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Pakistanis Protest U.S. Drone Strikes; Bill Clinton Pushes Tax Cut Deal; Elizabeth Smart Speaks Out

Aired December 10, 2010 - 17:57   ET


JESSICA YELLIN, GUEST HOST: Four alleged militants in Pakistan are reportedly dead following a suspected U.S. drone strike today. Attacks like these are prompting growing outrage in the region.

So what if they end up landing the United States in court?

Here's CNN's Reza Sayah.


REZA SAYAH, CNN INTERNATIONAL CORRESPONDENT (voice-over): Pakistanis have long protested U.S. drone strikes with cries of "Death to America!" But Kareem Khan is the first to sue the U.S. government.

"They kill innocent people," says the 43-year-old journalist. "Oppressors should be brought to justice."

Khan says on New Year's Eve, 2009, missiles from a U.S. drone flattened his home in north Waziristan, killing his teenage son and brother.

"I'm angry. That's why I'm suing," he says. Khan denies any links to the Taliban and asks for $500 million in his lawsuit.

This is a rare look at what witnesses say is the aftermath of drone attacks. Pakistani officials say this year, U.S. drones hit more than 100 alleged militant targets in Pakistan's tribal region along the Afghan border, up from 52 last year. Privately, U.S. officials say the covert strikes are legal and have killed hundreds of militants.

SHAHZAD AKBAR, LAWYER FOR VICTIMS: It's mostly innocent people are being killed, and it's not the militants.

SAYAH: But Khan's lawyer, Shahzad Akbar, and human rights groups inside and outside Pakistan say U.S. drones kill too many civilians. They say target killings on mere suspicion break the rules of war.

AKBAR: In a western society, you cannot even arrest someone just on mere suspicion, but here you're executing people on mere suspicion.

SAYAH (on camera): Right after Kareem Khan went public with his lawsuit came the media attention. Then other families of drone strikes started calling him. They wanted to sue the U.S. government too.

And less than two weeks later, this happened, a protest a few blocks away from the parliament building in the federal capital of Islamabad by more than a dozen families, each saying they are victims of U.S. drone strikes too.

(voice-over): Thirteen-year-old Sadu Lahan (ph) says he lost both legs and three relatives in a September drone strike. Last January, Muhammed Fahim says shrapnel from a drone strike gashed open his stomach.

"I want to tell the world we are victims," Muhammed says. "We don't have any connections with the Taliban."

Verifying these stories is virtually impossible. Media access to the tribal region is banned by the Pakistani government.

Even so, Akbar says a class-action lawsuit against the U.S. government is coming.

The U.S. Embassy in Islamabad tells CNN they have seen the protests, but are not aware of any lawsuits. Akbar says he probably won't get the U.S. government to show up in court any time soon. He says that doesn't mean these families are going away.

Reza Sayah, CNN, Islamabad.



Happening now: breaking news. President Obama pulls out one of the biggest guns in the Democratic arsenal to rally support for his tax cut deal with Republicans. The meeting led to an extraordinary White House briefing.

Also, kidnap victim Elizabeth Smart speaking out as jurors reached a verdict in the trial of the man who held her hostage for almost nine months.

Plus, it's being called one of the worst breaches of royal security ever. And now we have dramatic new video of the attack on the car carrying Prince Charles and Camilla.

Welcome to our viewers in the United States and around the world.

Breaking news and political headlines are straight ahead. Wolf Blitzer is off today. I'm Jessica Yellin. You're in THE SITUATION ROOM.

Veterans of the White House press corps probably had a sense of deja vu in the briefing room this afternoon as they listened to a Democratic Party whose party had lost the House, forcing him to compromise with Republicans. And it wasn't Barack Obama, although he was there briefly before leaving for a party. It was former President Bill Clinton. He and Mr. Obama met privately before going in front of reporters, where Mr. Clinton threw his weight behind the tax cut compromise President Obama hammered out with Republican leaders.

House Democrats have already rejected that compromise, but former President Clinton says he does not think there's a better deal out there.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I just had a terrific meeting with the former president, President Bill Clinton. And we just happen to have this as a topic of conversation. And I thought, given the fact that he presided over as good an economy as we've seen in our lifetimes, that it might be useful for him to share some of his thoughts.

I'm going to let him speak very briefly and then, I have actually got to go over and do some -- just one more Christmas party. So, he may decide he wants to take some questions, but I want to make sure that you guys heard from him directly.


OBAMA: Thank you.

CLINTON: Thank you very much, Mr. President.

First of all, I feel awkward being here and now you're going to leave me all by myself.


CLINTON: Let me just say a couple of things.

First of all, I still spend about an hour a day trying to study this economy. And I'm not running for anything and I don't have a political agenda, I just try to figure out what to do.

I have reviewed this agreement that the president reached with Republican leaders. And I want to make full disclosure, you know, I make quite a bit of money now, so that the position that the Republicans have urged will personally benefit me. And on its own, I wouldn't support it, because I don't think that my tax cut is the most economically efficient way to get the economy going again. But I don't want to be in the dark about the fact that I will receive the continuation of the tax rates.

However, the agreement taken as a whole is, I believe, the best bipartisan agreement we can reach to help the largest number of Americans.

QUESTION: What was your advice to President Obama today about how to deal with the congressmen in the opposition party? CLINTON: I have a general rule, which is that if whatever he asks me about my advice and whatever I say should become public only if he decides to make it public. He can say whatever he wants. We --

OBAMA: Here's what I will say. I have been keeping the first lady waiting for about half an hour, so, I'm going to take off.

CLINTON: I don't want to make her mad, please go.

OBAMA: You're in good hands and Gibbs will call last question.

CLINTON: Thank you.

Yes, go ahead.

QUESTION: Do you think your appearance here today will help sway votes where they're needed most right now, among House Democrats? And the reason I ask you that is because a lot of them are sort of antsy, and I know you never used the term back in your first term, but they are antsy about the president of triangulation. They are still smarting over that, and your appearance here today might not necessarily push them in the direction that they want to be pushed.

CLINTON: That's right. It might not. But I would like to -- you know, I told President Obama and I will tell you, you ought to go back and read a lecture that Franklin Roosevelt gave in 1926, before he was a vice presidential nominee, before he came down with polio, to his old alma mater, (INAUDIBLE), and when she discussed the dilemma of the progressive movement in American politics.

You know, I have an enormous amount of respect for the Democrats in the House, and I have already told you, I regret that so many of them lost. I think some of our best people lost. And I get where they're coming from.

I can only tell you that my economic analysis is that, given all the alternatives that I can imagine actually becoming law, this is the best economic result for America.


YELLIN: Let's get more on all this now with CNN White House correspondent Dan Lothian, former Clinton speechwriter Michael Waldman joining us from New York, CNN chief political correspondent and host of "STATE OF THE UNION," Candy Crowley, and CNN chief national correspondent John King, host of "JOHN KING, USA."

By the time I'm done introducing everyone, the block's over, right?


YELLIN: Let's go to you first, Dan. You were in the room. The White House is saying that bringing Bill Clinton out before the microphones, it wasn't planned. Is that what you're hearing too? DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: That's right. We're told that that really was just sort of a last-minute, spur-of-the- moment event.

I should back up a little bit. We're told by the White House that the president did reach out to the former president after the midterm elections to come and sit down and talk about a whole host of issues, domestic and foreign policy issues as well, and that the former president agreed to come in for this meeting.

We were told -- the indications we had been given throughout the day is that there would not be a readout of the meeting and in fact we were also told that we would not get sort of any highlights of what the president -- what advice the former president may have been giving this president.

So we were just given a few minutes' heads-up and told that the president and the former president would be coming to the briefing room. And so it was certainly a surprise to us. And former President Clinton was quite comfortable, spending quite a bit of time after President Obama walked out answering questions from reporters.

At various times, White House spokesman Robert Gibbs tried to cut off the questioning, and he kept pointing at reporters for additional questions. So, clearly, this was a former president wanting to lend some weight to this administration, which is facing right now just a major challenge in trying to get this tax cut framework through up on Capitol Hill, certainly through the Democrats as well.

And as the former president pointed out, that everyone in this will have to eat something that they don't like, but he believes this is the right compromise for the country.

YELLIN: All right, that's good to know, Candy, Robert Gibbs -- I didn't realize that -- was trying to cut it off. We couldn't see that as Bill Clinton kept going, which goes to my point.

You don't bring the president to the White House to endorse your tax cut proposal and then in front of cameras without expecting him to go long, do you?

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: No, you certainly don't, particularly when you leave him alone, say, oh, listen, I'm going to a party, have at it, because this is a man who clearly misses us, which is nice.

But I first looked up and I thought -- honestly, my first thought was, big mistake.

YELLIN: OK, why?

CROWLEY: Here's -- you know, it's kind of like never share a stage with animals and children. I think we should add Bill Clinton to that list.

(LAUGHTER) YELLIN: You're going to hear from people for that.


CROWLEY: I think he just takes the stage.


CROWLEY: And it reminds people of -- now, remember, he wasn't always the most popular president around, but he certainly is now, certainly was when he left. And he carries a lot of heft and he just commands that stage.

And it was almost too comfortable for him, almost to -- and I think sometimes the contrast is not good. And that's what occurred to me.

YELLIN: And it also occurs to me, John, that if this does get passed now, Bill Clinton will get some of the credit, and it won't all go to the White House.

JOHN KING, HOST, "JOHN KING, USA": But the guy who is facing reelection in two years who wants this passed is the current president of the United States, and he's willing to look a little weak.

And today some what will say he's weak. Some will say he needed the former president. Candy makes a good point. He's overshadowed to a degree. Bill Clinton is a better communicator in some ways, especially when it comes to economic issues, talking to average Americans. He's better than President Obama. That's just a fact.

But -- but this president has a problem right now. He had a revolt in the House. He had this spectacle going on, on the floor of the Senate with Bernie Sanders, who became a trending topic. A 69- year-old guy suddenly becomes a trending topic on Twitter, lighting up the president's plan and essentially treating it like a pinata.

Will it sway House liberals? Many of them were chairmen when Bill Clinton lost in 1994, the old guard. They look at him and they say here we go again. However, who has credibility with the American people on the economy? Bill Clinton does have credibility, especially with the middle of America right there.

So, it's a bit of an inside game, influence Washington. It's also part of an important outside game, influence the country, because they thought this deal would get acted on quickly. And you know how this works. The longer something is on the vine, the more you can hit it. So they needed some help today, and they decided to take the risk.

YELLIN: Let me bring in Michael Waldman, former, again, speechwriter for President Clinton who was there while the president, the former president, was dealing with a House that was against him.

Michael, your thoughts on the president -- Clinton's performance today. He looked comfortable to all of us. What did you think?

MICHAEL WALDMAN, FORMER CLINTON SPEECHWRITER: He sure did. And it was hard not to smile watching him. He relishes talking about the economy and talking about policy.

But, of course, remember after the 1994 election, when he had his shellacking, he didn't look so commanding. And everybody thought oh, he's diminished, and he's not a commanding figure like Ronald Reagan. So it helps to be out of office.

What was interesting I thought was that he had a message that was powerful, which was echoing some of his early messages. He said it almost offhand. He said the key thing is the economy first. He was saying, I don't like the tax cuts for the rich either, but the economy first.

And I think that that frame, that there would be a macroeconomic consequence if the taxes went up, and it's more important to get the economy right, right now, that helps with the deficit issue. And it was a very -- it was deft, and I wouldn't be surprised if you hear the Democrats and the White House talking that way.

YELLIN: Well, I was interested to read a column you wrote suggesting some other tips the current president might take from what Bill Clinton did. And your point was that he should both get tougher with the Republicans and more critical of them. Would you explain?


As I wrote in Bloomberg News, other presidents, whether it was Bill Clinton or Harry Truman, who everybody thinks was just fighting and saying -- denouncing the do-nothing Congress, there's really a pattern for how presidents who do badly in the midterm react.

They find some issues where it's not just that they compromise with the opposition party. They actually agree with the opposition party. For Harry Truman, it was the Cold War. For Bill Clinton, really, it was welfare reform. And they really make those signature issues.

But then they draw some sharp lines on key principles, and they fight. And that's what Bill Clinton did in vetoing the budget that was sent to him by Newt Gingrich and the Republican Congress, and winning the battle over the government shutdown.

So, it's not so much should the president compromise or not? Of course he should. It's where is he going to really aggressively work with the Republicans and where is he going to draw a sharp line? And I think that's what Democrats are craving. They want to know what Barack Obama is going to fight on.

And this tax issue was a core Democratic issue for years, and still is. It's a little harder to fight on it now. But I think this issue of the economy first and some other things going forward are what Obama, President Obama, needs to do.

YELLIN: Candy, it's ironic to me. He says the president needs to fight.

Liberals have been pushing for the president to fight for a long time. Finally, he picked a fight with them.

CROWLEY: Right. Exactly. Well, he tried. They picked a fight with him, in all fairness. He didn't want the fight.

YELLIN: Right. That's true.

CROWLEY: And I think that what Michael's saying is exactly where they're going. You can be sure that they will find in the new Congress ways to go no, thus far and no further. There will be those fights.

Maybe it's on immigration reform, just to have the fight to begin to tee up for 2012. So there are things that he's going to say, uh- uh, this is not happening. He will protect health care reform, no matter what happens. So that will be a clear line. So, he will get to that.

YELLIN: And the White House is going to think this was a swimming success, yes?

KING: I think they understand the risks involved. You make a calculation here.

They knew the dynamic of what the news cycle, today's news cycle would be, what the story would be heading into the weekend. And they made a calculation. To Michael's point and to Candy's point, Bush tax cuts, that's a tough one for the liberals to swallow. This is not some abstract policy. This is something they have fought for years, for a decade, Bush tax cuts.

Extending the Bush tax cuts is a hard pill for liberals to swallow. And so the president is having a hard time with his base. And he wanted help today. And there's not a better communicator. I think there will be people saying he was diminished by this, but this is a play toward his reelection and his standing in Washington, not toward what people in the party think about him.

YELLIN: I have a feeling we will be talking about this for some hours and into the weekend, no doubt.


YELLIN: And for years, yes.

Thanks to all of you for being here.

Well, they desperately want two things, citizenship and an education. But the bill that would give them both is facing an uncertain future, and so are they. That's coming up.

And so is the story of Elizabeth Smart, speaking out as her kidnapper's trial comes to a dramatic end. Plus, new video of a stunning security beach, Prince Charles and his wife, Camilla, inside that car surrounded by protesters who are yelling, "Off with their heads."


YELLIN: It was an emotional day for former kidnapping victim Elizabeth Smart and her family.

Just a short time ago in a Salt Lake City courtroom, a jury ruled on the insanity defense of the homeless street preacher accused of snatching the 14-year-old Smart from her home in 2002.

Joining us now is CNN's Ted Rowlands, who was in the courtroom.

And, Ted, let's get right to it. What was the verdict?

TED ROWLANDS, CNN CORRESPONDENT: Guilty, Jessica, on both counts that Brian David Mitchell faced.

Mitchell when he was brought into the courtroom was singing, as he has been most days throughout this trial. Most days during this trial, he has been escorted out of the courtroom. The judge kept him there, however, during the reading of the verdicts. And it was very bizarre, because he sang throughout the entire process.

When those verdicts were read, Elizabeth Smart was in the front row. I was watching her as the first verdict of guilty was read. Her smile came on to her face and stayed there throughout the reading of the second verdict. Her family was with her as well.

The Smarts have been a mainstay in this case. Elizabeth Smart's testimony was three days of riveting testimony about exactly what happened to her. She told jurors how she was taken out of her bed with a knife to her throat and taken up to a hillside camp and chained to a tree for six weeks.

She was raped, she said, between one and four times per day and held captive for nine months. Afterwards, she came out of the courthouse and addressed the media.


ELIZABETH SMART: I would like to say thank you to everyone who has put so much work into my case and in helping me.

Today is a wonderful day, and I am so thrilled to be here. I'm so thrilled with the verdict. But not only that, I'm so thrilled to stand before the people of America today and give hope to other victims who have not spoken out about their crime -- about what's happened to them.

I hope that not only is this an example that justice can be served in America, but that it is possible to move on after something terrible has happened.


ROWLANDS: And that basically is what prosecutors said, that this case leaned on, Jessica, Elizabeth Smart's testimony. Jessica, they said that this young woman, who's now 23 years old, was able to recount those details when she was just a 14-year-old with such clarity that it made the difference in the case.

The jurors here really weren't determining whether or not this defendant was guilty of the acts. They were determining whether he was sane or not. In state court, they declared in Utah that he was not sane to stand trial. So, their task today was to figure out was he sane and should he take the penalty for his crimes. And they said yes.

However, not everybody agreed with that. Listen to Brian David Mitchell's stepdaughter, who says that he doesn't belong in prison; he should be in a mental hospital.

OK -- Jessica.

YELLIN: Ted, the jurors, I understand...

ROWLANDS: Jessica, I guess we're not going to hear from her, but we interviewed her afterwards. Yes, we interviewed her afterwards and she said basically that she believes that Mitchell has severe mental disorders and shouldn't be sitting in prison. The jurors, however, disagreed.

YELLIN: Also, Ted, the jurors came out I understand and spoke afterwards. I'm curious, did they talk about how they were able to reach a verdict so quickly or what did they say?

ROWLANDS: They said they took this very seriously. They deliberated for three hours last night and then another two hours this morning. They said they went through it.

And they actually said a few of the jurors did have some reservations about Mitchell's mental stability, but, in the end, they say, the one thing that really did turn this case was Elizabeth Smart's testimony.

They say that stuck with them. And they didn't believe -- because Elizabeth Smart told them how Mitchell changed his demeanor throughout this ordeal, they did not believe that he was that mentally ill. And they believed in fact that a lot of this was just an act. So they came back with that guilty verdict.

YELLIN: All right, Ted Rowlands, thanks so much.

Just a horrifying ordeal for Elizabeth Smart.

And now a new reason to be concerned that America is not as secure as it could be from terrorists. We will tell you about a stunning gap in the government's ability to track private planes.

Also, Senate Democrats put off a vote on legislation that would help young people who came to the U.S. illegally become citizens and get an education. But supporters of the DREAM Act are not giving up.

Stay with us. You're in THE SITUATION ROOM.



YELLIN: Well, here's something worth paying attention to. Everything you know about your taxes could soon be changing. There's growing talk of rewriting the tax code. We will show you what it might mean for you.

Also, new video of royals under attack, this is being called possibly the worst security breach of its kind ever.

And a piece of sports history, the original rules of basketball, are up for auction. How much would you pay?


YELLIN: We're following developments with the DREAM Act. DREAM stands for Development, Relief and Education for Alien Minors. It would help young people who were brought to the U.S. illegally as children become citizens and get an education.

Well, right now, the future of this bill is very uncertain.

CNN's Mary Snow has been working the story for us.

And, Mary, where do things stand with this bill right now?

MARY SNOW, CNN CORRESPONDENT: Well, right now, Jessica, it's stalled.

The bill suffered a setback yesterday when Senate Democrats pulled the measure from consideration because it would not pass. Now, exactly when it might be considered again is unclear. Supporters, however, are welcoming this delay. They're using the time to ramp up their efforts.


SNOW (voice-over): Eighteen-year-old Lucia Allain is on a mission. With her future at stake, she's organizing volunteers from her former high school to try and persuade senators to pass the DREAM Act. The legislation would give a path to citizenship for illegal immigrants like her, who were brought to the U.S. as children by their parents.

Part of the path requires serving two years in the military or two years of college.

LUCIA ALLAIN, SUPPORTER OF DREAM ACT: So basically what I need is your calls and your support.

SNOW: Senate Democrats put off a vote on the legislation Thursday because they didn't have enough votes to pass it.

SEN. HARRY REID (D-NV), MAJORITY LEADER: I move to table the motion.

SNOW: But the House did pass it. And we first met Lucia Wednesday as she anxiously watched C-SPAN, waiting for the House vote. Because she came from Peru to the U.S. illegally as a child, she has no Social Security number. She graduated high school and wants to go to college, and the bill would provide in-state tuition, which would make it affordable.

ALLAIN: I want to go to college, and I want to graduate. And if I don't, if the DREAM Act doesn't pass, I can't graduate and exceed in my career.

SNOW: As she mobilizes in New York during a delay on the vote in the nation's capitol, supporters are trying to convince opponents to change their minds, but in the Senate there is stiff opposition.

SEN. DAVID VITTER (R), LOUISIANA: The DREAM Act is a major amnesty provision. There are no two ways about it.

SNOW: Among the critics is Louisiana Republican Senator David Vitter, who also questions financial aid for education in the bill, saying it would, quote, "provide incentives for illegal immigration and drain the nation's limited resources."

VITTER: These young illegals who would be granted amnesty would be put in direct competition with American citizens for those scare resources.

SNOW: But Carlos Saavedra of Peru, who is now a citizen, is working to convince critics otherwise.

CARLOS SAAVEDRA, UNITED WE DREAM NETWORK: This is about us contributing and giving back, because that's what we want. I mean, some people are in colleges trying to recruit people to go to school. We're here going crazy, because we want to give back to this nation.


SNOW: Well, the battle continues on Capitol Hill. A new poll shows a big division among Americans in how they feel about the DREAM Act. A Gallup poll shows 54 percent of Americans supporting it, 42 percent opposing it, 4 percent unsure -- Jessica.

YELLIN: Thank you, Mary.

As the battle rages here in Washington over extending Bush-era tax cuts, there's growing talk of major changes to the tax code itself, changes that could have broad impact for anyone who pays taxes. That's most of us. CNN's Brian Todd is looking into it for all of us.

Brian, what are you finding out about this? BRIAN TODD, CNN CORRESPONDENT: Well, Jessica, the people who know taxes, not me, but the people who know taxes say to get a real sense of what you and I are going to be paying down the line, you've got to look at what they're saying about rewriting the tax code. Look beyond the tax cut extensions that we're all talking about right now.


TODD (voice-over): Our taxes may stay the same for the moment, but two, three, four or more years down the line, we all may be paying more. Leaders from both political parties say the national deficit has to be cut, and to do that, America's tax code has to be rewritten. In an NPR radio interview, the president explained what's being talked about.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The general concept of simplifying, eliminating loopholes, eliminating deductions, eliminating exemptions in certain categories might make sense if, in exchange, people's rates are lower.

TODD: How would that trade-off work for you and me?

(on camera) First, we need to tell you about the deductions that many of us take that are most commonly talked about now as being on the chopping block, those deductions that may be taken away from us. Those are the deductions for the interest we pay on our home mortgages, the deduction for the property taxes that we pay and the deductions that we take for the charitable contributions that we make.

How does that translate to our tax bill? Well, I'm joined by Donald Marin of the Tax Policy Center. We're going to put up another graphic here. Donald, right now under current tax law, the average family, married couple with two children under 13 dollars [SIC], their average income is about $69,800.

With those itemized deductions that we talked about, for the mortgage interest, the charitable contributions, and the property taxes, they can take $14,200 off their taxable income, putting it down below about $55,000.

Everybody gets a child tax credit, a child care credit, for a final tax Bill right now for a family with this income of $2,453. Now when the tax code's rewritten to take away these deductions, what are we looking at here in this column?

DONALD MARIN, TAX POLICY CENTER: Well, for someone, for a family with the same level of income, the itemized deductions in the extreme case would completely go away.

TODD: Go away.

MARIN: But that doesn't mean you've got nothing. What it means is you get the standard deduction instead, $11,400. You get to deduct that off of your income before you calculate your taxes.

TODD: Right. MARIN: Then in some discussion of which credits would continue to exist. In the example we have here, the child credit would continue but the child care credit would disappear and the net effect of that is your taxes are going to be higher.

TODD: But in exchange for all this, the idea is to lower your overall tax rates. And that's when we go over here to this column. Rate reduction. OK. Same income, right? You still get the standard deduction. Then how does it figure?

MARIN: Yes, and so in this example, we've kept the same childcare -- child credit over here, but if rates go gown, your overall tax bill will go down.

TODD: OK. But then you're -- but your overall tax bill goes down, but it's still higher than it is here, for $2,453, then it is now. That Bill is going to be $3,256. It's an increase of about $800. Right?

MARIN: Right. In this example, the tax bill for this family goes up, which, of course, is one of the things that the tax reform commissions are thinking about, is raising more money.

TODD (voice-over): It's important to remember these estimates are on the high end. Our taxes may go up but maybe not as high as those projections, and it will likely be several years before we're paying those higher taxes.

(on camera) Why? Well, we're down here on K Street in Washington with Steven Moore of "The Wall Street Journal." Well, we're here on K Street because this is where all the lobbyists and lawyers work.

Steven, let's say they try to rewrite the tax code to take away our deductions for the mortgage interest rates and for property taxes. What are the people down here going to do?

STEVEN MOORE, "THE WALL STREET JOURNAL": Well, this really is the center of all lobbying in Washington. You see all the big buildings for Washington, D.C.

TODD: Right.

MOORE: This is where -- this is what I call the Den of Inequity in Washington, because this is where all the deal-making gets done. And you would see howls of indignation from all these lobbyists representing state and local governments and the housing industry.


TODD: All that lobbying, Moore says, may delay tax reform, but he says it may not kill it. He points out in 1986 the Reagan administration was able to work with Democrats to get past the lobbyists and special interests to rewrite the tax code and get the rates lower. That was 25 years ago, Jessica. They may be on the verge of doing it again after more than 25 years.

YELLIN: It's fascinating. The Obama administration says they may or may not take this up.

TODD: Right.

YELLIN: But it's obviously one of the big ideas on their plate.

TODD: Right.

YELLIN: If it does lead to higher taxes for most people -- we don't know yet -- it's going to be a hard sell politically.

TODD: It sure is. And how are you going to sell to the American public? Steven Moore says you've got to sell it as being job -- about job creation. He says under this new tax code, the corporate tax rates may lower. That's the way you've got to sell it. The corporate tax rates are lower. It's less outsourcing by corporations, more American jobs. You've got to sell it with points like that or else you're not going to sell it.

YELLIN: Well, I know a lot of us would be happier if the tax code got simpler.

TODD: That's right. And that's what they're trying to do, too, make it simpler.

YELLIN: Simpler is good. Taxes going up might not go over so well. Thank you, Brian.

All right. And this is a serious, serious story, disturbing news that the FAA may have lost track of more than 100,000 private planes in this country. We'll take a look at what it could mean to efforts to prevent terrorism.

And Britain's Prince Charles and Camilla attacked in their car as student protesters chant "Off with their heads." We'll tell you about the fallout after this major security breach.

Stay with us. You're in THE SITUATION ROOM.


YELLIN: Take a look at this brand-new video just obtained by CNN of the attack by student protesters on a car carrying Britain's Prince Charles and his wife, Camilla. Britain's prime minister, David Cameron, is now vowing to bring them to justice, and some are saying it may be the worst breach of royal security ever.

Here's CNN senior international correspondent Dan Rivers with details on the fallout -- Dan.


DAN RIVERS, CNN CORRESPONDENT (voice-over): The attack on Prince Charles's convoy happened here on Regent Street, where hundreds of protesters besieged their vehicles. There is now dramatic video emerging of those protesters banging on the windows and shouting, "Off with their heads." UNIDENTIFIED MALE: Off with their heads! Off with their heads! Off with the heads!

RIVERS: It's quite incredible that the police didn't draw their weapons. They are always accompanied by royal protection officers who are armed. The metropolitan police commissioner, Sir Paul Stevenson, has praised the restraint of the officers involved. But clearly, this is a massive breach of royal security, perhaps the worst ever breach of royal security.

GEOFF HILL, CNN PRODUCER: I saw the unmistakable arrival of a very important person, the motorcycle outriders, et cetera, and the royal car came around the corner. And I saw Charles and Camilla's faces. And I quickly realized the car had been attacked by the protesters. There was a large sort of paint mark on the back of the car and in the window on Prince Charles's side of the car, it was all cracked. Clearly, there had been a missile thrown, thrown at the car.

DAVID CAMERON, BRITISH PRIME MINISTER: We do need to learn the lessons of this. It was a very regrettable incident, but in the end, let's remember that this was not the fault of the police. This was the fault of the people that tried to smash up that car. Let's be very clear about where responsibility lies. Responsibility for smashing property, for violence, lies with the people that perpetrate that violence, and I want to see them arrested and punished in the correct way.

RIVERS: It will only add to the pressure on Sir Paul Stevenson after another student protest a few weeks ago when police officers were completely unprepared and overwhelmed by student protesters who broke into the Conservative Party office on Milbank, smashing windows and trashing the reception. This will prompt more questions about the coordination between the protection officers who were in the convoy moving out here and the officers who were trying to control the crowd.

Dan Rivers, CNN, London.


YELLIN: Thank you, Dan.

There are more than 300,000 private planes in the U.S., and the government now admits it can't be certain who owns a third of them. Details of a stunning lapse.

And more of this shocking video showing an attack on British royalty. Some are now calling it, as we just heard, the worst security breach of its kind.


YELLIN: Here's something disturbing. The Federal Aviation Administration says registration records for as many as one-third of all private planes in the U.S. are out of date and inaccurate. And there's deep concern that terrorists or other criminals could exploit that. Now the FAA says it's taking dramatic action, canceling registration for all civil aircraft and forcing the owners to re- register, but is it enough?

Let's get more with CNN national security contributor Fran Townsend. She was homeland security advisor for President George W. Bush and was a member of the homeland security external advisory board.

Fran, so they are incredibly thorough, the government, about patting us down when we go to the airport because of 9/11 and the aftermath. How is it possible that ten years after 9/11 they're not as thorough about keeping their own records?

FRAN TOWNSEND, CNN NATIONAL SECURITY CONTRIBUTOR: It's actually inconceivable to me. I mean, when you think about -- think of the speeches that Secretary Mike Chertoff in the prior administration that I was a part of made, where he talked about having concern that, in private aviation, they could put all sorts of things on those planes that could -- you know, to move nuclear weapons, all sorts of chemical and biological weapons. And for that reason, he banned them from landing at places like Reagan National Airport.

Well, that ban has been lifted because, of course, those planes now get screened before they're able to come in. The problem is, that's great that we're screening them. It would be nice if we knew who owned them.

And so it really is, to me, outrageous that they've identified the threat. They've taken the step of canceling these registrations and re-registering and certifying them. But it's -- where are those more than 100,000 planes? Who's got them and what are they doing with them and where are they landing? I mean, you know, will the lack of a registration, these cancellations, stop them from flying?

There's a lot of unanswered questions. And by the way, how long has this been going on that the FAA realized this and didn't do anything about it and made it public?

YELLIN: I remember not so long ago we were doing a story about somebody flew a plane into the IRS building. And you know, you had to track who it was and why it happened. Obviously, these planes, as you say, could be used as very dangerous devices, even because -- even though they're small. What are the chances that criminals or terrorists could be in control of some now?

TOWNSEND: The problem, Jessica, is we don't know, right? Because we don't know who owns them.

I can tell you when I was in the White House, we had an instance where a plane violated the restricted air space in Washington. And we called a conference call with the Air Force for the Northern Command, because we had to make a decision did we need to shoot it down?

Well, it turns out here's an example of one of these planes that had been sold over the Christmas holiday. This man hadn't registered it, and he was flying over the Capitol in the middle of a Christmas holiday.

YELLIN: They didn't know who it belonged to?

TOWNSEND: His wife was crying. When we tracked down who it was, his wife was crying on the other end of the phone, saying, "He's just stupid. Please don't shoot him down."

YELLIN: Oh, my gosh.

TOWNSEND: And two F-15's scrambled and forced him down to land outside the national capital region. I mean, so this is what happens. Resources that are desperately needed to fight terrorism and criminals get diverted because we don't have a good handle on these databases. It's got to be fixed. And it's got to be fixed quickly. They're talking about doing it over three years on a rolling basis. If you identify a threat, you fix a threat, because it's immediate.



YELLIN: I hope they're listening. Thank you, Fran Townsend.


YELLIN: Mary Snow is with us again. She is monitoring some of the top stories in THE SITUATION ROOM right now.

Hi, Mary. What's the latest?

SNOW: Hey, Jessica. We'll start with politics.

The former chairman of the Republican National Committee says it's time for the GOP to accept same-sex marriage. Ken Mehlman, who announced he was gay last summer, ran former President George W. Bush's 2004 re-election campaign. Mehlman tells the Web site The Big Think that supporting gay rights is a logical extension of the GOP's principles.

And here in New York, check out this dramatic video earlier today. This is an accident involving a bus, a car and a tractor trailer in Queens, New York. It happened this afternoon. Officials say there were six injuries, none of them life threatening. Three people were taken to a hospital.

And an accident of a different kind, an unforgettable Christmas performance in Florida when a camel fell into the pews of a Florida church, seen here on the videotape. Lulubelle (ph), the camel, was scratched but otherwise OK after her fall at the First Baptist Church of West Palm Beach. The camel apparently lost her balance, fell on her side during rehearsal for the Christmas show. Fortunately, no one was injured, including one of the three wise men sitting atop the camel -- Jessica.

YELLIN: Well, what are the chances? I don't know what to say to that. You go to a Christmas show, and a camel falls on you. Poor thing. I don't know what to say.

Thank you. Glad the camel wasn't badly hurt.

President Obama, he handed over the White House briefing room briefly today to Bill Clinton. That's coming up ahead on "JOHN KING USA."

Plus, the original rules of basketball go on the auction block.


YELLIN: The gavel came down today on what is believed to be a record-breaking sale of sports memorabilia. The nearly 119-year-old document on which James Naismith wrote the original rules of basketball sold for $4.3 million. Wow. CNN's Richard Roth is here with the details.

Hey, Richard.

RICHARD ROTH, CNN CORRESPONDENT: Well, Jessica, two pieces of paper were all it took to create what is now a global sport with large personalities and players with names known around the world. And today in Manhattan, the documents that created basketball were put up for auction.


ROTH (voice-over): Basketball is one of the world's biggest sports. The stars of the NBA earn mega-millions, all thanks to this man who didn't have a jump shot, educator Dr. James Naismith. At this Massachusetts gymnasium in 1891, Naismith invented basketball.

SELBY KIFFER, SVP, SOTHEBY'S BOOKS AND MANUSCRIPTS: It's the only sport where we can look at a couple of sheets of paper and say, "This is it. This is the birth certificate." It all started right here.

ROTH: Here is Sotheby's auction house in New York, where the historic 13 rules of basketball go to the highest rebounder, bidder.

IAN NAISMITH, JAMES NAISMITH'S GRANDSON: My grandfather says you don't make money out of my baby, referring to the game of basketball, but he said, "You're the caretaker and the next generation," so I'm considered the caretaker.

ROTH (on camera): You know the rules of basketball?

Madison Square Garden is a little louder than Sotheby's auction house. To see if this generation appreciates what the original Dr. J created, we invited Sotheby's to bring the original rules of the game to the Nicks-Bobcats contest.

UNIDENTIFIED MALE: These are the original rules.

ROTH (voice-over): The only coach to win an NBA and college championship was in awe. LARRY BROWN, COACH, CHARLOTTE BOBCATS: This is incredible.

ROTH: It's valued at $2 million at least. What's it worth to you?

BROWN: Well, this is a game that's been awful good to me and a lot of other people. So it's pretty special.

ROTH (on camera): The original rules did not call for dribbling. How do you think the game would have evolved without that?

UNIDENTIFIED MALE: It would probably have been better without dribbling, because we over-dribble most of the time.

ROTH (voice-over): Another rule says no pushing or striking an opponent. Tell that to President Obama.

Rules? Where the Harlem Globetrotters go, there are no rules.

UNIDENTIFIED MALE: Change the rules of basketball? We're going to do it again.

ROTH: The entertaining Globetrotters are now launching a new four-point shot.

(on camera) You think he would understand someone saying, "I'm taking my talents to South Beach?"

DIZZY GRANT, HARLEM GLOBETROTTERS: I'm sure he definitely would have been proud. Who would have thought in 120 years that the game of basketball would come as far it has?

ROTH (voice-over): Naismith invented basketball because he was searching for a way to give kids something to do indoors during winter.

(on camera) If you could tell Dr. James Naismith something, what would you tell him now?

UNIDENTIFIED MALE: Thank you for inventing this great game. It gives kids, parents and families opportunities to enjoy it, night in and night out.


ROTH: And we do have a winner. A billionaire mutual fund company executive with extensive roots and ties to Kansas, final home for Dr. Naismith, purchased the rules of the game for $4.3 million. David Booth said he grew up on Naismith Drive.

Booth and his wife did the bidding over the phone. The couple are big basketball fans, and Jessica, they're going to donate -- the plan is to donate the documents to the University of Kansas.

YELLIN: Thank you, Richard. And you looked very smart there in a tuxedo in that video. ROTH: Thank you.

YELLIN: Well, Bill Clinton came to the rescue. That's coming up at the top of the hour on "JOHN KING USA," but first, political comedy. We'll show you some of this week's highlights from late-night TV.


YELLIN: It's been a fascinating week of political news and, as usual, the late-night comedians have been all over it. Let's take a look.


JIMMY FALLON, HOST, NBC: This isn't good, you guys. WikiLeaks supporters, they have hacked Sarah Palin's credit card information after she criticized founder Julian Assange. That's right. Sarah said she's very upset and hopes suspicious charges to her account can be refundiated.

CONAN O'BRIEN, HOST, TBS'S "CONAN": According to a new study that just came out, fewer American women over 40 are now getting annual mammograms. Fewer, yes. Even worse, the place most of them get the mammogram is in a TSA screening line.

JAY LENO, HOST, NBC'S "THE TONIGHT SHOW WITH JAY LENO": An arrest warrant for former vice president Dick Cheney has been issued by the country of Nigeria. Well, good luck serving that warrant this time of year because, you know, right now Cheney's busy up in Whoville trying to steal Christmas.


YELLIN: And Wolf will be back on Monday. You can keep up with me on Twitter. Go to

I'm Jessica Yellin in THE SITUATION ROOM.

"JOHN KING USA" starts right now.