lips, no tax hikes for middle class america. trying to set the record straight after his top economic advisor suggested that a tax increase couldn't be ruled out as a way of cutting the deficit and paying for health care reform. you have the clunker, but will the government have the cash? the senate must act quickly and approve another $2 billion to save the popular cash-for-clunkers program. what happens to the old gas guzzler after you trade it in? a lot of people have been asking. we dispatched our jason carroll to look at that. we begin with breaking news with a surprise visit to north korea by former president bill clinton. he arrived in pyeongyang before midnight. his mission is to secure the release of laura ling and euna lee. >> you remember back in june, the women were sentenced to 12 years' hard labor after they claimed they entered the country illegally to smear the

government. can clinton get them out? how much of this deal is cooked before he went over there. jill is live at the white house. jill, when it comes to getting these journalists home, is this trip by the former president going to work? >> that really is the big question. no one can guarantee. one of the things that officials have said even before clinton went, they were talking about perhaps al gore going or bill richardson. and what they said was once they get off of that plane, nobody really knows precisely who they'll be meeting with, what could happen, and what the decision would be. it' extremely high profile. this is bill clinton, his first mission for president obama. and, of course, we have secretary of state hillary clinton. a very dramatic moment. kiran? >> jill, it's john here. >> sorry, john. >> so you know, north korea is the king of quid pro quo. they don't do anything for nothing. how do you expect north korea could benefit from all of this? >> this is the other part of it

is which is the administration has tried to keep the two things separate. the journalists on one side. the standoff of the nuclear part of north korea on the other side. the sanctions are growing, the world community is moving strongly to crack down on the north -- on the north's nuclear program and make those sanctions heard. so, the question would be, would north korea, if they were to release those journalists, they could score some points for say erasing some of that ferocious image that they've had recently with nuclear tests and missile firings, and what they would want is some type of negotiation in that direction. would that happen? would this just be the beginning of it? so you've got two stories playing out at the same time in a very dramatic fashion. >> watch this closely all day today. jill dougherty from washington. thanks. following a story from the white house. elaine kahano, the only reporter

live this early. what's the latest? what do we know about how involved the white house was in making this happen? >> we're waiting to find out, kiran. so far, it's been radio silence, perhaps an indication, obviously, of just how sensitive this mission is. but obviously, this is a very delicate balancing act. as jill was saying a moment ago for the obama administration, how to negotiate the release of these two journalists while at the same time keeping that separate from the nuclear issue. as jill was mentioning here, the white house really all along has been trying to say, look, this is a humanitarian issue, one that should be kept separate from the issue of trying to get north korea to curb its nuclear ambitions. but, in that time, of course, north korea conducted a nuclear test, launched ballistic missiles. it remains to be seen, kiran, whether any of that will come up during president clinton's visit to north korea. >> the interesting thing is he's the husband of the current

secretary of state hillary clinton and hillary clinton and barack obama were rivals in the primary. you have a lot going on there? >> a lot -- a lot of layers, you're right, kiran. this is the first high-profile public mission that president clinton is on on behalf of the obama administration. it answers the long-standing question -- what role would the former president have in the obama administration? what missions might he be asked to carry out? it was no secret during the campaign that barack obama and bill clinton did not necessarily have a close relationship. instead, it was described as being distant and cool. now, of course, though, it appears they're moving beyond that with president -- former president clinton now on the ground in north korea representing the obama add mn strags. -- administration. >> elaine, thank you so much. the interesting thing is the high-profile person in the government visit with the administration also.

madeleine albright, secretary of state. >> you have another figure in all of this is al gore, president clinton's former vice president. he's part owner of current tv. they both work for current tv. he said he was doing everything he possibly could to secure their release. the intersection of a lot of powerful players. who are euna lee and ling. euna lee is a korean american videographer. she's married to an l.a.-based actor and has a 4-year-old daughter named hanna. laura ling is 32. she gained fame from her reports in mexico. celebrity sister lisa spoke exclusively to anderson cooper about her sister's conviction. >> it's very challenging. we haven't heard much out of north korea. so, in a way, we appreciated that they released these

charges. we will say, again, as we've said before that we said before when they left u.s. soil, they never intended to cross to north korea. according to the charges, they confessed. so we know they're sorry. we're very sorry. and we hope that the north korean government now will show compassion and just let them come home. >> lisa, i mean, does it concern you that the north korean government is saying they were there for a smear campaign, not acknowledging they were independent journalists? >> all we can say is that they are journalists and they were doing their job. my sister has been a journalist for years. and that's really all we can say. you know, we weren't in the courtroom. we don't know any sort of specifics other than what was released. we just hope, you know, given the fact that we know the girls have apologized profusely, that they will let the girls come home to us.

it's been -- it's been three months. and that's been too long for us. >> stay with us. because coming up in five minutes' time, we're going to be talking to victor cha, the director of asian affairs at the white house in the bush administration, he went to north korea. we're going to find out what he thinks is going on behind closed doors right now. the white house wants to make it perfectly clear that president obama is committed to his campaign promise not to raise taxes on families earning less than $250,000. over the weekend, the president's top money men refused to rule out new taxes. they're going to close the budget gap. on monday, press secretary robert gibbs tried to set the record straight with reporters. >> did geithner and somer go off script or are they testing the temperature out there with something like this? oh. >> i don't know. the president has been clear about his commitment. >> there's no real scenario there that the administration says middle class taxpayers may

be hit. there's no scenario right now. >> the president made a commitment to the campaign. he's clear about that commitment. he's going to keep it. i don't know how much more clear about the commitment i can be. >> some economists have said that slashing the deficit and overhauling health care may require a middle class tax hike. iran for the first time confirming the arrest of three american hikers. according to the iranian officials, the two men and one woman were charged with illegal entry. they apparently strayed across the border into iran on friday. they contacted a friend to say they were surrounded by iranian soldiers. >> the white house warning the popular cash for clunkers trade-in program could be a clunker itself if the senate doesn't approve another $2 billion in funding before the friday recess. senate democrats are trying to win over republicans who ear saying it's just another tax-payer funded bailout. what happens to the clunker

after you trade it in. former president bill clinton in north korea trying to win the release of euna lee and laura ling. will he be able to do it? what's it in for north korea? is it about the nuclear program or a smooth transition of power? we'll find ctor cha will join u moment.

this is cnn breaking news. and welcome back to the most news in the morning. it's 11 minutes after the hour. right now, we're following breaking news. washington raising the stakes in the effort to win the release of two u.s. journalists jailed in north korea. as we speak, former president bill clinton is in pyeongyang.

this is video of him arriving there. his visit comes more than eight weeks after euna lee and laura ling were sentenced to 12 years of hard labor, accidentally crossing over the border is what they say happened. joining me now is victor shaw, director of asian affairs at the white house during the bush administration. he also visited pyeongyang with governor bill richardson back in 2007. he joins us via skype from hawaii this morning. thanks for being with us. >> my pleasure, kiran. >> drawing on your experience and extensive knowledge of north korea, what might be going on in these negotiations with korean leaders and our former president bill clinton? >> i think for the north koreans, they're receiving -- a former head of state gives them a lot of face, political face which is important to their country and leadership. i would imagine that the former president is there solely for the purpose of trying to bring

back the two americans and he's engaging in discussions with the foreign ministry as well as with some members of the party, perhaps even the -- the -- the leader himself to secure the release of the americans as a humanitarian gesture by the north korean government. >> it's interesting, we heard the rhetoric ratcheted up recently, the long-range missile firings, the censure of north korea by the united nation, the nuclear talks, pulling out of the six-party talks. what does it say on the world stage they're finally getting a former u.s. president to visit them, but it's only after detaining two american journalists? >> it doesn't say a lot in terms of their reputation around the world, clearly. you know, but for them, former president clinton is very credible to them because, you know, he as president considered very seriously going to north korea in his last few days or weeks in office. so, for the north koreans to receive him, i think they see

that as a big deal for him. and hopefully that will be enough to get them -- get the two americans released. but overall, in terms of the reputation around the world, it doesn't do them any good. >> i guess what i'm also wondering and what some of us are wandering is what will they get? will they get rewarded, perhaps, or get some agreements in exchange for the release of the two that many in the world say they were unfairly detain? >> yeah. well, i mean, i think -- i mean, i think that, you know, they will probably want some sort of apology from the two women. past practice in north koreans have always asked for some sort of an apology as a way to save face for themselves. they may want compensation for the fact that they held these two women in the state guest house for over five months which ends up being a lot of money for north koreans. they may ask for something like that. but i don't know if they'll link this directly to the nuclear

negotiations. having said that, president clinton comes out with the two women and he says that they're ready to negotiate on the nuclear side, that would put a lot of pressure on the obama administration to reengage and try to move this process forward even as u.n. sanctions continue on the north korean regime. >> that's the other interesting element here. what sort of message is this sending from the obama nically president but he's also the spouse of the current secretary of state? >> right. right. if you talk to u.s. government officials about this, they say very clearly this is a private humanitarian mission. it was requested by the families of unaand laura. and that there's no government officials going. having said all that, he's the former president and he's the husband of the secretary of state. this not being related to the u.s. government is difficult to believe. i think the north koreans

understand that and that's one of the reasons they were so eager to receive the president. >> and here's the -- you want to be careful about it. but it is something that we were wondering here in the newsroom. investigative reporter lisa ling, many know her as a reporter with "national geographic." she's the sister of laura ling. she entered north korea back in 2006 for a national geographic documentary and she was posing as a member of the medical team. this was entitled "undercover in north korea." she exposed some of the hardships of living in north korea. you think kim jong-il was aware of this documentary and that's caused the detainment of her sister? >> the north koreans were well aware of everything that's written and filmed about them outside of the country. i would not doubt that they knew about this earlier video. and i think that the reason they sent these two women was they were trying to send a message to

everybody that they don't want journalists snooping on their border trying to write stories about people leaving their country. and i think they're trying to use these two reporters to send a very strong message to the world that they don't want folks sniffing on their border. so this wasn't so much, you know, something that they were trying to do related to the nuclear problem, per se. e think they had a very clear message that they were trying to send to people about staying away from their border. >> victor cha, the last time you visited the country was in 2007. you have a lot of great insight on this. thanks so much for being with us this morning. >> my pleasure, kiran. >> good to hear from him today. lots of action in the markets. things in the positive direction. the dow up 114, the s&p up 15, the nasdaq up 30, leading indicator of potential economic recovery? we'll see. christine romans joins us in a few minutes to break it all down for you. 31 are streaming a sales conference from the road. eight are wearing bathrobes. two... less.

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updating you now on breaking news. former president bill clinton on a diplomatic mission this morning as we speak he's in north korea trying to win the release of american journalists euna lee and laura ling. the two women are serving 12-year sentences after being convicted of entering the country illegally to commit

hostile acts. we'll bring you the latest information when we get it. meantime, christine romans here minding your business. a very good start to the month of august with the stock market. do we hope things are on the upswing? >> july was good as well. this is a good run here. the s&p 500, this is the broadest gauge of stock market strength or weakness that is tied to your retirement money and your investments. if you look at the s&p 500, you can see it's back to november levels now. you can see that huge plunge just a catastrophic plunge that went from 12-year lows at 676 in march. since march, the s&p 500 is up 48%. it is very rare to see have strong rally in such a short a period of time. the dow and the nasdaq showing similar charts. the nasdaq is up 58% from 12-year lows hit back in march. why is this happening? because we like to say that the stock market is a leading indicator. it's looking ahead.

it's looking at things like a manufacturing survey yesterday that was strong. car sales, construction spending, earnings, all of the things that are showing -- they're not showing a free fall anymore. and the way one economist explained it to me, look, we're still skydiving out of the plane, but someone pulled the chute. the stock market is telling us we're floating down instead of plummeting to the earth. that's where we are. the stock market is reflecting that. that's why the stock market is up. >> what happened to the stocks that ended up being worth pennies? is that going to climb for people eventually or -- >> some of them will be worth pennies no matter what. and some of them will never get back up to their peak. it's a good question. the s&p over the past ten year, inlooked it up, it is down and it's down about 23%. it was at 1300 ten years ago. so it's something to remember too. i mean, we are up very substantially right here, but we are still down -- we are still down quite a bit from where we were last year and even over the past ten years. >> that brings us to the romans

numer numeral. it's a number driving a story about your money. >> it's a year, it's 1938 -- an up note. the best up year for stocks. since 1938. there were two very painful down waves. it was hard to get through. it was a big rally there in 1938. another big caveat i want to leave you with the oil prices. oil prices above $71 a barrel. they're cut in half from last year. but if you are -- if you are in or at the end of the great recession, oil is at $71, what happens if the economy starts growing? people are concerned that the oil prices are going to keep moving higher and that will be something that all of us will feel even as the investors are buying back some of their losses, we're watching losses here. >> clunkers and the oil and prices. do you like the cash for clunkers program? >> a lot of people like it, i tell you that. >> taken off. what happens to all of the clunkers after you trade them in? jason carroll is going to show us.

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welcome back to the most news in the morning. 26 minutes past the hour right now. you know something wrong when ambulances and stretchers line the runway. it was a scene after a continental flight from rio de janeiro to houston was forced to make an emergency landing after being hit by severe turbulence. 26 people on that flight were hurt. and we're hearing from some of the passengers onboard. here's cnn's brian todd. good morning, john, kiran. new information about the condition that continental airlines jet encountered over the caribbean and the passengers and their pictures are telling a harrowing story. this is what violent turbulence looks like inside the cabin.

these photographs from a passenger aboard continental flight 128 show the ceiling of the plane split open. two sections looked like casings for several oxygen masks. one witness says this damage may have been done by passengers who were thrown upward. >> all of the lighting, all the masks, people not seat belted in hit the ceiling. so their face and head broke the plastic. >> the plane with 179 people onboard encountered severe turbulence on the way from rio de janeiro to houston and diverted to miami. 26 were hurt. some required temporary hospitalization. cnn meteorologist chad myers said there's no severe weather in the area at the time. the continental airline official now tells cnn this aircraft encountered what's called clear air turbulence. pilots say this is when a plane gets caught between air masses moving swiftly in different

directions. it often happens when the weather looks fine and it comes on with virtually no warning. >> while the pilots are transiting this area, they're not seeing anything on the radar or anything visually to give them reason reason to believe they're getting ready to penetrate an area of clear air turbulence. >> pilots say during the events, passengers not wearing seat belts can get severely injured when g-forces throw them to the ceiling. they can be pinned on the ceiling for a few seconds and get thrown back down on the seats or the floor. after landing in miami, some panels were asked if they got any warning to buckle their seat belts when the turbulence began? oh. >> none, whatsoever. i hit my head on the light above. it broke the light out. it was showered in glass. >> the seat belt sign was illuminated and they give a verbal warning when that happens. >> there's every reason to

believe a verbal warning was given. back to you. coming up on 29 minutes after the hour. updating you on the breaking news this morning. a surprise visit in north korea by former president bill clinton. he arrived in by i don't think i don't think just before midnight. his mission was to secure the release of laura ling and euna lee. they were captured and tried and sentenced to 12 years of prison labor. we're tapping in to the global resources of cnn to get you the latest as soon as we get it. the custody issue is resolved. the battle over michael jackson's estate continues. a judge in los angeles approving an agreement to grant katherine permanent custody of his children. katherine jackson wants more of a say in her son's estate. she's challenging the two men named as co-executors in michael's will. the judge wants both sides to try to reach a resolution on their own. >> snow, rain, heat, gloom of night can't stop your mailman but e-mail might. they're looking at consolidating or closing 700 post offices

across the country. the two-cent increase in stamps was not enough to cover a loss this year. big reason -- more and more people are ditching snail mail and paying their bills on-line and sending e-mails or instant messages or smss or blackberry messages or whatever else they send to each other. congress is heading home, but congress is not taking a back seat. the august recess will be a working vacation. who should we keep our eye on in the next few weeks? martin kaydy, the deputy congress editor of politico.com. he's the author of politico's huddle. he's got an interesting article called "the five things to watch for during the recess." great to see you this morning. you say, watch for an aggressive move by karen ignati. she's the president and ceo of america's health care plan. what should we watch for from a person who many americans have not heard about before? >> the health insurance industry has been quieter than other

parts of the industry so far. but speaker nancy pelosi called the health insurance industry the villain in this whole debate last week. so, that means the health industry is rating a turn-on, the 100 million people or more who have insurance and how they're affected. the discussion about who is uninsured and they're ready to go on the attack during the summer. >> they had a seat at the table at the white house. they're not in favor of the public option, right? >> they're not in favor of the public option. the employers will drop the employer-based insurance. >> number two, watch president obama's numbers? how will they play out in the august recess? >> if the president was in the mid 60s and extremely popular like he was in the first six months of the presidency, conservative democrats from a district that mccain won could say, i'm with this president, i believe in him.

if obama's numbers are below 50s nationwide, they may be below that in a red district. if you're a democratic member of congress, people aren't buying in to the obama agenda right now. these guys will be worried and start to waiver while they're back on the home front. >> you mentioned we were talking about number one, speaker pelosi and the message war. that issue -- the number three thing to watch for in the august recess. a lot of that centers around health care, yeah? >> yeah, sure. republicans have it easy on the message war. they have a easy buzz word. socialized medicine, government takeover of your health care. government bureaucrats deciding what care you can and can't get. commercials on cnn this morning along these lines. democrats have it a lot harder. they have the noble goal of covering the uninsured. when they have to explain how does it affect me? they have to start talking about public insurance exchanges and nonprofit cooperatives and how to pay for it. it's a lot more complicated.

>> how do you sell the insurance exchanges and the health care cooperatives. most people have no clue what's going on or what's in the bill because it's 1,000 pages and so many members of congress haven't even read it. >> exactly. >> who will come to the tea parties? the anti-tax, anti-spending protests? >> we saw this flareup over the weekend. we have a video. several networks run this video as well. lloyd dog get, a town hall meeting in south austin that got overrun with the tea party-type protesters who are saying just say no as you can see on the screen here. these folks -- it's hard to tell if they're grassroots organized citizens, but the more likely thing is they're being organized on the national level by conservative groups. we've gotten memos from groups called how to embarrass your congressman.com. so these folks are keying up the party. they're not huge. but a small group of people can disrupt a congressman's town

hall event. it goes on youtube, nationwide, and it's embarrassing to members of congress. >> a lot of pushback coming up in this recess. you say baucus in a box. he's max baucus. he's charged with trying to write the health care reform in the senate. why is he in the box? >> he doesn't like to move major bills without getting a signoff of a few republicans. he's a conservative democrat. he wants to get chuck grassley of iowa or mark insio. he knows if it comes out of the senate finance committee on a pure partisan vote, it's going to be tough to get 60 in the senate. >> five things to watch for in the recess. thanks so much. enjoyed the article, by the way. if you want to read the full article from politico, we'll link you to it. go to cnn.com/amfix. you'll find the link there. we want you to weigh in on your take of how president obama is doing. the second 100 days of his administration winds down.

i'll get ready for the third 100 days. see the results this thursday night, 8:00 eastern right here on cnn. all right, meanwhile, this cash for clunkers program turned out to be quite popular. the white house is saying if you want to keep it going, the senate has to approve billions in more money for it. but wonder what happens to the clunker after you trade it many? jason carroll went digging. he shows us next. ththththththh

♪ learning to fly ♪ but i ain't got wings welcome back to the most news in the morning. we're wondering what happens to clunkers. the more pressing problem is what happened to jason carroll's piece on it. it's trapped in our electronic system somewhere. we're struggling to find it. we'll get it to you as soon as we can. meantime, you saw the pictures of the furry little doggies, a new airline flying the friendly skies. >> this is pet airways. it offers coast-to-coast travel for cats and dogs only. carol costello has the story for

us. she's live in d.c. people can go on the plane? >> no, no people. just dogs and cats. maybe that's where jason carroll is? getting worried about him. >> either he's going to get the piece or re-enact what happens to the clunkers. one way or the other. >> make him re-enact it. >> won't be good when he goes to the clunker. >> i hear him laughing in the back ground. let's talk about pet airways. i was skeptical about pet airways. who in a recession would doll out hundreds of dollars to fly their pets on a plane just for dogs and cats. once again, i underestimated the love americans have for their animals. welcome to pet airways, where passengers are powsengers. and people, pet parents. >> he's going to be -- going to be a special pawsenger. >> reporter: on pet airways,

they fly in an air conditioned main cabin of a beach turbo prop in the company of a pet specialist. >> you're going to behave themselves. >> the animal's owners aren't with them. they'll fly commercial and meet up with their loved ones when their pet's flight lands. the co-creator of pet airways. >> some people might think, oh, you're crazy yes, people did. there was a need. we're on our own community. we said we get it. >> reporter: no chief bet our own community. that's loosely defined as a group of people who think their pets are people who thinks that one day their dog will be able to do what the dog doug did in "up." >> he's a good and smart master and he made me this collar so that i may talk -- squirrel! 50. >> reporter: he's your baby. >> my first baby. >> reporter: gus is 12, arthritic, and prone to seizures. the thought of gus flying commercial alone is too much to

bear, even at $399 one way. >> definitely i'm nervous about how he's feeling, but it makes me feel so good to know that they're going to be stopping by, checking him, they're going to be in the plane with him. >> he treats him like he lives with us, sleeps with us. we take care of them. they go to the doctor. why is this any different. >> reporter: and with that sentiment in mind, gus and the rest are just buckled up and ready to fly. when pet airways lands in l.a. -- >> oh! >> reporter: let the reunions begin. >> hi! i'm going to cry. >> reporter: oh, gus made it safe and sound. we got an e-mail from gus' mom, renner if. said he had a great trip. as for the costs, he's a great big dog and he had problems, it costs $399 to fly him one way. but the airline says some flights are as low as $149 and the people who are flying their

pets, john, kiran, said those prices are comparable to what you'd pay if you had to fly your dog commercial in cargo. >> yeah, it's not cheap, particularly anymore, you know? in the charge of all of the extra baggage. why not just put the dog in the cargo hold of a regular aircraft, though? >> because it's dark down there, nobody keeps an eye on them. you know, you've heard nightmare stories of dogs escaping and some dogs dying. although that happens very rarely. so people just feel more comfortable, you know, to have their pets on an air conditioned plane with people watching them. one of whom is a veterinarian. >> see. >> you're moving across country and you want to ship your dog over, i guess that's -- that's worth it to some people. >> i admit. i actually -- i had a bad experience putting a dog in a cargo hold. we took the dog up to cottage in canada and when we arrived back at newark, the dog was covered in pool.

so -- -- poop -- >> see! if only to avoid the unpleasant washing after arrival. >> getting the dog in the car was a lot of fun after that. considering we didn't have access to the water. >> you could have strapped the dog to the top of the car. it's -- >> oh -- >> mitt romney again. pulled a mitt romney with the both of you. >> peta is coming after both of you. >> mitt romney did that. not us. >> exactly. >> we don't advocate that at all. >> no. >> we like pet airways. much safer. >> thank you so much. >> mitt romney's dog seamus is famous on the internet. look it up. spring storms on tap for the country this morning. rob marciano checks in coming up next. a great deal gets even better. let us recycle your older vehicle, and you could qualify for an additional $3500 or $4500 cash back... on top of all other offers.. on a new, more fuel efficient chevy. your chevy dealer has more eligible models to choose from - more than ford, toyota, or honda.

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rob marciano is at the weather center in atlanta checking on the conditions across the country today. rob? >> reports of wind and wind damage yesterday. no reports of tornadoes. an area of concern across parts of the midwest to kansas city. a couple of severe thunderstorm watches are posted until 7:00 a.m. and 10:00 a.m. local time, mostly for winds that could gust to 60 or so miles an hour and certainly some hail. right now, kansas city is under the gun. if you're traveling in that area, be aware. thunderstorms are rough at the moment. also, if you're traveling through kansas city, cincinnati, kofington airport, thunderstorms rolling through that area too. these will build and expand as

the day rolls along. parts of texas will be up and over 100 degrees. hot spots there. phoenix -- if you're heading out that way, bring the light clothes. they have experienced their hottest july on record and it will continue. 94 degrees in memphis. it will be 87 degrees in new york. one other note, enrique, tropical storm enrique. hawaii, the storm heading to the pacific. right now, winds of 40 miles per hour. it could become strong enough possibly to be hurt. in the pacific, atlantic, as you know, continues to be quiet. >> thank goodness for el nino this year. appreciate it. thanks. finally, we promise, we're going to have it for you. >> you're going to try this again? >> we're talking about the popular cash for clunkers program. you trade in, you get a voucher for a certain amount of money to go toward buying a new car. what happens to your old car. jason carroll, fingers crossed, jason carroll, fingers crossed, can show this in a minute. 30.

♪ this is it. welcome back to the most news in the morning. cash for clunkers is getting a lot of credit for the surge in july car sales that we've seen. right now, though, the wildly popular program is running on fumes, the senate needs to approve another $2 billion in money for the program this week or the white house says the program itself will have to be junked. but what happens to the actual clunker when you trade it in? jason carroll takes a look at that this morning. we waited a long time for it. it better be good. >> you put me under pressure there. >> oh, carol costello wanted to do a re-enactment.

that's a critical part of the process. we all know that. >> this is a lesson of mechanics 101 in some ways. one estimate shows some 120,000 cars were traded in under the cash for clunkers program. a lot of you have written in asking if those trade-ins are not supposed to go back out on the road, where do they go? well, you're finally about to get your answer. major automakers reporting a boost in sales thanks to the government's cash for clunkers program, consumers giving thanks to. >> you know, i got $4500 for this vehicle. >> deal is done. happy for him. >> reporter: the official numbers not in yet. but already, tens of thousands of owners have dumped their old cars for new ones. what happens to the old ones? fluid put in to the engine at the dealership makes them unuseable. what's next? >> this is the first step when they come in over here. >> reporter: most end up at salvage yards like this one in bridgefield, new jersey.

dan took us on a step-by-step process of declunking the clunker. step one, evaluation. >> these cars came in right from the dealership in teterboro right there over the bridge. >> so this is an example of what some of the clunkers for cash that you're getting. right? >> yeah. yeah. >> so basic on this, what's normally wasn't a clunker car, i can see the doors, air bags. >> the government program doesn't allow every car part to be recycled because they don't want certain parts back on the road. >> what's the next step? >> step two, when any car comes in to our facility, we put on this rack over here. >> reporter: evaluation complete, step two. draining. >> rearend fluids, brake fluids, all the fluids are drained here in this area. >> reporter: the next step is to recycle the items that are allowed. in this case -- the tires, the catalytic converter, the battery, the condenser, and the radiator. these are the only items from these types of cars that the program allows to be recycled. the next step --

it's got to be crushed. >> reporter: once it resembles a metal man cake, it's done, ready for the final step, shredding. >> pieces about that big and it gets exported to any metal repsychlers overseas. >> reporter: at the end of the day, if you had to give an assessment for this program, how it's working for you so far, what would it be? >> it's built relationships with the dealers out there also. and it also helps us to get every little bit you can out of a car. >> reporter: well under the cash for clunkers program, there's been concern some of the trade-ins have been sold to auction and do end up back on the streets. some environmentalists question how fuel efficient some of the cars bought in exchange for the trade-in are. not in question at this point, the financial success of the program. the dealers are making money. the consumers are making happy. even the salvage yards out there making money as well. >> going to see if the program is going to continue now.

>> we'll have to wait and see. maybe by the end of the week we'll know. >> we want to let you know what you think. do you support more funding for it? have you used it? will you use it? share your thoughts, cnn.com/amfix. everyone is not happy with the cash for clunkers program. jim demitts is not happy with it. he'll be joining us in the not too distant future to talk about why he doesn't support it being renewed. also why he's against the health care program as well. all of that coming up. we also will talk about president clinton, former president clinton in north korea trying to win the release of two american journalists. all that ahead. 54 after the hour.

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i think i'll go with the preferred package. good choice. only meineke lets you choose the brake service that's right for you. and save 50% on pads and shoes. meineke. welcome back to the most news in the morning. 56 minutes past the hour. right now on the most news in the morning. right now when the custody situation is settled in the mible jackson case.

the kids will be staying with his mother, katherine jackson. there's the matter of money. a judge decided who will handle the estate for now. but the marketing of a pop icon who died has only just begun. what's in the works already. >> reporter: good morning, john, kiran. michael jackson was $400 million in debt by some estimates. so why the fight over his estate? >> michael jackson will certainly be worth more dead than he was alive. >> reporter: business agent mark rossler handles the estates of other celebrities who have passed, like marilyn monroe and james dean. he predicts jackson will be the biggest grossing personality of all time. good news for his mother, katherine, and his three children, who, together, were left 80% of his estate. so what is the estate really worth? katherine jackson's attorney has said it's worth $2 billion. but a source close to the estate dealings called that ridiculous and called their attorney

terribly misinformed. that source told me the estate is more likely worth about $100 million right now with the toe potential to be worth a lot more. >> reporter: we heard deals are in the works to bring in hundreds of millions of dollars, including a movie, including hours of jackson's final rehearsal footage. our source said the estate will get 90% of the profits. also, jackson's memoir, "moonwalk" will be rereleased in october. that deal is worth $60 million. >> you're talking about the copyrig copyrights, the trademarks, you're talking about what you call the right of publicity associated with the name and likeness. >> reporter: nchin fact, he's t highest selling artist after death since neilsen started tracking this stuff in 1991. in january 1 of this year until the week he died, jackson sold 297,000 albums, compare that to 3.73 million five weeks later. and in 2009, prior to the week

he died, fans downloaded just 1.3 million of his songs. five weeks later, it has jumped to 8.5 million. also, he had the top ten albums on the billboard charts for two weeks. the first time any artist alive or dead has done that. >> everyone is looking at it through rosy tinted glasses. and the further we get away from his death, the more you'll see those sunglasses taken off. and, so, the value of that is going to go down. >> reporter: no doubt, jackson's family and his creditors hope that doesn't happen anytime soon. john, kiran, back to you from los angeles. >> randi kaye for us. we're coming up to the top of the hour. welcome. tuesday, august 4. i'm kiran chetry. >> i'm john roberts. here's what's on tap. the agenda, the big stories we'll be breaking down for you in the first 15 minutes. first, breaking news this morning. former president bill clin on the on the ground in north korea. he's hoping to come back with

the two u.s. journalists detained back in march. we have the global rep sources of cnn on top of every new development in story. >> and the first time the officials in iran confirming the country is holding three americans, saying they're arrested for entering the country illegally. reports from iran's state-run media casting doubt of whether the three are hikers who lost their way. secretary of state hillary clinton is calling on iran to release them, quote, as quickly as possible. plus, the dow is set to open as a nine-month high, pushing the markets up, better than expected results from detroit and the country's manufacturing sector. the dow closed up 115 points on monday. the current level, 9287. we begin with breaking news this hour. former president bill clinton is in north korea trying to negotiate the release of two u.s. journalists. clinton arrived an hour ago by an unmarked jet. this is pictures of his arrival.

he was fwreeted by two top officials and given flowers by a young girl. clinton is there. no formal record of what is happening is on the books to bring back journalists laura ling and euna lee. our broadcasters across the globe is bringing you this story in a way only cnn can. we have jill dougherty with more on the situation. is it to just secure the release of hostages, or will north korea's nuclear ambitions come up? what do we know about what may or may not be happening in the talks? >> at the airport, the president one of the people who greeted them was the chief nuclear negotiator, which was quite interesting. the whole thing is played out -- it's a gamble. it's played out with extraordinary diplomatic and personal stakes. look at it. you have the fate of the two journalists, who, after all, were sentenced to 12 years of hard labor. so the question is, will they get out? will bill clinton have them on the plane coming back to the united states?

then you have the standoff on the nuclear program of north korea. the administration has tried to keep that separate, two different tracks. but that's happening at the same time. look at the personal side. bill clinton's former president, husband, of course, of hillary clinton, the secretary of state, who is the person who has been really out front leading the diplomacy on trying to get these two journalists out. she's the one who talked about clemency. she was the one who talked about humanitarian issues. and let's not forget, the sort of a week or two ago, she was being insulted personally by the north koreans. so there are extraordinary levels here. ultimately, it would have to be bill clinton wants to get the two journalists out. that's number one. >> the other interesting question about whether the former president sort of paved the way to smooth things over for future talks. or did he steal some of the thunder, you know, even if it's not purposefully by his wife?

or from his wife? >> well, yes. but, you know, again, they're trying to keep this separate. but it might ultimately lead to some type of warming. after all, in 1994, jimmy carter went to north korea and there were some good things that came out of that. and another thing that we should keep our eye on, kiran, is whether or not he'll personally meet with kim jong-il, remember, the leader of north korea has been reported as being quite ill. he's been seen recently. but we have to really watch whether or not they will personally meet. it will be very, very interesting. >> that's right. we'll try to find out more details about that as well throughout the morning. keep it here for the latest details on what's going on with former president clinton's trip to north korea. thank you. what makes the trip so interesting. all of the talk in the u.s. and north korea was u.n. sanctions and potential threat of an all-out war? could bit a game changer? for more, we're joined by the l.a. times bureau chief. in seoul, south korea this morning. the former president, john,

arrived to a very warm welcome, almost with the air of afate acomp li. how is this precooked? is it he has to show up? the two journalists are released? >> i think most of the people in washington i talked to earlier today were of the opinion that bill clinton is a big enough personality that would not risk the loss of face of him showing up in pyeongyang and returning empty-handed. and as your correspondent said, the obama administration is doing all it can to keep these two issues separate. it's very -- it's unclear this morning what exact lip mr. clintclin -- exactly mr. clinton will bring to the bargaining table, though there's a lot of nostalgia of his administration with pyeongyang. what followed in eight years

with george. with bush was a complete deconstruction of any kind of relation the u.s. had with north korea. in fact, bill clinton, until the debacle of 2000 election, bill clinton was planning on visiting pyeongyang to end his presidency. that didn't work out. so, the -- the -- if the -- if kim jong-il is -- let's look at it this way -- a few months before they took the two reporters in custody, they were getting a cold shoulder from washington. they were getting not even -- even a whiff of -- of warmth from the obama administration. and now we have bill clinton who's at a very high profile visit is coming that adds legitimacy in their eyes to their way -- their political way of life. so it's an all-win situation for them. sure, they'd rather have -- i would think they would rather have hillary. but bill ain't bad. >> if you're looking at the optics of all of this, it

doesn't get better than bill clinton showing up on the ground there. a quid pro quo for north korea. they never do something for nothing. what do you think the quid pro quo is here? the chief nuclear negotiator is one of the people who greeted the president when they arrived on the ground in pyeongyang. but there's an idea of the transition of power who kim jong-il, who by most accounts is ailing, and his young son, kim jong-un. might this have something to do with the transformation of power? italoers the hostility between the two-countries. >> who knows. this will come out in the wash in the next few days. i talked to people both in seoul and washington that within the next 24 to 36 hours, bill clinton will board a plane with both of those reporters. what happens in the meantime -- that's what bill clinton gets. what does kim jong-il get for the communique they're having. i would think it would be all warm and fuzzy. he'll meet with kim jong-il.

mr. clinton might even meet with his son, some of the top leaders in pyeongyang. and, like you say, it's a breaking of the ice. clinton goes back. talks to obama. and, who knows, maybe next time it's a -- it's a -- you know, there won't be any of these circumstances. there will be an official visit by the obama administration. >> fascinating news to see the former president on the ground. we're looking forward to see what comes out of that meeting. john glionna, good to talk to you. appreciate it. >> good morning. no worries. secretary of state hillary clinton on the biggest trip yet to africa. the first stop, kenya, where mrs. clinton is expected to push president obama's policy objectives laid out last month. also on the agenda, the pirate problem in somalia. she'll meet with south african president nelson mandela. new backlash over the huge bank bonuses that hit a nerve with so many working class

americans. bank of america has agreed to pay $33 million to federal charges that it hid plans to pay benefits to merrill-lynch employees after it agreed to buy the bank last fall. bank of america neither admitted nor denied the charges. president obama turns 48 today. what is he doing to celebrate? he's meeting with senate democrats to discuss health care and cash for clunkers. sounds like a fun birthday lunch. going to have lunch at the white house with them. his press secretary said that chuck e. cheese was also booked. that's more for the kids. ski ball is a blast. the post office, $7 million in debt even though they raised the price of the stamp? snail mail too slow. you have to do instant message and e-mail. find out coming up. 8 1/2 minutes after the hour.

there's a lovely picture this morning of charlotte, north carolina. the way the sun is blazing, you might get the idea that it is going to be a hot one.

like seven inches from the midday sun. clear and 70 degrees right now. but later on today, partly cloudy, a high of 92. so, yeah, it's going to be hot in north carolina. checking the stories that are new this morning. 11 minutes after the hour. uncle sam has not been this strapped for cash since the middle of the great depression. the government is seeing the biggest drop of tax revenues since 1932 because people are spending and earning less. if the figures hold, the tax man will see an 18% drop this year while the federal deficit hits a record $1.8 trillion. well, could the post office go the way of the phone booth? even the price of stamps up 2 cents, the postal service is warning it could lose $7 billion this fiscal year. the biggest reason, they say, is e-mail. some post offices could close, collections spot could be eliminated. and postal workers can lose their job. congress is considering a bill that would save the agency money on pensions. the full debate on supreme

court nominee judge sonia sotomayor. it's all but certain she'll be confirmed before the august recess kicks off on friday. some republicans are promising to vote against her calling sotomayor an activist judge and the national rifle association is promising to downgrade any senator who votes to confirm the nominee. more on the breaking news this morning -- former vice president bill clinton is in north korea trying to broker a deal to get two american journalists back home. all of this happening while his wife, the secretary of state, is in africa. hillary clinton on the biggest international trip she's made so far. so a lot of high-stakes clinton traveling today. doug is a former advisor to hillary clinton, worked with the clintons. and the former strategist and advisor to mitt romney's campaign. good morning to both of you. thanks for being with us this morning. >> good morning. >> what do you make of president clinton's trip to pyongyang. they're talking about behind the scenes back room dealings going on. they didn't release an official

itinerary. he's there right now. but it seems to be to try to secure the release of the two u.s. journalists at the detain? >> apparently, the women's families were told by the korean government that if bill clinton came, they'd release him. i'm sure he's thrilled to help out in a situation like this. you can bet there's a lot of behind-the-scenes discussions. someone of his stature isn't going to get on a plane and fly out to north korea without some assurances sha something is going to come with it. he's expecting a good return for the women. it's a good thing. it could serve as an ice breaker. we need thawing with relations with north korea which have been tense as you know. one step forward, two steps back with them. but i think it will be a good move beyond what's going to happen today getting the two journalists released. >> what does it say about the -- the u.s. diplomacy as it -- as it relates to north korea with the situation? they've been launching the long-range missiles. they've been sort of upping their rhetoric of late.

yet, they're getting a visit from a former president. this will be the highest profile u.s. visit in nearly a decade. and it has to do with them detaining two u.s. journalists. >> you know, i have to say that if the president clinton can bring those two journalists home, all the more power to them. all the credit of the administration if they were behind this. and at the same time, we need to defuse the situation in north korea. and if this will help defuse it, he's popular up in that part of the world, then let's try something. because that's to our benefit to start a good relationship there or at least an improved one with the successor of this regime. >> all right, i want to turn your attention to the situation domestically that's been getting a lot of buzz. some comments made by two of the top economic advisors in the white house, both, of course, timothy geithner and larry summers. and you heard robert gibbs yesterday backing off saying, oh, no, the president is not going to be raising taxes. it was a big campaign promise.

and we all know what happens when you make a promise on the campaign trail and it looks like you're not able to keep it. let's watch. >> read my lips -- no new taxes. >> you will not see your taxes increase by a single dime. not your income tax, not your payroll tax, not your capital gains tax, no tax. >> all right, the first clip we saw, doug, is the famous read my lips, no new taxes. there were tax increases in the first presidency of george the elder bush. some say it cost him the election. the clintons used it very effectively in the 1992 campaign. is president obama facing a possible scenario similar to that if taxes do have to go up inevitably because of so many things going on right now with the recession, with trying to balance the budget, and with health care reform? >> well, they're starting out where they need to in consulting the deficit, which is cutting spending. this administration has found

dlf 5 $500 billion of spending to cut. that's when they need to focus the effort. the president made clear that he's not going to raise taxes on the middle class. the middle class were getting rich in the administration of the last eight years, it was the big corporations. >> tim geithner and larry summers couldn't rule that out when asked specifically if whether or not the middle class could possibly face a tax hike? >> yes, the -- they're answering -- go ahead. >> the key here is that you have two number guys making a statement clearly. they are good. they're looking at the policies you want. they're adding up the numbers. they don't know another way to to it. the president said, oh, no, they're not going to do it. it's an alternative. not going to do this, but to pay this to pay the bills. >> there are alternatives. >> but you just said, he's going to cut and cut. he's quadrupled the deficit in six months and has more plans

for more spending. then he says i'm not going to increase taxes. it all doesn't add up. and as a result, the american people no longer trust this president. >> well, here's where it starts. made out like bandits under the republican add administration. they need to start there not rush to the middle class to raise their taxes. there is plenty of savings that can be found. like i said, they found half a trillion dollars in savings already. they can find more savings. they need to balance that. make their corporations pay their fair share, gotten away scot-free under the republican administration and give the middle class a break. that's what the president tends to do. >> looking ahead to the second 100 days. does health care reform get passed? doug first. >> i think so. the -- the american people want it and if the -- if the democrats in congress can get everybody in line to pass it before the republicans and their allies in the insurance industry can poison the atmosphere around

it, they can get it done. it needs to happen. there are millions of people who don't have any health care. there's people who have it but really trying to struggle to pay for it. this needs to get the dealt with. >> listen, if it was going to pass, it would pass. go to democratic congress, senate, president. it would have passed. the reason it didn't pass is the american people do not want it. there's an anti-health care rally going on spreading across the country. just talk to your congressman. go to the town hall meetings. and they're all going to town hall meetings and all they're hearing is say no to health care. what do you think is going to happen, kiran? they're going to come back and tell the president, listen, my job is in jeopardy if i go with that obama camp. they're not doing it. it's dead. >> well, two very different predictions. thank you both for being with us. thanks. what do you think as well? have the second 100 days of the obama administration been days of change or frustration? what do you think.

cnn.com/reportcard and get the reports from the cnn national report card thursday night 8:00 eastern. breaking news this morning. former president bill clinton is in north korea trying to win the release of the two american journalists who have been held there since march. we go inside the country and what could be happening on the ground. that's a minute or two away. 19 minutes after the hour. wouldn't it be great if it were easy to spot the good guys ? you know, the guys who do a super job. introducing the superguarantee. go to superpages.com

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this is cnn breaking news. 22 minutes past the hour. welcome back to the most news in the morning. if you're waking up, we're trekking breaking news out of north korea this morning. former president bill clinton is now on the ground in north korea. these are some of the first pictures of him arrivinarriving. he's trying to negotiate the lease of two u.s. journalists, laura ling and euna lee. lisa ling spoke to our anderson cooper after the two women were sentenced to 12 years of hard labor while crossing into the border while doing a story on china.

>> all we can say is that they -- they are journalists and they were doing their job. my sister has been a journalist for years. and that's really all we can say. you know, we weren't in the -- in the courtroom. we don't know any sort of specifics other than what was released. we just hope, you know, given the fact that we know the girls have apologized profusely that they will let the girls come home to us. it's been -- it's been three months and that's been too long for us. >> for more on the negotiations, let's bring on our john voss. he's tracking things for us from beijing in china. john, north korea is a country that lives by the quid pro quo. so what might they be looking for here in exchange for releasing the two journalists? >> well, i'll tell you what they get, john. they get a visit by bill clinton. he's not the president, but he's the former president, analysts say that in himself is bringing plenty of status enough for the north koreans. they're looking for legitimacy here. you have the former u.s.

president being a part of the regi regime. legitimacy at home, most north koreans will know who bill clinton is. legitimacy overseas, bill clinton is willing to deal with the regime, then why aren't other countries as well. the meeting takes place against the backdrop in the change in tone with the administration. no longer demanding the release of the two reporters, rather looking for amnesty. yes, they've done something wrong, we're asking for forgiveness. we respect your system. as a sign of that respect, we're sending you an elder statesman, we're bringing you bill clinton. john? >> all right, there's speculation that bill clinton there will meet with north korea's leader kim jong-il. there's reports about his ailing health? you think that meeting will take place? >> yeah, it's pretty much a given that bill clinton will have a one-on-one meeting with kim jong-il. it will be very surprising if it didn't take place, unless, of course, kim jong-il's health

takes a turn for the worse, if he's capable of meeting with the president. and if north koreans being north koreans they'll decide they'll snub bill clinton at the last minute. that seems very unlikely. the bottom line in all of this is they have had this meeting. what they've decided is decided by lower-level officials. hand shakes and smiles. bill clinton will be wheels up in the private jet with laura ling or euna lee in the next day or two. you don't send a former u.s. president halfway around the world to come back empty-handed. >> you don't do it in the first couple of hours either. you want to keep him there as long as you possibly can. >> might get some insight on the health of kim jong-il based on whether or not bill clinton meets with him. all right, john, thanks. >> exactly, well, yeah, we'll be watching for the photographs which will come out of the meetings later on. have a good look at kim jong-il. >> keep up with you throughout

the show. thank you, john voss. the cash for clunkers program, very popular. will it be able to continue? they need $2 billion approve bid the senate. >> the house approved it, will the senate? it's tough sledding right there, i think. >> meanwhile, what happens to all of the clunkers after they're traded in? jason carroll heads to the junk yard. dit was whack ♪ ♪ 'cause now i'm driving off the lot in a used sub-compact. ♪ ♪ f-r-e-e, that spells free credit report dot com, baby. ♪ ♪ saw their ads on my tv ♪ thought about going but was too lazy ♪ ♪ now instead of looking fly and rollin' phat ♪ ♪ my legs are sticking to the vinyl ♪ ♪ and my posse's getting laughed at. ♪ ♪ f-r-e-e, that spells free- credit report dot com, baby. ♪

welcome back. 29 minutes past the hour. we're tracking breaking news out of north korea this morning. former president bill clinton is in pyongyang as we speak. his mission -- to secure the release of two american journalists, laura ling and euna lee. the two were sentenced back in june to 12 months of hard labor. north korea said they entered the country illegally and were trying to launch a smear campaign against their government. a plane crashed into the air traffic control tower. it i canned t it killed the plane's pilot. the dow will open in a few hours at a nine-month high.

stocks got a monday rally on better-than-respected results from detroit and the country's manufacturing sector. the dow closed up 115 points. on monday, closing at 928 7. >> doesn't it seem the holidays are coming earlier every year. harrod's is trying to lure customers by bringing out the christmas display. christmas in august. fake snow, santa claus. and even some real penguins on hand there as well. could be the most expensive download on record. $22,000 for one song. a college student who admitted downloading and sharing music with his friends got hit with a staggering verdict of $675,000. it breaks down to $22,500 a song. so, were they worth it? and does the punishment fit the crime? joel joins us live this morning from boston. he's the boston university student who got tagged with this bill. good to see you this morning,

joel. you did this from 1999 to 2007. you knew you were doing something wrong. why did you keep doing it? >> well, it wasn't really something that was foremost in my mind in terms of it being illegal or not. it's just sort of -- i had napster on my computer in front of me. and when i saw it, it was just this library of music in front of me. i did what came naturally to so many of the people in my generation, go to the college campus and try to find someone who hasn't done this. >> when napster came out, all kinds of people were downloading. then the court cases against napster. oh, wait a second, maybe it's not kosher to do. but you kept on doing it, but why? >> it was the same thing. napster went down. there were still platforms out there that i could get free music on. it was something i was used to doing. it was a social thing with my friends getting the music i got. i explored a lot of music i got

the chance i never explored. >> could be a social thing among your friends to shoplift as well but doesn't make it right. i wonder why you thought it was right? >> well, i mean, it's the comparison of shoplifting -- i've heard if you go in a store and you steal a cd, how is that any different? and i think that's sort of -- i don't think -- because i have never stolen a cd from a store. i've never done that. and these are different things, inherently. >> what's the difference? >> sure -- i'm glad you asked, john. so for example, nothing else, the amount of work that i have to go to to steal a cd. you ahave to go in and sneak it out. >> it's easy so it's okay. >> hold on. this is something that came naturally to so many people in the same situation where shoplifting isn't something that's done. even at that point doesn't convince you, i think if you take polls of people, the vast

majority of people do see these as inherently different things. the copying of something, the sharing of something on-line that's dupe lickable and right there in front of you natural is different from taking and going to a store and sneaking out of it. >> but perception of the law and the law can be two different things. you said that you believe artists deserve to get paid for their work. you were downloelding some stuff. they weren't getting paid. here's a couple of quotes from the artists. i am friends with a number of people in the music business and have been. they're against all of this. record companies, publishers, retailers, artist, and others in this industry must take very strong positions against the stealing of the writing and music or else they will be as cheap as the writing in the street. bare naked ladies said when the gap went on-line, t-shirts didn't become free. you have a lot of pushback from the artists here saying downloading music from the internet for free is just plain

wrong. >> but you haven't quoted trent rezer in, radio head, green day. >> let's -- let me just -- let me quote trent rezner from nine inch nails. who says -- just because technology exists where you can duplicate something, that doesn't give you the right to do it. there's nothing wrong with giving some tracks away or bits of stuff, that's fine. it's not everybody's right. once i record something, it's not public domain to give it away freely. >> he has, actually, on his latest album, he gave away his creative comments. >> that was his choice, though. >> no, no, i understand. i don't know where that quote comes from. but i'm focusing more on his rabid criticism of the eriaa and his continued campaign to distract this campaign which is to teach the public a lesson and the idea is to extract huge sums of money from people. the artists don't see this as threatening. peoplekocover music and end up

paying for it. there's a gray area here. i don't do it anymore. but i think it's a gray area. i think it has -- it can be used for the benefit or the detriment of the artists themselves. but i think that's something that everybody needs to come to terms with for themselves and not to have this huge ria machine out to teach the public a lesson on this. >> mm-hmm. >> if you're going to -- if you're going to make the argument that i'm responsible for hurting the industry and if you can show up in court and you can make an argument for the actual daniel that i've caused which is more in line with 99 cents on itune, then sure. if i hurt the industry, then in a reasonable way. >> let's talk about the settlement, $675,000, $22,500 per song. where are you going to get the money? >> i don't have any money for that or an appreciable fraction

of that. i have no choice at this point but to declare bankruptcy. another question john a lot of people asked me is why i didn't settle? i did try to settle from the start. i offered them $500. i sent a money order to them which they returned say iing essentially call him when you talk. >> you gave them fair value of the songs based upon what they cost if you download them from a place like itunes. >> exactly. $500 should be more than is reasonable and it's what i could put together at the time. at the time, they wanted $3,000. move forward in time to showing up in court in the pretrial days. i offered them $5,250. and they came back demanding double that. so, now, i don't have that. i would -- i was ready to declare bankruptcy. so, who is being unreasonable? who dragged who in to court is really the matter of the people who do spin? i never held i compete with the ria spin, they're a professional

spokeswoman who's professionally paid. i try to tell it as is it. >> you have the backing of a well-known law professor at harvard making a project for his students as well, the fight on your behalf. do you plan to appeal the decision? >> absolutely. a lot of options, i've been told, open to us. i don't know the official names or anything. but we can appeal -- we can -- we can file some legal motion to the judge to ask him to adjust the amount. >> so here's the -- >> it seems that she was -- >> here's a question for you, joel, jammi thomas ras set was in a situation similar to you. she was fined $22,000. she appealed and they slapped her with a $2 million. is there a risk here of going to appeal? >> well, there obviously is that. there are jokes like she should have quit when she was behind. the difference between $200,000 and $2 million. i am sure she can't afford

either of them. either is a bankrupting number. it's symbolling. it's not going to be paid. the artists aren't going to get the money. the only people making money here are the lawyers. the ria are losing customers, the artists aren't getting money. the ria said it's a money-losing campaign. and my generation is getting alien ated and i think kind of screwed in the whole process. >> we'll keep following this closely. joeltennenbaum, thanks for stopping by. >> sure, john. >> appreciate it. >> three minutes past the hour. coming up tomorrow, president barack obama talks about health care. taking his plan to elk hart, indiana holding a town hall event there. the town's major. what do his constituents think? do they want to see health care reform? dick moore joins us tomorrow. the president takes a stimulus pitch -- he took it to elkhart back in february. the president may be trying to do too much too fast. it's 7:30 eastern tomorrow on the most news in the morning. so cash for clunkers, we've

all heard about the program. the senate working on whether or not they'll put money in to it. there's questions as to what happens to the cars after they trade them in. we had a couple of people e-mail us saying do they get to third world countries? jason carroll went to the junk yard and he'll tell you when you cash it in. 39 minutes after the hour. you know why i sell tools? tools are uncomplicated? nothing complicated about a pair of 10 inch hose clamp pliers. you know what's complicated? shipping. shipping's complicated.

not really. with priority mail flat rate boxes from the postal service shipping is easy. if it fits, it ships anywhere in the country for a low flat rate. that's not complicated. come on. how about...a handshake. alright. priority mail flat rate boxes only from the postal service. a simpler way to ship. 40 minutes past the hour. the government's cash for clunkers program is running on fumes itself right now. the house has given the green light for another $2 billion that would triple the cash going towards the rebates. you turn in your gas guzzler and you get a rebate to get a more energy and fuel efficient car. the white house is laying on the senate to pass it. and allow the program to continue.

>> we're hopeful, again, if it doesn't happen this week, it's unlikely it doesn't make it to the weekend with a program that could continue. >> the white house said if you buy before friday, you should be able to get your rebate. this got us wondering, where do the traded in clunkers go. more on what happens after the trade takes place? oh. >> we found out. a little mechanics lesson in the process. one as we show 120,000 cars were traded in under the cash for clunkers program. a lot of you have written in asking if those trade-ins are not supposed to go back on the road, where do they end up going? well, you're about to get your answer. major automakers reporting a boost in sales thanks to the government's cash for clunkers program, consumers giving thanks to. . >> i got $4500 for this vehicle. >> deal is done. happy for it. >> reporter: the official

numbers not in yet. but already, tens of thousands of owners have dumped their old cars for new ones. what happens to the old ones? fluid put in to the engines at the dealership makes them unuseable. what's next? >> this is the first step when they come in over here. >> reporter: most end up in salvage yards like this one in bridgeport, new jersey. >> definitely helps us out. >> reporter: he took us on a step-by-step process of declunking the clunker. step one, evaluation. >> these cars came in from the dealership in teterboro over the bridge. >> reporter: this is an example of the clunkers for cash you're getting. >> yeah. yeah. the basic on this, normally if it wasn't a clunker car, i could save the doors, probably the air bags, save them. >> reporter: the government program doesn't allow every car part to be recycled because they don't want certain parts back out on the road. what's the next step? >> step two. any car comes into our facility, we put it on the rack over here.

>> reporter: evaluation complete -- step two. draining. >> rearend fluids, brake fluids, all the fluids are drained here in this area. >> reporter: the next step is to recycle the items that are allowed. in this case, the tires, the catalytic converter, the battery, the condenser, the radiator. these are the only items from these types of cars that the program allows to be recycled. the next step -- it's got to be crushed. once it resembles a metal pancake, it's done. ready for the next step, shredding. >> pieces that big. and it gets exported to any metal repsycyclers overseas. >> reporter: give an assessment of the program. how it's working for you. what would it be? >> build the relationships with the dealers out there, also. and it helms to get every little bit you can out of a car. >> reporter: well, under the cash for clunkers program, there's been some concerns that

some of the trade-ins have been sold through auction and do end up back in the streets. some environmentalists question how fuel efficient some of the cars bought in exchange for some of the trade-ins, how fuel efficient the cars end up being. not in question, though, at this point, the financial success of the program. everyone seems to be making money out there. the salvage yards are making money, consumers seem to be happy at least for now. >> see what happens. see what passes in the senate, again, for more money. thanks, jason. a look at the a.m. rundown. what's coming up in the next 15 minutes. big storms popping up in the midsection of this afternoon. rob marciano has the latest from the cnn weather center for us. so many of you are confused about health care reform. what will it mean to all of us. dr. sanjay gupta is answering some of your questions head on. on call for you in a couple of minutes. and there are small signs of a stall with cuba after president obama was sworn in to office.

what's changed now? live in havana for the latest. all coming up right now for you. right now, 45 minutes past the hour. (male announcer) if you've had a heart attack caused by a completely blocked artery, another heart attack could be lurking, waiting to strike. a heart attack caused by a clot, one that could be fatal. but plavix helps save lives. plavix, taken with other heart medicines goes beyond what other heart medicines do alone to provide greater protection against heart attack or stroke and even death by helping to keep blood platelets from sticking together and forming clots. ask your doctor about plavix, protection that helps save lives. (female announcer) if you have stomach ulcer or othp$ condition that causes bleeding, you should not use plavix. when taking plavix alone or with some other medicines including aspirin, the risk of bleeding may increase so tell your doctor before planning surgery.

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♪ son of a gun we'll have big fun on the bayou ♪ >> good morning, new orleans, clear, 97 degrees. hot, steamy one today. later on, partly cloudy with a high of 92. severe weather expected across parts of the nation today. rob marciano with the weather center in atlanta. he's tracking it all. hey, rob. slow-moving front will be moving across the midwest. that will produce severe weather. yesterday, no reports of tornadoes but a slight risk of those today. louisville, nashville, st. louis later on. the main worry will be damaging winds and flash flooding because the storms seem to be rolling over the same arias that are not doing so well.

kansas city over to cincinnati. kofington right now looking at thunderstorms. this could bring some travel delays to the picture. chicago, atlanta, fog and low clouds this morning. san francisco and seattle, a little bit more stubborn there. a quick check on some of the action here in idaho. this is just outside of boise. 50-acre grass fire. they had to evacuate about 58 homes there. red flag warning up again for parts of the pacific northwest. john? kiran, back over to you. 87, by the way, in new york city. >> very nice. >> not complaining, compared to what some of the folks are dealing with around the country today. >> we haven't had any 90-degree days. >> not many over 85. >> we had a long spring, winter, whatever you want to call it. you might have questions about health care. congress heads outrecess. a lot of people talking about this. so many competing plans, so many things to get your hands around. dr. sanjay gupta joins us next to explain some of the questions

you may have. he's got answers for you. 48 1/2 minutes after the hour.

♪ welcome back to american morning. if you don't understand all of the ins and outs of health care reform, you're certainly not alone. the plans, the prices, and exactly how it would affect you depending on who you listen to, it's the best thing in the world or the worst. >> difficult to get your hands around. >> well, we're trying to clarify a little bit. dr. sanjay gupta is in atlanta trying to answer your questions. >> good morning. >> i think one of the things we

heard from one of our callers and something we're all wondering about. let's listen and get you to weigh in. >> hi, any name's cindy and i'm calling from coverington, georgia. dr. goouptgupta, why doesn't th government make mandatory prices for doctors and their servicers? that's the problem, they all charge outrageous prices and vary from place to place, will that change in the new plan? >> well, first of all, cindy, you're absolutely right. even among medicare you have widely varied prices across the country. one operation in one state might cost $6,000, in another state, the same operation might cost $17,000. so it does vary even among medicare right now. what we're hearing are some specifics coming out of these health care bills. nothing's been set in stone, we are hearing, refresh her recollection, there may be caps on out of pocket expenses and full coverage for preventive care. what we're not hearing is there'll be some sort of set

price for various procedures and tests, those sorts of things. we talked to the white house specifically about that and they said, no, there is no plan to set prices across the board, across the country. let me explain a couple things really quick. when we talk about this public option, the idea that the government would have this public option. this option for people who can't afford their health care right now. and it's based on a percentage of their premiums compared to their income. they might buy into this public option. if this exists, it's going to be able to compete with private insurance companies and influence overall how prices are set. you can see there specifically no payment rates would be lower than medicare. keeping in mind it varies across the country, and also they would not be able to set prices higher than anything in this overall exchange around the country. no direct setting of prices, but a lot of influence, potentially over prices in the long run. >> when it comes to that public option, sanjay, as you well know, critics are saying the

government's going to be able to negotiate better prices, it's going to have a huge pool of people in the negotiating power of the federal government. and therefore, it would be able to negotiate prices that will be low enough that private companies won't be able to compete. they'll fall by the wayside and everybody will be funneled into the public plan. >> yeah, and that is the criticism exactly right, john. a couple of things to keep in mind, the criticism about the fact that everyone's going to sort of flood the public option or this public plan, not necessarily, because not everyone's going to qualify. keep in mind again, the way things stand now that you would qualify to be able to join this government-run public option, only if your premiums that you're paying for health care are about 11% or 12% of your overall income. if you're making $100,000, your health care premiums would have to be $11,000 or $12,000 for you to qualify. and second of all, it is going to be one of those things that

provide health care insurance for people who simply can't get it right now. it helps address this lack of access issue. >> all of that could change depending on the language as they go through the various committees that this is going through. >> no question. and in fact, i've heard everything from the public option being completely off the table so there would be no government-run system available at all, it's going to be larger than it is now. it's august, what is it? august 4th today? we'll see you in september, this might change again. >> sanjay, thanks so much. good information. >> and we want people to know all week long, you can ask dr. sanjay gupta about health care reform, go to cnn.com/amfix. you can also leave a voice mail 877-my-amfix. right now it's 54 minutes past the hour. (announcer) your doctor knows

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57 minutes past the hour now, raul castro says he's ready to talk and washington is relaxing some travel restrictions in place for decades on cuba. are these two cold war enemies breaking the ice? cnn's shasta darlington shows us what's next for these two countries. >> reporter: the signs are positive. the united states pulls the plug on an electronic ticker that blasted havana with news and slogans for three years. and cuban president raul castro tells washington time and again he's ready and willing to talk about everything. no topic is taboo, not even human rights. cubans like what they're hearing. positive, of course, it's positive, we have nothing to lose we've been waiting for 50 years. but despite the new tone, the cold war are still hung up on

the same points. just this weekend, castro warned dialogue is one thing, but the country's political system is not up for negotiation. >> translator: they didn't elect me president to restore capitalism to cuba nor to surrender the revolution, i was elected to defend, maintain, and continuing perfecting socialism, not to destroy it. >> reporter: so what does cuba want? above all, an end to the nearly 50-year-old trade embargo. president obama has lifted some restrictions on cuban-american travel and remittences. but washington wants signs of political change in cuba before offering more. an apparent stalemate, but there is movement, especially with the u.s. navy and cuban forces cooperating in training for natural disasters. >> well, i think we have to move probably in the two areas that have succeeded. the military to military cooperation, and the drug cooperation, and the immigration cooperation i think are the ones that are working now.

>> the next move may actually come from u.s. congress when it reconvenes. lawmakers from both parties have drawn up a bill that would allow all americans to travel to cuba, providing havana with much-needed foreign exchange, kiran. >> live in cuba this morning, thanks so much. and good morning once again, it is tuesday, august 4th, we're coming up on the top of the hour here in new york. >> good morning, thanks for being with us. here's what's on this morning's agenda. the stories we'll be breaking down in the next 15 minutes or so. former president bill clinton is in north korea this morning, on a high stakes mission to free two american journalists. we're covering all of the angles of the story with the global resources of cnn for you today. officials in washington in an uproar this morning, the white house is considering giving gitmo detainees to maximum security prisons at kansas.

jeanne meserve has new details on this story for us this morning. and the clock is ticking on the cash for clunkers rebate program. money for it will not last through this weekend unless the senate approves an additional $2 billion. will that happen? we'll ask one republican who is standing in the way of swift passage of a bill. senator jim demint calling cash for clunkers, quote an example of the stupidity coming out of washington. we begin this morning with breaking news. a surprise visit to north korea by former president bill clinton. he arrived in pyongyang just before midnight, his mission, to secure the release of american journalists, laura ling and euna lee. they were charged with illegally entering north korea and sentenced to 12 years hard labor. will the trip be a success? our foreign affairs correspondent jill dougherty live in washington for us this morning. jill, i was on a trip with president clinton where he met

with syria's president and stiffed by him, i take it he probably wouldn't be showing up in pyongyang and he's reasonably certain he'll be able to get them out. >> you're probably right. it feels certainly natural that he wouldn't embark on this high profile mission if he didn't feel there would be some success. but that said, you know, north korea can be a very unpredictable place. now the greeting at the airport was very friendly, little girl with flowers, and interestingly, the nuclear, the chief nuclear negotiator for north korea meeting former president clinton. but you have a lot of things going on at one time. you have the individual fates of those two journalists, then you have the nuclear standoff, act strong between the u.s. and north korea and you could add the rest of the world, and you also have the personal drama of bill clinton going to north

korea at the same time that his wife, secretary of state hillary clinton is the person who has been leading a lot of the diplomacy on north korea. >> so you have the white house saying this morning, jill, that this is a private trip by the former president, but is it likely someone of his stature would ever go to north korea without the blessing of the white house, but without the implicit knowledge and permission of the white house to do it? >> no, absolutely, it is planned in conjunction with the white house and the state department because this is very, very sensitive. and they've been talking, actually, for quite a while about sending some high profile negotiator or envoy and remember we were talking potentially al gore before that or bill ri richardson or somebody like that. i think what they're saying here is this is not a formal negotiator coming from the united states.

this is a personal mission to get those two journalists out. that said, ultimately it might have an effect on the overall relationship. >> we'll keep watching this one very closely. jill dougherty in washington, thanks so much. in the meantime elaine quijano working her sources at the white house this morning. there was a very tersely worded statement. what is the white house saying about this trip? >> no, you're right, two sentences is all we got from the white house press secretary robert gibbs, but telling in some ways. take a look. this is what he released earlier this morning. while this solely private mission to secure the release of two americans on the ground, we will have no comment. we do not want to jeopardize the success of former president clinton's mission. what's significant there is robert gibbs is making clear by using the words solely private mission, and saying that the former president clinton's mission trying to maintain some separation. obviously saying this is such a

highly sensitive issue behind the scenes a lot of negotiations leading to this point. is the white house talking about those details right now. they are obviously not perhaps a sign of just how critical a juncture the u.s. is at right now when it comes to the release of these two journalists, but definitely from this statement, the white house trying to maintain a little bit of distance as this mission continues. kiran? >> all right, we apologize for the audio. you were a little bit low, but i think we did hear most of what you were saying. thanks. well, who are euna lee and laura ling. both work for current tv, a web-based television channel started by al gore, euna lee is 36, she joined current back in 2005, married to an l.a.-based actor and has a 4-year-old daughter named hannah. laura ling is 32, she gained attention for her reports on the

drug wars in mexico, she's married to a financial analyst in clayton. last june her celebrity sister spoke exclusively to anderson cooper about her sister's condition. >> it's very challenging. we haven't heard much out of north korea. so in a way, we appreciate it that they released these charges. we will say, again, as we've said before that when they left u.s. soil they never intended to cross into north korea. according to the charges, they confessed, and so we know they're sorry, we are very sorry, and we hope that the north korean government now will show compassion and just let them come home. >> lisa, does it concern you that the north korean government is saying they were there for a smooth campaign, not acknowledging they were independent journalists? >> all we can say is they are journalists and they were doing

their job. my sister has been a journalist for years. and that's really all we can say. you know, we weren't in the courtroom, we don't know any sort of specifics other than what was released. we just given the fact the girls have apologized profusely, they will let the girls come home to us, it's been three months and that's been too long for us. >> and meanwhile, iran is confirming it's holding three americans and they were arrested for crossing illegally from iraq, that group says they got lost hiking, but iran's state run-run media is doubting those claims. hillary clinton is leaning on tehran to release them. we're going to get a full report on that situation by dan psimon just ahead. will the u.s. go about trying to negotiate the release of these three americans? how would it work? at 8:30 eastern, we'll be speaking to the director of the middle east program at the

woodrow wilson center. she also was held hostage. she was held in iran in a jail, actually, for three months. so we're going to -- >> she was at that prison, terrible place to be. >> that's right. we actually spoke to her husband live here on american morning as they were awaiting those several days not knowing what happened to her. so she can speak from a first-hand perspective of what that was like, what goes through your mind and whether or not these three americans can expect to be released any time soon. it's seven minutes after the hour. seven countries in 11 days for hillary clinton. she's in africa, and her biggest international trip yet. her first stop, kenya, she is expected to push policy objectives that president obama laid out last month. also on the agenda, the pirate problem in somalia. the full senate starts the debate on judge sonia sotomayor today. it's all but certain she'll be confirmed before the chamber's august recess kicks off on friday. the white house was hoping more republicans would vote for her because of her record as a judge, but looks like only a

handful of gop senators are siding with democrats to support her. it is president obama's birthday, he's 48 today, but the president did some early celebrating over the weekend at camp david, here's what white house press secretary robert gibbs said he did. and some chuckles actually did quite well. >> i can get you -- try to get some more information on that. i know the president spent a little time with some friends over the weekend at camp david playing basketball and having dinner and bowling and having some fun with -- >> what did he bowl? >> i watched this. 144, no, no, no -- >> how many friends? >> no. no. you a good bowler? what do you bowl? you might be -- i'm just

saying -- >> are we throwing down? >> you seem to doubt the president -- again, i watched the last four throws, three strikes and a nine, i'm just saying. i told the president, look, if you'd done this in pennsylvania, my life would have been a little easier last spring. >> he was referring there to the legendary low score of 37 that the president bowled in pennsylvania during the primaries. a lot of gutter balls he was throwing, got a lot of grief too. apparently he has improved quite a bit. he got a bowling out at the white house. >> they were going to tear it out, maybe he has a new love of the game. >> the ceiling is so low, you couldn't do much else with it. they couldn't put a basketball court in there for sure. you could always dig down a little deeper. cash for clunkers, it's passed the house last week, put another $2 billion into it. it's before the senate now, but not everybody's on board this idea of this sort of stimulus to

the economy. senator jim demint joins us to tell us why he opposes the program.

good morning, washington. fair weather right now and 76 degrees, it's going to be a beautiful day there, but hot, mostly sunny, with a high of 92. welcome back to the most news in the morning. cash for clunkers has driven car sales higher, but the popular rebate program is just about out of gas and needs some urgent refuelling from the senate to the tune of $2 billion if it wants to keep going. there are road blocks, mainly from republicans like jim demint who has been a vocal critic of the president. he joins us from capitol hill. it's good to see you this morning. >> good morning, john. >> you called this program quote an example of the stupidity coming out of washington now. however, during the month of july, ford saw its best sales in

two years, sales up 2. 3%, people are trading in inefficient gas guzzlers for more fuel efficient vehicles. some people might say where's the stupidity in that program? >> well, they're trying to micromanage the economy here. they told us, okay, we need $1 billion, we'd have this program through november, within one week it was broke, now they're back for $2 billion more. we have no idea what the program has done. and what this is an example of. if you do create some incentives, people will buy things, instead of just targeting one industry, we had talked about several months ago instead of the stimulus government spending plan, just give across the board tax cuts to businesses and to workers so they can go out and decide what to buy. it's not fair to borrow this money and charge it to people who aren't buying cars so that a few can buy cars. we can't manage the economy from washington, and the dealers have told me this is one of the worst

managed programs they've ever seen. >> now, your colleague from south carolina, lindsey graham was on the "today" show this morning saying he would probably support the program. but you want them to wait until september before moving on this. why do you want them to wait? >> well, we didn't read the bill when it came through the first time, they attached it to an emergency war-spending bill. now we don't know how it happened and how the $1 billion got spent and they want more $2 billion. and we need to just slow down this congress and this president and stop spending and borrowing money. we can't manage the whole economy. most of these cars would have been off the road anyway, the dealers tell me the sales were down for a couple of months waiting for this program, they'll go down once it's over, we're not selling any cars that wouldn't have been sold anyway. >> we're at point, though, senator, where the economy is starting to show the earliest signs of recovery, and if you can put a little fire under of

it by getting car sales up again through a program like this, is that a bad thing for the economy? >> well, it's not a bad thing to encourage the economy to work, but for the federal government to be trying to pick winners and losers. what about appliance dealers and tv manufacturers and heat pumps? all of these relate to efficiency. there are a lot of products and services in our economy, and we add the federal level should not be borrowing money to help one industry. again, i believe these cars would've sold anyway, the month to month sale for cars have gone up on most through this year already. and all we're doing is just creating a bump in car sales in a few months. but again, this is borrowed money, this is not the role of the federal government. and frankly, i think we're making a mess of the economy rather than help to fix it. >> let me turn to the issue of health care if i could because that'll be a big discussion over the course of the august recess. it's still a matter for a lot of discussion there in the senate.

you have now famously said quote if we're able to stop obama on this, it will be his waterloo, it will break him. many republicans have been accused by democrats of being obstructionists on this. do your statements add fuel to those charges? do you create the perception that all you want to do is scuttle this idea? senator, we seem to have somehow lost your audio and i'm not quite sure why. our profound apologies for that. don't quite know what happened, we usually have fairly easy connections there to the building. our apologies to senator demint. we would like to know what you know, though, about the cash for clunkers program. do you support more funding? have you used the program? will you use it? share your thoughts at cnn.com/amfix. well, two very different sides to this story. some say it's not fair for us to try to get guantanimo bay

detainees moved to other countries without taking some here in the u.s. but where? and is it doable? and what are some of the towns that could be housing these guantanimo bay inmates say about it.

19 minutes after the hour, we have managed to fix the problem. senator jim demint back with us. i want to give you, senator, a chance to respond to that. your waterloo statement that if you can stop president obama on health care, it could be his undoing and this idea that does that just give the perception that all you're interested in is scuttling this bill as opposed to trying to find health care reform. >> republicans are trying to stop a government takeover of health care.

we've been working on reform for a long time. i've introduced a lot of ideas as a former small businessman myself, if we do a couple of things. tax fairness who people who don't get their health insurance at work, we could give every family in america $5,000 a year to buy their health insurance, and if we only allowed interstate competition between insurance companies, the cost of insurance would go down and the quality of the insurance products would go up, but the democrats are fighting any real health care reform. they're insistent on a single payer government takeover. all the democrat leaders seem to be on record wanting a government-run health care system in america. and to pay for it, they're going to cut medicare and crowd out private policies through employers. >> now, when you say, senator, they want a government-run health care program. they only want that as part of an overall health care program according to all of the bills that have been written. you're not saying that they want to get rid of all of the private plans and just have a single

payer government-run system, are you? >> yes, i am, and the president has said that. there's a tape on youtube of his quote saying we will replace employer plans. and -- >> but where is that in any of the legislation that's currently making its way through congress? >> well, you don't have to put it in legislation if you have a taxpayer subsidized government plan is going to crowd out the private policies in a very short period of time. they're already shifting so many costs from medicare and medicaid to private insurance, they cost about 1/3 more than they should. >> yet the bill agreed on in the house specifically states that the government would not negotiate at medicare rates, it would negotiate at rates comparable to private plans. >> well, they would still be deciding what doctors get paid, and a taxpayer subsidized plan is going to run the private policies out of business. the other analysts say from 80 million to 100 million americans will lose their employer-based

insurance and more doctors are likely. >> under certain circumstances, and those circumstances are if the plan is open to everyone and they reimburse at medicare rates and that's not in any of the plans. >> well, you can't have a government plan at the state level for competition without running private policies out of business. because it's subsidized. but we don't need to do that, john, all we need to do is allow interstate competition. why do we need to create fannie meds in every state? we can keep them more accountable and bring down the price. we don't need a cash for clunkers type of medicare program running the health care business. they're saying it's going to cost $1 trillion, but we saw what happened with the cash for clunkers program, they ran out of money in a week. >> and some people would say that's because the program is so success isful. we'll see where that goes for the rest of the week.

glad we reconnected with you. appreciate it. well, our next guest spent 105 days in an iranian prison back in 2007. she was taken from her car at knife point, many questioned whether or not she'd ever be freed. she was accused of spying, and she spent that time in iranian jail. what was it like as three americans right now are also being detained in iran, accused of something very similar. she's going to join us in about seven minutes to talk about her story. i've been growing algae for 35 years. most people try to get rid of algae, and we're trying to grow it.

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you know, the guys who do a super job. introducing the superguarantee. go to superpages.com to find a business with the superguarantee. we're so confident in these super businesses we stand behind their services. you'll get the job done right or we'll step in and help to make it right. sign up for free at superpages.com the new superguarantee making the good guys easy to find. 25 minutes past the hour, welcome back to the most news in the morning. as soon as the president said he was going to shut down guantanimo bay's prison camp, where are they going to move to?

>> well, one proposal the white house is considering would many of them from gitmo to prisons in kansas and michigan. our jeanne meserve is tracking that plan and the backlash against it this morning. >> reporter: john and kiran, the administration is still wrestling with the very difficult question of what to do with detainees when the prison at guantanimo is closed. one option under consideration, housing them and trying them under one roof. the possibility that guantanimo detainees might be headed for the military prison has kansas officials in an uproar. >> transferring terror suspects here places a bulls eye on this community. >> this is a bad idea. >> reporter: officials say ft. levinworth, are being considered as possible multi-purpose destinations for detainees that could contain courtrooms for

both federal criminal trials and military commissions and house in one place detainees now being sorted into three groups. those being held for trial, those being indefinitely detained, and those cleared for release, but without a country to take them. in standish, michigan, where the unemployment rate stands at 24%, the maximum security prison is slated for closure. some local officials support using it as a detainee facility to preserve jobs. but michigan congressman disagrees saying turning it into a terrorist penal colony is not the way to improve the economic situation. for now, the white house is dodging the argument. >> well, i don't know to the degree to which they've gotten into specific siding and certainly no final decisions of any sort have been made. >> reporter: housing and trying most of the detainees in one location could reduce costs and avoid the risk of moving suspects for trial.

on the other hand, moving prosecutors and judges and forming a jury pool could be a challenge, but probably nowhere near the challenge of overcoming local opposition. john and kiran, back to you. >> all right, thanks so much, jeanne. meanwhile, 28 minutes past the hour right now. we check our top stories. a plane carrying tourists slid off the runway, crashed into an air traffic control tower killing the jet's pilot. 34 people on board were hurt, the bangkok airways flight was landing in stormy weather on the resort island of sumali. authorities say the men were going to raid a military base and launch quote an attack on military personnel until they themselves were killed. 400 officers took part in the raid, the men are said to have links to an islamic extremist group in somalia. former president bill clinton is in north korea trying

to secure the release of two american journalists, they were sentenced to 12 years hard labor there, the two could be released at any moment. north korea says they entered the country illegally and were trying to launch a smear campaign against their government. they insist they were doing a story on china and crossed over the border accidentally. well, as we just told you, former president bill clinton is in north korea, he is trying to get the release of these two u.s. journalists we've talked so much about. but iran now is also confirming it's holding three americans and iran is now accusing them of crossing into the country illegally. secretary of state hillary clinton is calling for their release, but what is it really like to be held in an iranian prison? our next guest knows this firsthand. she's the director at the woodrow wilson center and also spent 105 days in iran back in 2007. thanks for being with us this morning, we really appreciate it. >> thank you for having me. >> first, let's get a little bit of your personal story and what

it was like for you. you say you were visiting your mother. you were on your way to the airport after a visit to your mother, you were stopped by men with knives and then this led to the beginning of what turned into interrogations and then eventually 105 days in prison. what did they say you did? >> they thought i was part of a plot to overthrow the regime through the revolution. there is a sense of paranoia among the intelligence ministry officials in iran that the united states is after overthrowing the islamic republic. >> did they want some sort of concession from you? you said that you had to go through hours and hours of interrogations over eight months, what were they trying to get you to admit to? >> they were trying to find out really what the united states was up to. what the united states' plans

were for iran. but i was not aware of any such plan. >> right. yes, you were also unaware at the time, obviously, because you were being held, how everybody was working towards your release. in fact, we spoke where your husband here on american morning at the time, and he was proclaiming your innocence and talking about how you really need to be let go, how you were 67 years old, you had absolutely nothing to do with any plots against iran, and at the same time, i know your center was working for your release, as well. but you had no idea any of this was going on. what is it like as you wait with the unknowns not knowing what's going to happen to you when you're an in an iranian prison? >> solitary confinement is terrible being cut off from the rest of the world is even worse. you don't know what's going to happen to you the next hour let alone the next day or two. so i was concerned, i was worried, but i didn't want to

give into despair, because i think the idea of my interrogators was to break me down and i had decided i was not going to give them the pleasure of seeing me breaking down. >> right. and then how did you eventually get released? >> one day i was called in for interrogation and i was told that pack your belongings and leave, you are free to go. and i thought this was a very cruel joke. and i said are you sure? and they said, yes. and so i went back to the ward 209 where political prisoners are held, and i took my few meager belongings and then after a lot of paperwork walked out of prison, and it was only when i came out that i'd found out really there was so much effort and so much was done for me.

and it really makes a big difference if people focus on the detainees in these different countries. >> and that's what i wanted to ask you about. because there's been several high-profile prisoners that are then released with much fanfare from iran. remember the 15 royal navy sailors out of britain that were then paraded out and given candy and let go after they had to apologize profusely, i guess, for accidentally going into iranian waters and just recently red s roxana saberi who was accused of spying. these three who claim they were tourists in iraq that accidentally crossed over. how do we know? do we have any clues based on what happened in the past with iran and detainees of how it will turn out for them? >> it's not only the three detainees, there is another iranian american who was held with me who is also now in

prison. i think that three detainees will be set free and let go eventually. but my concern is for an urban planner, not at all politically involved who has been put on trial. >> right. and so what determines whether or not your case gets a lot of attention, whether or not your plight is noticed by others around the world, and whether countries and individuals are working for your release. >> in my case, i was very fortunate because both my husband as you know and my daughter at the wilson center, did everything possible under the moon and the sun to try and prove that i was innocent and to get me out. and i really think international

pressure makes a big difference. >> all right. and as we know, secretary of state hillary clinton putting international pressure on this situation with the three. and parallel situation almost in north korea right now with former president clinton trying to secure the release of laura ling and euna lee. we're glad your story ended well, as well. you wrote about it in my prison in my home. thanks so much for joining us this morning. >> thank you very having me. so you're on a transoceanianic flight, suddenly it's like the bottom drops out of the airplane, people and things hit the ceiling, bouncing around, that's what happened yesterday. injuring a number of people. we've got the incredible pictures from inside the plane coming up next.

♪ top videos right now on cnn.com, a house on the move in del ray beach, florida, 145 tons, slowly, oh so slowly transported via series of steel wheels to the new location down the block. also, this video from peo a

peoria, arizona a jeep loses control, flips over into a mine shaft. you can see the top of the jeep there. eventually the driver was rescued, he was okay. and the mayor of silverton, oregon, under fire for his choice of wardrobes. the first openly transgendered mayor and this outfit worn in front of school children has some in an uproar, accusing him of violating the city council's dress code. and i thought i got it when i went on the air without a tie. well, there was ten seconds of terror, passengers slammed against the ceiling. >> it happened yesterday and during a flight from rio to houston, at least 26 people were hurt as we understand, four of them hurt seriously. this morning, passengers are talking about the moment their jet hit that severe turbulence. here's cnn's brian todd. >> reporter: good morning, john and kiran, we're getting new information about the conditions that continental airlines jet

encountered over the caribbean and the passengers and their pictures are telling a story. this is what turbulence looks like inside the cabin. these photographs from a passenger aboard continental flight 128 showed the ceiling of the plane split open. two sections in sh shot looks like casings for several oxygen masks. this may have been done by passengers thrown upward. >> all of the lighting, people who weren't seat belted in, they flew up and hit the ceilings, their faces and heads broke the plastic up at the top. >> reporter: the plane with 179 people aboard encountered severe turbulence on the way from rio to houston and diverted to miami. 26 passengers were hurt, some required at least temporary hospitalization. cnn meteorologist chad myers say there was no severe weather in the area at the time. and a continental airlines official now tells cnn this aircraft encountered what's called clear air turbulence.

pilots we spoke to say this is when a plane gets caught between two different air masses moving in different directions. it often happens when the weather looks fine and comes on with no warning. >> the pilots transiting this area, they're not seeing anything on the radar or visually that gives them reason to believe that they're getting ready to penetrate an area with clear air turbulence. >> reporter: pilots say passengers not wearing seat belts can get severely injured when g-forces throw them to the ceiling. they can stay spined on the ceiling for a few seconds and could be injured by getting throw ban down on to the seats and the floor. after landing in miami, some passengers were asked whether they got any warning to buckle their seat belts when the heavy turbulence began. >> none, whatsoever, and i hit my head on the light above and it broke the light out and showered in glass. >> reporter: continental said the seat belt sign was illuminated.

an official told me they're still gathering information about exactly what happened. but quote, there's every reason to believe a verbal warning was given. back to you. >> well, thank goodness most people were not badly hurt. do you keep yours on? >> not as often as i should. sometimes in flights if i'm not getting out to do anything, i'll leave it on the entire time and not notice i've got it on. but other times, i'm there without it and i remember traveling with the press corps, never would put it on, take it off, with the tray table down too. it's so wonder any of us lived. >> exactly. still ahead, extreme weather, storms, possibly capable of producing tornadoes movered through some parts of the country. our rob marciano's going to join us on the other side of the break. cuments. at legalzoom, we'll help you incorporate your business, file a patent, make a will and more. you can complete our online questions in minutes. then we'll prepare your legal documents

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45 minutes past the hour, we fast forward through some of the stories making news later today. we're watching north korea all day long. former president bill clinton is now on the ground there in hopes of securing the release of two journalists. laura ling and euna lee, both americans who were detained there. they've been sentenced to 12 years of hard labor. after illegally crossing the border when they were reporting on a story in china. also today, at 9:30 a.m. eastern, hearings set to begin for seven men from north carolina that are accused of plotting a violent jihad. the men were arrested last week by federal investigators charged

with conspiracy to provide support to terrorists. also conspiracy to murder, kidnap, maim, and injure persons in a foreign country. also later today in new york, focusing on finding radio active material on chips and keeping a dirty bomb or nuke out of the city. 17 different vessels from new york and new jersey as well as the coast guard will all be involved, and that's what we're following for you today. it's good we did give that heads up, rob. can you imagine all of the looky lous if they see that active out there? it's just a drill. >> it's kind of like when air force one was flying overhead. >> yeah. probably not as much fallout after that one, but yeah, kind of like that. check this out. we've got a tropical storm in the pacific, enrique right here, not really doing too much as far as a where it's going to go into the open pacific, it'll head towards hawaii, it may strengthen to hurricane status, but far enough away we can tell our friends out there and give

them a heads up. san francisco, seattle, low clouds and fog, that will give you delay, chicago and atlanta, same deal on the lighter side, cincinnati and kansas city also seeing a little bit of thunderstorm activity. that's where most of the action will be. across parts of kansas city and across parts of cincinnati, and with that threat, the potential of seeing some tornadoes, although i think heavier rain and hail and maybe some wind damage with this highlighted red area in through the ohio valley. that's the latest -- and then we -- >> stop the jihad talk when i'm talking weather. it gets me upset. >> well, you know, if you're going to have bad weather, we're going to issue it, there's no question about that. >> i can understand that. it's 47 1/2 minutes after the hour. you talk about the problems associated with your kids, spending hours in front of the television set. well, a startling new study shows that the health consequences are even worse than you might have previously thought. our dr. sanjay gupta has got that for us coming up next. stay with us.

♪ good morning, hotlanta, sunny and 76 right now, later on today, mostly sunny and hot, hot, hot. 93 degrees is the high for atlanta today. we all know that it's not good for children to sit around all day watching television or staring at a computer screen, kids need activity, get up, run

around, go outside, play. but here's the new one, there's a startling new connection between your child's blood pressure and how much television they watch. and we're not just talking about overweight kids either. our chief medical correspondent dr. sanjay gupta in atlanta this morning with that. this is pretty surprising news, sanjay. >> it is surprising, in part because it's not just overweight children as you mentioned. but kids of normal weight even underweight, as well, looking at this pretty good link between television watching and increased blood pressure. and, again, we're not used to talking about hypertension in kids, but something we talk about more and more often as we talk about the childhood obesity epidemic. what they followed specifically, kids between the ages of 3 and 9 and followed them for a period of time trying to figure out what was going on here, what was the association exactly and found kids watching more than 30 minutes of television per day, which isn't much, it's pretty common for them to watch at least that much television, but they did seem to have an

increase of blood pressure of about 6 to 7 points overall. when they tried to figure out why that was, a couple of things emerged. one is that what kids tended to eat while they're watching television. poor choices in terms of food, pretty universally, low nutrition food, that wasn't very good for them and the other thing was that the television watching often interfered with their sleep. and we know that lack of sleep or poor sleep can also be associated with hypertension, those two things, john, more than anything else seem to account for this increase in blood pressure. >> so you say about six points differential, is that really a big deal in a kid who is between the ages of 3 and 9? >> right, it's a great question, and the right answer, after we talked to some people, we don't know for sure. again, because we're not used to monitoring blood pressure in children that young. so we don't know what the impact is. what we do know is that kids who have hyper tension, even low levels as children tend to become hyper tensive adults.

and we've talked about this several times in the past, we're starting to see evidence of, for example, thickening of arteries, in 8-year-olds, similar to the 45-year-olds, the process is starting much, much earlier and hypertension as we know can be an indicator for lots of these chronic diseases. who knows, but it seems to be a problem. >> that is surprising news this morning. sanjay gupta with that for us this morning. thanks very much. that's a lesson, kiran, get your kids out of the house, get them running around and playing and watch what they eat too. >> that's what you'd do when you were little. they'd have to call us back for dinner. >> that was in the days before xbox. >> and before -- >> that's before ski ball. you know when you've got to travel across country and you've got to take your dog, a lot of people worry throwing the dog in in the cargo hold. now there is a new airline catering to just that customer. carroll costello takes a look.

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♪ hazy morning this morning as we check out the george washington bridge over the hudson river this morning. 76 degrees right now, pretty fair. a little bit later, it's going to be mostly sunny, 89, and we haven't seen 89 very often, we haven't even seen 85 very often this summer in new york. no complaints, stay in the ac. >> as long as it doesn't rain today, everything will be all right. >> yep. well, welcome back to the most news in the morning. there is a new airline flying the friendly skies. one that caters to a very specific clientele. the name says it all, it's pet airways. >> the steve miller song was fly like an eagle. it offers coast to coast travel for cats, dogs, no owners can go on board the plane. carol costello has the story from washington. a new company, carol, and you think this would be an unlikely business model. is it catching on? >> they have a two-month waiting

list, can you believe it? i admit, i was skeptical about pet airways because who would dole out hundreds of dollars to fly their pet on a plane just for dogs and cats? but once again i underestimated the love americans have for their animals. it's crazy. >> reporter: welcome to pet airways where pets are passengers. and people pet parents. >> you're going to be a special passenger. >> reporter: pets fly in the air-conditioned main cabin of a beached 1900 turbo prop in the company of pet specialists. the animals' owners aren't up there with they will, they'll fly commercial and meet up with their loved ones when their pet's flight lands. the co-creator of pet airways. >> some people might think oh, you're crazy. yes, people did, but we said

there was a need and we are our own community and we said we get it. >> reporter: note she said our own community, that's loosely defined as a group of people who think their pets are people who know that one day their dog will be able to do what doug did in the movie up. >> my name is doug, i have just met you and i love you. my master made me this collar, he is a good and smart master and he made me this collar so i may talk. >> so he's your baby? >> my first baby. >> gus is 12, arthritic and prone to seizures and the thought of gus flying commercial alone is too much to bear, even at $399 one way. >> yeah, i'm definitely nervous about his -- how he's feeling, but it makes me feel so good to know at pet airways that they're going to be stopping by checking him, they're going to be in the plane with him. >> we treat them like they live with us, they sleep with us, we take care of them, they go to the doctor, why should this be

any different? >> reporter: and with that sentiment in mind, arthur, gus, and the rest are buckled up and ready to fly. when pet airways lands in l.a., let the reunions begin. >> we did get an e-mail from jennifer, gus traveled just fine. she said he had a great trip. gus was the great big dog with special needs it cost $399 to fly him from new york to l.a., but the airline says some flights are as low as $149, and john and kiran, some customers told me that that is comparable to what commercial airlines charge to fly the dogs in cargo. >> i guess it's what $75 or $150 to fly your pets? >> but what about the convenience factor? you have to drive your dog, sometimes to a separate airport than you're going to and get your own self and your family on that plane and then fly to