it's friday, july 24th. in the news, speaking out. we are hearing more from everyonenvolved in the race case of harvard's henry louis gates. the president, a police sergeant, and gates himself, all with plenty to say. education grants. billions of dollars worth. a new program being unveiled today. we'll hear exclusively from the man behind it. and baseball's play of the year. so far, it saved the day and year. so far, it saved the day and help make some history. captions paid for by abc, inc. good morning. and thanks for being with us. i'm vinita nair. jeremy is off this morning. we begin with morning with the war of words that's erupted following last week's e arrest of harvard professor henry louis gates.

it gained new ight when president obama spoke about it on wednesday night. and it shows no signs of stopping. >> reporter: after the president's surprisingly frank comments the other night, this issue has quickly overtaken his efforts to reform health care, much to his chagrin. it's perhaps the most memorable quote from the president's news conference earlier this week. health care reform.s push for >> the cambridge police acted stupidly in arresting somebody when there was already proof that they were in their own home. >> reporter: president obama was rufring to the arrest of prominent african-american scholar, henry louis gates jr. he was arrested for disorderly conduct, while trying to enter his cambridge home. gates told cnn, he did nothing wrong. >> this man, clearly, was a rogue police. >> reporter: critics say the president's comments were inflammatory. he disagreed during an exclusive interview with "nightline." >> i think it was a pretty

straightforward commentary. that you probably don't need to handcuff a guy, a middle-aged man, who uses a cane, who is in his own home. as i can tell, the sergeant who was involved is an upstanding police officer. my suspicion is, it probably would have been better if cooler heads prevailed. >> reporter: sergeant james crowley tells wbc radio, he's not the one who should apologize. >> i think he's way off base, wading into a local issue, before he made that comment. >> reporter: the incident has ignited a national dialogue about race relations, one that some say is long overdue. >> eruptions like that come along because we don't talk about race that much. >> reporter: sergeant crowley's colleagues are standing behind him. they point to the fact that he was hand-picked by a black official, to teach his fellow officers about racial profiling. vinita? >> i'm sure we'll hear a lot more on this one. diana alvear, reporting from chicago. our terry moran traveled

with the president yesterday, as mr. obama tried to remain focus on and drum up support for health care reform. the president appeared to shake off the setback he received from senate democrats regarding his health care timetable. >> there will be no vote on health care reform before the august recess. that deadline that you were insisting on. that deadline's gone now. >> yeah. >> how much of a setback is that? >> you know, given the progress that i'm seeing made, as long as everybody is working steadily, as fast as they can. and particularly the senate finance committee, which i think is the committee that a lot of folks are waiting for. if they gets done before the august recess, i feel pretty good. >> but they blew your deadline, the first deadline. and i wonder if you feel, as you look at the polls, that things are slipping away. it seems that the more people focus on your health care plans, the less they like them. >> well, you know, terry, i

don't think that's accurate. >> that's what the polls are showing. >> the polls are showing, that the more they focus on the political arguments out that, as opposed to my plan, the more anxioupeople get. but that happens every time we debate health care. if we do nothing, i can guarantee your premiums will double. we'll continue to see 14,000 people a day lose their health care. and it's guaranteed that we'll blow the federal budget to a point where we essentially can't provide other vit services. >> while democrats say there won't be a vote before the august recess, they say they should have most of the work on the bill wrapped up by then. the president will try to shift his focus today on education. he is announcing a multibillion-dollar fund to award states that overhaul their schools. mr. obama wants to emphasize national education standards, linking teacher pay to student performance.

education secretary, spoke exclusively to yunji de nies, about the new plan. >> we're looking for folks to push through a strong reform agenda. >> reporter: do you worry about those students who might suffer that don't get a taste of this money? >> absolutely. i absolutely worry about that. but we have to have a set of players around the country, who can lead us as a nation where we need to go. the status quo isn't good enough. we hope you will stay with us for "good morning america," and more of our exclues if interview with secretary duncan. four people have been killed after a helicopter crashed and burst into flames on interstate 70 in western maryland. it happened late last night near the town of smithsburg. it was an r-44 that was involved. it had just taken off by a nearby airport. all of the vicms were apparently aboard the helicopter. no one on the ground was hurt. fema is the focus of controversy again.

a new report says it was too slow to respond to charges that thousands of trailers given to victims of hurricane katrina contain potentially hazardous levels of formaldehyde. an inspector general's report says nearly a year passed before a testing program was issued. and nearly two years before occupants were warned about the problem. thousands of trailers are still in use in louisiana and mississippi. huge waves pounding southern california are about to get even bigger. and it couldn't happen at a better time. forecasters say the swells could reach up to ten feet today, just in time r surfing championship in huntington beach. surfers are being warned to use some extra caution. and now, to this morning's weather from around the nation. more scattered showers and thunderstorms for the east coast. with the heaviest downpours in maine and. >> nancy: >> nancy:. much-need rain stretching through south texas. strong tomroh ws from wisconsin to nebrask a high of 93 in omaha.91 n . stlouis.

and low 80s for chicago, detroit and fargo. mostly in the 90s from albuquerque 20 boise. 86 in portland. and 80 in seattle. a mild 75 in boston. 83 in new york. and 89 in atlanta. dallas will get up to 97. and new orleans is 91. and when we come back, a pay raise for millions of workers today. that is in your business news straight ahead. and there's just a couple more days to say alaskan governor, sarah palin. our new poll says what americans

overseas stock markets are mixed this morning, after wall street hit its high water mark for the year. tokyo's nikkei average climbed 1.5% today. hong kong's hang seng is higher. in london, the ftse opens slightly lower. wall street begins the day with the dow above 9000 for the first time since january, after adding 188 yesterday. the nasdaq jumped another 47 points to 1973, extending its longest rally since 1992. the market may have trouble holding on to those gains today, after a batch of disappointing earnings reports. shares of microsoft are set to tumble after the company said its profit for the quarter fell nearly 30% because of weak computer sales. microsoft also posted its first full-year revenue drop in its history. amazon stock is set to fall today, as well. investors were expecting a blowout quarter from the online retailer. but they didn't get it. amazon's bottom line was hurt by

weak sales of video games. well, netflix is one of the rare companies actually thriving during the recession. the company added nearly 300,000 subscribers last quarter, as people look for low-cost alternatives to ing out. that helped the company's profits surge past expectations. netflix also raised its earnings outlook for the year. the federal minimum wage is going up today for the third time in three years. the minimum wage goes from $6.55 an hour, to $7.25. that works out to about an extra $125 a month for as many as 5 million workers. in today's "usa today" tech report, a look at the new google phone. t-mobile introduced the first smartphone to run on google software last year. now, it's back with the my touch ez. ed baig has more. >> it's a lot slimmer. it has a few extras that the g-1

didn't have. notably microsoft exchange, so you can do work e-mail. there are trade-offs here. gone is the physical keyboard of the g-1. that's how they got it thinner and lighter. is it a perfect device? far from it. >> the new phone is available on august 5th. you can read ed's full review on usatoday.com. details of the cash for clunkers program are finally available. information on the program that offers up to $4,500 for trading in an old vehicle have been posted on the website cars.gov. the program applies to vehicles purchased july 1st through november 1st. walmart is trying to attract more back-to-school shoppers looking for computers. the retail giant is increasing its selection of low-price laptops, as it attempts to wrestle business away from best buy. walmart also renovated displays at one-third of its stores.

and remember. you can always get the latest business news on our website, abcnews.com. and when we come back, dozens taken into custody in new jersey. politicians accused of putting themselves up for sale. so, just what was on the take? and stuck in the mississippi mud. he wandered in and couldn't get

welcome back. these are the latest headlines from abc new president obama is standing by his words that the cambridge, massachusetts, police acted stupidly when arresting harvard professor henry louis gates. the sergeant is refusing to apologize. saying president obama shouldn't get involved in local issues without knowing all of the facts. and mr. obama switches the focus to education today. he's announcing a multibillion-dollar fund to prod states to think outside the box when it comes to overhauling

their schools. in new jersey, one u.s. attorney says everybody wanted a piece of the action, after the arrest of dozens of public officials in a bribery and corruption sting. as peter thomas reports, the dragnet even snagged some members of the clergy. >> reporter: the fbi says rabbis in handcuffs, shows how much more pervasive corruption has become in america. dozens of officials were charged in taking bribes in one of the largest crackdowns in the state's histy. >> mayors, deputy mayors. >> reporter: all allegedly on the take. pocketing cash and exchange for political favors. >> the politicians willingly put themselves up for sale. hundreds of thousands in bribes were paid in those places. >> reporter: in all, 44 public officials, taken down by 1 corroborating witness, working undercover for the fbi. allegedly bribed government

officials in parking lots, diners, basement boiler rooms, even bathrooms. >> new jersey's corruption problem is one of the worst, if not the worst, in the nation. >> reporter: citizens were disgusted. the mayor of hoboken had only been in office three weeks. >> it's crazy. but you almost come to expect it. >> i think they should throw them -- throw them in jail. throw them underneath the jail. put them away for like 30 years. >> reporter: police say the same corroborating witness said corruption was just as bad as new york. authorities there were charged with millions to criminals in exchange for fees. >> his busines was to entice vulnerable people to give up a kidney for $10,000. which he, in turn, would turn around and sell for $160,000. >> reporter: one fbi official jokingly said, it was the kind of corruption that would make

tony soprano proud. pierre thomas, abc news, shington. as alaska governor sarah palin leaves office this weekend, the latest abc news poll offers mixed messages about her future. it shows 40% of americans view her favorable. while more than half, 53%, view her unfavorably. that's a reversal since last fall. but the poll shows palin is a clear favorite with republican voters. and one of their top three choices for the next presidential election. california lawmakers are pulling an all-nighter, attempting to plug the state's huge $26 billion budget gap. it is a painful attempt to cut spending across the board, in the midst of a recession. included are cuts in education, health care, services for children and the poor. among the more contentious issues, allowing new offshore oil drilling to raise cash. meanwhile, more than $1 billion worth of marijuana was seized or destroyed in raids in california's sierra nevada mountains. 83 suspected marijuana farmers,

some of them mexican citizens, we arrested. and dozens of weapons were found. last year, more than 5 million pot plants were seized in a similar operation. well, pittsburgh steelers quarterback, ben roethlisberger, is out with a vehement denial of the rape allegations being made against him. roethlisberger says the 31-year-old nevada woman's civil lawsuit against him is reckless. >> i did not sexually assault andrea mcnulty. saturday was the first that i learned of her accusations. her false and vicious allegations are an attack on my family and on me. i would never, ever force myself on a woman. >> roethlisberger says he is prepared to fight those allegations in court. and that he is confident the truth will prevail. all right. well, check this one out. a horse that made a clean break from itswner almost had a very dirty demise. blaze, the horse, was found neck-deep in mississippi mud pit.

rescuers had to carefully harness him and hoist him back to safety. once blaze got back on solid ground, he got a good meal and a badly needed bath. and coming up on "america mortality the soud side of chicago. the game's rarest accomplishment. we have all the highlights, next. with an epa estimated 32 miles per gallon. and up to 600 miles between fill ups. it's the most fuel efficient crossover on the highway. better than honda cr-v, toyota rav4 and even the ford escape hybrid. the all new chevy equinox. i felt this deep lingering pain that was a complete mytery to me. my doctor diagnosed it as fibromyalgia muscle pain

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that's why purina fit & trim is specially formulated... with high-quality protein, including delicious real chicken, to help him maintain lean muscle and a healthy weight, so he can make the most of every day. long live your buddy. long live your dog. purina fit & trim. swimming's world chamonships arech taking place in rome right now. and the sport's governing body things down, literally. it stems from the superfast susws itim im hrsave been wearing, breaking tons of new world records. a new rule swimmer's are barred from wearing any swimsuit that aids performance. american officials are backing the change. lance armstrong moved up one place yesterday to third overall in the tour de france. the race ends in paris on sunday. here at home, the talk of the

sports world is perfection. here's j.w. stewart at espn news. >> good morning. history made in chicago thursday afternoon. mark buehrle and the chicago white sox, take on the tampa bay rays. top of the eighth. buehrle has a perfect game going. strikes out carlos pena, one out in the eighth. next batter, ben zobrist, pops out to gordon beckham. two outs in the eighth. next patter is pat burrell. that is just foul. buehrle is still perfect. but by inches. later in the at-bat, burl lines out softly to beckham. he's perfect through eight innings. mark buehrle said he's not superstition about these things. in the ninth inning, gabe kapler, a swing and a drive. but look at this play by dewayne wise. taking a home run away from gabe

kapler, and keeping the perfect game intact. dewayne wise came in as a defensive replacement. wise, that was probably the best catch i've made. could be the defensive play of the year in baseball. next batter, buehrle strikes out michael hernandez. we get two out in the ninth. buehrle, one out away from a perfect game. teammates, fans, on the edge of their seats. next batter, jason bartlett. ground ball to ramirez at shortstop. that will do it. buehrle, a perfect game. white sox win 5-0. back to you. ernest hemingway is being remembered this week on the 110th anniversary of his birth. and his favorite watering hole in key west is packed with men who think they are dead ringers. the papa hemingway look alike contest kicked off at the sloppy joe bar laos night. contest kicked off at the sloppy joe bar laos night. contestants are lining up. and you'llre of everything? yep, even the rental.

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finally from us this morning, starbucks in disguise. the coffee superchain is evolving yet again. and this time, it's not just a new product but a whole, new store. rebranding that puts beer and wine on the menu and the logo out of view. more, now, from abc's neal

karlinsky. >> reporter: this store right here, the first of its kind, is a starbucks that isn't called starbucks. no sign of that famous, green logo. it is, as they say, a neighborhood store called 15th avenue coffee and tea. this is starbucks? why don't you call it starbucks? >> this is absolutely starbucks. it's just one more it ration of innovative design. we don't feel the need to have that naming on every storefront going forward. >> coffee frappacino. >> reporter: the coffee business is stuff. starbucks grew to a point to see where there's a store on every corner. so, mcdonald's decided to feel like starbucks with coffee drinks. starbucks started to act like mcdonald's with breakfast sandwiches. dunkin' donuts got in on the game. then, starbucks tried value meals. today's reinvention, the unstarbucks starbucks is facing some skepticism.

>> seems like a bait and switch to me. >> reporter: the new shop is supposed to be more like the original homegrown coffee house. for the first time, you can get more than a caffeine buzz. beer and wine are on the menu. they hope to have coffee tastings and poetry readings inside, along with an independent look and feel. a lot like some of seattle's other boutique coffee houses. >> they were just -- they had big observations. i wasn't amused. >> people of design in other parts of the company, are in stores all over the world. and we're taking that information and feedback all the time. >> reporter: if the new coffee house is a success, starbucks has plans for more. possibly many more. i'm neal karlinsky, in seattle. and coming up on "good morning america," unwelcomed straight