Sneak Attack on the Dollar; Cigarette Tax Soars, Smokers Fume
BLITZER: The U.S. military and the intelligence services -- they work very hard to stay on top of new threats, like long-range weapons in the hands of America's foes. But the United States may also have to prepare for another kind of attack -- on its currency, the U.S. dollar. Let's go to Mary Snow in New York. She's working this story for us -- all right, Mary, explain what's going on.</s>MARY SNOW, CNN CORRESPONDENT: Well, Wolf, a panel of experts met recently for what was called the Unrestricted Warfare Symposium at Johns Hopkins. And a case was made that the U.S. needs to add the dollar on its list of things to watch.</s>SNOW (voice-over): A potential attack would not involve bullets or soldiers. Instead, the opening salvo could be a simple piece of paper. The seriousness of the situation was made in this fake press release from the Central Bank of Russia, saying it has arranged long term use of vaults in Zurich and Singapore, capable of holding up to 10,000 metric tons of gold. Translation -- the dollar is under attack. Analyst James Rickards calls it the dollar Pearl Harbor and he presented the scenario to a recent conference looking at national security implications of economic threats.</s>JAMES RICKARDS, OMNIS INC.: I'm not predicting this attack. I'm really just warning. I'm saying if we keep going down the path of debasing the dollar, this is something that could happen.</s>SNOW: Rickards envisions a potential attack driving down the value of the dollar by 75 percent, triggering an even larger economic meltdown. His warning -- the dollar is vulnerable.</s>RICKARDS: There's almost a kind of arrogant assumption that because the dollar has been king for a long time, it will always remain so. But history says the opposite.</s>SNOW: Concerns over the dollar arose just last week when China suggested using a new currency to replace the dollar as the world standard. Some who monitor currency markets say there are vulnerabilities, but play down the chances of an outright attack.</s>GREG IP, "THE ECONOMIST": Driving the dollar down would hurt them more than it hurts us. For example, China -- the United States is perhaps their single most important market and they like the dollar to be strong against their own currency, because it makes their exports cheaper to us.</s>SNOW: And, Wolf, China holds about $1 trillion worth of U.S. debt. And while it's worried about the dollar, some say China's investment in the U.S. also ensures for China that there is a market for its consumer goods -- Wolf.</s>BLITZER: Good point, Mary. Thanks very much. Mary Snow is in New York. Smokers are fuming over a huge jump in the federal tax on cigarettes and some are blaming President Obama -- himself a known smoker, at least in the past. CNN's Jim Acosta has the latest -- Jim.</s>JIM ACOSTA, CNN NATIONAL CORRESPONDENT: Wolf, the federal government is raising tobacco taxes like never before -- starting today. And on this April Fool's Day, smokers are not laughing.</s>ACOSTA (voice-over): Smoke them if you've got them has become smoke them if you can afford them.</s>UNIDENTIFIED FEMALE: I can't do it anymore. I'm done. I'm done. I'm not smoking anymore after this cigarette.</s>OBAMA: There you go.</s>ACOSTA: Last February, when President Obama signed a law that expanded health care coverage for millions of children, he did so on the butts of millions of smokers.</s>OBAMA: In a decent society, there are certain obligations that are not subject to tradeoffs or negotiations. And health care for our children is one of those obligations.</s>ACOSTA: To pay for all of that new health care coverage, starting today, the federal tobacco tax on a pack of cigarettes is going up big time -- from 39 cents to $1.01. Anti-smoking activists who have been fighting the likes of Joe Camel for decades like the smell of that.</s>UNIDENTIFIED MALE: All the research, all the evidence shows that one of the best ways to reduce smoking, particularly among kids, is to increase price. Our model suggests that almost two million kids will be prevented from becoming smokers just from this price increase.</s>OBAMA: Over the next two years...</s>ACOSTA: But critics argue it's a promise broken for President Obama, who has said he would only raise taxes on the wealthy and it's the poor who smoke the most.</s>UNIDENTIFIED MALE: If you're a pack a day smoker, that -- this 62 cents per pack increase is a $225 a year federal tax increase. For people with moderate income, that's a pretty big hit.</s>ACOSTA: And the tax is not a big hit with the dwindling number of restaurants that still sell tobacco products, like this Washington cigar bar just a few blocks from the White House.</s>UNIDENTIFIED MALE: If we get a dramatic increase in a particular brand or a particular line of cigars, we will be forced to -- to increase the price somewhat in order to -- to maintain our margins. So, yes, if there's dramatic increase in a particular item, we will pass that on somewhat.</s>ACOSTA: The big cigarette makers have done just that -- raising their prices before the hike. Public health advocates say add that to the list of reasons for smokers to kick the habit.</s>UNIDENTIFIED MALE: Yes. It's probably time to stop. It's just getting out of hand.</s>ACOSTA: And Congress isn't finished with the tobacco industry just yet. The House is set to vote on a bill that would give the Food and Drug Administration the power to regulation the products for the first time. It's a big leap forward from those days of smoke-filled rooms up on Capitol Hill -- Wolf.</s>BLITZER: All right. Jim Acosta, thanks very much. The new tax, by the way, pushes the national average price of a pack of cigarettes to $5. Here's the breakdown. A $1.01 federal tax as of today; an average of $1.21 state tax per pack; an average state sales tax of 23 cents; an average of $2.25 to the manufacturer; and the profit for distributors and retailers, an average 30 cents per pack. That's where the money goes. Senator John McCain -- he's standing by live. We're going to talk about his new budget that he's unveiling right now -- an alternative to President Obama's. And the former Republican presidential candidate will answer questions on other subjects, as well. Our interview with Senator McCain -- that's coming up next. Plus, the first lady, Michelle Obama, in the global spotlight -- how is she doing on her first overseas foray as first lady? We're checking the world reviews.