good thursday, everybody. i'm contessa brewer covering the big news coast to coast. the big news right now is the dow jones industrials plummeting on the day, erasing the gains for the year. we're down now 320 points on the day. the s & p and nasdaq following suit. the nasdaq off now 87 points. this is a real problem across the board. investors nervous about the way our country's heading, where the economy stands and whether growth is in our future. we'll haveore on this coming up. first, let's get you caught up on other breaking news we have been following this morning. police are investigating reports of a gunman at the virginia tech campus. let's go live to washington, d.c. and nbc's pete williams. what are you learning? >> reporter: it's been three hours since three young people attending a summer academic program at virginia tech told campus police that they saw a man carrying what they thought was a gun, what they described

as a long barreled gun with a short handle, walking across the campus with what they thought was the weapon partially covered by cloth. now, the police have interviewed these three young people, 14 year olds who were attending the summer program, and they extensively searched the campus to see if they can find this person, and they have yet to find any trace of the person that the young people described, very distinct descriptions, wearing a blue and white vertically striped shirt, shorts, brown sandals, clean-shaven. the police talked to the university officials, they immediately put the campus in lockdown and just a few moments ago, virginia tech sent another alert out to people on campus keeping the lockdown in effect. they say police are continuing to investigate, is their word, investigate the campus, that there have been no sightings of this person and that they are asking people to stay inside while this more extensive search

is going on on campus. so our understanding is that the police from the campus and from surrounding jurisdictions are looking all over the campus, probably beginning to look inside campus buildings to see if they find any trace of either this person or a weapon, and so far, there has been neither. so at some point today, if no trace of either the person or a weapon is found, the university officials are going to have to decide whether to lift this lockdown but of course, they were very quick to act because as you recall, i the 2007 ooting, the much more serious incident at virginia tech, the university was criticized for not responding soon enough, even though the university said at the time they thought they followed all the procedures properly. so a very different time now. the phrase abundance of caution, we have heard many times today, but it's still a bit baffling exactly what happened here, whether in fact there really ever was a gun despite the account of these three 14-year-olds who say they

thought that's what they saw. until the authorities either give the all-clear or find out what really happened here, everyone's still waiting. >> pete williams, thank you. of course, they would have an abundance of caution because four years ago, they lost 33 people, including the gunman on that campus. it is still fresh in the minds of those who are responsible for the safety and security of the students and the staffers and friends and family who may be on campus. let me bring in kelsey hider, managing editor of the collegiate times. that 2007 spector, the massacre that happened on campus, would influence every decision made from here on out about security. >> sure. exactly. i'm just, we're just kind of on lockdown, everything is pretty calm. there are, you know, cop cars around but honestly, nothing has changed since the beginning. we're all staying pretty calm here. >> where are you locked down right now? are you in the offices of the newspaper? >> no. i'm where our gym is located on

campus. >> all right. explain about these kids, the summer camps that are on campus and what the campus is being used for before the students attending virginia tech come back. >> sure. there's lots of different programs going on on campus i'm not sure which program this is specifically for. our spokesperson for virginia tech said it was some sort of leadership camp, maybe. i have no idea. i know exactly what you all know. i don't know anything new. but we are just kind of staying put and waiting until he can find anything, anything new going on. but everyone in my building is safe. we're just waiting. >> the campus-wide alert issued at 9:37 eastern time this morning, is there any sense of impatience on the part of those around you to find out, a, more information about when the lockdown will beifted, given that there's no new information about this potential gunman being spotted?

>> sure. i mean, we don't know if he's a gunman. we know he's a man that may have a gun. again, we don't know exactly what is going on. we don't know who the perspective of this whole situation is coming from. people here, we understand, we are hokies, we know what has happened and we are going to take all precautions that we can. everyone's in pretty good spirits, just waiting. >> all right. kelsey, thank you for checking in with us. appreciate that. we are following other breaking news as well. the markets right now, plunging across the board. the dow jones industrials is now off by a little less than 300 points. we've seen it today, the s & p is following it, the nasdaq at this point down 83 points. rick newman is the chief business correspondent for "u.s. news and world report." good to talk to you. to what do you attribute such intense nervousness on the part of investors? >> it's worth pointing out there's no big piece of bad news today. i think this is kind of a

delayed reaction to a lot of bad news we have been getting over the last few weeks, and you're starting to hear a lot more concern that we may actually be going back into another recession, and some people say we might actually be in one right now. last week we saw numbers for growth so far this year went way down. they were much worse than people were expecting. >> almost stagnant. >> that's right. the phrase that you're hearing now among economists is stall speed. they're saying the u.s. economy is hitting stall speed which means it's not generating any momentum of its own for hiring to pick up, for companies to spend or for consumers to spend. then we've got problems in europe with italy now and there's no good news and there's sort of a continued piling up of bad news. >>he thing is that you have this sort of nervousness, anticipation about whether a debt deal would be done before default happened, would our credit rating be downgraded. we had moody's and fitch yesterday coming out saying no, we will keep the aaa rating

where it is. now you're seeing this. why now? it seems like if you were going to have this sort of reaction it would have happened before the deal was done, not after. >> you never know exactly because the markets are peculiar and unpredictable. i think for the last couple weeks it's almost like that debt debate was a humongous side show. while there was all this arguing about that, that was mostly arguing about what's gng to happen with spending cuts and government spending in the next six months, 12 months and even ten years. meanwhile, all these other things are happening in the real economy which it's almost as if now we're not paying attention to the debt debate and now these other things we're finally starting to affect the markets. >> we have seen weeks of down days on the dow and again now, it's pretty much erased the gains for the entire year, down 293 points as we're speaking. at this point, will you anticipate a continuing trend? >> let's put it in perspective. there's been a huge bull market rally since march of 2009. stocks were up almost 100% from that point. so it's not that crazy that we

would see this kind of correction right now. it's also wor remembering companies in those indexes are very, very strong. they're in great shape. they really got healthy and survived the recession. a lot of people think those stocks are undvalued. i think it's possible, you know, a little bit of good news might turn this around a little bit. remember, we will get jobs numbers tomorrow. we're hearing that the expectations about 75,000 new jobs. that's a bad number but if it turns out better than that, the markets might react positively. >> better jobs added than jobs lost, for sure. we'll keep our fingers crossed. thanks. another war of words in congress over what should be another routine reauthorization and again, jobs at the center of it. funding the federal aviation administration. lawmakers are on paid vacation but tens of thousands of faa employees and airport construction workers aren't getting paid. >> looking them in the face is like telling their families sorry, we can't feed you today. it's a hard feeling.

>> luca toscana feeling the pain of laying off 70 construction workers in brooklyn. the total number of construction jobs lost nationwide, 70,000. 4,000 faa employees have been furloughed. >> september mortgage won't get paid. >> reporter: faa workers troy swansberg says finances are so tight he might be forced to disappoint his daughter. >> the question has come up from my wife, do we need to cancel her 2-year-old birthday party. it's embarrassing to me that this is the position congress has put me in. >> reporter: congress' position seems to be playing party politics. >> it's as if someone puts a gun to your head and says give me your money. >> reporter: senator schumer and democrats want to fund the faa through next month. republicans say okay, but only if you cut subsidies for flights in and out of 13 rural airports. to cover the cost of running service at many small cities, some in states of powerful democrats. >> when you can't even pass one flight reform of cutting

subsidies that are as high as $3,700 per ticket, we're in pretty sad shape. >> reporter: president obama says it's more than sad. >> this is a lose, lose, lose situation that can be easily solved if congress gets back into town and does its job. >> reporter: lawmakers are on vacation right now. transportation secretary ray la hood says recess time is over. >> come back to washington, pass the bill, let's get american workers back to work, let's put all the talk about creating jobs, all the talk about jobs is now the priority, let's make it a priority today. >> luke russert's on capitol hill. what are the chances the house and the senate get the faa funded during this august recess? >> reporter: i'm hearing it's stilpossible but not likely, contessa. the reason being is that both chambers are now out.

it's not unprecedented to have one or both come back on a recess, but it's not likely. what could occur is a bit of parliamentary procedure. the democratic senate would have to take up the house republican bill or the house would have to take up the senate democratic bill and use unanimous consent. in order for that to occur, john boehner would have to sign off on the democrat bill or harry reid would have to sign off on the republican bill. i'm told the staffs between both the senate democrats and house republicans are still talking at this moment in an attempt to try and move something forward. obviously it does not look good. you mentioned the stats, 74,000 construction workers out of work right now. the government set to lose $1 billion in revenue until september 7th when congress would come back and presumably fix this. but the signs point right now, it does not look like congress is going to do anything to get it done in the short term. >> luke, thank you for the update from capitol hill. keeping your tabs on that.

coming up at the half hour, i will talk with faa administrator randy babbitt about what the contingency plans are if they don't get a deal done. so we're following this breaking news from virginia tech. three kids at summer camp say they saw a guy with what looked like a gun. it happened just after 9:00 this morning outside of a residence hall on virginia tech. now you have police officers swarming the campus looking for this guy. the campus is in lockdown. all of course with the memory still fresh of what happened in 2007. 33 people, including the gunman, killed on that campus. we'll be right back. ♪ ♪ introducing purina one beyond

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what's your story? citi can help you write it. quarter past the hour now, and a tense situation on virginia tech's campus, where about three hours ago, three students attending summer camp on the college campus reported

seeing a guy carrying a gun. they said it appeared to be a long barreled gun with a short handle and that there was some sort of covering or cloth over it. so immediately, they contacted the authorities. the police came in, they have locked down virginia tech's campus, and they have all the cooperation, of course, from the campus administration, virginia tech's administration, but so far, they have not found anyone matching the description. the description is a 6 foot tall white man wearing a blue and white striped shirt, gray shorts, brown sandals, and he doesn't have any facial hair or glasses. so again, they're looking for this guy and/or his gun. we'll let you know when we get new details on that front. so hot across the south right now that 100-year-old records are being completely obliterated from florida to phoenix. the deadly heat is not letting up. lee cowan is in phoenix with more. >> reporter: well, certainly

people here are used to the heat in arizona. it is the desert, after all. even here, the heat is getting a little excessive. there's an excessive heat warning in effect for arizona as well as at least 12 other states today as the nation's heat wave enters its second deadly month. it's been on the football field where the heat is taking its most obvious toll of late. they're practicing now before sun-up in georgia after a team collapsed on the field this week and later died. >> this is serious stuff. i'm glad the coaches are taking the necessary steps of taking care of the safety of the kids. >> reporter: across the country, dozens of lives have been claimed by temperatures hovering in the triple digits for weeks now, putting record-breaking strains on the nation's electric power grid. in texas, wichita falls has had 43 days in a row of temps over the century mark. in dallas, it's been 33 straight days. there's no end in sight. >> it feels like the worst one so far. i've been here 15 years. >> reporter: in little rock, arkansas, the high hit 114

degrees. it hasn't been that hot ever, at least not in the last 132 years of recorded history. and at this atlanta train station, a man was so exhausted from the heat, he fainted right on to the tracks only to be saved by a good samaritan. >> felt like a little dizzy spell and my legs got jiggly. >> reporter: livestock are suffering, too. the worst drought since the '50s have left them little to eat. ranchers are selling off the herds early to soften the blow. >> it's already a $9 billion disaster. crops are just dying in the fields, on the vines. there's nothing growing. >> reporter: no rain, no cold fronts, not an inch of relief. at the phoenix zoo, it's expected to be so hot today, the ostriches would normally thrive on desert temperatures will be hosed off again. >> just like humans, you can definitely tell when an animal is dehydrated, starting to suffer the effects of heat exhaustion. >> reporter: whether you're a warthog or a workaday joe, this summer is something to sweat.

yesterday, almost 150 cities broke their high temperature record. it looks like the same thing may happen again today. there may be a bit of a cooling trend in the works at the beginning of next week although from the sounds of it, some of the hardest hit areas like oklahoma and texas, still going to be in the triple digits there. not a lot of relief. >> lee, thank you. the heat is on wall street right now, where we're seeing a nosedive on the dow jones, down at this point 294 points. that has essentially erased the gains of the day. lot of nervous investors now acting on some of the trickle of bad news that we have been getting over the last couple weeks, and it's just sort of culminating on this day, seeing a big plunge. we'll keep our eyes on that, try to get more explanations and predictions of what may be to come. designer lolita heeley copyrighted her first cartoon character when she was 12.

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casey anthony wins another reprieve. the florida mom who was found not guilty of killing her 2-year-old daughter was supposed

to turn herself in to a probation officer in florida this morning. the order stemmed from a check fraud conviction last year. judge strickland, who issued the order, recused himself from the case. judge belvin perry issued a stay and scheduled a hearing for tomorrow morning. casey anthony reportedly will not be present. judge larry seidlin presided over another notorious case, the hearing to determine where anna nicole smith would be buried. good to see you today. why would judge strickland step away from this case in the first place? >> well, he's shown to be prejudiced so he was removed from the murder case originally. he really should have -- he really should have stepped away from this probation case at the inception, at the get-go. he sentences her to probation and jail time in a check fraud case. she's awaiting trial in the

murder case and he sentences her for the check fraud case. he says you're going to get 412 days, plus i'm going to place you on probation. the minutes, the clerk's minutes, don't reflect whether probation was to begin immediately or when she leaves jail. most of the time, i found all the time, probation is to run immediately. if you're a defendant awaiting trial on a case, probation is to run immediately. the department of corrections believed probation would run immediately. >> so while she's in jail awaiting trial. >> yes. they even gave her, they being corrections, gave her a letter of completion of her probation. if we were to place her on probation now, it would be a

flagrant disregard of her due process. it would be what you would call double jeopardy. >> in fact -- >> it can't be done -- >> that's what her attorney, cheney mason, is arguing in his motion. he says any second sentence for probation imposed will be in violation of miss anthony's rights of protection against double jeopardy under both the florida state and united states constitution. so tomorrow when the new judge, belvin perry, comes in, what will he be looking for when deciding whether or not casey anthony should be on probation from here on out? >> he's going to look at the court order. now, strickland tries to say well, i meant this, i meant that. we need finality in law and we also need to understand some of the public may be outcrying for i want this gal hung. she was found not guilty but she's guilty. that's not the way we do justice in america. the jury deliberated.

she was overcharged to begin with. she was charged with murder one. she should have been charged with manslaughter. the prosecutor got caught up with the drumbeat and they over charged her. she was found not guilty and you have to distribute justice evenly and equally. she's going to walk tomorrow. when i say that, i mean it in the proverbial sense. i don't believe she will be placed on probation again. she'll be let go, which she should be. >> we will keep our eye on that orlando courtroom tomorrow and again, she's not expected to appear personally in court tomorrow, just her lawyers for her. judge, good to see you. thank you for your take. breaking news right now from virginia tech. so far, no sightings of the reported gunman. three kids say they saw a guy with what they thought was a gun walking near a residence hall today towards some volleyball courts. they reported it. the campus went into lockdown. law enforcement are on campus right now, searching for the guy but so far, we're not getting any reports that they found him.

we are keeping our eye on that. plus, stocks right now, down 308 points on the dow jones industrials. looks like the s & p is off by 35 points now, the nasdaq is down almost 80 points. keeping our eye on all of the consequences here from these nervous investors. we'll be right back. at bayer, we're re-inventing aspirin for pain relief. with new extra-strength bayer advanced aspirin. it has microparticles, enters the bloodstream faster and rushes relief to the site of pain. it's clinically proven to relieve pain twice as fast. new bayer advanced aspirin.

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anyone matching that description. they haven't found a gunman but the campus is in lockdown out of an abundance of caution. nbc's pete williams has more. what are they learning about this report? >> reporter: nothing. nothing i think is the answer here. they still want to know what really these young people saw three and a half hours ago who believed it was a gun. the young people say they were quite certain it seemed to be a gun. they said actually that it may be a gun is the way they put it. but because the person hasn't been found and the gun hasn't been found, there is some skepticism among some investigators about whether there really was a gun or not. they understand the young people seem to be cnfident that they found it but they're treating this as if it really was a gun. they believe that's the only safe option to follow. half an hour ago, the university repeated the lockdown order and said they still want everybody

to stay in place while the campus police, aided by police from nearby jurisdictions, me a thorough continuing search of the campus to see if they can turn up either this person or any kind of weapon, but if nothing is found in the next couple of hours, the university's going to have to make some decision about whether to lift this lockdown and allow campus life to come back to normal, let the football team have practice as is scheduled this afternoon. >> you point out something interesting here, because back in 2007 when the virginia tech shooter came on campus and started shooting everybody, the administration got criticized for not taking action in a serious enough way right off the bat. it puts them in a difficult position when to lift the lockdown when you haven't seen further report of a gunman. >> that's right. two things, that and the other thinis the university responded very, very quickly once they had gotten this report. they didn't find any confirmation of it. they didn't wait for that. they said okay, we've got three young people who say this is what they saw, let's put the

campus on lockdown. so a very different response this time. >> pete, thank you very much. let me bring in ashley brown, who was on campus at the time of the alert. what did you do when the alert came across? >> i h just been in class about seven minutes when the alert went off. we had immediately seen in the classroom the alert, had read that a gunman had been spotted or reported. so we were immediately alerted. >> what did you do? >> well, we remained in the classroom until class ended, throughout which we received alerts to our cell phones, if you had a smartphone, you also received the vt alert. e-mail around 10:00. so around 10:30 is when my class was finished. >>o you left class then? my understanding is that campus is on lockdown. were you on lockdown in your classroom? >> we were on lockdown but around ten minutes after 10:00, we received the vt alert saying

that the subject or the suspect, they reallyhadn't found him, they were patrolling the campus, continuing to look for the subject. that e-mail actually did not say lockdown but the classroom was on lockdown. our class was finished and the location that we were at on campus, william hall, was across, so it was pretty far away and the parking lot was right behind us. >> so you felt safe then leaving the class even though you didn't know where the gunman might be? >> well, it seemed very skeptical. we weren't taking the alert very seriously. the alarm had went off but the threat level was kind of low and we were relatively close to the parking lot so we did feel confident and especially with the security measures on campus. there were officers patrolling right outside the window that we could see. we did feel safe enough to just walk across to the parking lot. >> ashley, thank you very much for joining us.

appreciate that. >> no problem. faa engineers will be back on capitol hill today to lobby law makers who haven't left for vacation. the faa is partially shut down. members of congress may not do anything until september. so if they don't, it leaves 4,000 government workers without paychecks, hundreds of construction projects on hold and those workers aren't getting paid and yet again, it all goes back to gridlock in congress. >> this is a lose, lose, lose situatio that can be easily solved if congress gets back into town and does its job. >> randy babbitt ishe administrator of the faa. mr. babbitt, good to see you today. >> thank you. nice to be here. >> one of the biggest sticking points right now seems to be slashing the funding to these rural airports, some 13 where the government helps cover the costs to run them. would you support the funding cut if it means a deal now that would put these furloughed employees back to work? >> well, one of the basic

problems is we have had this extension passed 20 times without any riders to it. they have chosen this one to put some political attachments to it, which is kind of thwarting the effort. i just want an extension bill passed. i'll let congress use their wisdom as to what they'll accept or not accept with it. but we need to put 4,000 people back to work. we need to put 70,000 construction workers back to work. we've got 250 projects already stopped around the country and that number increases every day. i just would like congress to take a break from vacation, come back and pass a bill and let us get back to work. >> what's your contingency plan if the house doesn't return to work, if the senate doesn't pass the bill that the house has already pushed through? >> we're operating the system safely. people should understand there's a difference between the operational funding and the funding that was stopped from our trust fund. i think it's important to note as well that the money to pay what has been stopped has already been captured. we have that in a trust fund. we simply lost the mechanism to

pay it. so it's not like we're going to raise any new money. we already have the money. we simply lost our authorization to spend it. we're going to continue to support and monitor the air traffic control system, all of our controllers are there, all of our safety inspections are being done at airports and mechanics and pilots are being tested and surveilled. what has come to a stop are these massive construction projects. we've got about, as i mentioned, 250, we're talking about billions of dollars worth of construction and jobs and that number increases every day. >> mr. babbitt, what about you mentioned the safety inspections. the safety inspectors are on the job. my understanding is they're not getting paid. >> that's correct. >> this puts an awfulot of pressure on them at a time when the air traffic control people are already under a lot of pressure. what are the consequences here? >> well, it's not good in the long run. we are depending upon the professionalism of our airport inspectors, there's about 50 of them out there that are doing their jobs. we don't have the ability to pay

them. so they're working out of their pride and what they do, their loyalty to america and their jobs, and we can't even pay their credit card bills. when they travel, they incur hotel expenses, airline tickets and those. they're doing their work but they're doing it because they're proud employees and they believe in what they do. but this just isn't right. this isn't right to ask people to do this, not when congress could come back in. the president has appealed to them, the secretary, i'm appealing to them. congress, come back, pass a bill and let us put these people back to work and put literally tens of thousands of construction workers back on the job. >> it's just so ironic, such a juxtaposition foyou to say because of their professionalism, because of their dedication to america, that the safety inspectors are coming back to work every day and not getting paid, and congress is on vacation and so far, no concrete plans to come back to work. unbelievable. >> it's no way to run. we have the finest air transportation system in the world. we have the envy of the world. this is no way to do it,

operating on short-term extensions, then to be hold hostage, to put 4,000 working people, put them out of work over a political fight that is literally over a very small amount of money. we are also sacrificing, we have lost the ability to collect airline tax revenues and cargo tax revenues. i'm sorry? >> millions of dollars, right? >> hundreds of millions. $200 million a week, almost $1 billion a month, $10 billion a year, we're not collecting now which is now, we no longer are funding our trust fund which is where all of these projects get funded from. we have lost the ability to collect those taxes. >> unbelievable. the estimate here, if this continues, is $1.1 billion lost in uncollected taxes. mr. babbitt, good to have you on. thank you, sir. hope it gets resolved soon. >> i do, too. i really hope congress can see their way. >> sorry we cut him off at the end there. sorry.

we're watching the dow jones industrials down 280 points. the s & p is off 32 now, the nasdaq down 70. rough ride might be the understatement on wall street today. let's check in with melissa francis. what in the world is going on? >> reporter: it is a really rough day on wall street. it started the same way it started yesterday with the european close, lot of problems in europe right now. the focus is italy. we saw major indices trading off 3% or 4% by the close. that signaled a ton of selling here as well. we were down more than 300 points, about 350 points on the dow and we have battled back from that level. the most interesting thing that's going on right now is what's happening in gold. we are actually seeing gold sell off. you remember we have seen record after record after record, nine or ten since the beginning of the year. right now, gold is actually trading significantly lower, i think down about $20 at last check, moving so quickly. the same is true of silver. crude oil also trading lower. the theory behind that is actually a little bit scary, that it's a race for liquidity.

traders out there are trying to get as much cash as they can so they are breaking the piggy bank, so to speak, on gold and silver and selling those funds because that's where you can raise cash right now. so it's -- i don't want to say panic, a very nervous market right now, although they are off the lows of the session. we are looking at the s & p, 1227 is a key indicator. that's where we have seen a 10% correction since the highs we saw in may. from a technical perspective, that's something a lot of traders are watching. maybe if we see it trade down 10%, that's the point where you can get back in and we might see a bottom. we have seen it come back a little from there. that could be the case. really, the thing to watch right now is europe and commodities. >> we are watching some of this climbing back and we are now down 264 points, where we saw it down 350. the above and the down, we saw it drop more than 350 points at one point today. we are doing better. >> reporter: better, yeah. who would think you would look

at these numbers and say this is an improvement. but that's the case right now. >> thank you for keeping tabs on that. coming up, we are keeping our eye on tropical storm emily causing real problems for the island of hispaniola. i love that my daughter's part fish.

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maybe not. v8 v-fusion juice gives them a full serving of vegetables plus a full serving of fruit. but it just tastes like fruit. [ male announcer ] get five dollars in money-saving coupons at v8juice.com. a new study suggests many parents seem to be reluctant to seek help for their child's weight problem. researchers in the uk studied 285 families that received doctors' letters saying their child's body mass index qualified them as obese. the letters encouraged families to consult their doctor. fewer than half did. >> i'm andrea mitchell. coming up next on "andrea mitchell reports" we're following all the breaking

developments on wall street. the dow takes a plunge, wiping out its gains for the year amid signs of a weakening u.s. economy and concerns abroad. plus, virginia tech in lockdown. police searching for an alleged gunman on campus. all that plus the faa funding fight. lawmakers pointing fingers as 70,000 workers wonder how are they going to get paid. see you in 15 minutes right here on "andrea mitchell reports." tropical storm emily is battering the island of hispaniola right now, unleashing fierce rain on haiti and the dominican republic as it heads closer to the united states. let's get a check on the storm's path from the weather channel's nick walker. nick, first of all, how's it looking there over the island? >> reporter: it could be devastating. we're looking at heavy rainfall, perhaps six to 12 inches could fall over the dominican republic and haiti and maybe in the mountains of the dominican republic. we're talking as much as 20 inches of rain. that's bad news because this is really barely moving and that is going to mean heavier rain over

the island of hispaniola. so no doubt we are going to see flooding and mudslides. the impact to the eastern coast of the united states harder to determine. since it has been so weak, it's sort of drifting off toward the west and if it stays that way, it will move over more land and that would weaken the storm more. however, we do expect that it will strengthen and just brush by cuba up toward the bahamas, maybe brush the coast of the united states and florida as we get into the weekend, and then move out to sea. this on a day when noaa has upped its forecast for tropical storms. now they say 14 to 19 of those could occur the rest of the season. the average would be 15. contes contessa? >> nick, thank you. all across the country, cities are scrambling to balance their budgets as they deal with the aftermath of the recession. in central falls, rhode island, it's too late. the one square mile town is buried in debt and has filed for

bankruptcy protection, hanging in the balance, city services, taxes and pension and benefits for city workers and retirees. i'm joined by rhode island governor lincoln chaffey. good to see you today. >> good afternoon. >> why did it get to this point for this particular town? to get to the point where they have to file for bankruptcy protection? >> well, at one time central falls, although it's only one square mile, was a very prosperous community. that economy has changed, as you said in your lead-in. the crash of '08 really just exacerbated the financial problems and the revenues are not meeting expenditures anymore so we have to file for bankruptcy. the end goal is to get central falls in some way either merged with another community or shared services to get back on its feet. >> there's a state senator, elizabeth crowley, who said this whole filing was premature. she says that you and the state should have given retirees more

time to consider making concessions, maybe offering up a counterproposal. why did the bankruptcy filing need to happen when it did? >> central falls went into receivership a year ago in may so it's been a year of knowing that expenditures are higher than revenues. i think a year's long enough. now we just have to act. >> i know central falls owes $80 million in pension and benefits. it's looking at $5 million in deficits over the next five years. so what happens now? what happens to retirees who did their service for decades, thought they were going to have certain pension checks coming in? what might happen for them? >> well, my best solution would be to merge with a neighboring community, in this case, pawtucket. that's what we want to seriously look at. shared services might be a temporary solution but really, i think central falls just cannot survive as a one square mile city. that economy has moved on. the factories are closed.

that's one option we're looking at. >> is there any big broad lesson learned here? >> well, the big lesson is the national economy pushes down problems all the way to a community of one square mile and it really started with the crash of '08 and all the national problems, all the debt problems we're reading about in the news every day. that just crippled our national economy and had ramifications in a small community here in rhode island. >> sir, thank you so much for your time today. >> my pleasure. we'll be right back. just one phillips' colon health probiotic cap a day

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okay. political sidebar, today making sweet music. it's music to the ears of those who might want to run for congress. david wu has resigned. the oregon congressman has been accused of an aggressive unwanted sexual encounter by the teenaged daughter of a campaign contributor. that makes room for a new representative and a special election will be held january 31st. minority teens might be dancing in the streets of new

york city. michael bloomberg plans to spend $30 million of his own money to help black and latino men tackle disparities in their opportunities versus their white peers. billionaire george soros will chip in another $30 million and the city of new york will pick up the rest of the tab, $67.5 million. republican presidential candidate newt gingrich is being criticized for his campaign schedule or lack thereof. some analysts say it's more like silent. he's holding low-key events or staying close to home in georgia, which is a state with very little importance in the primaries. one poly-sci professor says it seems to be more of a hobby than a campaign at this point. who knew but republican presidential candidate jon huntsman is quite the piano player. he stopped in a music shop in manchester, new hampshire yesterday and let his fingers do

the talking. a little "peanuts." i'm impressed. that's not an easy song to play. i play the piano. it's difficult. he just did it for all the cameras. if he messed up, everybody sees it. thanks for watching today. i'm contessa brewer. see you tomorrow noon eastern, 9:00 a.m. out west. the labor department releases the july jobs report. hopefully that will be some good news that investors can latch on to because right now, there is plenty of bad news to go around. "andrea mitchell reports" next. hi, andrea. thanks so much. up next on "andrea mitchell reports" breaking developments on two fronts. stocks are taking a tumble on wall street amid fears of a global economic slowdown. we'll break it down. plus, breaking news at virginia tech. the school is still in lockdown after three teenagers told police they saw a gunman on campus. all that plus talking 2012 and

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breaking on wall street, stocks take a steep plunge as fears mount over global economic slowdown ahead of tomorrow's widely anticipated jobs report. lockdown. three teenagers in a summer camp reported a gunman on the virginia tech campus. police activate the alert system, telling students and employees to stay inside and lock their doors. ready for round two? first the debt limit, now the faa. >> this is a lose, lose, lose situation that can be easily solved if congress gets back into town and does its job. >> both parties are playing the blame game. 74,000 workers are out of luck. on the daily rundown this morning,