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Defense Secretary Expected to Stay; Bailout Bucks

Aired November 25, 2008 - 22:00   ET


SOLEDAD O'BRIEN, CNN ANCHOR: And we begin with some breaking news for you out of Chicago. Sources tell CNN that Defense Secretary Robert Gates is expected to stay on the job for at least the first year of the new administration, and possibly beyond.
Earlier today, Obama named two more members of his economic team and the government announced a major expansion and shift in the bailout plans.

Let's get right to the breaking news with CNN's Ed Henry. He joins me now from Chicago.

Ed, good evening.


I have been talking to senior advisers to the president-elect, who say this largely came down to Barack Obama being serious about trying to get at least some bipartisanship into his Cabinet. And they also say an important factor is that the president-elect has been developing some chemistry with Defense Secretary Robert Gates in private, during their private conversations during this transition period, and that the president-elect feels like it's important to have a steady hand, some continuity at the Pentagon right now, with two wars, Iraq and Afghanistan, as he comes to office.

So, he feels like he will have a steady hand at the Pentagon, he will have some muscle at the State Department, with Senator Hillary Clinton likely becoming secretary of state. And we're also being told by our sources the likely choice to be national security adviser is the retired Marine General Jim Jones.

And, so, another major factor and the final big factor, we're told, is this financial crisis, and the fact that Barack Obama is feeling in private that he will have a powerhouse team handling national security, while he is going to have to be focused on economic security.


SEN. BARACK OBAMA (D-IL), PRESIDENT-ELECT: Good morning, everybody.

HENRY (voice-over): There's a leadership vacuum, and president- elect Barack Obama is trying fill it, sort of.

OBAMA: There is only one president at a time. Given the extraordinary circumstances that we find ourselves in, however, I think it is very important for the American people to understand that we are putting together a first-class team and for them to have clarity that we don't intend to stumble into the next administration. We are going to hit the ground running.

HENRY: A careful calibration: Mr. Obama gets credit for stepping up, while leaving the actual responsibility for the crisis on the lame-duck president's shoulders. Plus, he gets more breathing space, before having to flesh out how he will back up his promise to create 2.5 million new jobs in his first two years.

So far, he's giving little detail about his economic stimulus plan or how he plans to cut the budget to pay for a package that may cost $700 billion.

OBAMA: We are going to go through our federal budget, as I promised during the campaign, page by page, line by line, eliminating those programs we don't need.

HENRY: Mr. Obama talked about sacrifice, as he unveiled two more Clinton officials for his economic team, both congressional budget experts, Peter Orszag as the new White House budget director, and Robert Nabors as his deputy. But the president-elect did not name major budget item he would cut. And reporters who were called on didn't press him on it.

OBAMA: Peter -- where's Peter? I didn't recognize you, because you don't have the floppy hat that you had during the campaign.


QUESTION: I actually do.

OBAMA: There it is.


OBAMA: Man, that's what I'm talking about.

HENRY: After the jocularity Mr. Obama was asked what kind of mandate he has.

OBAMA: I don't think that there's any question that we have a mandate to move the country in a new direction and not continue the same, old practices that have gotten us into the fix that we're in.

But I won 53 percent of the vote. That means 46 percent or 47 percent of the country voted for John McCain.

And it's important, as I said on election night, that we enter into the new administration with a sense of humility.


O'BRIEN: Ed, we still have lots to -- to hear about, the key appointments, clearly, and also another news conference. For a guy who we didn't see a lot over the last couple of weeks, suddenly, he's out every single day. What do we know about that?

HENRY: That's right, Soledad.

It's fascinating, because yet another press conference tomorrow morning here in Chicago, where we're told Barack Obama will be talking about the economy again, three straight days. For someone who was very reluctant to jump into this crisis last week, he's realizing now he has to jump in. This thing is spiraling right now.

During this transition period, there's that leadership vacuum, and he wants to fill it. And so there's sort of an unofficial message and an official message. The official message is, look, I'm going to get my team up and running, and we will be ready to hit the ground running on January 20 of next year. The unofficial message is, we're not going to wait on at least trying to grapple with it and we're trying to put a shot in the arm for the markets right now, not January, but right now -- Soledad.

O'BRIEN: All right, Ed Henry for us from Chicago this evening -- thanks, Ed. Appreciate it.

The mess of the financial crisis got even more complicated today, when the government unveiled a new plan to pump $800 billion more into the economy. Now, that's on top of all the other money that is on the table or in the pipeline right now.

We're talking about three massive piles of money. Is it confusing? Absolutely. But here's how it breaks out for you.

First, you have the $700 billion in the original bailout plan. That's the one that Congress passed last month. About half that money has already been spent. Then, Obama's economic stimulus plan in the works, and separate from the bailout money, economists estimates the stimulus plan is going to cost between $500 billion and 700 billion -- with a B -- dollars.

And then the third pile of cash is the $800 billion that was announced today. The Fed and the Treasury say they're going to use it to free up credit for consumers and small businesses. So, three separate giant piles of money.

If it all sounds familiar, it kind of is, but there are also some important differences. It's your money, your future.

And CNN chief business correspondent Ali Velshi joins us now to kind of walk us through it all.

All right, so, first, the bailout plan is supposed to help consumers more. How exactly, Ali, is that going to work?

ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: Right. This will be a walk through the jungle, so stay with me.


VELSHI: The way the world used to work, before the credit freeze, was that big investors would lend money to companies or banks that needed it. And they would go through the investment banks. And ever since the investment banks sort of disappeared, the government -- they didn't disappear. There are two investment banks. There are three of them that sort of have left the face of our landscape.

The government took that role. So, here's how it worked post- bailout. The government would lend money to major corporations. That's called commercial paper. And those corporations needed that -- those are short-term loans -- because they use that to pay operating expenses, including your salary. So, that is why the unfreezing of the credit crisis mattered to you on the corporate side.

But, on the other side, the government also became a lender to major banks. And the thinking behind this is that those banks -- that the money that went into the banks would trickle down to you, in terms of loans, particularly consumer loans, credit cards, car loans, student loans, things like that.

Well, that didn't work. So, today, part of the announcement was a shift in that. What the government is going to do now is, it's going to continue to lend money to banks. But it won't be a loan. They will actually be buying up some of that consumer credit, those car loans, those student loans, those credit cards, those lines of credit.

The idea is that the government is giving money to the banks in a way that is more directed at the individual. So, in some cases, the government had previously given money to banks, and they didn't spend it in a way that was helpful to people, didn't loosen the credit crisis. The money didn't get to you. This is designed to get to you, $200 billion.

It's a massive change in the way that things are being done. And we're hoping, Soledad, that this will -- this will result in people being able to access money. If they're able to do that, that means they can continue to spend. And that might give us some sense of this economy coming back on track, because, right now, you have got two problems. One is, people can't get credit if they want it.

And the second one is, even if they could get credit, because of the difficulty in this economy and the danger of losing a job, people aren't even willing to spend.

O'BRIEN: Yes, big, giant problems there. So, you mentioned the -- my math with the billions not so great.

VELSHI: Right.

O'BRIEN: But -- so, walk me through here -- $200 billion, you pointed out...

VELSHI: Right.

O'BRIEN: ... is going to go to the consumer lending, buying, et cetera.

VELSHI: Right.

O'BRIEN: So, that leaves us $600 billion.

VELSHI: Six hundred billion.

O'BRIEN: What happens to that?

VELSHI: That maybe is going to be used to buy mortgages from Fannie and Freddie and Ginnie Mae.

So, the organizations that buy mortgages from your bank, this replenishes that money. Now, that is still not going to help anybody in the country with a troubled mortgage or who is up for foreclosure. What it will, though, do is that, if you're looking to buy a house, that makes more money available through the traditional mortgage channels.

And if you're looking to sell your house, because maybe you're in trouble, you want to get out from that debt, chances are the buyer now has more access to money. There's a better chance of you being able to make that sale. So, it might somehow help the housing market.

O'BRIEN: Well, what about those people who fall in that other category, you might lose your job, you can't pay your mortgage? Like 84,000 people last month alone, their homes went into foreclosure.


O'BRIEN: So, they're not looking for a loan. They're looking to be saved.

VELSHI: The worst off -- the worst off of Americans remain unhelped by this situation. There was a bit of moratorium on some people with Fannie Mae and Freddie Mac guaranteed loans until January 9.

But bottom line is the worst off of people have still not got a solution.

O'BRIEN: Do you think that there's going to have to be a solution? I mean, everyone keeps saying until you bail off those people, the worst-off people, you really cannot fully bring back the economy?

VELSHI: Yes. I think there's going to have to be some aid for people who are drastically in trouble, in many cases through no fault of their own.

O'BRIEN: All right, Ali, as always, I have got to ask you to stick around...


O'BRIEN: ... because we're going to continue talk about this, talk the politics of the bailout, coming up next. Check out Randi Kaye's live Webcast happening during the break. Going to be blogging throughout the show as well. To join the conversation, you go to

And then also tonight, we're going to talk how president-elect Obama actually is going to pay for fixing the economy. We're "Keeping Them Honest" on that one.

And the Internet hoax that allegedly ended in a suicide -- now it's up to the jury to decide whether bullying over the Internet is a crime.

Then, cashing in on history -- as Washington goes wild over the next first family, enterprising capitalists are just trying to make a buck. And we're not even talking about the inaugural ticket scalpers yet. We're talking about Obama-mania.

That's when 360 continues.



OBAMA: There is only one president at a time. That president is George W. Bush, and he will be president until I'm sworn in on January 20. Given the extraordinary circumstances that we find ourselves in, however, I think it is very important for the American people to understand that we are putting together a first-class team.


O'BRIEN: President-elect Obama today in Chicago shortly after naming two more members of his economic team and pledging to go through the federal budget page by page, line by line, to eliminate excessive spending and get the economy back on track.

For two straight days now, he has come out with very strong statements about the economy and also his recovery plan, plenty of "Raw Politics" to talk about tonight.

Ali Velshi is back, joining us to talk, along with CNN senior political analyst and former presidential adviser David Gergen, and CNN senior political correspondent Candy Crowley.

Nice to see all of you. Thanks for being with us.

David, let's start with you.

Tomorrow is the third day of the workweek, third press conference. The president-elect has been much more visible this week than he was last week, certainly. Is he making up for being out of the public view? I mean, is this sort of what he has to do to -- to restore confidence here?

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: I think it's been very helpful. And I think it was triggered by that massive fall in the markets that Ali reported on last week, back-to-back, you know, falls of about 400 points in the Dow.

And that, I think, accelerated the -- the Obama effort to appoint his team. He's very much filled this leadership vacuum that we were talking about only last week. And, finally, the Bush administration, after a lull, seems to be coming back on with -- with great force.

So, we have got a double-barrelled approach here that -- that is encouraging. I don't know whether it's all going to work. But I will tell you this. Barack Obama is putting together one of the most impressive teams, starting on economic policy, that we have seen in a long, long time in Washington.

If it -- if what is required here to turn -- to bring back a recovery is talent, smarts, people with focus, people who have got experience to bring policy to bear, he's putting it together. I'm telling you, Soledad, this is a good team.

O'BRIEN: Well, good. It's exactly the right time to have a good team. I will tell you that.

Now, Candy, you heard the president-elect talk about fiscal restraint, but, you know, he didn't have a lot of specifics. He talked about this one example of those millionaire farmers who get subsidies, $49 million over three years. But that's some tiny -- that's literally, literally a drop in the bucket, for all the money you're talking about. At what point do you think he's going to need to really start spelling out details?

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Well, as far as what he's going to cut in the budget, that can go on down the road, because he also made it very clear that, first, you have to jump-start the economy, and that is going to put -- mean priming it with a lot of money, as we're seeing. So, that's kind of pushed down the road.

But he also wants Congress to act on the stimulus bill that he wants when Congress come back into session in January, which is ahead of the time that he would be sworn in, because they would like at this point to have a huge stimulus package by the end of January, early February.

So, I suspect that we will -- we will beginning to hear details of how large he think would be, how he would shape it, who would get what, that kind of thing. I think, at some point, we will have the jump-start begin to take some form, maybe later this month, at least early January.

O'BRIEN: All right. And when you say huge stimulus package, you're not kidding.

Ali, you were doing the math before the break, a stimulus of $150 billion already there, bailout of $700 billion, the new package at $800 billion. And then Obama is going to have his own stimulus plan.

VELSHI: Right.

O'BRIEN: Seven hundred billion is sort of the number that is being floated.

Pre-the crisis, our deficit was...


O'BRIEN: ... our deficit was at $407 billion.


O'BRIEN: Now people are talking about a trillion next year.



O'BRIEN: Explain to me, in basic 101 of the economy, where are we going to get this money from?

VELSHI: Well, the government can print money. They can issue bonds, basically. They -- they -- they basically take money from other people, and give that -- those people bonds, saying that they will pay it back.

Now, generally speaking, nobody doubts that the U.S. government will pay it back. But what happens is, a lot of those bonds are bought by foreign governments. So, it reduces the leverage of the American government in dealing with other nations, in the same way that you don't have leverage with your bank manager.

When you go to your bank, you're not on an equal playing field. They own your debt. Well, that's the danger of the American government. There's also fear of inflation if you keep printing money. But, fundamentally, in this environment, inflation has taken a back-burner. Demand is down around the world. So, we don't have the same pressures.

Want to tell you one other thing. Lakshman Achuthan, a noted economist, whom you have spoke to, said the stimulus is a really important thing to think about, but the same amount of money used at the wrong time or in the wrong way can have the wrong effect.

So, if you're at the playground with your child, you know that, if you push the swing at the right point, that's going to be a beautiful swing, but you can't push the swing when the kid is at the other side. That's the problem with stimulus.


O'BRIEN: Right.

VELSHI: You have got to hit the right places at the right time. And, if you do, this could be record-breaking. We could -- we could be in for years of growth because they did the right thing at the right time.

That's why they're taking a lot of time to figure out how they're going to spend it.

O'BRIEN: All right, well, then let's talk about that swing metaphor, if we can.

David, on the campaign trail, Barack Obama talked about priorities, energy independence, improving education, health care reform. And, actually, it was one of those at the debates he wouldn't back away from.

Remember, in the first two debates, kind of wouldn't say, well, if there's this crisis, what I will not fund.

Is that going to be risky, or is it so bad that no one expects those things to be fulfilled? Is it going to come back to bite him, potentially?

GERGEN: Soledad, the impression he's giving out is that he's going to use the stimulus package that is going to be very massive and cover a lot of different bases, he will use a lot of the spending on the stimulus package as down payments for the reforms on energy and -- and -- and health care that he wants.

For example, he will use some of the stimulus package, perhaps, to pay for electronic billing records in hospitals. And that's expected to help lower the coast of health care, as it's done in the Veterans Administration and be part -- in other words, your short-term stimulus becomes part of your long-term investment strategy.

And, similarly, on energy, he's going to spend money on clean energy, which becomes part of your long-term strategy to make America more independent.

But let me just stress this, to go back to who is going to pay the bills here and who is going to buy these bonds. As Ali was talking about, it's very important. Where does that money come from? Japan has been the country that has been -- has been out in the forefront, buying U.S. treasuries in recent years.

That's tapering off some. And as CNN's Fareed Zakaria has been writing in recent days, the new banker for us may well be China. And that's going to put us -- from a foreign policy standpoint, Hillary Clinton's team is going to have her hands full trying to figure out how do you have a relationship with China, because once somebody becomes your banker, they start getting a lot of muscle and they can start moving you around.

O'BRIEN: You're the banker, you have got the leverage.

All right, we're out of time. I want to thank our panel.

GERGEN: Absolutely.

O'BRIEN: David, and Candy, and Ali, appreciate it a lot.

Coming up next, some breaking news: The former first lady Barbara Bush is in the hospital. We will bring you details on that straight ahead.

Plus, millionaire farmers, we were talking about them just a moment ago. It turns out they are reaping huge handouts from the government. And some of them don't even live in the United States. Who are they and why are they getting our tax dollars?

Plus, Sarah Palin is back on the campaign trail. We will tell you why. And we will tell you what John McCain said about his former running mate.

That's all straight ahead. Stay with us.


O'BRIEN: Breaking news -- there's late word tonight that Barbara Bush, the mother of President Bush, is undergoing tests at Houston Hospital. We just got off the phone with a family spokeswoman. And she told us that Mrs. Bush has been having stomach pains for a couple of weeks and, as a precaution, went to the hospital. Mrs. Bush is 83 years old, said to be in great health.

The spokeswoman says it does not appear to be anything serious. You may remember that Mrs. Bush has Graves' disease. Unclear if this is related at all. At this point, this is all we know. And we're going to of course bring you more details as we get them.

Barack Obama campaigned with the specific programs that he said wanted to would implement if he got elected, national health care, for example. So, now comes the hard part. How does he actually translate campaign promises into reality when you're in the middle of an economic meltdown? And how much will paying for the bailout compromise the Obama agenda?

360's Tom Foreman is "Keeping Them Honest."

TOM FOREMAN, CNN CORRESPONDENT: Well, Soledad, as a candidate, Barack Obama did indeed promise a lot: more health insurance, more green energy, improvements for education, infrastructure, lower taxes, and, of course, jobs, jobs, jobs.


(voice-over): Now, as president-elect, Mr. Obama is facing a hobbled economy, and he's talking about not just expansion, but also scrubbing the federal budget to help pay for it.

OBAMA: There are just going to be some programs that simply don't work, and we've got to eliminate them.

FOREMAN: But which ones, and will some of his own programs get delayed or cut, too? Those are questions economic analysts say he must answer.

He's talked about rooting out waste in the Department of Defense, entitlement programs and other government agencies. But the Tax Policy Center, a nonpartisan group that went after both Obama and McCain's fiscal plans as unrealistic, says:

LEN BURMAN, TAX POLICY CENTER: Every president since at least Jimmy Carter has been -- has wanted to trim waste, fraud and abuse from government. And it never amounts to very much money.

FOREMAN: The president-elect is pushing to continue work he says is critically important.

OBAMA: We are going to have to make sure that we are investing in roads, bridges, other infrastructure investments that lay the groundwork for long-term economic growth.

FOREMAN: In short term, however, all that might drive the deficit skyward, unless the president-elect makes painful cuts elsewhere. Some economists say a ballooning deficit could be OK for a while, but, if it lingers, it will trigger deeper economic turmoil. So, they're looking at Obama's new economic team, hoping they will make the hard choices to right the economy, even if those prove unpopular.

BURMAN; The hope is that president-elect Obama is signalling that, as president, he will take much more seriously the long-term economic challenges than he did as a candidate. And that would be a good thing.


FOREMAN: The president-elect certainly doesn't have to provide all of these answers right away, his inauguration sometime off.

And it is clear that, behind the scenes, his team is working furiously on the puzzle they now face: how to keep the economy from collapsing in the short term, while not undermining his long-term goals -- Soledad.

O'BRIEN: But, realistically, how much time do you need before you start dealing out those details?

FOREMAN: Giving the real details on that?


FOREMAN: Well, I mean, look, you're going to through the inauguration. There's going to be a honeymoon period after that.

I think, really, the measure of that is going to be the extent to which we continue to see bad news in the economy, because the public always says -- you know, people say, we have got time. We will be patient.


FOREMAN: But, boy, you -- if the jobless rate keeps rising...

O'BRIEN: Yes. FOREMAN: ... if this economy doesn't start showing signs of moving in the right direction, people will start saying, where are your details? And that's the thing he has to be prepared for. He's putting the team in place to maybe be able to do that.

O'BRIEN: All right, Tom Foreman, thanks.

Still ahead tonight: She's back: Sarah Palin campaigning again, and her old running mate is singing her praises.

Also, Obama-mania -- the first family's every move -- the new first family to be, I should say, is being watched not just by the Secret Service, though. We're going to take you close up -- coming up.

Stay with us.


O'BRIEN: Did a woman push a teenager to side in a MySpace hoax? Jury deliberations have begun in the case. The details in "Crime and Punishment" -- coming up.

First, though, Randi Kaye joins us with a 360 bulletin.

Hey, Randi.


Explosions at two Bangkok, Thailand, airports have left at least four people injured. The blasts come in the wake of a day of protests. All flights at one of the city's airports have now been canceled. The anti-government protesters are trying to destabilize the current region.

Congressman John Dingell was briefly hospitalized today in Washington, but the Michigan Republican, who is 82, is feeling better and expects to return to work tomorrow.

Former presidential candidate John McCain said today he thinks Sarah Palin should have a very bright future in the GOP. She's already headed back on the trail, campaigning in Georgia next week for Saxby Chambliss, the GOP candidate who is in a runoff race for the Senate.

And the hot word this year -- yes, you probably guessed it -- it's bailout. According to Merriam-Webster's online dictionary, bailout won as the word of the year simply because it gets looked up more than any other.

Big shocker there, huh, Soledad?

O'BRIEN: Yes. Congratulations, I guess, right?

All right, let's take a look now at the "Beat 360" winners. It's the daily challenge to the viewers to come up with a caption for the picture that is posted on the blog every day, a caption that is better than the one the 360 staff has come up with. Take a look at this.

This is tonight's photo of a pensive Rahm Emanuel listens in Chicago today to Barack Obama's news conference.

Our staff winner is Kay with: "If I tap my nose three times do you think he'll realize I'm telling him to wrap it up?"


KAYE: You have to have a signal. It's a new thing.

O'BRIEN: Here's the viewer winner. Charlotte from San Francisco won with this: "... eggs, gallon of milk, orange juice, pick up dry- cleaning."

Charlotte, your "Beat 360" T-shirt is on the way to you, and you can check up all the entries that we received by going to the blog.

You want to play along tomorrow by going to the Web site:

Pretty good.

KAYE: Pretty good. We've all been there been, where we're somewhere else, and we're thinking about what we have to do.

O'BRIEN: He probably literally is doing that list, too.

KAYE: Yes.

O'BRIEN: Coming up next, farm subsidies ending up in the pockets of millionaires. Some of those millionaires even live in Saudi Arabia. How are they getting our tax dollars? We're "Keeping Them Honest," straight ahead.

Coming up tonight, a teenage girl kills herself after police say she fell for a cruel Internet hoax. We've been following the story. The jury now has the case. We'll bring you the very latest, coming up.



SEN. BARACK OBAMA (D-IL), PRESIDENT-ELECT: You can't sustain a system that bleeds billions of taxpayer dollars on programs that have outlived their usefulness or exist solely because of the power of politicians, lobbyists or interest groups. We simply can't afford it.


O'BRIEN: He's not in office yet but striking a take-charge tone. That's the president-elect, Barack Obama, today vowing to stop government waste and to start finding ways to make it happen. He singled out one notorious program that gives farm subsidies to rich Americans, many of them millionaires. And many don't make their money by working the land.

360's Joe Johns is "Keeping Them Honest" tonight.


JOE JOHNS, CNN CORRESPONDENT (voice-over): Farm subsidies that come straight out of the pocketbooks of U.S. taxpayers like you are being funneled into the bank accounts of millionaires living overseas in exotic locals like Hong Kong and Saudi Arabia and the United Kingdom, says a report by the Government Accountability Office.

Now, the law says that if you're lucky enough to rake in more than $2.5 million a year, you don't need farm subsidies. But that report says more than 2,700 millionaires who -- you guessed it -- exceeded the income cap got nearly $50 million anyway between 2003 and 2006.

The government says it can't release the names, because the law keeps the records private.

But some people getting the money don't sound like your average family farmers outstanding in their field. The report says only that the part owner of a sports team got 200 grand. A former insurance executive got 300 grand. A top financial executive got $60,000.

If there's some reasonable explanation for why folks like this got paid like they did, no one's been able to come up with it, though this guy, who will be stuck with stuff like this, is already asking questions about it.

OBAMA: This is true, and this was just a report this morning. But if it's true, it is a prime example of the kind of waste that I intend to end as president.

JOHNS (on camera): When we asked why this is allowed to happen, the U.S. Department of Agriculture put out a statement saying this same thing the GAO did: USDA bureaucrats aren't allowed to go rummaging around in people's IRS records the way auditors do. So they asked GAO to cough up the names of the government offenders.

(voice-over) Which means your government knows what's causing the problem but says it still can't fix it. And a watchdog group that's been hounding the Agriculture Department for years over farm subsidies says the government regulators are part of the problem.

KEN COOK, ENVIRONMENTAL WORKING GROUP: There's a bias down there in every aspect of USDA's operations to let the big guys off the hook, to look the other way, to assume that the big, large, well-funded, wealthy operators are the successful ones and they're deserving of even more government subsidy.

JOHNS: Whatever the case, the new report at least put farm subsidies on the president-elect's radar screen, as one example of the change many say this country needs.

Joe Johns, CNN, New York. (END VIDEOTAPE)

O'BRIEN: Awaiting the verdict of the MySpace suicide trial, the cyber hoax that some people say led a young girl to kill herself. It's now in the jury's hands. The latest on this disturbing case coming up next.

Then later, Obama mania: an insider's guide to the inauguration. We'll show you what $100,000 gets you for the big party. Stay with us.


O'BRIEN: In "Crime & Punishment" tonight, deliberations began in Los Angeles today in what some people have called the MySpace suicide trial. The woman who's at the center of the case could spend decades in prison if she's convicted.

Now, the crime involves a computer, but is the government blaming the woman for a tragedy that was beyond her control? We're going to talk to CNN senior legal analyst, Jeff Toobin, in just a moment.

First, though, the story.


O'BRIEN (voice-over): Lori Drew is not charged with murder, but the parents of Megan Meier are convinced she pushed their troubled 13- year-old daughter to suicide.

RON MEIER, FATHER OF MEGAN MEIER: As in, if my daughter would have killed herself with a gun, they loaded the gun for her.

O'BRIEN: Megan Meier hanged herself in her bedroom in 2006. Now, two years later, Drew awaits the outcome in what has become an extraordinary and extremely emotional trial.

SAL HERNANDEZ, FBI: This case is yet another lesson, teaching us that malicious acts may have unforeseen but very serious consequences.

O'BRIEN: Federal prosecutors say Drew conspired with her daughter and an 18-year-old woman to bully and torment Megan on the Internet. Prosecutors allege they used a fake MySpace page to trick Megan into thinking that a boy named Josh Evans liked her. Megan had no idea there was no such person as Josh Evans.

TINA MEIER, MEGAN'S MOTHER: He thought she was really pretty, posted on her comments on her pictures, you know, "This is beautiful. Your eyes are beautiful."

O'BRIEN: But when the fictitious boy suddenly ended their online relationship, telling her the world would be a better place without her, Megan became deeply distraught and took her own life.

The trial is being heard in Los Angeles, because even though the case unfolded in Missouri, the headquarters for MySpace is in L.A. Drew is charged with one count of conspiracy and three counts of accessing protected computers without authorization to obtain information to inflict emotional distress.

Drew has not admitted playing any role in the Internet hoax, and there was conflicting testimony about that in the trial. Drew's defense attorney says she is innocent of the charges and is being vilified for simply not reading the MySpace terms of agreement.

During closing arguments, he told the jury, "It's not a homicide case. This, ladies and gentlemen, is a computer case. And that's what you need to decide."

If convicted, Drew faces a maximum sentence of 20 years in prison.


O'BRIEN: Kind of a crazy story. So what do you think? Did Lori Drew drive Megan Meier to suicide? Are prosecutors railroading her for what amounts to a computer crime?

Let's get right to our expert. Joining us is CNN senior legal analyst, Jeff Toobin.

You know, if you listen to the prosecutors, their position is it was murder. If you look at, you know, kind of positioning it that way, if you look at the defense attorneys, they say this is a -- this is a computer crime. What -- what is it? What do you think it is?

JEFFREY TOOBIN, CNN LEGAL ANALYST: This is such a hard case legally. It's actually pretty simple morally. I mean, what Lori Drew did was appalling at any human level.

But the question is, does the legal system have the tools to convict her for it? And I think that's very much an open question. Because, you know, the Missouri prosecutors looked at this and said, "Look, as bad as this behavior was, we can't find a crime that this fits under."

But even though it's on the other side of the country, the Los Angeles prosecutors said, "We're going to charge this, essentially, as defrauding MySpace, the service provider, by abusing the system in this way." Now, I don't know if that will fly legally.

O'BRIEN: You know, when you listen to the defense team, they say, well, you can't violate the terms of MySpace, because nobody reads those terms. That's kind of odd argument, isn't it?

TOOBIN: It's an odd argument, but it also happens to be true. Remember, this is a crime. This is a specific intent crime, which means you have to intentionally violate a legal duty that you have. Well, how do you know what your legal duty is if you haven't read the agreement?

Now, everybody clicks through "I agree" on all those forms, and none of us read it. But none of us are criminally prosecuted either for the outcome here. That's one of the aspects of the case that's so peculiar.

O'BRIEN: The little girl was emotionally fragile. She had problems, and it turns out in court that some people knew about those problems. What kind of a role does that play, not in the moral argument, as you point out, which is very clear, but in the legal argument?

TOOBIN: Again, it makes it harder for the prosecution. You know, we've seen a series of cases involving technology and crime, where we think that, for example, a video, or video game or a movie -- remember the "Natural Born Killers" case, where people...

O'BRIEN: That it caused someone to do something.

TOOBIN: Right.

O'BRIEN: Why would it make it harder for the prosecution? You know she's emotionally fragile. It's like handing the girl a gun, as her father said.

TOOBIN: Because causation is very hard to prove. Depressed people commit suicide. You never know what the trigger is going to be. Proving causation on anything where there is not direct evidence is very hard. And so here, it's hard, as well.

O'BRIEN: Are they basically, are we sort of seeing this new ground? I mean, we are forging new ground, and maybe something will come out of this case, regardless how it goes that will say, OK, in cases like this, because this will not, sadly, be the last?

TOOBIN: Every new technology creates new law with it. Telephones had created a whole new set of laws. Video has changed laws. And, of course, we know all about DNA.

This is an unusual case, fortunately. And it may be that it is so unusual that the legal system simply is incapable of -- of applying a remedy.

O'BRIEN: People harass people online, maybe not to the point where they commit suicide. But certainly, it happens all the time. I mean, is there going to be a new...

TOOBIN: There might be. But you know the phrase, don't make a federal case out of it. I mean, there is an argument that, you know, parents should get involved.

O'BRIEN: Maybe as prosecutor you just didn't want to deal with it.

TOOBIN: I mean, it's hard. I mean, it's really -- you know, it's true: prosecutors tend to be conservative in these areas, because they know that, to prove someone guilty of a crime, you need a lot of evidence.

O'BRIEN: Yes or no, she goes to prison or no?

TOOBIN: I would say no.

O'BRIEN: We'll see how it turns out. Jeff Toobin, thanks, as always.

Still ahead, Anderson's hero. We're going to meet the person who inspires him. Just who is it? We'll give you the answer, coming up.

Plus, you want a ticket to the inauguration? You want a place to stay, maybe a package deal for the presidential party? All the information and the price tag, you might want to sit down for this. That's coming up next.


O'BRIEN: Do you think election night in Chicago's Grant Park was big? Well, just wait until January 20. It's going to be an inauguration celebration to remember.

Now, for many, it's like New Year's Eve, the Super Bowl, and Fourth of July all rolled up into one. Yes, Obama-mania is hitting Washington D.C.

Of course, you can watch it all here on CNN. But if you want a ticket to history, you can get one. Just plan on paying a fortune.

With an up-close look at the party and the price, here's 360's Erica Hill.


ERICA HILL, CNN ANCHOR: With just over two months to go until the inauguration, Washington is going wild.

ANNE SCHROEDER MULLINI, GOSSIP COLUMNIST, POLITICO: Washington, D.C., was pro-Obama and had Obama-mania long before November 4. But the moment November 4 occurred, all -- all craziness sort of broke loose.

HILL: Craziness like what life will be like for the Obama girls and, of course, the new administration's cabinet post.

Hillary, anyone?

MULLINI: Washington loves parlor games. And so a transition right now and a new -- a new presidency, all that does is offer parlor games. I mean, 24 hours a day. It's like who's going to get A.G.? Who's going to get HHS?

HILL: The other big question, who gets to see the inauguration? Only 240,000 seats are available for the swearing in. And even though the free tickets haven't been handed out yet, they're already being sold online with price tags in the thousands, a practice California Senator Dianne Feinstein wants to make a crime, punishable by up to a year in prison.

SEN. DIANNE FEINSTEIN (D), CALIFORNIA: I find it unconscionable. These tickets are supposed to be free for people. And the chance to witness this solemn event should not be bought and sold like tickets to a football game.

HILL: It's not just scalpers of those non-existent tickets after your hard-earned cash. From baseball cards to hot sauce, even hope on a rope. If there's a way to make a buck off of the president-elect, you can bet someone's selling it.

With all the interest -- between one and four million people are expected for the festivities -- security is the government's top concern.

FRED BURTON, FORMER STATE DEPARTMENT SPECIAL AGENT: Any kind of contingency that you can think of, the Secret Service has game-board and has got a plan in place to deal with it.

HILL: While several airlines have added flights to D.C. for the festivities, once get there, finding a hotel may be impossible. But you could try renting from the locals. A quick Craig's List search turns up hundreds of offers.

MULLINI: People who are not politically motivated or maybe you're Republican and you don't want to hang out and see all the camaraderie. They're like, "OK, I'll just rent out my apartment, make some -- make a few bucks and go to Jamaica."

HILL: Or you could stay in town and then hit the beach. Just book the inaugural package at the Ritz Carlton in D.C.


HILL: You'll get tickets to the parade, one of the balls, and a trip to the Caribbean, all for 100 grand.

Erica Hill, CNN, New York


O'BRIEN: Yes, that's kind of expensive.

So who pays for all those parties? Well, private donations help cover the cost and, in years past, companies, individuals would contribute as much as $250,000.

But Barack Obama's presidential inaugural committee today announced guidelines, limits on fundraising, saying they're not going to accept amounts greater than $50,000.

And in this time of economic gloom, we at CNN are glad to introduce you to ten inspiring people around the globe for "CNN Heroes." Now, for the last few weeks, hundreds of thousands of you have been voting to choose the hero of the year from the top ten list. The winner is going to be announced on Thanksgiving night by Anderson Cooper, who tonight has a profile of the woman for whom the word "hero" feels almost too small.

Here's Anderson, sharing who's a hero to him.


ANDERSON COOPER, CNN ANCHOR: I met a woman recently in the Democratic Republic of Congo, who -- a woman named Angela, who was one of many women there who had been raped, gang-raped. And she was raped by three men in front of her children, and she was actually shot by them afterward. And her child was burned by one of the men.

And she, despite this horrific thing that had happened to her and despite later being thrown out of her house by her own husband, who was concerned that she had contracted HIV, you know, was continuing on, was caring for her kids, waking up everyday, and trying to survive and build a life for her children.

It's been probably two years now. But I still to this day think about her. And just the strength it takes not only to survive something like that but to survive and thrive, to survive and, you know, not have that control who you are, not have that change who you are is truly heroic.


O'BRIEN: Find out on Thanksgiving night who's been named CNN's "Hero of the Year." Going to hear some amazing and inspirational stories and an all-star tribute, which is hosted by Anderson Cooper. That's on Thanksgiving night, 9 p.m. Eastern, only on CNN.

And if you remember the Dr. Seuss book, when "The Cat in the Hat" swept into the house to clean things up, well, take a look at this kitty, who's vacuuming, too, riding around on a Roomba. This is a purr-fect -- ha-ha, get it, purr-fect -- solution to tidying up. It is our "Shot of the Day." I'm not sure that's cleaning up the floor at all, but it is our "Shot of the Day." We'll talk about that coming up next.


O'BRIEN: So I'm handling "The Shot" tonight. It involves a pet. Cue up the tape, "Dramatic Animal Video." Here it is. See the little kitty cat there? KAYE: Oh!

O'BRIEN: It's cute. Very cute.

KAYE: Oh, boy.

O'BRIEN: This is a cat on a Roomba. You know what a Roomba is?

KAYE: Oh, yes.

O'BRIEN: A Roomba vacuum, a swirling robotic vacuum cleaner, like a little mini flying saucer. For some reason, people have been posting tons of videos on YouTube of cats riding around on Roombas. Who knew so many people owned Roombas, but I don't know why, but that's -- cats seem to love them. KAYE: He actually think that he's operating that thing.

O'BRIEN: He is operating that thing.

KAYE: Soledad, let me tell you: I will see your Roomba cat, and I will raise it a shrimp on a treadmill. That's right. Take a look at this.

It's just not the same without the "Benny Hill" theme music, of course.

Anyway, this has also been a huge hit on YouTube. Yes, the shrimp treadmill isn't just entertaining. It is actually scientific, invented by a scientific researcher to -- get this -- study oxygen levels among fit and healthy shrimp. It's very important, I understand, the oxygen levels.

Can we go back to the cat with the Roomba? That was...

O'BRIEN: Yes, much more interesting. Although I think that that's better science.

KAYE: Yes, the shrimp. Well, there might be some science involved. Maybe.

O'BRIEN: With the cat on the Roomba? None at all. None at all, but the cat seems -- cats seem to like the Roomba.

KAYE: Yes. You can make a mess, shed, and clean up after yourself.

O'BRIEN: Coming up at the top of the hour, breaking news about Obama's cabinet. Another key position is said to be filled.

Plus, strong words from President-elect Obama about his economic recovery plan.

All that and much more when 360 continues.