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High Gas Prices Hitting Home; Cutting Budget by $38 Billion; Ivory Coast's Future; Apps Can Turn On You; The Help Desk; Talk Back Question; Soaring Pump Prices

Aired April 12, 2011 - 12:00   ET

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

SUZANNE MALVEAUX, CNN ANCHOR: Top of the hour, I want to get you up to speed.

We'll start with breaking news. We've learned that an American is now being held in North Korea.

Our Jill Dougherty is at the State Department learning new details.

Jill, what can you tell us?

JILL DOUGHERTY, CNN FOREIGN AFFAIRS CORRESPONDENT: Well, Suzanne, at this point, there's not really a lot being known other than the State Department confirming that this American, identity at this point unknown or at least they're not giving it to us, went into North Korea in November, that is what they're confirming, and he is being held.

We also know that since the U.S. does not have diplomatic relations with North Korea, the Swedes are what's called the protecting power, and they are going in. They've actually been able to meet with this man. They've asked for regular visits with him.

And also, the State Department is saying that the U.S. is asking the North Koreans to release him on humanitarian grounds. And that really is about what we know at this point.

Suzanne, you know, there have been Americans who have walked over the border, and in other ways gotten into North Korea. We'll have to see if we can get more information on exactly how he got in and why he's being held.

SUZANNE MALVEAUX, CNN ANCHOR: OK. Jill Dougherty, thank you for the breaking news. Obviously, we'll get back to you as soon as you have more details.

Thank you, Jill.

Well, a bump in the night draws investigators from the National Transportation Safety Board to New York's JFK airport today. An Air France Airbus 380 clipped a commuter plane last night, forcing the smaller plane to spin in a whiplash turn. Now, both aircraft had minor damage, but fortunately, no one was hurt, just delayed. (BEGIN VIDEO CLIP)

CLAIRE BANDY, AIR FRANCE PASSENGER: We were just waiting. We were kind of all having a chat and saying it was a bit annoying. And then, suddenly, there's this big bang from one side of the plane. I think it was the tail of the big Air France jet hit the back of ours, or something.

UNIDENTIFIED FEMALE: Well, no. The engine of the Air France jet hit the tail above and pushed it around, and pushed our front end around the other way.

(END VIDEO CLIP)

MALVEAUX: Gas prices inch closer to the $4 a gallon mark today. AAA says a gallon will cost you an average of $3.77 nationwide. Gas is already above $4 in four states, including California.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: $4.19 a gallon? That's ridiculous. It's absolutely absurd.

UNIDENTIFIED FEMALE: I have to drive, and they don't pay mileage, so it's really, really sticking me.

UNIDENTIFIED MALE: You know, they are getting all the bailouts and the breaks, and we're getting squeezed.

UNIDENTIFIED MALE: It's L.A., so it's even worse than most places.

(END VIDEO CLIP)

MALVEAUX: New York police say that human remains found on a Long Island beach may be the ninth victim of a serial killer. Eight sets of remains have been recovered on another beach just five miles away. A 10th set of remains found Monday appear to be human, but that has not been confirmed by the medical examiner.

Arizona Governor Jan Brewer says the state is considering its legal options on its tough new immigration law. The Ninth Circuit Court of Appeals refused to lift a stay that has blocked the law's major provisions. The court says immigration is a federal concern. One judge wrote it's an absurdity to think 50 states can have their own foreign policy.

Well, coming up in the White House East Room this hour, the president and the vice president are helping their wives launch a new program for military families. It's called Joining Forces, and it's going to be headed by former Afghan war commander General Stanley McChrystal. The program educates communities, corporations, nonprofit organizations on ways to support troops and their families.

And Japan raised the nuclear alert level at the Fukushima plant to 7 today. That is the maximum. That puts the disaster on the same footing as Chernobyl. Still, officials are quick to point out that the Fukushima plant has released just a 10th of the radiation given off at Chernobyl.

(BEGIN VIDEO CLIP)

JAMES WALSH, INTERNATIONAL SECURITY ANALYST, MIT: This is more looking back than looking forward, and it's saying there's more radiation released than they had originally calculated. And I think that does -- I think there is a little bit of blame here that they were slow to get out into the field.

(END VIDEO CLIP)

MALVEAUX: Tension at NATO over Libya now. The foreign ministers of Britain and France publicly complain today that NATO is not doing enough to protect civilians in Libya. Witnesses say that five civilians died in the latest fighting in Misrata, including two toddlers. Rebels have rejected an African Union cease-fire plan because Moammar Gadhafi would remain in power.

More now on the story that's hitting all of us, and hitting hard -- rising gas prices. The average price now is $3.79 a gallon. The highest price is in Hawaii, $4.44. The lowest is in Wyoming, at $3.51 a gallon. That is according to AAA.

I want to bring in CNN's Alison Kosik to talk about how these rising gas prices are affecting the economy overall, and also your personal bottom line.

Alison, thanks for joining us.

Tell us, what -- how does this actually impact the country's economy? What does this say about how we're doing economically?

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Suzanne, I'll tell you what, these high gas prices are mostly a big drain on the economy. Sure, you know, the government earns something from taxes, but taxes only make up about 13 percent of gas prices. The bigger portion is oil, and we do import most of that.

And we all remember, of course, that we are above $100 a barrel on oil right now since February. And the International Energy Agency says we're already beginning to hurt as far as the global recovery goes because of these higher oil prices.

We heard the same thing from the IMF. It cut its growth forecast for the U.S. It sees GDP this year at a 2.8 percent pace. I'm going to show you what that means right here, over the past two years.

Last quarter, we grew at a 3.1 percent pace -- 3.1 percent is mediocre by historical standards -- 2.8 percent, Suzanne, would be considered below par. So obviously these gas prices are going to be taking away the momentum of the economic recovery.

MALVEAUX: What about the impact on our individual finances? KOSIK: Oh, sure. You know what? Every dollar we spend at the pump means that we have less money to spend on other things. You know, we're not going to go out to eat as much, go to the movies, even fix up the House.

You know, it's going to be tougher to pay our bills. We may even rethink the vacations we take. Remember the rise of the staycation in 2008, when we saw gas prices top $4?

And we can also see these higher gas prices affect the jobs picture. Companies are going to have less room to hire because they're spending more, too, on higher oil prices and higher energy prices.

You know, corporate America also is dealing with more than just higher oil prices. They've got higher commodity prices as well.

Here's the kicker. The IMF sees oil prices staying high through next year, so get ready for these gas prices to kind of stick around. We'll just have to get used to them -- Suzanne.

MALVEAUX: All right. We're going to try to get used to them, Alison. It's a little tough there, but we're going to try. Thanks.

It's your chance to "Talk Back" on gas prices. No matter where you live, you've seen them go up.

Carol Costello, here with today's "Talk Back" question.

You know, I mean, you and I both were lamenting over the fact that it's out of control.

COSTELLO: It is. A lot of people feel it's out of control. And there's a lot of fingers being pointed in different directions, because, you know, here we go again.

Politicians blaming other politicians for high gas prices. Instead of doing something about it, everybody is pointing fingers. In the meantime, you are paying more for gas again, an average of $3.70 a gallon.

On Facebook, ex-governor and Republican vice presidential candidate Sarah Palin blasted President Obama's reluctance on drilling after the BP oil spill, saying, "His war on domestic oil and gas exploration and production has caused us pain at the pump, endangered our already sluggish economic recovery, and threatened our national security." Palin called Mr. Obama the "$4-per-gallon president."

Except gas prices hit their all-time high of $4.11 a gallon in July of 2008, under President Bush. But there's enough blame to go around -- sky-rocketing oil prices, turmoil in North Africa and the Middle East, and those Wall Street oil speculators who keep betting up the price of crude.

Democrats want more controls on those speculators. Some in the gas and trucking industry agree, but Republicans generally oppose such restrictions. And even though 70 percent of gas stations say people have been buying less gas in recent weeks, we still love our gas- guzzling SUVs and pickup trucks.

Hybrids only account for three percent of the market. That's according to Trucar.com. And states like Texas might raise the speed limit to 85 miles per hour. And that is not great for good gas mileage.

So, is it Libya, is it Wall Street, or is it us?

"Talk Back" today: Who do you think is to blame for high gas prices?

Write to me at Facebook.com/CarolCNN, and I will read your answers later this hour.

MALVEAUX: All right. Thank you, Carol. Appreciate it.

Here's what we have "On the Rundown."

Details on the 2011 spending plan lawmakers worked out to avoid a government shutdown.

Smoke clears, dust settles in Ivory Coast. Now the country must decide what to do with its former president.

And protecting your smartphone from would-be hackers.

And --

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: NASA put together a set of requirements for museums around the country to respond to. We think that we have responded positively.

(END VIDEO CLIP)

MALVEAUX: -- competing to land a retiring space shuttle. We're going to tell you who might get to keep one.

(COMMERCIAL BREAK)

MALVEAUX: In today's "Choose the News," a bit of variety here. Let us know which story you'd like to see later this hour. Vote by texting 22360. So here are the choices.

First, you notice that every time you fill the gas tank, prices now are soaring. What's going on?

Next, police officer, a baby squirrel, a can of mace. Hear what the officer and the kids have to say.

And finally, acting like a princess. Our Richard Quest goes to the school that teaches the curtsy, the walk, the royal wave. Vote by texting 22360. Text 1 for "Soaring Pump Prices"; 2 for "Cop Versus Squirrel"; and 3 for "Princess School." The winning story is going to air later this next hour.

Well, the House is now set to vote Thursday on the budget deal that kept the federal government from shutting down, and it calls for more than $38 billion in spending cuts. We're learning more details about what is going and what is actually on the chopping block.

Our Brianna Keilar joins us from Capitol Hill.

Brianna, we have details. Tell us about some of these cuts. What are people going to be feeling?

BRIANNA KEILAR, CNN CONGRESSIONAL CORRESPONDENT: Yes, we finally have details. And Suzanne, I should tell you, these cuts are spread pretty wide.

There are hundreds of programs that are going to see funding reductions, a lot of agencies and departments cut. The Department of Transportation, the Department of Health and Human Services, really seeing some of the deeper cuts. So, let's talk about specifics here.

High-speed rail loses about $3 billion in this budget deal that averted a government shutdown on Friday. Highway construction, $3 billion as well. And then programs to prevent the spread of sexually- transmitted diseases lost about $1 billion.

And then there's WIC, nutrition assistance for low-income women and children. That lost about $500 million, which is part of about $1 billion in cuts to social safety net programs.

So, who overall was kind of spared in this? Well, the Pentagon actually is seeing an increase overall by about $5 billion in more spending. The Department of Veteran Affairs seeing about $600 million of an increase.

This was posted very early this morning, Suzanne, about 2:00 a.m. What we're going to be seeing in the coming days is how the votes are going to really shake out, because you have some Democrats who say no way, these cuts are way too deep, and then you have a lot of Republicans who were saying there weren't enough cuts -- Suzanne.

MALVEAUX: And Brianna, what about the vote that was moved from Wednesday now to Thursday in the House? How does that affect this Friday deadline when the funding for the government expires?

KEILAR: That's right. So we were thinking that the House would vote on Wednesday, but because it took so long to get this bill posted online -- part of that was drafting legislation, part of that was crunching numbers -- we didn't see it go online until 2:00 a.m. today. Well, Republicans, as part of their pledge coming out of the election, they said we're going to put these bills online for three days, and so they're trying to stick to that now, having the vote on Thursday instead. It just makes everything a little more uncomfortable, I think, because then the Senate has to move, has to follow suit. We're still waiting to see if they would follow on Thursday or Friday, but it gets pretty close, because at this point, that short-term deal that was brokered, Suzanne, funding would expire Friday night.

MALVEAUX: OK.

Brianna Keilar.

Thank you very much, Brianna.

Focusing now overseas, we're just getting word that former Egyptian president Hosni Mubarak has been hospitalized. Confirmation coming from "Al Aham," a prominent Egyptian state-owned newspaper. Now, the former dictator is being investigated despite his recent claims of having no overseas bank accounts. Well, Egyptians insist that his government was corrupt.

Syrian security forces are accused of blocking wounded protesters from getting medical care. Human Rights Watch says it happened in two cities last Friday. The group says doctors complained that it was impossible to bring the injured into the hospital because it was surrounded by armed forces.

In the West African nation of Ivory Coast, the internationally recognized president, Alassane Ouattara, must now focus on reuniting his country. A violent struggle with his predecessor ended just yesterday.

I want to go beyond the headlines here. Our CNN's Dan Rivers, he joins us from the coast there in Ivory Coast, the capital.

Dan, tell us about this. Forces had to storm the presidential residence, arrest the former president, Laurent Gbagbo, in order for his predecessor to take office.

What is it like now in Ivory Coast, one day after this standoff has ended? How are people getting back to normal and getting their government back in place?

DAN RIVERS, CNN INTERNATIONAL CORRESPONDENT: Well, I mean, it's a lot calmer here than it has been over the last week, where there has been terrible sort of urban warfare, basically, here in the main city, Abidjan. Now things are tense, but calmer. There is traffic and people moving on the streets.

Alassane Ouattara's sort of republican forces fanning out through the city. These are former rebels from the north, many of these men, who are now basically trying to impose security on this shattered city which has been heavily looted and damaged. We've seen just dozens and dozens of buildings that have been burned and smashed, and lots of debris, charred bodies on the streets as well.

It's not completely safe and secure here yet, and we are still hearing the odd rattle of gunfire. But compared to what this people and city have been through in the last week, this is much, much calmer.

And within the last few minutes, we're being told that at an official ceremony at the Golf Hotel, where President Ouattara has been holed up for months, the heads of the army and the navy and the air force have pledged allegiance to him. So that will be a big boost for his effort to try and calm things down, to bring all of the military forces on to his side. It's just whether the kind of young militia that are out on the streets that have been terrorizing people, whether they will heed the calls for calm.

MALVEAUX: Let's talk about that, Dan, because Ouattara is not blameless here. I mean, there are accusations that there are atrocities that were committed by forces loyal to him, and that must be tarnishing this moment of victory.

How does he bring this country together when people are accusing his own forces of committing atrocities as well?

RIVERS: Well, that's right, yes. I mean, Ouattara's forces have been blamed for atrocities themselves.

You've got to understand this is a patchwork of complex tribal and ethnic dynamics here. I think there's 56 different ethnic groups here. Some of that violence was tribal. You know, there was a power vacuum, and, you know, the longstanding enmity between these tribes exploded into killing.

Now, some of that is being attributed to Ouattara's forces. Some of it is being attributed to Gbagbo's forces. President Ouattara himself has denied that, but that's going to be investigated going forward. And the big balancing act for him is to try and unite this complex and divided country, moving forward.

MALVEAUX: And Dan, really quickly here, tell us about Laurent Gbagbo, the ousted leader today. We're hearing that he was offered a teaching deal here in the United States that he rejected, and also rejected an offer of immunity from prosecution. Is that true?

RIVERS: Well, that's what we're hearing from an African source and a U.S. diplomatic source, that he was offered a teaching job -- he's a trained historian -- a teaching job in Boston University. Boston University itself is denying that, but a spokesman for a Republican senator in the U.S. is also saying that the senator was approached by the State Department, urging him to make this offer to Gbagbo. He's a friend of Gbagbo.

He declined, but clearly Gbagbo just wasn't interested. He was hunkered down underneath the presidential palace. He was insisting, according to an African source here, that he wanted nothing else other than to stay as president in some sort of power-sharing arrangement.

And when his forces started defecting, Ouattara's guys decided, OK, now we can move in and get him. And so they did, and he was arrested. But they obviously went a long way to try and tempt him out.

MALVEAUX: OK.

Our Dan Simon there on Ivory Coast.

Appreciate that, Dan.

Well, finding a new home for the Atlantis, Discovery and Endeavour. NASA, with a big announcement next hour on who gets to keep a United States space shuttle.

And today marks a major milestone for space exploration. It is the 50th anniversary of the first human in space. Can you name the cosmonaut? Maybe this will refresh your memory.

(COMMERCIAL BREAK)

MALVEAUX: Fifty years ago today, the first human went into space. Do you know the name of the cosmonaut? Here's the answer. Yuri Gagarin.

He made a 108-minute orbital flight on the Vostok 1 spacecraft on this day in 1961. Gagarin received various medals for his voyage, including the Hero of the Soviet Union Award, Russia's highest honor. He died in 1968 when a training jet he was piloting crashed.

Well, today, the Web site Google is paying tribute to his mission with this unique space-inspired doodle.

Thirty years after the first shuttle took off, about two dozen places are fighting to land one after the final mission this year.

Our John Zarrella reports on who's in the running and where they could be headed.

(BEGIN VIDEOTAPE)

JOHN ZARRELLA, CNN CORRESPONDENT (voice-over): One wall of the new space gallery is already up. At the Museum of Flight in Seattle, it's like hoping, if you build it, a space shuttle will come.

DOUG KING, PRESIDENT, MUSEUM OF FLIGHT: I think "confident" might be too strong a word. "Hopeful" is probably a better one. NASA put together a set of requirements for museums around the country to respond to. We think that we have responded positively.

ZARRELLA: The Seattle Museum is one of nearly two dozen museums, planetariums and visitors centers across the country looking to land a space shuttle orbiter. In Texas, home of the Johnson Space Center, members of Congress publicly lobbied for their home state.

REP. PETER OLSON, (R) TEXAS: There's no community in the world, none in the world that deserve an orbiter more than Houston, Texas.

ZARRELLA: The drama mirrors the bidding to host the Olympic games, with good reason. If your city gets one, the iconic winged flying machines will generate tens of millions in increased revenues every year. The Intrepid Museum in the Big Apple estimates an orbiter translates to a 30 percent increase in attendance.

SUSAN MARENOFF, EXECUTIVE DIRECTOR, INTREPID MUSEUM: So figure over 300,000 people additional to the Intrepid, to New York City. Couple that with the a $106 million in economic benefit, we think that's pretty good deal.

ZARRELLA: A pretty good deal because the price tag for each orbiter, Discovery, Atlantis and Endeavour, is $28.8 million, the cost to NASA for cleaning up and making them museum-ready.

(END VIDEOTAPE)

ZARRELLA: NASA administrator Charlie Bolden will be coming to the Kennedy Space Center to make the announcement on where the shuttles will be going. Because Bolden is coming here to Florida, it's believed that the visitor complex right here will be getting one of those shuttles -- Suzanne.

MALVEAUX: Thank you, John.

Well, reaction now from an American in Japan. The nuclear disaster threat level there has the same rating as Chernobyl now.

(COMMERCIAL BREAK)

Ahead "On the Rundown," reaction from an American in Japan. The nuclear disaster threat level there has the same rating as Chernobyl.

Plus, reforming Medicaid, the plan being considered by some Republican governors.

And your smartphone, vulnerable to would-be hackers. We're going to tell you how to lock down your device.

Well, it was the first image that many of us imagined when the nuclear crisis in Japan began -- Chernobyl, the worst disaster at a nuclear power plant ever. Well, today, the Japanese government is officially confirming what so many of us suspected, that the Fukushima nuclear plant crisis ranks just as high as Chernobyl.

The alert level has been raised from 5 to 7, the highest level possible. Now, officials now admit that damage to the plant caused by last month's earthquake and tsunami could result in substantial and long-term consequences for both health, as well as the environment.

So, what did Chernobyl look like back then? Does it give us a picture of what we're dealing with now?

(BEGIN VIDEOTAPE)

MALVEAUX (voice-over): It's called the sarcophagus, a massive concrete structure built to contain the worst nuclear power plant disaster the world has ever known. An explosion in Ukraine in 1986 showed us just how high the stakes could be in producing nuclear power. GEORGE H.W. BUSH, FORMER PRESIDENT OF THE UNITED STATES: It is unconscionable in this -- with this tragedy there that they are not coming forth in a new spirit of frankness and openness.

MALVEAUX: The numbers from that disaster are staggering. According to the World Health Organization, 240,000 cleanup workers received high levels of exposure in their attempts to contain the radioactive debris. Twenty-eight of them died that year. And public health experts believe that as many as 4,000 of those exposed to the disaster died later of cancers linked to Chernobyl.

Children were also impacted. Five thousand cases of thyroid cancer were diagnosed among Ukraine's youngest victims exposed to the leak.

In all, nearly 350,000 people were forced to abandon their homes as a radioactive cloud blew over Ukraine, Belarus and Russia. And the invisible damage, the psychological wounds, were also astounding.

Chernobyl led to massive relocations, a shock to the economy, and mutations in animal and plant life in the surrounding region. A no- man's land of 36 miles still surrounds the Chernobyl site.

Now, a chilling confession from the Japanese government. The nuclear nightmare in Japan is now ranked with Chernobyl. When scientists talk about cleanup efforts, they don't speak in terms of months or years, but centuries.

So, four weeks now into Japan's nuclear crisis, it's clear, we're still in the beginning of what will be a very long and difficult story.

(END VIDEOTAPE)

MALVEUAX: There are some stark differences, however, between the disasters in Japan and Ukraine. Chernobyl was a massive explosion that blew radioactive material into the air, while Japan is more of a slow leak. Still, the Japanese government has already evacuated 85,000 people within 12 to 18 miles of that power plant.

Well, let's get a personal perspective from near the disaster zone. Ryan McDonald is a CNN iReporter and a regular guest of ours on this show. And he joins us via Skype from Japan's Fukushima region.

Ryan, I know you heard this news about the Fukushima nuclear disaster now getting this highest alert ranking possible, a seven rating. Did it make your heart skip a beat when you heard it?

RYAN MCDONALD, CNN IREPORTER: At first it did. I was very worried about it, but then as I researched it more, I found that it's -- nothing has actually changed. It's still stabilizing. There's been no recent deterioration. I think it's just a reassessment of current data, and they decided that each of the reactors is still a five, but the overall cumulative release of radiation verifies -- warrants a seven rating, so --

MALVEUAX: Ryan --

MCDONALD: At first, it was very - mm hmm?

MALVEUAX: Nope, at first response, your reaction?

MCDONALD: Oh, at first, yes, I was very worried. I didn't know exactly what it meant, but now that I've read it a little bit more, I -- it's the same as it was yesterday or the day before to me. It's just a reassessment, I believe.

MALVEUAX: Ryan, that's what we love about you. You do your research and that's great, because you really have a sense of what's going on here.

But you more than us here, you have a sense of what is happening on the ground there. Does this make you or anyone else there even more suspicious about the government, the Japanese authorities or TEPCO that you're just getting this information now, that this rating has been increased based on information that they've had for quite some time?

MCDONALD: Well, I've lived here for nine years, so I know how the Japanese government and different systems work. A lot of people have said that they think the Japanese government's lying. I truly and honestly don't believe they're lying. They just have a very different culture from American culture, and it makes it quite difficult for me to live here sometimes.

I'm looking for facts right up front, and I don't care whose toes get stepped on, I just want to know what the deal is. But the Japanese, they're very concerned about the appearance. I think they have the world's third or fourth largest economy. They're very careful about the language that they use when they release press reports.

So, it's -- it's -- it's difficult for me sometimes, and this -- I feel like, you know, it's been a month, haven't they known this? Nothing's changed recently. Haven't they known this for a while but --

MALVEUAX: And, Ryan, you showed us some pictures. We actually see some pictures. You went recently went to the area where the earthquake struck, and you helped cleaning the debris where the tsunami and earthquake struck. We're looking at those pictures now. Can you give us a sense of what that was like just to be there just very recently?

MCDONALD: It was like being in a disaster movie. It was surreal. It went from perfectly normal countryside, and then as soon as we lowered, down closer to sea level and hit a certain level, it was post-apocalyptic movie. There was debris everywhere. There were cars. There's a picture of a car in a tree. There's another picture of a car inside the school.

The thing that really disturbed me the most was that there's a line. It came up to my chest. I have one picture of me possibly standing by the line -- if not you can see it in some of the photos, and it's exactly where the water went. You could see exactly the height of the tsunami. And I was standing there looking in the principal's office or the first grade classroom and thinking water was up to here a month ago. This is -- it was very surreal.

But at the same time, it was great because we were doing actual, real work. Before I was volunteering at a shelter playing with the kids, but this was -- we were cleaning an elementary school so the kids -- I think yesterday they went back to school. And they're able to, you know, start to rebuild their lives.

MALVEUAX: Well, Ryan, we appreciate that we can talk to you and that we can keep up with you and how you're doing as well as the young students that you work with there and the people who have been devastated by that earthquake and tsunami.

So, Ryan, keep us posted. We always appreciate your reports. Thanks, Ryan.

MCDONALD: Thank you. Thank you, Suzanne.

MALVEUAX: Well, time running out to Choose the News. Hurry to pick the story that you'd like to see by texting 22360. Text 1 to check out soaring pump prices, text 2 to watch police officers take on a baby squirrel, or text 3 to see CNN's Richard Quest at a school that teaches you how to act like a princess. The winning story will air in just a few minutes.

(COMMERCIAL BREAK)

MALVEAUX: Tomorrow, President Obama spells out his plan for dealing with the country's deficit. And aides say he's going to address the rising cost of Medicare as well as Medicaid. A 2012 budget by House Republicans calls for cuts in Medicaid and for changes in the way that Medicaid dollars are doled out. Our business news correspondent Stephanie Elam join us from New York. Steph, tell us how all of this is going to work specifically when it comes to Medicaid.

STEPHANIE ELAM, CNN BUSINESS CORRESPONDENT: Right. Suzanne, let's start off taking a look at Medicaid and how it provides health care to 50 million poor and disabled Americans. Right now, the federal government pays about two-thirds of the cost and the states go ahead and pick up the rest. In fiscal 2009, states shelled out about $130 billion on Medicaid and received $250 billion from the federal government to cover the rest.

But some House Republicans, they want to change that formula, and budget chief Paul Ryan wants the federal government to distribute lump sums to the state instead of matching state spending. States would then be able to spend these Medicaid block grants, as they're called, however they want. It's actually an idea that several Republican governors support. And here's what Mississippi's governor told a congressional committee last month about Medicaid.

(BEGIN VIDEO CLIP) GOV. HALEY BARBOUR (R), MISSISSIPPI: We just want to run it better. We want to run it better for the taxpayers. We want to run it better for our beneficiaries. We can control the costs much, much better if -- and if the federal government would give us more flexibility.

(END VIDEO CLIP)

ELAM: Now, governors like Haley Barbour, who you just heard there, argue that the current Medicaid system just doesn't give states enough freedom to find their own cost savings. On top of that, the Congressional Budget office has estimated that a Medicaid block grant system could save the federal government $180 billion over the next 10 years, Suzanne.

MALVEAUX: So, Steph, I guess the critics are coming out pretty strongly against the idea. What are the risks here?

ELAM: If you ask opponents, they'll say it shifts too much burdens to the states. And with the block grants, if the states run out of federal dollars, well, just too bad. They'll have to make up their funds on their own, which are in pretty short supply these days as we know. So, that's leading to an even bigger concern. It could lead some states to cut back on Medicaid eligibility or benefits or cut payments to providers, and that would likely drive up the number of uninsured, raise cost sharing probably, or mean fewer doctors will accept Medicaid patients.

So, the bottom line here, everyone agrees Medicaid needs reform, but just like Medicare and Social Security, it's all about the details here. And bipartisanship, well, Suzanne, no surprise there, may be hard to come by.

MALVEAUX: Very controversial. Very hard to come by. OK. Stephanie, thank you. Appreciate it.

Also want to let you know we're keeping our eye on the White House. An event taking place, President Obama and the first lady and the vice president, all of them participating in an event to support military families, American military families and their spouses and children.

And we will also, as you know, tomorrow be following very closely -- the president making a statement about his own budget blueprint for 2012, moving forward. Perhaps some dramatic changes, reforms, to Medicare and Medicaid, as well as other cuts.

Well, you take them everywhere you go, but -

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: The smartphone is really your most personal computer. And it knows where you are, who you talk to, who you -- who's on your contact list, and it may even store financial information.

(END VIDEO CLIP)

MALVEAUX: We're going to tell you how to protect all of your private information.

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MALVEAUX: Downloading apps to your smartphone, some of them are extremely effective, but you can't trust all of them. Our CNN Silicon Valley correspondent Dan Simon joins us with what to look out for.

Dan.

DAN SIMON, CNN SILICON VALLEY CORRESPONDENT: Well, Suzanne, as I was looking into this story, I have to admit, I was a bit surprised at the number of apps that are looking into your private data. That have access to your private data. And to learn about things, I consulted with one of the greatest mobile security experts here in Silicon Valley. And, guess what, he's all of 26.

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SIMON (voice-over): Kevin Mahaffey is one of those whiz kids who began programming computers when he was 10. Now at 26, as mobile devices become as important, if not more so than PCs, he and some friends sensed a business opportunity to help smartphone users protect their data.

KEVIN MAHAFFEY, COFOUNDER, LOOKOUT INC.: The smartphone is really your most personal computer. And it knows where you are, who you talk to, who you -- who's on your contact list, and it may even store financial information.

SIMON (on camera): Now, if you're like 99 percent of the people who buy a smartphone and download applications, you have no idea that many of them are taking your private information. But as a user, you're entitled to know.

MAHAFFEY: It's important that, as a user, you understand who you want to share your data with, what type of data you want to share and how it's being used so that you can make the appropriate decisions for yourself.

SIMON (voice-over): His company, called Lookout, designed an app for android devices that gives users full transparency of what private information the application is taking. For example, seven apps on this smartphone, all considered reputable, track location. But the question users should ask themselves is, why?

MAHAFFEY: For example, a mapping application needs to know your location to display your most -- display maps near where you are.

SIMON: Another 10 apps know our mobile phone number or the phone's unique ID number. The most common reasons they site are to preserve settings if a user reinstalls an app and to track how much they use the app. Finally, four applications have access to our contact list. That might make you squeamish, but most app developers use that information to make it easier to share content, like photos with people in your address book. Still, it's unsettling to some that the app developer would have access to your private contacts.

SIMON (on camera): App developers may have well-intentioned reasons why they want your private information. The developer should clearly state things in the terms of service. But few customers, of course, actually take the time to read it.

MAHAFFEY: If you downloaded a legitimate app as a user, you are trusting that developer to treat your data with respect.

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MALVEAUX: So, Dan, tell us more ways that users can actually protect themselves?

SIMON: Well, here's the bottom line. You should really think of your iPhone or your android device or whatever you're using as a personal computer. You should treat it really the same way. And most of the apps are for the iPhone and android devices. And there are often software updates. So you want to constantly be updating your phone. There are some security features involved in those updates. So it's a good idea to do that.

Also, only download apps from reputable places. You might hear about techies who jailbreak their phones and get apps sort of on an underground market. So that's really a good way to sort of get yourself into trouble. And the third thing is, let other people do your homework for you. Read the app reviews. That's a great resource to prevent some, you know, major privacy breaches and malware that can get on your phone, Suzanne.

MALVEAUX: All right, our own Dan Simon. Thank you, Dan.

We're talking gas prices for today's "Talk Back." We asked you, who is to blame for the high prices? Zachary Durnell (ph) says, "to be honest, we are all to blame. We need to stop using as many petrol derived products as possible. We have the ability to do this, but I don't think that we have the will to do it." Our Carol Costello is back with more of your responses.

CARMEN WONG ULRICH, CNN CORRESPONDENT: It is time now for "The Help Desk," where we get answers to your financial questions. And joining me this hour, Donna Rosato, a senior editor at "Money" magazine, and John Ulzheimer is president of consumer education at smartcredit.com.

Now our first question up here is from Robert. Robert says, "I have no real debt except for rent and bills and I don't use credit cards, but I find it hard to save money. Where should I start?"

Donna, what's your word for him? DONNA ROSATO, SENIOR EDITOR, "MONEY": Well, first of all, I want to say Robert's in a great position to start saving because he doesn't have any debt. But what I recommend is starting with an emergency savings fund. That's where you really want to save. You want to put away six months of saving to cover any expenses that you have, things that you're not sure you might -- if you lose your job or have an unexpected repair come up. It's great if he has a 401(k) on his job. There's -- the last place you can get free money for your investing any contributions would be matched.

But, as he said, it can be really difficult to save. So my advice there is, make it automatic, Like the 401(k) is. You know, try to take the savings out of your paycheck before you hit it and then you're going to be much more successful.

ULRICH: Yes, automated savings is great, great advice.

And here's our second question. Brent in Missouri. He says, "my current job pays in cash. Now how much can I deposit before taxes start coming out?"

John.

JOHN ULZHEIMER, PRES. OF CONSUMER ED., SMARTCREDIT.COM: Old- fashioned job, pays in cash. Isn't that nice?

ULRICH: Uh-huh.

ULZHEIMER: Well, the answer to the question is, he can deposit as much as he wants before taxes start coming out, but that is not a good idea. Why? Because the IRS is going to penalize you for not making your quarterly estimated tax payments. He needs to go to irs.gov and download form 1040-ES. And, of course, it's a very complicated form. But essentially what he's going to want to do is set aside about a third of every dollar that he receives in payment because that's the amount of money he's going to start paying to the IRS every quarter. And not coincidentally, the first payment is going to be due April 18th of this year.

ULRICH: And he better do it because they can come after him.

Thanks you so much, guys.

Do you have a question that you want answered? Send us an e-mail any time to the cnnhelpdesk@cnn.com.

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MALVEAUX: Seems everyone has an opinion on the increasing gas prices. So it made for a perfect "Talk Back" question today. Our Carol Costello has all your responses.

Carol, take it away. A lot of them.

CAROL COSTELLO, CNN CORRESPONDENT: Oh, some of them were quite funny and some were quite caustic. "Talk Back" question today, who do you think is to blame for high gas prices?

This from Lee. "Oil companies make huge profits because they can. Drill and get more oil out there. That means left wingers need to back off."

This from Jim. "It's simply the speculators who drive up prices of crude and politicians who thrive off cozy relationships. Easy to figure out, but hard to do anything about."

This from Michael. "The president. He isn't doing a darn thing about it. I don't think he even cares. I even voted for him. Big mistake."

This from Henry. "Oil speculators. There should be some regulations on these bozos. How is it when oil goes up, prices go up immediately? And when oil goes down, it takes weeks before we see it at the pump?"

And this from Nicole. "I blame this on what's happening in North Africa and the Middle East. America, we need to invest in clean energy. And I'm not talking about nuclear energy. You saw what happened in Japan. Green energy is the way to go."

Continue the conversation, facebook.com/carolcnn. And thanks, again, for your opinions. Always fun to read and interesting.

MALVEAUX: Always. All right. Thank you, Carol.

COSTELLO: Sure.

MALVEAUX: You told us what story you wanted to see. Your "Choose The News" winner. That's up. Just moments away.

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MALVEAUX: Here's the story that you wanted to see. It is affecting all of us, soaring prices at the pumps. Our CNN's Lisa Sylvester takes a look at what's going on.

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LISA SYLVESTER, CNN CORRESPONDENT (voice-over): Coast to coast, from Atlanta to New York to Los Angeles, consumers are getting socked by high gas prices.

UNIDENTIFIED MALE: $4.19 a gallon. That's ridiculous. It's absolutely absurd.

UNIDENTIFIED FEMALE: I have to drive and they don't pay mileage. So it's really, really sticking me.

UNIDENTIFIED MALE: You know, they're getting all the bailouts and the breaks and we're getting squeezed.

UNIDENTIFIED MALE: It's L.A., so it's even worse than most places. SYLVESTER: The national average price for regular gasoline is $3.79. That's up 93 cents since last year.

Why are oil prices shooting upward now? The fighting in Libya is one contributing factor. Fears of unrest spreading to other countries in the Middle East, including Saudi Arabia, also has markets on edge. And economists say factoring in speculation and an increase in demand from countries like China. Higher gas prices hit consumers where it hurts most, discretionary spending.

PETER MORICI, ECONOMICS PROFESSOR: Consumers really feel a pinch. They're limited in their discretion because they have to pay their mortgage, they have to pay their utilities. So to pay higher gas prices, they go out to dinner less, they go to movies less, they buy fewer clothes. The amount of money that most consumers have to work with is very limited.

SYLVESTER: Gas prices are expected to continue to rise through the spring. The spike in prices is not just a pocketbook issue, it's also a political one.

KEN VOGEL, POLITICO: There's not a lot of evidence that anything that political leaders are doing in the short term has as much impact on gas prices as market trends or long-term energy policy, but that doesn't stop politicians of both parties from pointing the finger at each other.

SYLVESTER: The issue is already playing out like a campaign ad. Republicans are blaming President Obama. Sarah Palin is calling him the $4 per gallon president on a FaceBook page. Democrats pushing back, pointing to Republicans cozy ties with the oil and gas industry.

Lisa Sylvester, CNN, Washington.

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MALVEAUX: CNN NEWSROOM continues right now with Randi Kaye.