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Gaza Battle Rages Amid Peace Efforts; Obama's Great Challenges; Ceasefire In the Works for Israel-Hamas Conflict; Jett Travolta's Death Leads to Questions about Medical Care; Adult Entertainment Industry Requests Bailout

Aired January 7, 2009 - 22:00   ET


ANDERSON COOPER, CNN ANCHOR: We begin with breaking news on the Mideast war. As the ground assault inside Gaza enters a fifth day, momentum for a solution intensifies. We're told an envoy from Israel is heading to Egypt. Members of Hamas are already there, as diplomatic efforts to end the fighting are picking up steam.
Also tonight, new developments on a brief, but promised pause in the fighting. Despite pockets of gunfire, a truce managed to hold for a few hours today. You see long lines there, humanitarian aid -- allowing it to enter Gaza. Is that a sign that both sides are ready to stop the bloodshed? We will talk about that tonight.

We're also following new details on the Israeli mortar attack on the U.N. school, killed dozens of children and civilians. Today, the victims were buried. Was Hamas using the building to launch rockets? We have late-breaking information on this incident ahead, a lot of ground to cover from several fronts.

Let's begin with Nic Robertson on the Israeli-Gaza border.


NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice- over): These pictures are the first of Israeli troops in Gaza, but were subject to Israeli military censorship, just one cameraman taken on patrol in Gaza's dangerous alleyways.

The streets are deserted. Damage to what appears to be civilian property is significant. Palestinians living in the area seemed frightened. One man appeals for help, saying, "We have been stuck in the house for five days and need food and baby milk."

The video comes as a mounting civilian death toll builds pressure on Israel to show how its ground offensive is being fought.

UNIDENTIFIED MALE: We definitely don't enjoy. You don't enjoy to see houses that are getting ruined. But we have to remember that the Palestinians chose, they the Hamas, and Hamas is a terror organization. And this is exactly what they got.

ROBERTSON: Israel also succumbed to international pressure, agreeing to a shaky and only partially observed three-hour cease-fire, allowing the first aid convoys into Gaza since the ground incursion began four days ago. More than 100 food and medical supplies trucks were allowed through. The U.N. says it needs 500 trucks daily.

UNIDENTIFIED MALE: We are feeding 750,000 people on a permanent basis. More than three hours a day is needed for that..

ROBERTSON: Just minutes after the lull, the fighting began again. Israel says it's committed to more supplies getting through, but:

UNIDENTIFIED MALE: We know that Hamas can try to exploit this sort of procedure for their own military purposes, and we won't allow that to happen. That's why the way this mechanism will work will be fluid. We don't do it exactly in the same way when we do it next time.

ROBERTSON: As destruction continues, diplomacy gets a hearing. Several proposals are on the table, none making much headway yet. This seems to want an end, or at least another lull.

UNIDENTIFIED MALE: We need any cease-fire, actually, either -- either through the Egyptians, the United Nations, France, or anybody, because the humanitarian crisis is -- is very huge.

ROBERTSON: It's not just humanitarian pressure Hamas is feeling. Israeli troops say they have captured dozens of Hamas fighters and killed over a hundred more.


COOPER: Nic, I understand you have seen an uptick in activity over your -- right behind you in the last hour.

ROBERTSON: This -- an operation just seems to have started there, Anderson. We are seeing a lot of tracer fire, hearing a lot of small-arms fire, a lot of heavy machine gun fire, and also quite a lot of explosions. It really is much busier down there.

The fight really seems to be pushing into the houses around Beit Hanoun and the Jabalia refugee camp at the northern end of the Gaza Strip here -- Anderson.

COOPER: What do we know now about this Israeli strike yesterday on the U.N. school? Are there any new details?

ROBERTSON: There are.

The U.N. has had what they it describes as a preliminary investigation. They say that they have worked with local community leaders around the school. And they say that they are now 99 percent confident that there were no Hamas fighters in the school.

And the Israeli Defense Forces also say that they have now had an investigation. Of course, what happened there, more than 40 people were killed. There were 400 refugees in this school that the U.N. had designated as a safe place for them to -- to stay during the fighting. Several Israeli artillery shells hit the school. And the Israeli Defense Forces have said that they were firing, their troops were firing those rounds in response to Hamas being at the school, in fact, two named Hamas fighters at the school firing their mortars at the -- at the troops.

But what the Israeli Defense Forces now say they have -- they have gathered during their investigation is that the Hamas fighters were not actually inside the school compound, but, they say, very, very close to it and adjacent to it -- Anderson.

COOPER: Nic, it sounds like we're listening to an unmanned drone fly over you at this point. That is what the sound is, I think.

The ground operation is at a critical juncture. Gaza is divided. Gaza City is surrounded. They really haven't moved directly into urban centers in a sustained way. Are they going to do that? That would be a big change, a big new step.

ROBERTSON: You're absolutely right. That is a drone flying over. There -- there are several, and they seem to be supporting those troops, who seem to be doing exactly that, which is pushing into this urban environment.

What we have seen in this first video that -- that the Israeli Defense Forces have allowed an international journalist to -- to go and film with them does seem to be them in some -- the sort of urban environment, and that this operation right now, where all the gunfire going on, that is -- that is an area of housing. So, they do seem to be pushing in.

And that has a lot of dangers, the dangers of getting caught up in alleyways that are much more familiar to the Hamas fighters down there. What we have seen on the video is -- is that the streets are widely deserted.

But, again, in this situation, potential for civilian casualties, and that is what seems to be going on, that push into the urban, the built-up areas there -- Anderson.

COOPER: All right. Nic Robertson on the border -- Nic, thanks very much.

We are going to check in with chief international correspondent Christiane Amanpour later on in this broadcast.

The Mideast crisis going to land on president-elect Obama's plate in less than two weeks. Meantime, the Obama transition team already has its hands full, the number-one issue one their plate, of course, the economy. It turns out it is even worse -- in even worse shape than many of us thought.

Today, the Congressional Budget Office projected a record $1.2 trillion deficit for 2009, and also predicted the unemployment rate would surge above 9 percent by year's end. In other words, there was plenty to talk about today at today's ultimate power lunch at the White House, a midday meeting of five presidents, past, present, and future, a lunch that made history.

From our 360 transition team, here's Candy Crowley.


CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT (voice-over): It was like old home week for an elite brain trust.

SEN. BARACK OBAMA (D-IL), PRESIDENT-ELECT: All the gentlemen here understand both the pressures and possibilities of this office. And for me to have the opportunity to get advice, good counsel, and fellowship with these individuals is extraordinary.

CROWLEY: There is a commonality of experience here: the mysteries of the Middle East, the complexity of the economy, choosing the Oval Office floor covering.


CROWLEY: Barack Obama got more than valuable advice during the White House confab. As he tries to pull Republicans on board his stimulus plan, he got a class picture of bipartisanship, not to mention a predecessor on message.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: We want you to succeed. Whether we're a Democrat or Republican, we care deeply about this country.

CROWLEY: Sweet words for the president-elect pushing an economic stimulus package with a price tag approaching $800 billion, an eye- popper he's selling with daily warnings of tough choices and high stakes.

OBAMA: We have an economic situation that is dire.

CROWLEY: Eight hundred billion or so to pump up the economy may be necessary, but it will only add to an already ginormous deficit.

OBAMA: The Congressional Budget Office announced that the deficit we are inheriting from this budget year will be $1.2 trillion. We know that our recovery and reinvestment plan will necessarily add more.

CROWLEY: All that red ink would have been unthinkable eight years ago, and it's making a lot of lawmakers squeamish now. To them, Obama pledged his fidelity to getting things under control eventually.

OBAMA: We must scour this budget line by line, eliminating what we don't need or what doesn't work.

CROWLEY: Reinforcing his commitment, Obama announced that Nancy Killefer, a former top Treasury official who modernized the IRS, will oversee efforts to eliminate waste in the budget.

He calls the position chief performance officer. Nobody has called it that before, but most presidents have had similar positions, with not much luck. It's not easy or quick.

NANCY KILLEFER, INCOMING OBAMA ADMINISTRATION CHIEF PERFORMANCE OFFICER: Most of the operational issues that the government faces today have developed over decades and will take time to address.

CROWLEY: Thursday, the sales campaign continues, an economic speech aimed at amassing the kind of public support that moves Congress. It's the beauty of being president. You get the bully pulpit.


COOPER: Bully pulpit, and you don't have to really go into too many specifics.

What about the specifics of the president-elect's stimulus plan? When do we actually see those?

CROWLEY: Listen, here's the problem for Barack Obama. He wants to not put specifics out there and begin to have people pick this stimulus bill apart.

It's going to be a massive bill when it gets together. So, they are working with Congress and don't want to put things out there that are going to have to be taken back. So, you're getting these broad strokes: Here's how much it's going to cost. I want unemployment benefits extended. I want to give some money to cities that are hurting. I want to do jobs through infrastructure, bridges, and those sorts of things.

But the real details, how much for this, how much for that, how many jobs will this create, they're being very, very closed about, simply because Congress is going to change this bill. There's just no -- no ifs ands or buts about that. They are going to want to have their say-so and put their imprint on it. So, they don't want to get out there ahead with details that are going to be undone once it gets to Congress.

COOPER: All right, Candy, stick around. We want to talk to you and our panel coming up.

Ali Velshi also joins later to talk about what the staggering $1.2 trillion deficit means for your wallet.

Are you confident the crisis is being handled well? Let us know. Join the live chat happening now at I'm about to join on myself. And check out Erica Hill's live Webcast during the break as well.

Also, new details on Roland Burris' fight to be seated in the Senate. How deep do his ties to Rod Blagojevich really run? He has hosted fund-raisers for the governor, and his consulting firm has run lucrative state contracts. Did Burris pay to play to get Obama's vacant Senate seat? We're "Keeping Them Honest."

Plus, talk about economic stimulus. The porn industry wants its slice of the bailout pie -- that's right, porn -- Larry Flynt and others leading the charge for a $5 billion handout of your tax money.

Maybe it's just a publicity stunt, but we will talk about it.

And the Travolta family's tragedy has put Scientology back in the spotlight, specifically its teachings on medication for kids. Tonight, Scientology speaks out.


COOPER: A media circus there.

When former Illinois state Attorney General Roland Burris showed up to take his seat in the Senate, Barack Obama's vacant seat, he was turned away. And all the cameras were following.

Today, a much different tune from Democratic leaders, though, who just, a week ago, vowed they would not seat him. Today, they had nothing but praise for Burris and signaled they're inching toward an amicable solution.

In the end, that solution may hinge on Burris' testimony before an impeachment panel investigating Illinois Governor Rod Blagojevich, the man who appointed Burris. But exactly what are Burris's ties to Blagojevich?

Drew Griffin of CNN's Special Investigation Unit tonight "Keeping Them Honest."


DREW GRIFFIN, CNN INVESTIGATIVE CORRESPONDENT (voice-over): Republicans in Springfield want Burris to explain how he got the appointment from Illinois' tainted governor. Records are beginning to reveal state contracts, political contributions and even the job for the governor's wife that at least raised questions by Republicans that Burris may have paid to play.

JIM DURKIN (R), ILLINOIS STATE ASSEMBLYMAN: But I want Mr. Burris to, under oath, talk about that, about exactly when his interest in this seat, when he became interested in the seat, how back it went, who did he talk to and exactly the communications that went back and forth between him and the governor and any type of documentations which he may have given to the governor.

GRIFFIN: The governor stands accused but not indicted in an investigation focused on the use of public office for personal gain, including alleged trying to sell the Senate seat vacated by President- elect Obama.

Illinois Republicans want to know if Burris was paying to play. Their possible evidence? State records show Roland Burris and his lobbying firm contributed more than $20,000 to Governor Blagojevich's political campaigns.

Two years ago, Roland Burris hosted a $1,000-a-plate fund-raiser for the governor. Burris' consulting firm won nearly $300,000 in state contracts over the last four years. And, just this September, the governor's wife, Patti Blagojevich, was hired in an $80,000-a-year job with the Chicago Christian Industrial League, where Burris' lobbying partner is a board member.

Today, in a press conference, Burris said his selection had nothing to do with money or a pay-to-play scheme.

ROLAND BURRIS, FORMER ILLINOIS ATTORNEY GENERAL: Certainly no pay to play involved, because I don't have no money.


COOPER: So, Drew, where -- where does all this go? I mean, can Illinois or the Senate scuttle Burris's appointment to the -- to the Senate at this point?

GRIFFIN: You know, Anderson, that's the question. There doesn't seem to be any endgame here.

What happened was, the Democrats in Washington kicked this back to Illinois, asking the secretary of state there to sign the certification paper. He says, "I'm not signing," and you don't need the signing for Burris to be seated.

Meanwhile, you have got Burris appearing at the -- the impeachment panel of the governor who appointed him, potentially to answer incriminating questions about his relationship with the governor, though no one seems to say that, even if those answers are bad, that somehow this appointment is going to be stopped.

The only way it could be stopped, legally, is if Governor Blagojevich pulls the -- the -- the appointment. And I have got to think he's home chuckling over this mess.

COOPER: Yes. That's certainly not going to happen.

All right, Drew, thanks.

Burris is only the beginning. Up next, we're going to dig deeper on the rest of the Senate drama.

Plus, why are the Obamas living in a hotel? Well, we know the government's Blair House was booked, we were told, but now we know by whom. Who was so important, they bumped the Obamas? You may be surprised to find out tonight.

Also ahead, a porn bailout? Larry Flynt is asking the government for a $5 billion bailout for the porn industry.


COOPER: It's no doubt a publicity stunt, but it certainly has a lot of people talking.

We will be right back.



BURRIS: I'm very pleased this afternoon. I'm happy. My whole interest in this experience has been to be prepared, Roland, to represent my great state.


COOPER: Roland Burris today speaking about himself in the third person after meeting with Democratic Senate leaders.

What a difference just a day can make. Today, Majority Leader Harry Reid and his number two, Dick Durbin, embraced the former Illinois state attorney general, heaping praise on Burris, and saying they were open to recognizing his appointment to Barack Obama's vacant Senate seat.

This would seem to be a victory, at least, for Illinois Governor Rod Blagojevich, who defied his party by filling the seat, despite federal charges that he may have tried to sell the seat originally.

Let's dig deeper with Candy Crowley, CNN contributor, and "New York Daily News" columnist Errol Louis, and Jeffrey Toobin.

So, Candy, Obama said this Burris situation is a -- is a Senate matter. Does he basically just want to get -- get this over with, get Burris in there, and get the whole thing over with?

CROWLEY: Sure, absolutely. It's a huge distraction.

I mean, here it is that the Democrats are going to control the White House, and the Democrats are going to the Senate and the House again, but with larger margins, and the first day the Senate gets back, there is this -- all this craziness. And they send a fellow Democrat out into the rain to say, well, they won't seat me.

Now, look, they may have perfectly justifiable reasons, but it was really, really bad political theater for the Democrats. And it's not what Obama wants. He wants their attention on the economy and a stimulus package. So, yes, he would like this to be over.

COOPER: Yes, no-drama Obama.

Is this a done deal, Jeff?

JEFFREY TOOBIN, CNN SENIOR ANALYST: It certainly looks that way.

I mean, it's just an astonishing example of how Blagojevich just played these people like a flute. I mean, he just completely outmaneuvered them. You had all 50 Democrats in the Senate saying, we will not accept this guy.

And now that's out the window. It's just amazing.

COOPER: Errol, how did he do that? I mean, was it initially by bringing up race, which sort of got people knocked people off their game a little bit, or, I mean...

ERROL LOUIS, CNN CONTRIBUTOR: Well, I don't know if he had to bring it up. I mean, the reality is, there -- there was a -- a substantive problem with the way that they tried to block Burris.

And you have people like Dick Durbin, who is running for reelection, you have people like Harry Reid, they have sizable black constituencies. You know, if -- if you stir up people's concern about these issues, they have to start thinking -- I don't know if it's called playing the race card. It's really more like looking at a constituency which might not send Dick Durbin back to the Senate, that, you know, might make life tough for him.


LOUIS: And all of the opponents who have been falling over themselves to try and get at Blagojevich, I think, failed to realize that.

COOPER: We did hear from a Republican legislator from Illinois, Jeff, who was saying he -- you know, he wants to see him testify under oath about what his connections may or may not have been to Blagojevich. But...

TOOBIN: I think the Democrats just want this whole thing to go away.

COOPER: Right.

TOOBIN: Let him be the 100th most senior senator. He probably will not have much influence, nothing much to do.

But, you know, I think it's important, you know, as a citizen, you know, to be a little shocked at what went on here. I mean, here, you have a governor out on bail successfully nominating someone for this seat, when he's accused of trying to sell the seat. And he got this thing through.

It's just -- I still find it shocking.


CROWLEY: But, from a practical basis, he is still governor, and he is still doing governor things.

He's, you know, signing bills. He's conducting business. This can't be the one thing he can't do. I mean, it is within his purview. And I just don't -- he hasn't been convicted of a thing.


CROWLEY: And I know, Jeffrey, you stand by that principle. He's been convicted of nothing.

TOOBIN: Yes, but when you're out on bail, you don't have the same rights as everyone else. Yes, he can't be put in jail, because he's innocent until proven guilty.

But I do think there are some rights you give up. And I think the legal issue is actually a little harder. I -- I think the Senate might have had a pretty good argument to try to keep him out. But they don't want to pick that fight.

COOPER: Let's talk about Caroline Kennedy and -- or whoever is going to fill Hillary Clinton's Senate seat. Hillary Clinton is supposed to go up for confirmation I think next Tuesday. Do we know, Errol, when Governor Paterson is going to name somebody?

LOUIS: He has no interest in delaying this too much further, although it doesn't necessarily work to Caroline Kennedy's benefit.

The reality is, she's not doing so well in the polls, when you give her certain kind of matchups. The one thing that the governor, David Paterson, does not want is to be running for office at the same time as there is a big fratricidal primary fight going on for that Senate seat.

He wants somebody who's going to be strong, who's going to ward off challenges, who's going to really just kind of occupy the seat and really hold onto it. Caroline Kennedy, unfortunately, has a -- a pretty high burden. She has a pretty high hurdle to get over to show that she's that person. Can she be a good senator? Of course. But we have got -- you know, we're back to politics again.

COOPER: Jeff, do you think she will be the senator?

TOOBIN: It certainly looks that way, although she has certainly run a very dismal campaign, if you can call what she's doing a campaign.

I mean, she has not filled anyone, I don't think, with confidence or admiration, either for her record or the way she's conducted herself. But, you know, she hasn't been indicted. She hasn't done anything wrong.


TOOBIN: And there's not an immediate...

COOPER: That's now the benchmark?


TOOBIN: That -- well, that does seem to be.


TOOBIN: But there doesn't seem to be a really good alternative...

COOPER: Right.

TOOBIN: ... for Governor Paterson, so maybe it's still hers to lose.

COOPER: Candy, on this story of the Obamas, you know, we know that, right now, they're living in the Hay-Adams Hotel, and they had to move there because they had to move to Washington early, so that their kids could go to school.

And we have these pictures of them getting their kids ready for school in the Hay-Adams Hotel. It turns out, though, we now know that Blair House was booked. And, previously, we didn't really know who it was booked by. It turns out it's -- it's former Australian Prime Minister John Howard, who is the only overnight guest actually booked there. He's going to stay there one night before he gets a medal from President Bush. And the rest of the events are parties thrown by Laura Bush and -- and other folks in the government.

Does this make any sense, that -- that Howard outranks Barack Obama?

CROWLEY: Well, I mean, here's the problem. Well, he is getting the Medal of Freedom. These are, in fact, people who stayed with Bush in the coalition of the willing in Iraq. And they are being awarded a very prestigious award from Bush.

Listen, president-elects don't generally come until the 15th of January. So, you know, you could make an argument that the Bush White House had no idea they wanted to come early. And, indeed, there was some discussion about whether the kids would come early and go to school stay in Chicago.

So, I don't -- you know, the Obama team, I haven't heard a single person make a big deal out of it. I think they just think, look, you know, the former...

COOPER: It seems weird to me, though. I mean, if you're throwing a party, OK, so you have got move your party to a convention center or like some -- some, you know, Shriners hall. So what?



CROWLEY: No, no.


TOOBIN: Let the former Prime Minister John Howard stay at the Hay-Adams. It's a very nice hotel, but, I mean, why make the president-elect move twice?

COOPER: I was -- I was just surprised to hear this. I guess I'm the only one.

Candy, thanks very much.


COOPER: Errol Louis, thank you.

Jeff Toobin, thanks.

Coming up next: what the projected $1.2 trillion deficit means to you. We're talking about your money, your future.

Also, we will have the latest on John Travolta's tragic loss. Tonight, the Church of Scientology speaks out about its beliefs on medicine and the afterlife.

And -- oh, man -- believe it or not, Joe the plumber is back, and he's headed to Israel.


COOPER: He says he wants...


COOPER: That's Jeff Toobin laughing.

He says he wants to be a war correspondent -- the surprising story coming up.


COOPER: Eye-popping numbers today about the federal deficit. As we mentioned earlier, today, the Congressional Budget Office projected a record $1.2 trillion shortfall for this year.

That doesn't even include president-elect Obama's economic rescue plan, with its massive spending and proposed tax cuts.

So, what does it mean to all of us, the taxpayer? We're talking about your money, your future.

Ali Velshi joins us with some answers. He is out with a new book, "Gimme My Money Back: Your Guide to Beating the Financial Crisis."

Ali, what does this debt mean for the average American?

ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: Well, let's talk about how much it is. You described it as a shortfall. That's the budget deficit.

That's the amount every year that the budget -- the amount that the government takes in is less than the amount that it gives out. So, the shortfall now is $1.2 trillion. That's what we're short. Now, when you take all of the deficits together, and you add them together, you have the national debt.

And we will have a fancy graphic about that. But I just want to show you, just give you an impression of how big this is. This is $10.6 trillion. And, just to remind myself how much $10.6 trillion is -- I haven't finished unrolling it yet. COOPER: Yikes.

VELSHI: That's the size of the national debt.

And that means that everybody in America is responsible for some amount of this. It's owned by bondholders. In many cases, more than half of the national debt now is issued to other countries. China is the biggest owner of national debt right now.

So, the effect on most Americans is that what tends to happen when you have that much debt is that your taxes ultimately have to go up, because this has to get paid. And, if it doesn't look like it's getting paid, other countries will not want to lend money to the United States. And, if they do, they will charge a higher interest rate, which means interest rates here could get higher.

So, fundamentally, this bill has to be paid. And, if it doesn't look like we're going to pay it, it's going to cost more. Most economists believe that a debt -- a deficit is OK in times of recession or in times of war. But we need a plan.

And Barack Obama has got to come up with a plan that says, ultimately, we will get rid of that -- Anderson.

COOPER: Obama wants to give individuals a $500 stimulus check, a thousand dollars for couples. Is that really going to be a shot in the arm that the economy needs?

VELSHI: Not likely. That is not a directed amount of stimulus. It's like the stimulus plan we had last year. It didn't keep us out of a recession.

That kind of money that you give to people to spend is only effective if you give it at the right time, which means people are actually going to spend it to stimulate the economy. At this point, with credit as hard to come by as it is, and people in tough times, losing jobs, it's not likely that will get spent the right way. So that might be more political than it is necessary or effective, Anderson.

COOPER: All right. Ali Velshi, thanks very much.

The recession hurting everyone, including the porn industry. It's also asking for a federal bailout. Details on that coming up.

But first, Erica hill has a "360 Bulletin" -- Erica.

ERICA HILL, CNN ANCHOR: Anderson, two leaders of a polygamist sect arrested today in Canada. The attorney general of British Columbia charged James Oler and Winston Blackmore with polygamy following a three-year investigation.

Blackmore is the former leader of the Fundamentalist Church of Latter Day Saints and allegedly has 19 wives, according to the A.G. there. The sect became well known after last year's raid on a Texas polygamist compound. The sticking point here is going to be whether the men are protected under Canada's religious freedom laws.

The officer who shot and killed a passenger in a crowded Oakland, California, subway station on New Year's Day has resigned. Officials say he has also moved at least twice because of threats against him and his family. Twenty-two-year-old Oscar Grant was shot in the back after officers pulled him and some friends from a subway car, reportedly for fighting.

And Joe the plumber back for another round. After stumping for John McCain in the presidential campaign, Joe Wurzelbacher, you may recall, released a book. Well, now he's trying his hand at reporting.

The Ohio man plans to spend ten days in Israel covering the conflict for a conservative Web site. Anderson, he told a Toledo affiliate he wants to get Israel's average Joe's point of view out there.

COOPER: OK. Leave it at that. Good luck to him.

Now our best -- our "Beat 360" winners, our daily challenge to viewers, a chance to come up with a caption better than the one that anyone here could think of for a photo that's on our blog.

Here's the photo: Jack Nicholson and his daughter, actress Lorraine Nicholson, watching the Lakers play the New Orleans Hornets in Los Angeles. If you didn't know, Lorraine is an 18-year-old student at Brown University. I did not know that.

Our staff winner tonight, Steve. His caption: "Jack, I like dribbling not drooling."


COOPER: That was rather clever.

Our viewer winner is Andy from San Raymond (ph) in California. His caption: "You know, these courtside seats actually cost more than Obama's Senate seat."


HILL: Oh, like it.

COOPER: Money falling from the sky. Andy, your "Beat 360" T- shirt is on the way. Congratulations.

So still ahead, Larry Flynt and others asking for a $5 billion bailout for the porn industry. Yes, it's probably just a publicity stunt. But it certainly has a lot of folks talking. We'll take a look at that.

Also the latest in our breaking news. The ground assault inside Gaza today. Brief pause in the fighting and news of talk that could lead to a more permanent ceasefire. CNN's chief international correspondent Christiane Amanpour is in Israel. She'll join us live with the latest. And later, something that could help the Obamas make a very important decision. The first ever presidential puppy debate, moderated by me for "The Daily Show." Ahead.


COOPER: Breaking news: new operations underway right now, apparently, in Gaza. Nic Robertson live on the Israel-Gaza border with the latest.

Nic, what are you seeing or hearing?

NIC ROBERTSON, CNN CORRESPONDENT: Anderson, in the last minute or so two huge explosions right down there behind me. We're noticing tanks moving over the sort of lone hill towards. There's another big explosion. Moving over the lone hill towards the built-up area.

Also seeing a lot more of that tracer fire and gun fire going on. This is tonight a very active operation, Anderson.

COOPER: Do we know at this point how extensively they have moved into the cities? We talked about this a little bit at the top of the hour. There is new video from Israeli Defense Forces showing them inside cities. But if they really do, in a sustained way, go street to street, house to house, the death toll, the casualty toll is likely to rise.

ROBERTS: It is. What we've been -- what we've learned from the video material the Israeli Defense Force is releasing is that they're using sniffer dogs to go into such places as schools. You know, one soldier today said that he found -- they found explosives inside a school. We've seen them with the tanks moving into that area.

They have to do that because that's where the rockets have been launched from. We've seen them from here. The rockets being fired just in the towns very close to where we stand right now. So they have to go in. And that appears to be what they're doing. But how deep and how -- and how they're trying to do it.

We saw some of that video today. You could see holes blasted in walls, and it was like the troops had blasted a hole in the wall of a building to get in the building, go through the buildings and then come out through the other end, rather than expose themselves on the streets. And I think that's the way they're fighting this.

Plus, those surveillance drones you can hear going in the sky, they're mapping the land. They're looking at the terrain. They're seeing who's behind the corners so they're getting a lot of information that way, as well, Anderson.

COOPER: All right. Nic Robertson, thanks from the border.

The battle between Israel and Hamas has killed hundreds of people, wounded thousands more. It's triggered an international call for an immediate ceasefire. Tonight, the fighting in Gaza persists. Diplomats are working on a ceasefire solution in Egypt. We're told representatives from Hamas are in Egypt and an Israeli delegation is on its way.

Christiane Amanpour is in Jerusalem. She joins us with more on the war and the chances for peace.

Christiane, Hamas, Fatah, Israel have agreed to meet in Egypt for talks. What's it going to take, though, for the Israeli government and Hamas to agree to some kind of a ceasefire?

CHRISTIANE AMANPOUR, CNN CORRESPONDENT: Well, it's going to take precisely the kind of military activity Nic has just been talking about. There are reports that Israel feels that its campaign is really putting the pressure on Hamas. The rocket fire has been decreasing over the last several days.

But they really want a ceasefire before they agree -- before they agree to any of the actual proposals, so there's not going to be any temporary ceasefire. They want to get Hamas to stop the rocket fire and make the pain so hard right now to make them understand that's the only way Israel is going to stop.

And in conjunction with that, sort of finalizing the wording and the implementations for stopping the smuggling over the Egypt/Gaza border. So that's basically the bottom line, that this proposal is being looked at by all sides now. Israel is sending a two-person delegation to Cairo tomorrow.

Hamas leaders have been -- representatives have been meeting with the Egyptians, and they're probably going to go through this for the next several days before it actually ends -- Anderson.

COOPER: Christiane, Kissinger said that the conventional army loses if it doesn't win, and the guerrilla wins if he doesn't lose. This certainly seems to be true in the 2006 war against Hezbollah. Will Israel be able to claim victory if it doesn't seriously hurt Hamas?

AMANPOUR: Both sides are going to claim victory. Israel's victory will be in saying that it achieved a severe degradation of Hamas's capability but more its motivation and its will to fire into Israel. And Israel's achievement will be if it can get this -- a real stop to the smuggling of weapons and cash into Hamas, into Gaza.

Hamas's victory will be that it's still standing and that it will get the humanitarian convoy corridors and openings and border crossings open that it wants. That's what it's aiming for. So that seems to be the parameters of this solution that's being hammered out now. Not just between Egypt, Israel, and the partners but also, of course, the United States working very hard on it.

COOPER: Can there be a real, lasting peace agreement as long as Hamas remains in power? I mean, they don't recognize the state of Israel. They want to destroy Israel. And they don't accept the Palestinian Authority, which controls the West Bank. AMANPOUR: Anderson, the fact of the matter is there won't be a lasting peace agreement until there's a solution to this whole global Palestinian-Israeli problem. Everybody's been saying that. We've been talking to Tony Blair, to others who are involved in this latest outburst of violence.

But it's just another episode. It's just another episode, until there's a real solution to the Israeli-Palestinian conflict.

Obviously, the problem is vastly exacerbated by the fact that there isn't a united Palestinian front anymore, and there's this division between the Palestinian Authority and Hamas.

So, clearly, in this -- in this episode, Egypt is going to try to broker, again, some rapprochement between the Palestinian Authority and Hamas so that they can try to be at least one word, one face, one unity amongst the Palestinians. But this is going to be exceptionally difficult going forward.

COOPER: No doubt about that. Christiane Amanpour from Jerusalem live tonight. Thank you, Christiane.

From the serious to the surreal now. Up next, is the porn industry in need of a bailout? The people who brought us "Girls Gone Wild" and a host of movies whose titles I can't even mention are begging for billions from the government. Sure, it may just be a publicity stunt, but it gives the term "economic stimulus" a whole new meaning.

And later the latest on 16-year-old Jett Travolta's sudden death. What does the Church of Scientology believe about medicine and death? Tonight, the church speaks out.


COOPER: A private pain in the public eye. Video taken just weeks ago shows John Travolta with his son, Jett, in Paris. As we've been reporting, Jett died of a seizure last Friday in the Bahamas. He was just 16 years old.

A private memorial service will be held tomorrow at the family's estate in Florida.

John Travolta and his wife, actress Kelly Preston, are scientologists. As we've seen with other follower, Tom Cruise, this faith has taken a firm stand on prescription drugs, especially regarding children. Tonight Scientology's position on medication is raising questions about the care that Jett may have received.

Up close tonight here's Randi Kaye.


RANDI KAYE, CNN CORRESPONDENT (voice-over): An attorney for the Travolta family said Jett Travolta's seizures were frequent and extremely serious. Yet the 16-year-old was not on anti-seizure medication. He had been for years until his parents grew concerned, consulted neurosurgeons, and took him off it. In the end, a seizure killed him.

Tommy Davis, a spokesman for the Church of Scientology, told me, despite rumors the church does not believe in medicine, it does. Davis says it's church policy that someone see a doctor for a physical condition. Davis says, "Scientologists get conventional medical treatment for medical conditions, and they use prescription drugs as prescribed by a doctor."

(on camera) That's in line with what the family's lawyers have said, that Jett took the anti-seizure medicine Depakote for years, but it lost its effectiveness.

The lawyers also said that no one has suggested that withdrawal of the medicine caused the fatal episode.

(voice-over) The church is clear that what it doesn't agree with is drugs to treat psychiatric conditions such as antidepressants. This was brought to the forefront in 2005. Actor Tom Cruise, a Scientologist, and "The Today Show's" Matt Lauer debating drugs prescribed by psychiatrists.

TOM CRUISE, ACTOR: Do you know what Aderol is? Do you know Ritalin? Do you know now that Ritalin is a street drug? Do you understand that?

MATT LAUER, CO-HOST, NBC'S "THE TODAY SHOW": The difference is -- this is not against their will, though.

CRUISE: Matt -- Matt, I'm asking you a question. Matt, I'm asking you a question.

LAUER: I understand there's abuse of all of these things.

CRUISE: No, you see, here's the problem. You don't know the history of psychiatry. I do.

KAYE: The church's spokesman explained medical diagnoses are based on medical conditions. Psychiatric conditions are subjective.

Years ago Kelly Preston shared her views against psychotropic drugs with "Access Hollywood."

KELLY PRESTON, ACTRESS: We've become a psychiatric or prescription drug culture.

The whole chemical imbalance fallacy. There are no tests for chemical imbalances.

KAYE: And she's right. The American Psychiatric Association admits there is no way to test for a chemical imbalance, but many doctors believe drugs and therapy do help.

Fellow Scientologist Lisa Marie Presley defended her friends this week. On her MySpace page, she called the chatter about Jett "crazy, made up garbage." She wrote, "His parents were on a tireless, never- ending quest to get and provide him with the absolute best care anyone could ever ask for and need, medically, physically, emotionally, medicinally and spiritually."

Jett was cremated in the Bahamas where he died, though Davis says the church does not insist on cremation. He says scientologists believe that people are immortal, spiritual beings, that you've lived before and that you will live again.

If Travolta and his wife have a Scientology funeral service, Davis says, it will acknowledge a life well lived and wish the person well in his future life and existence. Jett's parents hope, as Scientologists, they will see their son again.

Randi Kaye, CNN, New York.


COOPER: As we said, a memorial service tomorrow.

Up next a new bailout request. The porn industry is asking for $5 billion. That's right. "Hustler" publisher Larry Flynt and others. Publicity stunt? Yes. But an interesting idea to talk about.

Plus, picking a presidential puppy. Tough questions for some of the candidates ahead.



JOE FRANCIS, "GIRLS GONE WILD": The government is more than eager to hand out as much money as possible and nationalize as many businesses and have their hand in. Why wouldn't the government want to be Larry's and I's partner in the adult entertainment industry?


COOPER: Did they put porn music over that? Was that what that was? That's Joe Francis, the guy behind the "Girls Gone Wild." Thank you. Appreciate that. Thanks for keeping the music going.

Tonight Francis and other porn purveyors are asking Congress for a share of the bailout pie. No, you can keep going. They want billions to save the adult entertainment industry. It's certainly a P.R. stunt, but it's also got plenty of people talking.

Erica Hill has the story.


HILL (voice-over): You may not know it, but you're too depressed to have sex, and that's threatening to bring the economy down. At least, that's the claim from some of America's best-known adult entertainment execs. Their answer? Another government bailout. FRANCIS: It seems the government is more than -- more than eager to hand out as much money as possible and nationalize as many businesses and have their hand in. Why wouldn't the government want to be Larry's and I's partner in the adult entertainment industry?

HILL: The "Larry" he's referring to is Larry Flynt, publisher of "Hustler" magazine. Today the two adult entertainment giants issued a joint statement, asking for a $5 billion bailout and calling on Congress to, quote, "rejuvenate the sexual appetite of America" by supporting the adult industry.

Flynt says Americans are, quote, "too depressed to be sexually active" and that it's hurting business. DVD sales and rentals are off more than 20 percent, according to Francis. But the industry isn't exactly headed for bankruptcy.

FRANCIS: It's not that we are under the impression that the porn industry needs a bailout, but -- but we thought that we would get in line with everybody else.

HILL: and it's that admission that has some lawmakers fuming.

REP. BRAD SHERMAN (D), CALIFORNIA: I thought it was a shame that two porn industry executives would pull this publicity stunt. America faces some really difficult times. We need to focus our national attention on the kinds of reforms that we're going to need to make sure this never happens again.

HILL: Brad Sherman represents Southern California's San Fernando Valley, widely referred to as the porn hub of America.

While it's tough to pinpoint exact numbers, adult entertainment is estimated to bring in anywhere from $3 to $13 billion annually.

VELSHI: The fact is a lot of money goes through this industry, and it is influential. But it is not the auto industry, and it's not the construction industry, and it's not the banking industry. It is not crucial to the American economy that the porn industry remains healthy.

HILL: And that's why some look at this as more of a tongue-in- cheek stunt than an earnest request for federal aid. But Francis denies that.

FRANCIS: I think there's a lot of lawmakers out there that would like to prove a point. Our industry also supports, you know -- supports small business. So I -- I could see -- I could see congressmen getting behind this who are truly, truly offended by -- by the nationalization of our system and the erosion of our free-market capitalism.

HILL: Buzz words that are much sexier in Washington than "adult entertainment."



HILL: Now, Anderson, if they ever did get the chance to go to Washington to make their case in person, Flynt and Francis have learned an important lesson from the Big Three auto makers. And it's not "bring your porn music soundtrack."

Francis told me the two would actually carpool across country, Anderson, in a hybrid car, that they would leave the personal jets at home.

COOPER: Really?

HILL: And they'd love to make a stop here and visit us on the way.

COOPER: Yes. Yes. I don't know. Yes, there you go. Their business isn't in decline. Their business -- the porn business seems to be doing very well.

HILL: Honestly, it's a point that's up for debate. Because it's always hard to get exact numbers on the porn industry. This is serious. Because -- because it's, you know, tough to keep track of it.

But there was actually -- there's a "Newsweek" article earlier this year that looked at the growth of people visiting porn sites while they're at work. And according to Nielsen Online, fully a quarter of Americans at work who have Internet access visit porn sites on the job.

Close your computer, Anderson. Yes. Take your shot.

COOPER: There you go. All right. Erica, thanks.

Up next "The Shot of the Day," serious stuff. A doggie debate to help the Obamas search for a new puppy. And yes, I was asked to moderate the doggie debate by "The Daily Show." Yes, I did it. Sure, I was -- I had nothing else to do that day.

HILL: You got paid.

COOPER: And -- sadly, I didn't. And top of the hour, breaking news on the Mideast crisis. New attacks just moments ago. Also a shaky truce for a few hours to get humanitarian aid in. We'll have the latest from the front.


COOPER: All right. Time now for "The Shot." In case you missed it, Erica, "The Daily Show" had some fun with the Obama family's search for a first family pet. They brought some candidates together for what they called "The CNN Pick of the Litter Pup-idential Debate." Brian Williams was too busy, so they asked me to moderate. Take a look.

(BEGIN VIDEOTAPE) COOPER: Princess, there have been allegations that your campaign has spent hundreds of thousands of dollars on wardrobe and collars. Your critics say you're out of touch with the average American.

Rags, do you think, given your obvious condition, that you would be physically able to execute the duties in the White House?

Mr. Skittles, you scratch, you pee, you poo. And quite frankly, I don't think you're very cute. How do you respond?


JON STEWART, HOST, COMEDY CENTRAL'S "THE DAILY SHOW": It was all going well until, inevitably, a protestor.

COOPER: Please do not interfere with Rags. Rags, do not -- we don't have time for your puppy agenda. Do not confront the protestor. Get this bitch off the stage.


Of course for some reason CNN thinks a room full of puppies isn't enough to keep our attention, so they had to throw in their usual bells and whistles, from real-time opinion polling to the inevitable You Tube question.

UNIDENTIFIED MALE: My name is Joe Johnston. I'm an Iraq war veteran, and I come from a long line of U.S. servicemen. My question for all the candidates is, who's a good boy?

COOPER: Joe, thanks for your question. So, who's a good boy? Hum?

STEWART: You know, rarely in this campaign season has anyone spoken so directly to the issue at stake. Kudos, CNN.

Now, there are still two more debates to go before the Obamas reach -- I'm sorry, I'm being told that the Obamas have already made a decision. And I think we can all agree, they've clearly chosen the most adorable of last night's participants: Anderson cooper.


HILL: Any word on when you get to move in?

COOPER: No, I'm waiting.

HILL: Are you going to stay at the Hay-Adams for a little while?

COOPER: Until I'm house broken.

Coming up at the top of the hour, serious stuff. The breaking news out of Israel. New operations inside Gaza right now. And for the first time since Israel's all-out offensive began Israeli forces allow a camera crew -- or a cameraman -- inside the war zone. The latest, next. (COMMERCIAL BREAK)