an acquaintance showed up on her doorstep with a state policemen and they told her there had been another bad accident, this one involving her husband and son. she rushed to the hospital with her daughter and daughter-in-law where she was put in handcuffs, interrogated and treated rudely

and she said it was all a ruse. the fbi would not comment on this or anything else pertaining to the investigation. tony, back to you. >> jeanne, appreciate it. thank you. an investigative journalist who focuses on terror and islamic extremism. these north carolina arrests represent a new phase what he calls the radicalization of americans. >> i think the reason why they wrapped up the case at this point was that they were thwarted in carrying out jihad overseas and with the arsenal that they had collected, a massive arsenal, they believe the u.s. was an infidel country that could be targeted and all swore to martyrdom and that meant they were prepared to die in the course of carrying out suicide bombings and, therefore, the possibility existed that they would train on the united states and carry out attacks here. >> 40 americans have been arrested in just the last six months accused in terror plots at home or abroad.

the special on aisle three today, a presidential pitch on health care reform. president obama taking his message directly to the people. again, he holds a town hall meeting within the hour in raleigh, north carolina. later he visits the grocery store in bristol, virginia. senior white house correspondent ed henry tells us what he is likely to hear from workers. >> they're rolling out the red carpet in rural virginia, but the president could get a chilly reception in the frozen food aisle where we found a mccain voter who found health care reform is being rushed just like the stimulus. >> like the last package he pushed through, i think it was too hurried and a lot of mistakes and a lot of things that shouldn't be. >> reporter: but cathy montgomery assistant produce manager voted for the president and is pumped up he is getting tough with congress. >> i like the fact that he stepped up and being aggressive. i really do.

i am all for that. >> reporter: thousands in this region showed up at a health expo offering free medical care this past weekend. exposing a problem all too familiar to doctors here. >> clearly, we all recognize any physician in the hospital would recognize that it's a system in crisis. >> reporter: but like most employees back at the kroger super market, produce manager steve shiplet gets generous benefits, he's nervous those benefits may be taxed to cover the uninsured and demanding more specifics from the president. >> he's going to have to spit out some numbers and let the public know exactly what it is going to cost them and what they have to give up. >> reporter: shipplett says if the president steps up and sells it, then he is willing to step up himself. >> if it means me paying those taxes to get this reform through, then i would begrudgeenedly do it. >> reporter: this republican is ready to do his share, too.

>> no matter what kind of plan you come up with, somebody has to pay for it. so, eventually, it comes down to us, the people that's working and paying taxes. we're going to have to pay for it one way or the other. i just hope we can come up with a plan that's worth paying for. >> ed henry live from bristol, virginia. ed, good to see you. isn't there a saneness to these events. the president didn't draft a bill and certainsent it to cong. he offered guidelines and isn't he stuck with just talking about the broad strokes of reform? >> you heard it from one of the employees. they want him to sell it more in terms of more specifics. "time" magazine just put an ad which he says that basically in private he's actually been giving these senators, lawmakers more guidance and more specifics than he's letting on publicly. i've heard that separately. sunday i reported on "state of the union with john king" in a

meeting friday the president did lay out some specifics. white house aides won't say exactly what he said, but one area to look at, is he sort of taxing the cadillac plan and the gold plated health plan and maybe taxing those and that's something that the people at the white house seem very high on and one way to do it, senator john kerry wants instead of taxing the beneficiaries, tax the insurance companies. the rub there could be the insurance companies end up not passing on taxes, but higher premiums to people who work at this grocery store. whoever it may be. these employees are iis aing, look, we're willing to step up, even if it means higher premiums and higher taxes and the president needs to do a number of things. make sure the rich are doing their fair share and get a bit more specific and show that everybody has some skin in this game. >> ed, what is the president's connection to bristol? >> well, if you remember at the end of the long primary season, the battle with hillary clinton when the president finally won

and then senator obama came right here to bristol, not to the supermarket, but here, which is the birthplace of country music. that's how they advertise it. he came here to launch his general election campaign and won the commonwealth of virginia first time for the a democrat in. 44 years. he is hoping for a rebirth for this health care reform measure, tony. >> air force one lands in raleigh, north carolina. the president's town hall meeting there at raleigh at broaden high school scheduled for 11:55 a.m. and, of course, we will bring you that town hall live right here in the "cnn newsroom. ". meanwhile, back in washington, lawmakers are locked in intense negotiations over health care reform by bipartisan senate group searching for a compromise. in the house, democratic leaders are trying to strike the deal with conservatives in their own party as senior congressional correspondent dana bash reports the so-called blue dogs aren't budging. >> reporter: one after another conservative house democrats have emerged from a strategy

session determined not to let up on their rebellion against their own party's health care plans. >> we're not there yet and our biggest concern is making sure that we control costs and we're not ready to support a bill yet. >> reporter: that was the refrain of many in the 52-member conservative blue dog coalition, a democratic group big enough to dash their party leaders hopes for a health care vote this week. >> the members of the blue dog coalition are more united than i've ever seen. and i think it's because health care reform goes to the heart of our core principal fiscal responsibility. >> reporter: meanwhile, democratic senators who already gave up hope of passing a health care bill before summer recess are still struggling to find compromise, but they were upbeat after marathon closed-door negotiation. >> i think we're really making progress and i feel relatively confident that we're going to be able to come together. >> reporter: in fact, democratic senators say they're coalescing

around john kerry's idea for how to control medical costs and help pay for expanded health coverage. exposing a tax on insurance companies and the high cost of so-called cadillac plans. senators haven't settled on the details, but one possibility is taxing plans worth $25,000 or more, which could generate $90 billion in revenue. >> it is a way, many of us have fought to do to make sure that this country stops subsidizing cadillac coverage. i think it is wonderful that in a free country you can buy as many designer smiles as you want, but you shouldn't be able to buy those designer smiles with tax subsidized dollars. >> okay, dana bash joining us again. dana, you're once again outside the senate negotiations and i have to tell you, i was listening to senator chuck grassley driving into work and he is part of that group of six senators, a bipartisan group working in that room behind you

to come up with a compromise and it sounds, as though, lisening to him this morning, that progress is being made. could a deal be eminent? >> i heard that, as well. he acxhael said on national public radio that he believes they are on the edge of the deal. but i believe we have an e-mail from a senator max baucus' top aide that was sent to senate aides across the committee insisting the answer to that question is no. this one out this morning and i'll read you part of the e-mail. progress has been made in recent days, in fact, significant policy issues remain to be discussed among the members and any one of these issues could preclude bipartisan agreement. that is russ sullivan, who is the democratic staff director for the senate finance committee. why did he send that e-mail this morning? it is the expectations game, tony. we know if there is a sense that they could get a deal by the end of the week and they don't, it is, yet, another failure. there is another reason.

another main reason is because the senators who are not in this room, if they see, read and hear they're close to an agreement and they don't know all the details there, not going to be very happy about it. we have already seen ruffled feathers about that so far. but having said that, you're right, it really struck me that the lead republican this morning suggested that they are close and that is not that different than what other senators going in and out of this room today are telling us, but, you know, a deal isn't going to happen until the deal actually happens and we hope that we'll be the first to tell you about it. >> dana, let's do this, when we get together the next hour, the president has the town hall and we'll assume we will have more time. dana bash, thanks. as we mentioned, president obama has a full agenda today focusing on health care reform. his town hall meeting is scheduled to start within the hour. 11:55 a.m. eastern time, air force one landing just moments ago. live coverage in the "cnn

newsroom." at 4:00 p.m. eastern time his meeting with grocery store workers in bristol, virginia. we will have republican reaction following the president's town hall meeting in raleigh. eric canter the minority whip will join kyra philips during the 1:00 p.m. eastern hour. remember last summer when filling your gas tank drained your wallet? we'll see what the feds are doing today to keep it from happening again.

weather is really turning downward across the northeastern corridor. show you a picture out of new york city right now. take a look at the gray skies. we were talking. this is about starting at a $3 million view here. you can see gray overcast skies and the rainfall beginning to move on in. let's pan a little bit further towards the south and i'll show you thunderstorms around atla a atlanta. this is why we're experiencing some fairly lengthy delays in and out of atlanta hartsfield jackson airport. a couple thunderstorms off shore of south carolina and earlier there was a report of a huge waterspout just off the coast of charleston, specifically right around the folly beach area. then across texas, yep, no rain to the south. we're still counting on some of that and seeing amazing reports from jacqui jeras out of central texas where lake travis, lake buchanan are all being reported

severely down, 50% of their volume. into the pacific northwest, here we have excessive heat warnings out where temperatures are expected in the triple digits today and again tomorrow and turning cooler as we head towards the weekend. we'll have another look at the news coming right up. i love showing bailey how special she is. yes, you are. i know exactly what you love, don't i? - [ barks ] - mmm. aromas like rotisserie chicken. and filet mignon. yeah, that's what inspired a very special dry dog food. [ woman ] introducing chef michael's canine creations. so tasty and nutritious it's hard to believe it's dry dog food. chef-inspired. dog-desired.@i chef michael's canine creations.

you know last summer oil prices skyrocketed out of control and we were paying for it big time at the pump and now federal regulators want to step in and make sure that doesn't happen again.

christine romans and ali velshi joining us from new york and ali is hosting his radio show and we'll talk to ali in just a moment. it looks like he's taking a call right now. christine, good to see you. so, let's see here. that reining in would require something with the big money gamblers in the energy pitch. excessive speculation. >> excess positive speculation. you know it when you see it. there's speculation which ask the other side of the market. makes it easier for people who are using commodities in their business and then excessive speculation of the pury financial players who go in and who are maybe able to see some kind of spread in the market or able to put a lot of money into it and move prices around. look, at this point there are some restrictions on it and the commission is trying to find a way to maybe rein in the

positions, the huge excessive positions of some of these firms. now, tony, you might recall that last summer the cftc studied what happened with those oil prices and when you look at this chart i've made for you, you can see oil prices doubled and then were cut, oh, my gosh, down to $34 and doubled again. it's been crazy. but demand has been essentially sideways to actually down a little bit when the recession began. so, why all of this crazy -- >> please explain that. >> well, some people say it just has to be some form of speculation and the cftc found, no, it was primarily supply and demand. the cftc has not reversed this scission from last summer and a lot of talk including the "wall street journal" and said that speculation played a bigger role and cftc said it's irpossible to say what it is going to find in the future and this is being reexamined, again, and reasons

to rein in excessive speculation. but, that's pretty subjective, too. >> you're absolutely right. here's the thing, is ali able to join us? there he is. what are your thoughts on this? i am trying to remember what we were paying. >> july of last year we got above $4. >> that's right. in july -- >> look, this was, this was represented a huge hit to the economy. >> yep. >> so, the idea of -- >> a direct tax. >> right, exactly. >> why aren't people talking about how speculating now that prices are lower. >> two issues here. what happened to cause oil to go to $147 and gasoline to go up? they're related, obviously. the other issue here is, who's watching it. the cftc is one of more than a dozen agencies that oversee various things in the world. this alphabet soup and a lot of

criticism from people who are recently on the cftc about the way this agency works. this business about whether they put out a report last year and now they'll put out a report again that contradicts that. i think some of the problem is that there is speculation in a market. that's how you have a liquid market. the same reason someone buys a condo or invest in apple shares thinking they're going to go up. speculation in and of itself is not bad and important for some businesses. the issue was, was there collusion, manipulation of the oil market and we need to know if our agencies are on top of that. i don't think we're getting an answer of that. >> first of all, ali, let's get everyone the telephone number. what's the number here? >> christine coming in shortly. >> all right, here's my next question. i haven't heard your reaction yet on the news over the last couple days on the housing front. we have new home sales up 11% and existing home sales up 3.6% and home prices are up and that's my piggy bank.

i love that. >> that's right. >> and the low interest rates. what are your thoughts on what's happening in the market? >> home affordability has come down dramatically. i always use california as the example because the home prices were the highest there to get a house that was $6,000 and to put 20% down you had to put a lot of money down and carrying cost was $11,000 a month. now that same home in the $250 range and your interest rate is lower and that carrying cost $1,500. for a whole lot of people, what this recession has meant is an opportunity to get into a home and that's what you see playing out across the country. maybe prices will go down further but it's affordable now and they'll be in it for 5, 10, 15 years. the trick here is interest rates. they're starting go up. if they stay in that 5% range, you'll see more of this and that will drive this recovery back and cause people to build homes and cause people to be able to sell their homes and get their mortgages paid off. it is a good sign, but very

tentative right now. >> the big winners in the housing market right now are the cash investors. they're buying distressed places and some of the uptick in sales. i'm almost sure it is investors that are going in, not necessarily you and me taking advantage of a first-time home credit and a higher price. it spreads and other people, you know, not that investors aren't real people, but people living in the house and have their job are going to be able to benefit, too. >> christine, you're about to call into the radio show with ali? >> i'm going to walk right on down. >> she's going to join me. >> perfect. ali, again, what's the phone number? >> 877-266-4189. hope you call us and tell us what you think. >> terrific, appreciate it, ali and christine. maybe i'll see you next hour after the president's town hall meeting. let us direct you now to cnnmoney.com and christine romans, ali velshi at the top of the flow chart. for the latest on financial news and analysis, cnnmoney.com.

we just mentioned of those signs of a housing recovery, gerri willis is here to help you cash in on the uptick.

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how about this. finally, some really good economic news as several indicators this week point to a housing recovery and home sales, construction and prices all jumped in june. your personal finance editor gerri willis is here, gerri, boy, is it time, first of all, good it see you. >> good morning, tony. good to see you. >> is it time for home buyers to jump in, as well? >> well, i have to tell you, if you want to jump in, there's several, several hurdles to get over and one is beating the deadline. one of the biggest for first-time home buyers is the tax credit and we talked a lot about it you have to purchase your home before december 1st of this year. if you're buying hoa-backed loan you can use this for down payment costs after you cover the first 3.5% of the down payment. for more info go to the website.

but there's a deadline out there if you do want to buy in this market. >> well, gerri, how do you know it's time to buy in your particular market? >> well, everybody asks me about prices. if you're trying to time that market bottom, hey, good luck. it's tough to do. having said that, though, if you want to estimate the market's ability to recover, consider these factors. first off, the local job's climate where there is unemployment you're sure to find foreclosures and lower home prices, scan local newspapers for large layoffs and companies that are based in the area. you want to consider if the area is in the market cycle and have prices stabilized and still going down and how much inventory on the mark isn't a good realtor can help you dig down on these issues. if the inventory is growing at a slower rate or shrinking, then the market is stabilizing. next, walk through the area and you'll be surprised how many people do not look at the condition of the neighborhood. how many homes are abandoned and are people taking care of their yard? talk to the neighbors, this is a

valuable source of info. >> gerri, any advice coming up -- it's a huge purchase. >> well, it is. it is very tough. you have to know what you can afford. look, just because some homes are selling for half of what they used to, it doesn't mean it's a bargain for your wallet. down payments of 20% or more considered and a lot of desperate sellers out there and you can ask for something called seller financing and you can get a partial downpayment or closing by the seller. you may take advantage of programs run by nonprofits to help people buy their own homes. go to the u.s. department of housing and urban development. hud.gov to find out about programs you might qualify for. send your questions to me, gerri@cnn.com. >> good to see you, thank you. >> my pleasure. the stimulus has already saved taxpayers $43 billion, at least that's what president

obama says. is it true? the truth-o-meter has the answer.

the health care reform debate dominating the day for lawmakers on capitol hill and the president obama.

town hall meeting scheduled to start shortly at 11:55 eastern. live coverage in the "cnn newsroom." he meets with grocery store workers in bristol, virginia, on capitol hill. the bipartisan finance group continues working and democratic house leaders are trying to strike a deal with blue dog democrats. six hours of talks ended last night with no deal. has the stimulus saved the country $43 billion in taxes are taxpayers paying millions for road signs praising the stimulus. here's our josh levs with the truth-o-meter. >> so trillions, billions or millions. seems like all this recovery money flying around because lawmakers talk about it that way. but along with this money are also a lot of claims we chwe need to break down. hey, bill. >> thanks for having me, josh. >> thank you. let's start off with this.

you're looking at a claim from president balma that talks about $43 billion. what is that about? >> this is a claim he made many times. he talks about the economic stimulus. >> it delivered $43 billion in tax relief to american working families and businesses. >> we look under to that and found there's am fuzzy math in that. the $43 billion includes some money that was used for the fix for the alternative minimum tax and, of course, the amt as it's called is a tax that was set up in the '60s to try to limit, to put some restrictions on the wealthy, but it is gradually spread to affect the middle class. every year congress puts a fix in so it doesn't spread to the middle class. obama is counting that in the $43 billion and we decided in talking to some experts that that's not correct to do that. that's really exaggerating the impact of the stimulus. we ended up giving this a half true on our truth-o-meter. he's right about the other parts that make up the $43 billion,

but the $8 billion from the amt fix, we felt he wasn't. half true for this one. >> speaking of half true, you have another half true. you're looking at one claim from a republican, this is senator bennett who talks about road signs out there. tell us about this. >> bennett is correct that the obama administration has encouraged states to put up these signs but the obama administration has not required them and the other part of bennett's claim that they have spent million s to do this may r may not be true. we haven't been able to get a good accounting of how much money has been spent on signs. it may be in the millions, it may not. we're not sure. we gave this one a half true. >> those are just two of the latest. you guys always have a steady supply, which is one reason we love looking at politifacts.com. get you to capitol hill right now and senator conrad is talking about the progress being made as the group of six

continues to work hard, diligently, to try to reach a compromise. >> 40 million new entrants. they believe very quickly that this kind of operation would have 12 million members. be the third largest insurer in the country. i've got to go because i can't miss a vote. >> so, clearly, some comments earlier and we'll try to turn some of those around and engage. oh, great. we may have those comments from earlier in just a moment here. as you know, the group of six, republicans and democrats are trying right now in the senate finance committee panel to work out a compromise to try to get some health care legislation passed to get it marked up at some point. that's a couple steps ahead from where we are right now. here are the comments from moments ago from senator ken conrad. >> we have not reached conclusion on how much money. part of that is, of course, a matter of cbo scoring.

how to structure this organization, what powers they should have and how it should be made up. is the supermajority required and all those kind of issues. >> so, senator conrad talking about the process of, first, there has to be an agreement in the panel and then the panel, that piece of legislation then has to go after it's crafted by the committee members to the full committee then that has to be scored and the process continues on and on and on. we will continue to follow these developments from the senate finance committee panel with our senior congressional correspondent dana bash. you know after more than, what, a year of speculation and much back and forth, two tech giants are finally teaming up. the deal is done. microsoft and yahoo! have struck a deal to become search partners. susan lisovicz is on the floor of the new york stock exchange with details. finally, susan, a deal is done. >> the deal is done, what a

twisted path it took to get to this point. google, as we know, is the 800-pound gorilla in search and also the very lucrative search-related ads. yahoo! and microsoft want a piece of the action. a lot of time between them and, obviously, they decided to better than one to take them on. what is the deal? ten-year deal and microsoft's bing, which has spent a lot of money -- >> susan? >> yes. >> i apologize, you know, we're following all the action in this panel that is meeting, the panel of the senate finance committee to try to reach a compromise on health care reform, well, the chairman of the senate finance committee max baucus is talking to reporters right now. letser have a listen. >> the current draft of the bill is below $9 billion over ten years. covers 95% of all americans by 2015 and is fully offset. in fact, according to the preliminary report, the bill would actually reduce the

federal deficit in the tenth year by several billion dollars. in addition, employer-sponsored coverage increases throughout the life of the program. that is, there is no net product. this will help us, clearly, as we continue our discussion. >> i got to go. i got to go. >> okay. max baucus in the middle of that there. the chairman of the senate finance committee and, obviously, his committee is key to any health care reform legislation. i'm going to check this with our senior congressional correspondent dana bash. it seemed to me the chairman was saying the current shape of the compromise comes in at about $900 billion over ten years and that it is paid for, meaning that it is deficit neutral. all right, we will check on those details, if my hearing didn't fail me here, with our

senior congressional correspondent dana bash. but right now we'll take a break.

the president plays maesmaker tomorrow. he brings henry louis gates face-to-face with james crowley. they will chat a picnic table outside the oval office. former secretary of state, colin powell, tells our larry king both gates and crowley could have handled things better. >> you are saying gates was wrong? >> i am saying skip, perhaps in this instance, may have waited a while. come outside, talked to the officer and that may have been the end of it. i think he should have reflected on whether or not this was the time to make that big a deal. i think in this case the situation was made more

difficult. on the part of the cambridge police department, once they felt they had to drag gates out of the house and to hand different hikf him at that point some adult supervision would have step in and said, it is his house. let's not take this any further. >> powell went on to say there is no african-american in this country who has not been exposed to this kind of situation. even he has been racially profiled many times. we expect to hear soon from the woman who made the 911 call to report a possible break-in at professor gates' home. she is set to speak publicly for the first time. she is holding a news conference about 15 minutes from now. cnn i-reporters are weighing in on this hot button issue. let's check in with the producer at cnn.com/ireport desk. what are our i-reporters saying on this issue? >> this issue, the arrest of gates, in particular, has been

spurring a lot of discussion on ireport.com. particularly around racial profiling. let's go ahead and take a look at the sampling of what people are saying on ireport.com. >> everybody is so sensitive, you can't do anything. if you're a white guy or a white person, you really can't do anything or say anything against anybody being of color because you'll be accused of being racist. i think a lot of my own people, a lot of my own brothers and sisters, every time something is done against them, they think it's racist. sometimes i'm sure it is, but it's not every time. >> i think we need to stop jumping to conclusions and have a real honest debate about race by setting aside these assumed notions that only certain people can be racest aist and only cer people can be victims. >> my only hope is that we don't make a good cop's mistake unforgivable because while we browbeat, we may end up losing a

good cop in the process. we can't afford to do that. at least not in my hood. >> all right, now, tony, we want to hear from our viewers on this issue. here's what we want to invite our viewers to do, go to ireport.com and find this assignment here on racial profiling and we particularly want to hear from people who have experienced racial profiling and also like to hear from folks in law enforcement and ask you, you know, what are the challenges of policing in a diverse community. really great discussion. you can see here, we've gotten just many, many great responses. can't get that to work. >> that's okay. >> we hope to see you there. >> all right, tyson, appreciate it. thank you. we'll get an update on the work being done by the senate finance committee panel on health care reform from our senior congressional correspondent dana bash in just a moment.

so, let's do this, as promised. let's get an update on where we are in the effort to craft health care reform. a compromise in the senate. our senior congressional correspondent, dana bash, is where the action is. and, dana, look, we heard from senators conrad and baucus in the last ten minutes. what's the latest? >> reporter: the latest is that the finance chairman, max baucus, who resides in this office where we've been standing, he just came out and he suggested that -- said that they have some good news. and that good news, i'm not sure if we have the sound bite, somebody can tell me if we do.

if not, i'll tell you what he said. okay, we do have the sound bite. let me roll it for you and i'll explain it on the other end. >> okay. >> we have some good news. last night we received a preliminary report from the congressional budget office. the cbo has reviewed a draft of the health care reform bill we are currently negotiating. keep in mind the current draft does not include a resolution of several key issues. nonetheless, the report is encouraging. the current draft of the bill scores below $900 billion over 10 years, covers 95% of all americans by 2015 and is fully offset. in fact, according to the preliminary cbo report, the bill would actually reduce the federal deficit in the tenth year by several billion dollars. >> reporter: so, why is this significant? let's start with the beginning. first of all, the overall price tag. what they had been working on in this room is a trillion dollars. so they shaved off $100 billion

in that price tag. and he also said that what they're talking about does achieve one of the main goals, which is broad coverage for all americans. he said what they're talking about is about 95% coverage. but the caveat is important. the caveat is they're not done yet. what it sounds like they have done is given a bunch of different ideas to the all-important congressional budget office to see what the cost is some of the things they're talking about and that's why they just got back a bit of good news. it's a little bit schizophrenic, because you and i talked about in the last hour they are trying to downplay progress, the fact that they could get a deal this week. so, they're doing that, while at the same time trying to portray an image and a sense of momentum, and that's what we just saw from senator baucus just now. >> dana, it's interesting. one of the important pieces here is the idea that the current shape of the compromise has been scored by the cbo, because there are a lot of plans out there,

not all of them have been scored. at least what is being worked on has been scored and it comes in around the $900 billion mark over 10 years, correct? >> reporter: correct. but what this is -- i want to apologize to our viewers, because it might sound like it's in the weeks, but it's important, what's been going on in the room they've been taking big pieces of this puzzle and working on it. i want to give you an example of something they're working on this morning, the idea that the president has been talking about, giving independent commissions, instead of congress, an independent commission the power to dictate medicare rates. they've been talking about this all morning, what kind of power that commission would have and, you know, how much money they could save. >> that's right. >> reporter: if they do that. and that's something we were told by senator conrad, they don't even know how much money that would generate. so, there are lots of pieces of this puzzle, but they at least took one potential puzzle, if you will, gave the it to the congressional budget office, got it back and that has come back

at less than $900 billion. >> the work continues. dana bash, good work, thank you. >> reporter: thank you. we've got our eyes on two live events happening in the next hour of "cnn newsroom." the first expected to get under way in just a few minutes. president obama talking to north carolinians about health care reform. the other big event is out of cambridge, massachusetts. the 911 caller in the harvard professor arrest case is about to speak publicly for the first time since the incident. hear what she has to say about the phone call and how things have escalated.

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investigators in the michael jackson case are busy today poring over files and potential evidence taken from the las vegas home and office of dr. conrad murray. jackson's personal physician. cnn's ted rowlands has details on the items removed and where this investigation is headed. >> reporter: when agents showed up at dr. conrad murray's las vegas home, he was there to greet them. after three hours inside,

investigators left, according to murray's attorney, with cell phones and a computer hard drive. another warrant was served at murray's las vegas clinic, where agents spent the entire day. >> they're looking through records and documents, and looking for any that pertain to the search warrant itself. and those documents will be seized. as evidence. >> reporter: the search warrant, according to murray's attorneys, authorize investigators to look for medical records relating to michael jackson and all of hills reported aliases. meaning, investigators believe jackson and/or murray may have used fake names on some records. >> it's very significant to me that the search warrant refers to aliases. remember in the anna nicole case, the doctors were charged with felonies for prescribing medications to anna nicole under assumed names. it's absolutely a violation of california law. >> reporter: meanwhile everybody waiting on the l.a. county coroner's report, which will have a cause of death for michael jackson, the core

northern's office tells cnn that it will not be completed this week and will not be made public until, at the earliest, sometime next week. ted rowlands, cnn, las vegas. developments unfolding in two major stories this hour, and we're following both here in the "cnn newsroom." president obama makes his latest pitch for health care reform. we are awaiting his town hall meeting in raleigh, north carolina, and we will bring that to you live, of course. and we're also waiting to hear from the 911 caller in the arrest of harvard professor henry louis gates, lucia blaleen, holding a news conference in cambridge, massachusetts. first, president obama tries to keep the pressure on congress and rally public support for health care reform. after his town hall meeting in raleigh, he makes a pitch to supermarket employees in bristol, virginia. cnn white house correspondent, ed henry, with a preview. >> reporter: they're rolling out the red carpet in rural virginia, but the president could get a chilly reception in the frozen food aisle, where we found clerk phil yownt, a worker

who thought the health care reform is being rushed like the stimulus. >> like the last package, i thought it was too hurried, a lot of mistakes and things that shouldn't be. >> reporter: but kathy montgomery, assistant produce manager, voted for the president. >> i liked the fact that he stepped up and being aggressive. i really do. i'm all for it. >> reporter: thousands in the region showed up at a health expo offering free medical care this past weekend, exposing a problem all too familiar to doctors here. >> clearly we all recognize, any physician in the hospital would recognize that it's a system in crisis. obama rut like most employees back at the kroger's supermarket, producer manager steve shiplet gets generous health benefits. he is worried that the benefits will be taxed to cover the uninsured and is demanding more specifics from the president. >> he's going to have to spit

out some numbers and let the public know exactly what it's going to cost them and what they're going to have to give up. >> reporter: he says if the president steps up and sells it, then he's willing to step up himself. >> you've got to do something, and if it means me paying those taxes to get this reform through, then -- then i'd begrudgingly do it, yes. >> reporter: and back in the frozen food aisle, this republican is ready to do his share, too. >> no matter what kind of plan you're going to come up with, somebody has to pay for it. so, eventually it comes down to us, the people that's working, and paying taxes, we're going to have to pay for it one way or the other. i just hope we can come up with a plan that's worth paying for. >> reporter: these employees note they make less than $250,000 a year. and the president has repeated his campaign promise he won't raise taxes in that category. nevertheless, these employees say they may accept a broken campaign promise if the president does a few things, if he makes sure the rich pay their fair share and if he finally

gets specific, lays out the sacrifices people will have to make, and proves this plan will actually work. ed henry, cnn, bristol, virginia. and we will have republican reaction following the president's town hall meeting, which is scheduled to get under way any moment now. congressman eric cantor, the michort whip, will join kyra phillips for a live interview in the next hour of "cnn newsroom." and a woman whose phone call brought the police to the harvard professor's home, will be speaking any moment now. it's been a few weeks since she called 911. the incident led to an arrest at his home. it sparked accusations of racial profiling. we now know whalen never referred to black suspects in that 911 call. >> are they still in the house? >> they're still in the house i believe, yeah. >> were they white, black, or hispanic? >> two larger men, one looked

kind of hispanic, but i'm not really sure. and we are monitoring lucia whalen's news conference for you in cambridge, massachusetts. the arrest of professor gates has ignited a passionate discussion about race relations. we want to hear from you on this. have you been a victim of racial profiling? if you work in law enforcement, what are the challenges you face while policing diverse communities? just go to ireport.com and share your personal stories or video. just put it on video for us and you could be featured on cnn. federal agents are searching for an eighth terror suspect today. he is believed to be in pakistan. these men among seven alleged accomplices are jailed today in north carolina. prosecutors accuse the men of plotting attacks in pakistan. and an indictment claims the group's alleged ringleader, raleigh drywall contractor, daniel boyd trained in afghanistan and pakistan. his wife told cnn the public shouldn't rush to judgment.

>> that man has been free of guilt, and i'm hopeful that that -- the truth will come to light. >> sabrina boyd said trips to the middle east were religious pilgrimages and she explains an alleged training site. prosecutors say her husband used this way just to further helping his son -- his boy scout sons -- with marksmanship. >> we'll say that we do have -- we do own guns in our home as our constitutional right. it allows us. and i don't think there's a crime in that. well, homeland security secretary, janet napolitano, didn't discuss the north carolina case in a speech today, but she said privatized terrorism is growing. >> we face a network enemy. we must meet it with a network response. the job of securing our nation

against the threat of terrorism is a large one, and it may never be totally completed. but we have a much larger chance at success if we strengthen our own networks, by enlisting the talents and energies of americans. countering the terrorist threat is not just the effort of one agency. it is one -- or one element of society. nor is countering terrorism the consequence of one tactic. rather, it requires a holistic, unrelenting approach at all levels, with all tactics and all elements of society. >> okay. napolitano spoke at the council on foreign relations in new york. she announced new measures to boost communication between federal, state, and law -- and local law enforcement. let's quickly now get you to the president, his town hall meeting, in raleigh, north carolina. >> and raleigh, to be back in north carolina.

it's a community and a state that has been so good to me. and i know that part of the reason is because i travel with one of your homeboys, reggie love. but i hope it's more than that. a couple of people i want to acknowledge very quickly. first of all, i just want to thank sara coleman for the wonderful introduction. give her a great round of applause. yes, she brought me a cupcake factory t-shirt, but no cupca cupcakes. i mean, i know i've been talking about health care a lot, but i think cupcakes are good for your health.

so, next time. i also want to acknowledge the broad high school jazz ensemble. i want to thank garner taylor for the invocation. tom gill for the pledge of allegiance. chelsea cole for "the national anthem." dale burns, our wake county public school superintendent. i want to thank steven mayers, the broad high school principal. i want to thank your own governor, governor perdue who is here.

unfortunately, senator kay hagan, senator richard burr and congressman brad miller can't be here, because they're all working hard in washington. give them all a big round of applause. we also have the raleigh mayor, charles meeker, is here. where is charles? there he is, right here. you got the speaker of the house right here. give him a big round of applause. i hear that the former governor, rich hunt, is in the hallway. there are a lot of elected

officials. i'm starting to get into trouble. i'm just going to stop there and say thank you to all of them for their outstanding service. it is not only great to be back in raleigh, it is also nice to get out of washington. with all the noise and the fussing and the fighting that goes on, it's pretty easy for the voices of everyday people to get lost. and for folks to forget why they're there. so, when i took office in january, i asked to receive ten letters, to see ten letters, from people across the country every day. they're just selected by the mailroom. we get about 40,000 letters a day. they send me about 10 a day. and i read through them. and some of them are heartbreaking. people talking about the tough

times they're going through. some of them are inspiring. most of the letters these days are about one thing, and that's the economy. so, this is a town hall meeting. but before i take your questi s questions, i want to spend a few minutes just talking about where we are and where we need to go on the economy. i don't know whether you've seen the latest cover of "newsweek" magazine on the rack at the grocery store, but the cover says "the recession is over." now, i imagine that you might have found the news a little startling. i know i did. here's what's true. we have stopped the free-fall. the market's up, and the financial system is no longer on the verge of collapse. that's true.

we're losing jobs at half the rate we were when i took office six months ago. we just saw -- we just saw home prices rise for the first time in three years. so, there's no doubt that things have gotten better. we may be seeing the beginning of the end of the recession. but that's little comfort if you're one of the folks who have lost their job and haven't found another. unemployment in north carolina is over 10% today. a lot of small businesses like sara's are still struggling with falling revenue and rising costs. health care premiums, for example, are rising twice as fast as wages and much more for small businesses, something that i'll talk about a little bit later.

so, we know the tough times aren't over. but we also know that without the steps we have already taken, our troubled economy and the pain it's inflicting on north carolina families would be much worse. so, let's look at the facts. when my administration came into office, we were facing the worst economy of our lifetimes. we were losing an average of 700,000 jobs per month. it was nearly impossible to take out a home loan or an auto loan or a student loan and loans for small business to buy inventory and make payroll. and economists across the ideological spectrum, conservatives and liberals, were fearing the second coming of a great depression. now, at the time there were some who thought that doing nothing was somehow an option.

i disagree. we knew that some action was required. we knew that ending our immediate economic crisis would require ending the housing crisis, where it began, or at least slowing down the pace of foreclosures. that's why we took unprecedented action to stem the spread of foreclosures by helping responsible homeowners stay in their homes and pay their mortgages. we didn't stop every foreclosure. we couldn't help every single homeowner who had gotten overextended, but folks who could make their payments with a little bit of help, we were able to keep them in their homes. ending this immediate cia sis also required taking steps to avert the collapse of our financial system. which as fed chairman bernanke said the other day was a real possibility. now, let me just say this about banks. i know it doesn't seem fair to

many americans to use tax dollars to stabilize banks that took reckless risks and helped cause this problem in the first place. it didn't seem fair to me either. and even though the bank bailout began under the previous administration and i wasn't always happy with the lack of accountability, when it was first begun, i do believe that it was actually necessary to step in. because by unlocking frozen credit markets and opening up loans for families and businesses, we helped stop a recession from becoming a depression. and, by the way, taxpayers are already being paid back by the banks with interest. we also took steps to help a struggling auto industry emerge from a crisis largely of its own making. again, some folks thought, why are we doing that? there was a strong argument to let general motors and chrysler go under. and i know many of you probably

share that view, and if we had been in ordinary times, not teetering on the brink of depression, we might have exercised other options. because if you make a series of bad decisions that undermine your company's viability, the folks back here, they probably wouldn't get bailed out. your company wouldn't be in business. many folks didn't see why these companies should be treated any differently. but in the midst of a recession, their collapse would have wreaked even worse havoc across our economy. so, i said if gm and chrysler were willing to do what was necessary to make themselves competitive, and if taxpayers were repaid every dime they put on the line, it was a process worth supporting. we saved hundreds of thousands of jobs as a result. and we expect to get our money back. now, even as we worked to address the crisis in our banking sector and our housing market and our auto industry --

by the way, there was a flu that came by during that process. -- we also began attacking our economic crisis on a broader front. less than one month after taking office, we enacted the most sweeping economic recovery package in history. and, by the way, we did so -- we did so without any earmarks or wasteful pork barrel projects, pet projects, that we'd become accustomed to. not one was in there. now, there's a lot of misinformation about the recovery act or the stimulus, whatever you want to call it. so, let me just lay out the facts, because i think some folks are confused. as i was driving in, everybody was -- there were some folks cheering, and then there were some folks with signs.

so, i hope they're paying attention, because -- because i want to make sure everybody understands exactly what the recovery act was all about. to date, roughly a quarter of the recovery act's funding has been committed. over 30,000 projects have been approved. thousands have been posted online as part of an effort to uphold the highest standards of transparency and accountability when it comes to our economic recovery act. now, the recovery act is divided into three parts. and i know a lot of people think, oh, this is just blowing up government and wasting money. let me describe exactly where this money went. just so if your friends or neighbors talk to you, you can give them the right information. one-third of the entire recovery act is for tax relief for you.

for families and small businesses. one-third of it. 95% of you got a tax cut. you may not notice it because it's appearing in your paycheck on a weekly basis -- every time you get a paycheck as opposed to you getting a lump sum. because it turned out by spreading it out, it had more of a potential to stimulate the economy. that's what the economists advised us to do. but a third of it is going to tax breaks, to individuals and small businesses. that's money in your pocket to buy cupcakes and other necessities of life. so, for americans struggling to pay rising bills, with shrinking wages, we have kept a campaign promise to put a middle-class

tax cut in the pockets of 95% of working families. that began showing up in your paycheck about three months ago. we also cut taxes for small businesses on the investments that they make. so, just remember this, one-third of it. if you think about the recovery was a little under $800 billion, a third of it went to tax cuts. and all those folks who were complaining about growing government and all that stuff, we are actually cutting your taxes, giving your money back, so you can spend it. that's a third. another third of the money in the recovery act is for emergency relief that is helping folks who have borne the brunt of this recession. for americans who were laid off, we expanded unemployment benefits, a measure that's already made a difference for 12

million americans. so, we extended unemployment insurance. that's made a difference in 12 million americans, including 300,000 folks here in north carolina, who would have been cut off from unemployment insurance if we hadn't extended it. we're making health insurance 65% cheaper for families who are relying on c.o.b.r.a. while looking for work. so, let me just -- let me just see a show of hands. how many people know what c.o.b.r.a. is? all right. so you know if you lose your job, you're allowed to keep your health insurance by paying premiums through c.o.b.r.a. here's the problem, if you lost your job and your premium is $1,000, right at a time when you've got no job, it's hard to come up with that money, right?

so, what we did in the recovery package was to say, we're going to give 65% of those costs, we will pick up so that you can keep your health insurance while you're looking for a job. and for states who were facing historic budget shortfalls -- i was just talking to the governor and the speaker. we provided assistance that has saved the jobs of tens of thousands of teachers and police officers and firefighters. so that's the second third. i just want to remind everybody. first third, tax cuts. second third was providing emergency relief to families who had lost their jobs, for their

insurance, and to support them with unemployment insurance and states that otherwise would have billions of dollars in shortfalls. now, that's two-thirds of the money of the recovery act. and if we hadn't put that in place, imagine the situation the people would be going through right now. it would be a lot worse. and the states would be going through a lot tougher times having to make cuts that they don't want to make. all right. so, this brings us to the last third. and this is where the critics will say, okay, well, maybe we agree with the tax cuts. maybe we agree with the assistance to the states and individuals. but what about that last third? all those investments. well, you know what, we decided that the last third should be for short-term and long-term investments that are putting people back to work and building a stronger economy for the future. and i want you to know, this

money's not being wasted. we're seeing the results of these investments here in raleigh and across north carolina. the belt line is being resurfaced between wake forest road and wade avenue. the raleigh -- the raleigh-durham airport is renovating its runways. the city of raleigh's transit system is building a new operations and maintenance facility. over 500 people are going to work as part of a summer youth work initiative. water treatment plants are being renovated throughout the triangle. these are the kinds of projects being launched across the country, to rebuild crumbling roads and highways and bridges and waterways, with the largest new investment in our national infrastructure since eisenhower

built the interstate highway system in the 1950s. and that puts people to work right away, but it also creates a long-term, sustainable economic future. now, i know that there's some critics in washington, maybe out there, they say, well, you've been too slow getting these projects started. they're saying we should have broken ground on all our highway projects on the first day. well, that's impossible. especially because i wanted to be sure we did our homework and invested our tax dollars only in ways that jump-started our economy. so, we knew that it was going to take a few months before these projects got online. that takes time, if you're going to do it right. and we've already eliminated wasteful projects that didn't meet this test, because every taxpayer should have the assurance that we're investing

their hard-earned tax dollars responsibly. so, just remember, if somebody asks you about the stimulus or the recovery, one-third of it's in your pocket in tax cuts. one-third of it is unemployment insurance relief, help on c.o.b.r.a., and making sure that the states don't have to make cuts that would make things worse. one-third of it, investments in roads and bridges, putting people back to work. so, it will take time to achieve a complete recovery. we're not going to rest until anyone who's looking for work can find a job but -- but there should be little debate that the steps we took, taken together, have helped stop our economic free-fall. that's the story of the first six months. it's cost some money to do this. although i've got to say, when i hear critics talk about

out-of-control spending, i start scratching my head. i can't help but remember those same critics contributed to a $1.3 trillion deficit that i inherited when i took office. i mean, seriously, you know, i'm now president, so i'm responsible for solving it, but i do think that we shouldn't have a selective memory in terms of spending habits. you hand me a $1.3 trillion b l bill, and then you're complaining six months later because we haven't paid it all back. you know, a debt, by the way, that was partially the result of

two tax cuts that went primarily to the wealthiest few americans and a medicare drug program that wasn't paid for. these are the same folks who are now complaining, well, now, health care, we can't afford health care. you passed the prescription drug plan, didn't pay for it. handed the bill to me. now, because of that debt, a lot of people are saying, we can't go any further in tackling our problems. we definitely can't do health care. too much debt, too big deficits. look, i understand the concern about debt. i am looking at these spreadsheets every day. we dug ourselves a deep hole. and because of the recovery package that we put together, you know, that has added to it.

so, we now have problems. we're going to have to tighten our belts, but we can't do it in the middle of the stimulus. we can't do it in the middle -- just as the economy is coming out of the recession. no economist would recommend that. and i do understand people who feel like they've had to cut back, so why shouldn't the government have to cut back? why start a new government program now? so, let me just explain why the health of the american people and the american economy demands health insurance reform. i want to just explain briefly reform, what it will mean for you. and then we'll start taking questions. first of all, nobody is talking about some government takeover of health care. i am tired of hearing that. i have been as clear as i can e be. under the reform i've proposed, if you like your doctor, you keep your doctor. if you like your health care plan, you keep your health care plan. these folks need to stop scaring

everybody. you know? nobody -- nobody -- is talking about you forcing to change your plan. but if you're one of the 46 million americans who don't have coverage today or you've got that coverage where you've got a $10,000 deductible, so it's basically house insurance, it's not health insurance, you haven't -- you pay the premium so you won't lose your house if you get hit by a bus, heaven forbid, then you'll finally be able to get quality, affordable coverage. but what a lot of chatter out there hasn't focused on is the fact that if you've got health insurance, then the reform we're proposing will also help you, because it will provide you more stability and more security. because the truth is, we have a system today that works well for

the insurance industry, but it doesn't always work well for you. so, what we need and what we will have when we pass these reforms are health insurance consumer protections to make sure that those who have insurance are treated fairly and insurance companies are held accountable. let me be specific. we will stop insurance companies from denying you coverage because of your medical history. i've told this story before. i'll never forget watching my own mother, as she fought cancer in her final days, worrying about whether her insurer would claim her illness was a prix existing condition so they could wiggle out of paying for her coverage. how many of you have worried about the same thing?

a lot of people have gone through this. many of you have been denied insurance, or heard someone who was denied insurance, because they got -- had a pre-existing condition. that will no longer be allowed. with reform. now, we won't allow that. we won't allow that. with reform, insurance companies will have to abide by a yearly cap on how much you can be charged for your out-of-pocket expenses. no one in america should go broke because of an illness. we will require insurance companies to cover routine checkups and preventive care, like mammograms and

colonoscopies. eye and foot exams for diabetics so we can avoid chronic illnesses that cost not only lives but money. no longer will insurance companies be allowed to drop or water down coverage for someone who's become seriously ill. it's not right. it's not fair. we will stop insurance companies from placing arbitrary caps on the coverage you can receive in a given year or in a lifetime. now so my point is whether or not you have health insurance right now, the reforms we seek will bring stability and security that you don't have today, reforms that will become more and more urgent with each passing year. so, in the end the debate about reform boils down to a choice

between two approaches -- the first is projected to double your health care costs over the next decade, make millions more americans uninsured, bankrupt state and federal governments, and allow insurance companies to run roughshod over consumers. that's one option. that's called the status quo. that's what we have right now. i want -- i want everybody to understand this. if we do nothing, i can almost guarantee you, your premiums will double over the next ten years, because that's what they did over the last ten years. it will go up three times faster than your wages, so a bigger and bigger chunk of your paycheck will be going in to health insurance. it will eat into the possibility of you getting a raise on your job, because your employer's going to be looking and saying, i can't afford to give you a raise, because my health care costs just went up, 10%, 20%, 30%, and medicare, which seniors

rely on, is going to become more and more vulnerable on current projections medicare will be in the red in less than ten years. so, that's -- that's the status quo. when everybody goes around saying, why is obama taking on health care? that's the answer. that's one option. i don't like that option. you shouldn't either. that plan doesn't sound too good. that's the health care system we have right now. so, we can either continue with that approach, or we can choose another approach, one that will gradually bring costs down, will improve quality and affordability for every american when it comes to their health care and will help get our exploding deficits under control. that's the health care system we can bring about with reform. so, back in washington, there's been a lot of talk about the politics of health care, who is

up and who is down and what it will mean for my party, you know, will my presidency be damaged severely if we don't pass health care. i keep saying to people, i have health care. this is not for me. here in north carolina, you know this isn't about politics. this is about people's lives. this is about people's businesses. this is about the future! i want our children, our grandchildren, to look back and say, "this is when we decided to take the politics out of it and start doing something for the future of this country." i'm going to need your help, raleigh. let's go do it! thank you! thank you. thank you very much. thank you very much. all right. i was getting fired up there at the end. okay, so this is the -- this is the town hall portion.

[ inaudible ] okay. sorry, i can't hear you, sir. sir, i'll be happy to take your question, but -- all right. i'll be happy to take the question, but maybe let's do it in an orderly fashion. thank you, sir, we appreciate you. where was i? here's -- here's what we're going to do. we're going to go girl, boy, girl, eye. we're going to go around the room. i'm going to try to take as many questions as i can. if you can keep your answers short -- or your questions short, i'll try to keep my answers short. and just raise your hand. i won't be able to get to everybody. there are people with microphones in the audience, so if you can wait until somebody with a microphone finds you, that way we'll be able to hear

your questions. people with the microphones, can you wave or -- just so i can see you. all right, there they are. all right, so i said girl, boy, girl, boy. we'll start with this young lady right here. here, she's coming with the microphone. the one with the white dress. and please introduce yourself, if you don't mind. why stand you stand up so everybody can see you. >> okay. i'm so honored for being here. and thank you for taking my question first. i'm really nervous. i guess i want to ask -- >> what's your name? >> my name's kim. >> hey, kim. >> and i'm here from the chapel hills area. >> right. >> as the wife of a family physician, we see people not only coming in to that specialty less and less often, but also leaving that specialty because it's so, so hard as a young family to make that work, long hours, not great reimbursement, not great pay. >> right. >> with huge amounts of debt when you come out of medical school. >> right. >> so, what are you thinking of to entice more people to come into that specialty, because you

can insure every person in america, and if there's not a physician there to see that person, you still don't have health care. so, what are you going to do to entice people to come -- >> this is a great question. and so let me -- just so everybody understands what we're talking about here, it used to be that the most common type of doctor was the family physician. you know, you'd go in and they knew you and they knew your family. every once in a while you'd go to a specialist, but basically you were dealing with a family doctor. increasingly the economics of being a primary care or -- physician or a family doctor is a bad deal for a lot of medical students, because they come out with hundreds of thousands of dollars of debt, but it turns out that a primary care physician, as kim just pointed

out, their reimbursement rates are lower. the system doesn't reimburse for things like preventive care. if they stop one of their patients from smoking, they don't get reimbursed for that. but they do get reimbursed if they're a surgeon and they have to open up somebody's chest. now, actually that first part of it is probably more valuable to the person's health and to the society as a whole, but if it's not rewarded, then fewer and fewer people go into that branch of medicine. if we pass health reform, when we pass health reform, then what we're going to -- what we are -- and more people now have access to the system, it is going to be vital that we increase the number of primary care physicians. the best way for us to do it is twofold. one is to change how we reimburse.

change is in the delivery system. so, what we're trying to do is we're trying to say, in all these systems, insurance companies, they should reimburse for preventive care. if a health system is making sure that a diabetic is taking their meds or monitoring their diet, they should get reimbursed for that, not just getting reimbursed for the $30,000 foot amputation after somebody, you know, gets into real medical trouble. so, one thing to do is to change reimbursements so that the incomes of primary physicians are more comparable with specialists. the second thing is -- >> all right. very quickly, we're going to leave the president's town hall meeting in raleigh, north carolina, for a very good reason. our senior congressional correspondent, dana bash, is on the phone with us. and is this dana bash that i'm speaking with?

>> it is. hi, tony. >> okay. great. dana, i understand you have some breaking developments. and, again, we're talking about a possible compromise on health care reform. >> that's right. this is good news for the president, as he speaks about health care reform. we've been talking about the feuding democrats in the house, and that feud has delayed the president's top priority. well, we understand that there is now a deal between some of the key blue dog conservative democrats and house leaders. there is a deal that -- here's what we know. we know a few details. we're going to get more, but here's the headline. the headline is that they're going to put some kind of bill into committee. that vote is going to happen by week's end. however, as part of the deal, the full house is not going to bring up health care reform until the fall. we understand just a little bit of detail, that they have -- that those conservative blue dog democrats have been successful in bringing down the costs of this health care bill by about $100 billion, but that's all we know so far. the key is they're going to move forward.

there will be a committee vote by friday, but the full house will not vote until the fall. that is part of this deal that was just brokered after hours and hours of talks. >> wow. >> inside the house speaker's office. the white house chief of staff, rahm emanuel, was there. blue dogs and house leaders, and this just happened moments ago. >> are we talking about congressman waxman's committee here? >> exactly. >> i see. >> exactly. you've seen and heard congressman mike ross. >> yes. >> he is a conservative blue dog from the state of arkansas. he has been negotiated with the chairman of the energy and commerce committee, henry waxman, and they, with the help of the leadership, including the house speaker and the white house, who -- and the chief of staff has basically been camped out here, they have created this deal that allows the which itty to go forward this week, but a full house vote will not happen until the fall. and this, i should tell you, is according to our great producers, who have been standing outside the door. >> you guys have really been working on a team on this.

and we're now talking about a bill that will go to the full committee for consideration? >> that's correct. the full committee. in fact, they're going to meet at 4:00 this afternoon, tony, and they're going to begin the arduous work of marking it up and going line by line working on it, with the goal of going throughout the night in order to get it done by friday. the key is we're talking about the house. this is separate from where i've been standing over the past several days, that is the senate finance committee. but this is the house. there's been a revolt among the president's fellow democrats, the conservative democrats who did not like the way the party leaders crafted the health care plan, for the most part because they felt the costs were too high and that it did not do enough to control the costs of -- of health care. >> yeah. bending that curve that we keep hearing so often. >> exactly. in terms -- we're still waiting for the details, but at this point what we know is that they were successful able to bring the costs of the health care bill down by about $100,000.

>> correct me if i'm wrong, dana, but work has been completed on two other house bills. so, we are talking about the last key committee, energy and commerce, chaired by congressman waxman, has now come together. the blue dogs on that negotiating committee have come to some kind of an understanding on a bill that will go before the full committee. is that a decent recap of where we are? >> that is it. that is it. and it's highly significant. highly significant. because these conservative democrats have successfully been holding up and delaying their own president's top priority, because they felt that it didn't do enough of what he said he wants to do, had is to control costs. and at this point they have -- they feel that they have gotten enough assurances that it will do that, that they can move forward at least in this last committee. >> right. >> and, you know, it really is -- it really is a significant breakthrough, in that, you know, these guys have been -- have been pretty strong.

>> absolutely. >> and pretty intense on not allowing their own leadership and their own president to go forward on something that they didn't think did the right things. >> dana, we're going to get back to the president's town hall in just a minute, but i can't let you go without -- all right, so that is the breakthrough on the house side. there also appears to be real progress being made on the senate side as well. why don't you bring everyone up to speed on that as well. >> that's right. on the senate side, you do have the negotiators continuing to meet. they met this morning. they'll meet later on this afternoon. the chairman of the finance committee came out and said that they have one particular concept that would actually bring the costs down from a trillion dollar health care plan to under $900 billion. but, you know, in the same breath as he made that announcement to try to, you know, push some progress and give the idea of momentum, the same breath, he cautioned, well, you know, we're not there yet, and we still have a lot more work to do. and i can tell you, tony, talking to republicans -- there are three republicans and three democrats in that room.

talking to republicans, there is a lot of consternation among republicans that democrats may be pushing a little too fast and trying to potentially get headlines saying they are close to a deal. because those 30 republicans in that room are under a lot of pressure by their own party and their own party leadership not -- to give too much, to give too much of the store away. so, that's what's going on there. >> great. >> those talks continue. but the headline, of course, and the news right now is the breakthrough among democrats in the house of representatives. >> our senior congressional correspondent, dana bash, on the phone with us. dana, appreciate the update on the new developments health care reform. let's get you back to the president's town hall meeting in raleigh, north carolina. >> medicare has cost taxpayers, even though seniors have high satisfaction rates with medicare. now, having said all that, it's all relative. medicare still needs to be a lot better and more efficient. and there are examples of how we can make the entire health care system more efficient.

we know where these examples are. the mayo clinic, the cleveland clinic, guessenger, kaiser permanente. there are health care systems around the country that actually have costs that are as much as 20% or 30% lower than the national average and have higher quality. and so the question is, why is that? what is it that they're doing differently than other systems? and there's some patterns that start coming in to play. for example, number one is that they have a patient-focused practice, where instead of worrying about how they're getting -- how they're billing, so how many tests they're ordering or how many procedures they're ordering, all they're focused on is the patient. and they -- part of what helps is their doctors are all on

salaries, so they don't even know what the economics of any decisions that they're making are. then it turns out you also have a group practice, so that when you come in, the family physician, your primary care physician, has already coordinated with all the specialists. so, instead of having to go to four different doctors and four different tests, you go take one trip, and you see all of them all at once, and they all help diagnose you and help coordinate your care throughout the entire process. they have health information technologies so when you take a test, it actually gets forwarded to the next doctor and the next doctor and the next doctor and the nurse and the pharmacist so that there aren't any errors. so, there are a whole range of, you know, practical things that they're doing that are improving quality and lowering costs at the same time. now, there's no reason that we can't duplicate that in both

private and public settings across the board. but in order to do that, we're going to have to change how we reimburse, for example. so, we've got to say to doctors and hospitals, we're not going to reimburse you for the number of tests you -- you provided. we're going to reimburse you instead for the quality of the outcome. here's another example. right now, we just reimburse hospitals no matter how many times they re-admit you. now, if you took your car to the shop and they fixed it, or you thought they fixed it, and then two, three weeks later you go back in and they're having to do the same thing, you wouldn't feel good about paying twice for the exact same thing that you thought had been fixed. but under medicare, there is no penalty to hospitals for having very high readmission rates

compared to their peers. so, those are the kinds of things that can be changed. now, your broader question may just be, i don't have confidence in government. but as i pointed out, i just want to go back to my original point, medicare costs have gone up more slowly than private-sector health care costs. that is documented. >> i'm sorry. if you do say that we know medicare has this problem, that they're paying for re-admittance, why don't we reform that now? that's a government program. why are we allowing that? >> that's exactly what i want to reform. no, no, maybe i'm just -- i don't understand your question. i mean, that's exactly the changes that we want to make. that's exactly -- those are the exactly the changes that we want to make. that's what we're proposing. and what happens when we propose that is, then people start

trying to scare you by saying -- i mean, i've got seniors right now who are writing to me -- let me address the seniors in the audience. i've been getting letters, people saying, i hear that you're going to take my medicare away. i've received letters that say, i don't want a government-run program. i don't want socialized medicine. and, by the way, don't touch my medicare. no, i do. because -- because, you know, what's happened in this debate, on the one hand people are worried about change. they're nervous that even though they may not be satisfied with what they have, what we create might be worse, and every proposal that you make, it's very easy to use scare tactics to make people think that you're going to lose your medicare, we're going to ration your care,

et cetera, this is going to cost way too much. and so part of my job is just to try to get the facts in front of people. i want to make these reforms that you just talked about as part of the overall change in health care. and, by the way, here's an important point. you've been hearing these figures that say, it's going to cost a trillion dollars for this new health care program. so then, of course, people think, well, we can't afford that. a trillion dollars, that's a lot of money. first of all, just to keep it in perspective, it's a lot less than we spent on the war in iraq, but that's -- but it's still a lot of money. two-thirds of the costs to cover everybody in america, two-thirds of it, could actually be paid for by money that's already in

the health care system that taxpayers are paying that's being wasted. so, let me give you an example. $177 billion over 10 years is spent on subsidies to insurance companies under something called medicare advantage. there's no showing that seniors are healthier using medicare advantage than using regular medicare, but taxpayers, you fork over an additional $177 billion to them over 10 years. you take that out, that right there helps pay for millions of people who could get coverage. so, we've already identified $500 billion to $600 billion that's already being spent by taxpayers that would help pay for the reforms we're talking about. but you wouldn't know that from watching the news. and, by the way, so $1 trillion

is over 10 years. that's $100 billion a year. $600 billion of it, already paid for my money that you're already using -- that's already being used, but just not used wisely in the health care system. that's what we're talking about. and for that, we can have 40 million people who don't have health insurance get health insurance, and small businesses, if you're already paying health insurance, so you're already paying, you would get a tax credit. we're putting $43 billion on the table to help reduce your costs directly. for your care. so, small -- 90%, 95% of small businesses would benefit from subsidies if they're already providing health insurance for their employees. and if they're not providing health insurance for their employees, the problem is small businesses typically have a much

tougher time getting health insurance, and they pay higher premiums, because you've got a smaller pool. you're only 20 people. it's not like, you know, some big fortune 500 company with 1,000 people, they can drive a harder bargain. you'll be able now to join and access health care through a health care exchange that we set up so that you're able to be part of a pool that can leverage lower prices. this is not something that's -- this is not something that is impossible to do. but we've got to overcome the understandable skepticism that somehow washington can never get anything right. i mean, that's the biggest challenge we have right now, is just people sort of generally have skepticism about washington. and, look, i under that. that's why i ran for president, because i was skeptical about what was happening in washington. all right.

it's a man's turn. this gentleman right up in front here. you've got a -- he looks -- he looks quite popular. everybody was pointing at him. >> thank you very much, mr. president. my name is bill purcell. i'm one of those primary care doctors you were talking about, a pediatrician. i also have a little job in the north carolina senate. but i can see in my practice a patient and make a correct diagnosis and prescribe the right medicine, but if the patient can't afford the medicine, they don't get treatment. what can we do about the high cost of prescription drugs in america? >> since i gave a very long answer on the last, i'll try to

keep this one short. we pay 77% more for prescription drugs in america than any other country does. 77% more. than any other country. now, if you talk to the pharmaceutical industry, they'll say, well, you know, a lot of the research and development is done in this country, and that's how we're developing the great new drugs. that accounts for maybe 25% to 30% of the difference in the costs. the rest of it has to do with marketing. it has to do with the fact that basically the pharmaceutical industry can get away with it. and what happened when the prescription drug bill was passed several years ago, under medicare, they specifically prohibited you negotiating -- they prohibited medicare from negotiating with the drug companies for the cheapest

available price on drugs. specifically said you cannot negotiate. so, what we've said is in this reform process, we are going to turn that around. and to the pharmaceutical industry's credit, they have sat down and started negotiating, and they've already said -- they've already put $80 billion in deep discounts and rebates on the table that would help to close the so-called doughnut hole that a lot of seniors are suffering under medicare. they've already committed to that. that would cut the costs of the doughnut hole in about half. so, that's a significant savings. i think we can obtain more savings. one other thing that's being debated right now in capitol hill, though, that people need to keep an eye on, one of the ways to lower prescription drug costs is to move to generics.