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PIERS MORGAN TONIGHT

President Obama's $3 Trillion Debt Plan; Former Governor Jennifer Granholm's Story; Joe McGinniss Primetime Exclusive

Aired September 19, 2011 - 21:00   ET

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


PIERS MORGAN, HOST: Tonight, what happens when a shoot from the hip writer meets the biggest maverick of her time? Well, for Joe McGinniss, said some pretty nasty things about Sarah Palin -- cheating, drug use. He even says she's a bad mother. But who's the real rogue here? Has Joe McGinniss gone too far? I'll ask him on a primetime exclusive.

Also, is this any way to start a class war?

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I reject the idea that asking a hedge fund manager to pay the same tax rate as a plumber or a teacher is class warfare. I think it's just the right thing to do.

MORGAN: Can his plan work? I'll ask one of the president's top advisers. And I'll ask the former governor of Michigan how he'll get America back to work.

And for the first time Norway's prime minister speak out about the terror attacks that shocked the world.

UNIDENTIFIED MALE: We are even more aware of and the danger is not (INAUDIBLE) attacks.

MORGAN: This is PIERS MORGAN TONIGHT.

Today President Obama unveiled a $3 trillion plan to cut the deficit. The plan includes cuts in Medicare and Medicaid, reduce spending in Iraq and Afghanistan, and higher taxes on the wealthiest Americans. Republican leaders promptly dismissed it calling the plan class warfare.

Does the president's plan have a chance? Joining me now at the White House is Gene Sperling, director of the National Economic Council and assistant to the president for economic policy.

Mr. Sperling, thank you for joining me.

GENE SPERLING, DIRECTOR, NATIONAL ECONOMIC COUNCIL: Thank you.

MORGAN: Mr. Sperling, I mean, the president announced today that he'll go after the rich. The Republicans say that is a form of class warfare. The president says it's math. But the reality is it is class warfare. Isn't it? The rich are a class and he's going after them.

(LAUGHTER)

SPERLING: Well, I think it's really the opposite. The president is asking for balance, for shared sacrifice. He's asking for everybody to contribute and getting our long-term deficit down. He wants a plan that's going to be strong and powerful. The American Jobs Act, getting jobs going now. But we come to fiscal discipline, we all have to be in this together.

You know when the president put out as a principle that those who make over a million or 10 million shouldn't be paying lower taxes than middle class, you know, teachers, firemen, construction workers, some said class warfare, but I'm a little puzzled. How can it be class warfare when you're just trying to ensure that there's greater parity between those in the middle class and those who make over 10 or 50 million?

You know the top 400 -- highest 400 earners in the United States who average over $110 million paid an effective rate of 18 percent. That's a lot lower than a lot of people who are out there busting their chops every day trying to support a family.

MORGAN: But there's a sense of, you know, stealing from the rich and all the rest of it and these people, many of them have got what they have through hard work and success and achievement. It's almost a tax, many people argue, on success. How does the White House counter that argument?

SPERLING: Well, I just don't think there's anything to that. As the president said, this is a country where we want to see more millionaires. We want to see people have those opportunities, but those opportunities don't come in a vacuum. They come because generations before us have invested in our country and in our potential, and our infrastructure and our intellectual property system and our education system.

So those who do most well off in a sense pay it forward. They try to pay it forward so that we can bring our deficit down and make sure that we can invest in the innovation and future of our country.

MORGAN: I mean if the Republicans, as seems likely from their immediate reaction, just say, sorry, no chance, what then? What's plan B?

SPERLING: Well, I just want to -- I want to remind you that the public overwhelmingly thinks a long-term deficit reduction plan should have a combination of spending restraint with asking the most well-off and largest companies to pay a bit more --

MORGAN: But Mr. Sperling -- Mr. Sperling, as you know --

(CROSSTALK)

SPERLING: Hold it, hold it. MORGAN: But as you know, what the public think doesn't really matter when it comes to what the Republicans do. So I repeat, what are you going to do if, as seems likely, the Republicans say sorry, no?

SPERLING: Well, I would remind that you the speaker of the House did for a period of several weeks negotiate with this president and did express a willingness to have $800 billion in additional revenues as part of a package.

I want to remind you that there are Senate Republicans who've been part of the Gang of Six who are -- who have been willing to be part of a balanced plan of spending constraint and higher revenues on the most well-off. So I do believe that this compromise is possible, and if there is gridlock, it is not -- the blame should not be evenly shared. It should go to those who refuse to compromise, who say my way or the highway.

MORGAN: Finally Ron Suskind's book is to be released. It apparently gives a scathing look of the past three years of the Obama administration. He contends that the administration's problems with handling the economic crisis began with the hiring of Larry Summers and Timothy Geithner.

He says the actions by both men had, and I quote, "have contributed to the very financial disaster they were hired to solve." What is the White House reaction to that?

SPERLING: Let me tell you what my reaction is. I've been here since day one. And I want to say unequivocally the premise of Ron Suskind's book is dead wrong. Dead wrong.

What I saw firsthand was this president facing the worst financial and economic crisis since FDR had to deal with the Great Depression. And I saw him at times where in the most difficult issues, whether we should do stress tests for our banks, whether we should save Chrysler, deal with these complex issues where his economic advisers were often split, providing different choices to him.

And I saw the president sit in the Roosevelt Room for hours asking penetrating questions. And then he made the difficult call. And on things like the financial rescue, on things like saving Chrysler, he knew at the time they were politically difficult, but he did so because they were the right thing for our economy.

And virtually everybody now looks back at those decisions and recognizes that they were the right things to do. So the notion that this president was not leading and making the tough choices all along is just dead wrong, and I say that from somebody who has been here every moment, who was here through all eight years of the Clinton administration.

This president has been as focused and tough and decisive in leading us and this economic team, and I think that is the real story. And anything else really does a disservice to this administration and the real record that has been established.

MORGAN: The president looked pretty fired up today, Mr. Sperling. I mean, very quickly, has he got his gander back again, do you think? Do you think he's up and running now for the forthcoming election battle?

SPERLING: You know if you're someone like me meeting with him every day, you don't feel like he's ever lost it. He is -- I mean, there are times where you have to -- if you want to do what's right for your country, you have to try to strike compromises. You have to sometimes to take the temperature down and work and try to reach the grand compromise and the grand bargains.

That's part of governing, that's part of being responsible. But he has never lost his fundamental view that led him to run for president in the first place, which is we have an economy that has not been working for middle class families for a long time, even before this deep financial crisis.

And he is here not only to help dig us out but to chart a new course where we're seeing shared prosperity again, and not the middle class feeling like they're getting left behind because our economy is serving and our government and our politics are serving the special interests and those who are most well connected.

And what you saw him doing today is what he's always been doing, fighting for what's going to be best for our economy. And I think that was a balanced plan that really asked for a sacrifice and tough choices from everyone, leaving no one out.

MORGAN: Gene Sperling, thank you very much.

SPERLING: Thank you.

MORGAN: And joining me now is Jennifer Granholm, he's the former governor of Michigan and the author of "A Governor's Story: The Fight for Jobs and America's Economic Future." Very timely title.

You don't mind me saying, Governor.

JENNIFER GRANHOLM (D), FORMER GOVERNOR OF MICHIGAN: And a timely book, honestly.

MORGAN: Whichever way you skin this cat, it is a form of class warfare, isn't it? I mean President Obama has today delighted his Democratic base by saying, right, we're going to do Robin Hood taxation. We're going to whack the rich and we're going to give it to the poor.

GRANHOLM: Well, in effect, those who haven't been paying the beneficial rates have been subsidizing the upper class. If you're not having fair rates, you come to Michigan and you tell people that people who make $200 million a year pay a lot less in taxes as a percentage of their income, that's not fair.

The question is what's fair and where is the money going? Is the money going to invest in America and create jobs for people? And that's what this is all about. How do you cut where you can in order to invest where you must.

MORGAN: Well, you're the perfect person to ask this because you heard Gene Sperling talking about what happened in Michigan, in Detroit, with the car industry. Big bold measures by the president and they seem to have paid off. Why can he not replicate that on to a wider economic stage in America and what should he be doing?

GRANHOLM: It's exactly what we should be doing across America is to have an active, strategic government that is intervening in the economy, not a big government, but to help create jobs in America. You know that our economic competitors, all of those countries out there who don't care about laissez-faire, trickle-down economics, they are actively intervening to create jobs for their citizens.

The world has changed since before the turn of the century when we used to bow to the altar of trickle down. That is no longer the playing field that we are on.

MORGAN: Reading your book, it seemed to me one of the key things that you say is the problem is just the loss of manufacturing in America. I mean, I couldn't believe the statistics. Since 2001, 42,000 factories have shut in America.

GRANHOLM: Yes.

MORGAN: That's amazing.

GRANHOLM: One-third of all manufacturing jobs have been lost since the beginning of this decade. Why? Because of the type of jobs they are and the fact that other countries can lure them much more cheaply. And the question is for America --

(CROSSTALK)

GRANHOLM: How do you keep those kind of jobs or get advanced manufacturing jobs in America?

MORGAN: Well, I agree with that. But how complicit are many American companies in allowing countries like China to take those jobs? To take that manufacturing?

GRANHOLM: This is a really important question because companies are not going to be loyal to a particular country. They're going to be loyal to their shareholders. Where are they going to invest that will maximize shareholder return? And that's why the United States has to get real about that being the number one fiduciary responsibility of companies.

So we've got to make a competitive playing field for them to choose to come to America. And when I say that, I'm not talking about a race to the bottom where we are just slashing taxes and slashing wages. I'm talking about a partnership with business so that they can choose to come here like they're doing in all these other countries. But I'll tell you just a quick story. I was in China in March and in China they of course have done an unbelievable job of getting manufacturing jobs to come from the United States. And they were boasting about how well they had done particularly in the clean energy economy.

And the person -- the people that we were meeting with were Chinese officials. And one of them pulled me aside and said, when do you think the United States is going to get a national energy policy? And I said, I don't know. We've got the Tea Party, divided Congress, and this is what he did. He went, he said take your time, and was happy as could be. Because our --

MORGAN: Because they'll be standing in the meantime, right?

GRANHOLM: Our passivity is their opportunity. And every single day these companies are making decisions about where to locate. So if we don't have -- I mean, we could have a jobs race to the top. We should be partnering, we should be offering as much as we can in terms of training and intellectual capital.

MORGAN: Are you -- are you encouraged --

GRANHOLM: Research and development.

MORGAN: Are you encouraged by President Obama's demeanor today?

GRANHOLM: Yes, I am.

MORGAN: Do you get a sense that he's had enough of everyone calling him weak --

GRANHOLM: He's rolling up -- come on.

MORGAN: -- and pathetic, and rolling over to these Republicans?

GRANHOLM: Taking off the gloves.

MORGAN: And he's now saying, I'm going to do what I want to do. I mean it's about time. Is he now doing this?

GRANHOLM: It's totally great. But you know what? He had to take the steps before this time to demonstrate that he was the adult in the room. He put on the table obviously proposals that Republicans had previously not just supported but actually proposed. And when you can demonstrate that they're saying no just because of who is making the proposal, i.e., the president, then it looks like they are being unreasonable.

On CNN, when they had the debate, and the Republicans were asked, would you take $10 in cuts for $1 in revenue, and not a single one would take it.

MORGAN: Yes. Saw them, yes.

GRANHOLM: I mean it demonstrates how unreasonable they are. And so take it -- take it to the people. Take it to their districts. Be strong about it because the people are on his side.

MORGAN: And tell me this. Does he actually have the power? Here's the key thing that people say to me. It's all very well, the president beating his chest now, coming out fighting. I'm standing up to these Tea Party people, I'm going to stand up against the Republicans, all of it. It's all fine.

Can he actually do it? Can he challenge the convention of modern Washington politics?

GRANHOLM: The way you do it, one, is you take it to their district. And if they don't listen to the people that hired them -- I mean, the people are hiring these politicians and they can fire them. And that's what he's got to say. You hire them, you can fire them.

If you think that they are not representing you or acting in America's best interests, if their policies are actually facilitating the off-shoring of jobs -- I mean, when you think about tax cuts and smaller government, can I just -- Michigan, as a state, we cut more out of government than any state in the country over this past decade. Our corporate tax burden dropped faster than any other state in the country.

In my first term I've had taxes --

MORGAN: You also had rising unemployment throughout that period so --

GRANHOLM: Well, the point is I was doing all of this because I was thinking that that would work, because that's what all the economists used to say, right? But it didn't work. The only thing that worked was that we were able to partner with the federal government to get investment in Michigan.

So saving the auto industry, yes, and investing in battery technology, clean energy technology, defense sector, and that investment aloud Michigan's unemployment rate to drop six times faster than the national rate.

In 2010 Gallup said in February of this year that Michigan's job improvement was the best of all of the states in 2010. The difference was we tried all of those other things. They weren't working in this new world. The investment is what worked.

MORGAN: OK. Take that thought, hold it for a moment. We'll come back after the break. We want to know how can President Obama avoid losing next year in the election, because at the moment that's the way it's headed.

(COMMERCIAL BREAK)

MORGAN: Back with now is Governor Jennifer Granholm.

Governor, President Obama at the moment, we're looking at 39 percent approval rating, and 9.1 percent unemployment rate. It's not looking good, is it? I mean how is he going to pull this back for the election next year?

GRANHOLM: Well, you know, election is always about a choice. Everybody says that. He's going to have a specific opponent. And I look at this similarly. If you look at the laboratories of democracy, which Michigan is one of them. I was in virtually the exact same thing.

And my reelection in 2006 when Michigan had the highest unemployment rate in the nation, we were losing all of these manufacturing jobs. I was running against a wealthy, very conservative opponent. I was under water in my approval ratings and ultimately I ended up winning by the largest number of votes ever has --

MORGAN: How did you turn things around?

GRANHOLM: Because it was all about a choice. When you -- when you ask people in the abstract, people are unhappy and psychologically they want to move from where they are. But when they're presented with a choice and see that where they move to might put them in deeper doo-doo --

(LAUGHTER)

GRANHOLM: The technical --

MORGAN: (INAUDIBLE) put.

GRANHOLM: Technical term, then they don't move. And so --

MORGAN: President Clinton's point, actually, yesterday in one of the interviews he gave.

GRANHOLM: Yes.

(CROSSTALK)

MORGAN: He said, you know, at the moment, it's just President Obama against angry people.

GRANHOLM: Right.

MORGAN: The moment it becomes him against a definable face of the other side, then the people may be less angry to him and more about, whoa, we can't go there. If you were him, who would you most like to face next year? Who would you least like to face?

GRANHOLM: I think that he has a good case -- well, I mean, for example, Governor Perry, I think he'll have a tough time, for example, in, you know, the northeast, in the upper Midwest. And I think he and Romney both are supporting policies that are, as my daughter would say, so 20th century. That those are not the policies that will keep and create jobs in the United States.

MORGAN: What if unemployment figures, despite everything the president's currently trying to do, actually go up between now and next November?

GRANHOLM: And I think he's got an argument against the Republicans. They won't let me invest in creating jobs for American teachers and American road builders and American firefighters and the private sector. I've got tax credits that he can say that are going to reward companies for creating jobs in America.

What they want to do is to give broad tax cuts to corporations who can choose to take that money, it's fungible, move it overseas where they can maximize their profits. His plan creates jobs here rather than facilitating -- giving more money to invest somewhere else.

MORGAN: Former Vice President Cheney rather mischievously suggested that should things continue to go badly for the president that maybe Hillary Clinton could come along to save the Democrats from ignominious defeat. Do you see that?

GRANHOLM: Well --

MORGAN: If ever a possible scenario?

GRANHOLM: You heard what she said. The chances of that are less than zero.

MORGAN: I took that as confirmation.

GRANHOLM: Yes, I would think.

MORGAN: It wasn't a denial.

GRANHOLM: You think it's confirmation -- no. She's not --

MORGAN: Well, when people say less than zero, it's not a no, is it? It's a very carefully phrased non-denial.

(LAUGHTER)

MORGAN: Because they can always say, well, my -- everything changed. I went from minus three to positive three.

GRANHOLM: Spoken like a news guy who really wants to create a fight.

(LAUGHTER)

GRANHOLM: I think she's made it abundantly clear. You don't run against the person who appointed you. She is going to be a loyal team player. And I hope other Democrats are going to loyal team players and get -- our Democrats do need to get in line.

MORGAN: Well, talking about the loyal team players, I couldn't let you go without reminding you of this glorious tweet that you personally wrote after Arnold Schwarzenegger --

GRANHOLM: What are you pulling out? MORGAN: It's when Arnold Schwarzenegger was caught with his trousers down with the nanny. And you tweeted the following. "Another guy governor admits to cheating on his wife. Maybe we should -- we need more women governors. Guys, keep your pants zipped, for Pete's sake."

Strong words, Governor.

GRANHOLM: Well?

MORGAN: Who's Pete?

(LAUGHTER)

GRANHOLM: It's another technical term.

MORGAN: Are you basically implying that only female governors can keep their pants on?

GRANHOLM: I'm just saying that the temptations for female governors are probably just not as great as they are for men.

MORGAN: Really? You never got any good offers?

GRANHOLM: No.

MORGAN: Really?

GRANHOLM: We don't have -- I don't have any staffers coming and putting notes in my pocket.

MORGAN: You never get -- in the whole time you were governor, you never got a single inappropriate approach?

GRANHOLM: You know what the deal is, is that women in power are much less attractive to men, I think, than men in power are attractive to women.

MORGAN: Do you think so?

GRANHOLM: Yes. I do think so.

MORGAN: Is it because you're more terrifying?

GRANHOLM: I just -- I don't think that -- I think that male power and sex go together but women power, it's -- it's just not -- it doesn't have the same ring.

MORGAN: You sound almost disappointed.

GRANHOLM: Not at all. I'm happily married and I'm grateful that I don't have that issue to deal with.

MORGAN: Do you think Obama's going to win?

GRANHOLM: Yes, I do. MORGAN: Do you have any doubts?

GRANHOLM: No, I really don't

MORGAN: Many Democrats at the moment have a doubt? A mounting sense of concern.

(CROSSTALK)

GRANHOLM: Well, only because I've been there. And you know and I wrote this book because I have been there. And I fee like every day I watch this unfolding. And I feel like, deja vu. It's exactly what unfolded in our situation. So I feel like if he's got the right script and he's got the great team around him, he's going to win.

MORGAN: Jennifer Granholm, thank you very much indeed.

GRANHOLM: Very good to be on. Thanks, Piers.

MORGAN: Coming up, Sarah Palin's least favorite human being on planet earth. Joe McGinniss. The primetime exclusive with the controversial author.

(COMMERCIAL BREAK)

MORGAN: My next guest is certainly Sarah Palin's least favorite current person. He's Joe McGinniss, author of a controversial new book "The Rogue: Searching for the real Sarah Palin." And he joins me now.

Welcome.

JOE MCGINNISS, "THE ROGUE: SEARCHING FOR THE REAL SARAH PALIN": Thank you, Piers.

MORGAN: It's been a lively all week for you, hasn't it? Are you taken aback by the reaction to your tome?

MCGINNISS: Well, the book doesn't publish until tomorrow. And most of the reaction is coming from people who haven't read it. They've read one review of it and they've pontificated it as the basis for that, but it's --

MORGAN: Do you like Sarah Palin?

MCGINNISS: You know, I've never met the woman. So whether I like her or not is not the point. The point is how far she's gotten in American politics on the strength of an image and a persona that are entirely false.

MORGAN: I mean what's interesting to me is that you're a very distinguished writer, you've written some terrific books over the years. And you're a respected, reputable journalist. The criticisms against you are on this occasion you sort of dipped into the tabloid mire a little too much. That the sourcing is not on the record -- MCGINNISS: Well, that's it -- that's interesting because if you actually -- this is what happens when "The National Enquirer" steals a copy of your book ahead of time and reads through it and finds four or five supposedly salacious details and trumpets them all over their own tabloid.

MORGAN: Well, to be fair, they're not really supposedly salacious. I mean you do --

MCGINNISS: Well, it depends on your definition of salacious.

MORGAN: Well, let me trot a couple at you and you can respond to the allegation of salaciousness. I mean one of them is that she had a one-night stand with a black basketball player despite being apparently racist. Then we have her snorting cocaine off a barrel while snowboarding. And so on and so on. These are fairly salacious details.

MCGINNISS: Well, I don't know. She was an unmarried woman. And the point of the story about her encounter with the basketball player was that I had heard over and over again that one reason for her racism was that she had an event in her young adulthood where she had a sexual encounter with a black man, and that afterward she freaked out about it.

She became hysterical. She was horrified with herself because of being racist, that she had actually had sex with a black man.

I didn't want to put that story in the book until I could talk to the man involved. And because it was 23 years ago, it was no easy task to track down --

(CROSSTALK)

MORGAN: I mean, you ring him up, he's on the phone, right? The encounter.

MCGINNISS: Yes. We talked on the phone.

MORGAN: Yes. And he's sort of -- I mean it's a bit of an old tabloid trick. It's like -- kind of like, you know, it's the old are you gay, and when they say no, it's, I'm denying being gay.

MCGINNISS: No, no, no.

MORGAN: It is a bit --

MCGINNISS: No, no, no. It's not a bit. Actually you're wrong about that. The question I asked him was the only question I was interested in. Afterward, did she have a bad reaction, did she freak out, was this something that upset her? And he said no, not at all. In fact --

MORGAN: Yes, but that's the point. I mean you say after you had sex with Sarah Palin, did she freak out? He's thinking about the racism part when actually you slipped in the sex part. MCGINNISS: There's nothing to slip in.

MORGAN: Well, I commend the work. I mean --

MCGINNISS: There was nothing to slip in. Let's not go there. I mean --

MORGAN: Well, that's another question altogether.

MCGINNISS: But you know I talked to Glenn yesterday. Actually Saturday he called me.

MORGAN: Glenn Rice, the basketball player.

MCGINNISS: Yes, Glenn Rice. He said that he read that part. He got the book. He said I read that part. He said, that's good, that's all good. That's just what we talked about, that's just how it was.

It's actually a sweet little story. He really liked her. That's the charming part of the story. He said I had kind of a crush on Sarah Palin. There's nothing tawdry about this. And these stories about her freaking out about it and that's a demonstration for racism, that's just not true. He had only good things to say about her.

MORGAN: Todd Palin issued this statement to CNN in response to the book, "The Rogue," last week: "this is a man who has been relentlessly stalking my family, to the point of moving in right next door to us, to harass and spy on us, to satisfy his creepy obsession with my wife. His book is full of disgusting lies, innuendo and smears. Even "the New York Times" called this book dated, petty, and that it chases caustic, unsubstantiated gossip."

MCGINNISS: Well, he's wrong.

MORGAN: You would say that, wouldn't you?

MCGINNISS: Of course, really -- he cannot -- I mean, Todd seriously can't believe that I have an obsession with his wife. Believe me, I'm so sick of Sarah Palin right now that after this couple of weeks is over, I hope to never hear her name again.

I was never obsessed with Sarah Palin. I went out to write a new book about Alaska. She happened to be governor. John McCain happened to pick her as a vice presidential candidate. That made her synonymous with Alaska. My book about Alaska, because of events, became a book about Sarah Palin. There was no obsession on my part.

MORGAN: Part of the family's complaint is that you rented a property right next to theirs for months to do the book, and that you were kind of peering over the garden fence. That's a bit creepy, isn't it?

MCGINNISS: There was no -- to be peering over the fence? That would have been horribly creepy.

MORGAN: You never had a sneaky look? MCGINNISS: I never had any kind of a look.

MORGAN: Why did you want to be next to them?

MCGINNISS: The house was given to me. It was offered to me. What a perfect place to be. I could look at the same view of Lake Lucille as she had --

(CROSS TALK)

MCGINNISS: No The people who were peering at her all last summer were the people who were paying her money from Discovery Channel so they could film her, and her family in supposedly intimate moments for a reality TV show.

MORGAN: Are you honestly telling me that for months on end, having rented the house next to the Palin family, you never once looked at the house? You were looking at a lake?

MCGINNISS: I looked at the house above the fence, if I'm facing in that direction, but I had no interest in what was going on the other side. And I told Todd, by the way, if you -- in the book, you see, Todd comes over to say, what are you doing here? Now do we have to worry about you spying on us?

I said, no. As long as I'm here, that's the one thing you don't have to worry about because I'm not that kind of person. I will tell you this, I gave him a blanket guarantee. I said I'll never put in my book or pass on to anyone else verbally anything that I might happen accidentally to observe or overhear from your side of the fence. So your privacy is totally protected. I promise you I'll put nothing about your side of the fence in my book.

It was a non-issue from the start.

MORGAN: Given the significance and the possible damaging significance of the cocaine revelation, that is not sourced to anybody on the record. I mean, do you regret -- given the furor that kind of material that has caused, do you regret that you didn't go with an on the record source for that? Would it have carried more weight?

MCGINNISS: The Palins have intimidated so many people for so long in the Wasilla area that it's very hard to find people willing to talk about them even in inconsequential ways on the record. They scare people. They threaten people. Even since the book has come out, I've gotten contacted by two of my named sources in the book who said they're now being told they better watch their backs.

MORGAN: Were you threatened?

MCGINNISS: Last summer, I was threatened over and over and over again.

MORGAN: Who by?

MCGINNISS: By people who got my e-mail address from a right wing radio talk show host.

MORGAN: Anybody connected to the Palins?

MCGINNISS: Nobody directly. But Sarah incited that hatred with the lies that she put on her Facebook page and the lies she told to Glenn Beck about me. She did everything she could to incite hatred against me. And she succeeded. I got hundreds if not thousands of threatening e-mails, people threatening my wife, people threatening my grandchildren.

MORGAN: Any death threats?

MCGINNISS: Yes, many death threats.

MORGAN: Against you?

MCGINNISS: Yes. The Wasilla Police Department was keeping a very close watch on my house. And the Alaska State Police were keeping a very close watch on my house because they took those threats very seriously. And this was before Representative Giffords was actually shot by a deranged person.

The Palins marched right up to the border of inciting violence, and stop there and then stand back and say, we had nothing to do with it, if anything happens.

MORGAN: Let's take a break and come back and talk about whether you think she's actually going to run for president, and if she is, why America shouldn't vote for her, which I believe is your position. Sort of guessing.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

GLENN BECK, RADIO TALK SHOW HOST: He's a voyeur. The only reason why he moved there is to be either a peeping Tom and watch your family over the fence, or, B, watch the comings and goings of your family. This is talking and harassment.

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MORGAN: That was Sarah Palin and Glenn Beck on Glenn Beck's radio show. Clearly not a fan of my guest, Joe McGinniss, and his book, "The Rogue, Searching for the Real Sarah Palin."

MCGINNISS: That's outrageous. That's irresponsible. He doesn't know what he's talking about, but he's talking about it in a way -- he's using language to describe me that has nothing to do with the reality. He's accusing me of crimes. Stalking is a crime. He has no right to do that.

MORGAN: I suppose the point is I can't think of a single high profile author ever who has rented a house next to their subject for months on end. It's a bit weird, isn't it?

MCGINNISS: I think it's pretty wonderful.

MORGAN: Well, you would. You're the one who did it. It is a bit weird.

MCGINNISS: I don't think it was weird. It would have been weird if I had said no. The lady calls -- I was about to sign a lease on an apartment in Anchorage. It's 6:00 on a Thursday night in May. I get a call from a woman I don't know at 3:00 that afternoon. She says I have a house in Wasilla --

MORGAN: I know the story. But you didn't have to take it.

MCGINNISS: I would have been crazy not to. That would have been journalistic malpractice.

MORGAN: You call this "the Rogue." And inside there's a little Webster's Revised Unabridged Dictionary definition of Rogue: an elephant that is separated from a heard and roams about alone, at which state it is very savage. In the book, you describe Sarah Palin occasionally as "a clown, a nitwit, a rabid wolf, a lap dancer, a bad mother, a drug abuser, a sex cheat, a bulimic and a religious nut case."

MCGINNISS: I don't think I used the word bulimic.

MORGAN: Right. Other than that, the rest of it's all --

MCGINNISS: No, I didn't use the word sex cheat. Don't attribute to me words that I didn't write.

MORGAN: But you accused her of cheating in a sexual way.

MCGINNISS: I mentioned that "the National Enquirer" had printed a story about an alleged affair that she had.

MORGAN: Do you think she had the affair?

MCGINNISS: I have no idea except what I read it in "the National Enquirer" and --

MORGAN: But as a prestigious journalist -- let me ask you, as a prestigious journalist, do you just willy-nilly repeat "National Enquirer" scoops even if you can't substantiate them?

MCGINNISS: No, but I substantiated this.

MORGAN: So it is true?

MCGINNISS: I substantiated it by talking to many, many people.

MORGAN: So it is true?

MCGINNISS: Yes, it is true.

MORGAN: So she was a sex cheat.

MCGINNISS: She had an affair.

MORGAN: Is that the same as being a sex cheat?

MCGINNISS: That's your terminology.

MORGAN: Is it or not?

MCGINNISS: She made a mistake.

MORGAN: She cheated sexually.

MCGINNISS: If you want to say that.

MORGAN: I don't want to say that. Did you say that in the book?

MCGINNISS: No, I didn't.

MORGAN: You just said you did.

MCGINNISS: I said she had an affair. No, I didn't. This is like Monty Python.

MORGAN: You substantiated the affair, but that doesn't make her a sex cheat.

MCGINNISS: Well, that's not language that I use.

MORGAN: I see. So she had an affair. On the bulimic, you said she had eating disorders.

MCGINNISS: No, I don't.

MORGAN: Well, you allude to them.

MCGINNISS: No. I describe one incident that was described to me where she came in after binging at a fast food restaurant, and went into the bathroom and came out ten minutes later with her knuckles red and her eyes popping.

MORGAN: What was the implication you were trying to make.

MCGINNISS: It's an inference that anybody can draw if they want to draw an inference.

MORGAN: What was the inference? You wrote the book?

MCGINNISS: I'm not asking anyone to draw any particular inference.

MORGAN: Of course you are.

MCGINNISS: No, I'm not.

MORGAN: You are writing a book about Sarah Palin and you want us to draw the inference that she had an eating disorder.

MCGINNISS: I want to report --

MORGAN: That she crawled out of that toilet with her knuckles raw from having been vomiting in the loo.

MCGINNISS: You're a good writer, you know, much more colorful than I am.

MORGAN: Let me ask you then, in simple language that you feel comfortable, what was the inference you were trying to make us draw from that anecdote?

MCGINNISS: I wasn't trying to make anyone draw any inference. But I found it an interesting fact because many other people have suggested that she has an eating disorder. I didn't find any evidence of it beyond one anecdote that was repeated to me, which I thought, because it was verifiable by talking to other people who explained that Sarah is sometimes a little bit strange about food -- it is not an area that I pursued, because it wasn't an area that I was very interested in.

MORGAN: It is an area that is published in the book and is therefore being picked up. So you did pursue it.

MCGINNISS: I pursued it to the point of putting -- I wrote it.

MORGAN: Do you think she's going to run as president?

MCGINNISS: No, I don't. I could be wrong. I mean --

MORGAN: You still hope she does for book sales, right?

MCGINNISS: At this point, I'm not sure it matters.

MORGAN: Got to go. Thank you very much indeed.

Next, the prime minister of Norway on his narrow escape from a brutal terror attack.

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MORGAN: The man who admits he killed 77 people in a brutal terror attack in Norway this summer was back in court today. Anders Breivik claimed being in solitary confinement was a form of torture. The judge ruled he will remain there for another month.

Joining me now is Norway's prime minister, Jens Stoltenberg. Prime Minister, thank you very much for joining me. And my sincere condolences to you and your people for this terrible atrocity.

Have you been able to get your head around what happened, to understand why it happened?

JENS STOLTENBERG, PRIME MINISTER OF NORWAY: Not fully. I think no one can really understand what happened the 22nd of July in Norway. We have been prepared for terrorist attacks. But to see one man do so much harm to so many people is more than I think anyone could imagine. MORGAN: Take me back to that terrible day. Where were you when you first heard of the first attack, which is, obviously, the explosion in the center, near your office.

STOLTENBERG: I was in my office in the house where I live, which is not the office where I usually work, the prime minister's office. And I was actually sitting there preparing my speech in which I was going to deliver at the youth camp that was attacked on the island, that was attacked later on.

And then I was phoned by some people in my office, and they asked me if I was hurt. And I said, I didn't understand actually why they asked me, because they were in the building and they were moving out of the building, where I -- out to the government building where I had my office.

And then two of the people came to my house, and then I saw them. They had wounds on their heads and they had blood on their clothes. And that was actually when I understood the magnitude, because these people were on the 16th floor. Then I understand that people --

MORGAN: Would you normally have been in your office that day?

STOLTENBERG: Yes, because it was a working day.

MORGAN: Would you have been hurt, do you know?

STOLTENBERG: I don't think so, because I was in the -- my office is in the 16th and the 17th floor. As far as I know, no one that high in the building were killed, but people were wounded. So, of course, it was a risk also so high in the building. But if I were on my way out, people on the ground floor, they were killed and lost their lives.

MORGAN: Obviously, it then got dramatically worse. The island that you were supposed to be going to a few hours later came under this extraordinary assault with this man just indiscriminately murdering anybody he could find, many of them very young people. Where did you hear about that and what was your reaction?

STOLTENBERG: I was phoned by some of the people that escaped the island. And I knew many of them. I was supposed to go there the day after. And I have spent every summer since 1974 on that island because this is a big youth camp and I participate. I was leader of the youth organization back in the 1980s.

And people phoned us and told us that the man was going around shooting. And again, it was hard to understand the magnitude and what was really going on. We were afraid it was more than one. And then, of course, the first estimates was it was ten people killed. But later on, we were informed that it was much more.

MORGAN: Did you know any of the people who died?

STOLTENBERG: Yes, I know several of the people who died. Some of them I've known since the 1980s. And I know many of their parents, their relatives. They lost their loved ones. So for me this has been part of a strong personal, emotional situation to live through. But also then to combine it with being the prime minister and trying to convey both my personal feelings, my comfort, condolences to those who have been harmed, but also to, at the same time, be the prime minister of the country which has been attacked in such a brutal way.

MORGAN: There have been two criticisms really about the authorities, I guess. One is there was a delay in responding to what was happening on the island. How do you answer that?

STOLTENBERG: The main answer is that we are going to go through everything that happened, the response of the police, the health system, everything. There's a -- we have established a commission. And they're going to present the report in some months or a year from now. And I will be surprised if we, after such a dramatic event, do not find anything that could have been done in a better way.

MORGAN: The other criticism, I guess, is that there were lots of pieces of evidence about this character, from Facebook and Youtube videos and so on, suggesting he was a pretty nasty piece of work who had malicious intent. Was there a failure, do you think, on the intelligence side, to not pick up on somebody like him earlier?

STOLTENBERG: Again, I think it will be wrong to jump to conclusions. So that's one of the issues which we certainly go through. The independent commission is going to go through and also the media is already looking into. I think that's good to have an open debate on how did our intelligence sources react to information they got beforehand.

At the same time, I think we have to understand that this is as far, as you know, the act of one man, a lonely wolf. The problem with detecting that kind of terrorism is that there's no organization. There's no information. So it's hard to detect when it's only one man working by himself.

MORGAN: Your country suffered its worst ever terrorist outrage that day. What are your feelings toward the man that did this?

STOLTENBERG: Actually, I don't have so much feelings about him at all. I have concentrated myself, my feelings on those who lost their loved ones, to give them care, sympathy, and I have not devoted so much my -- how should I say -- thinking or focus to that man. I lead him to the courts, to the -- to our -- to the judges to decide. And he will get the sentence he deserves.

MORGAN: We're going to take a short break. When we come back, I want to talk to you about the U.N. You're here in New York for the big conference. Specifically about President Obama's announcement today that his way of tackling the financial crisis is going to be by primarily abased by going after the rich.

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MORGAN: Back now with my guest, Jens Stoltenberg, the prime minister of Norway. Prime minister, you're here in New York for the United Nations General Assembly. But I want to talk to you about President Obama, because he's come to New York today. It's obviously a big day for him and the Assembly.

He's chosen today to announce his attack now on the financial crisis in America, which is to tax the rich in a much heavier way. What is your reaction to that as a world leader?

STOLTENBERG: As prime minister of Norway, I fully understand him, because compared to, for instance, Norway, rich people pay much less taxes in the U.S. than in Norway.

MORGAN: Do they? What is the comparative taxation?

STOLTENBERG: In Norway, the average tax on people earning more than one million will be around 50 percent or something.

MORGAN: So significantly higher?

STOLTENBERG: Yeah. So I understand that there has to be a balance. I think everyone understands that there has to be a balance between income and expenditures. When you have a deficit, like you now have in the United States, there are two ways of doing something with that. You can reduce expenditures. I think that's needed.

At the same time, it might be a good idea also to increase income. And those who have most should most probably also contribute a bit more than they do today.

MORGAN: How concerned are you about what's happening with the European Union. I mean, look at Greece, which is on the verge of defaulting potentially. There are other countries in very precarious financial situations in the Union. Many in America are saying, what is happening to Europe? What's your overview?

STOLTENBERG: I'm concerned. There are many reasons to be concerned, particularly because there is a dangerous trap, in a way, that many European economists have moved into. They have high unemployment. At the same time, they have low growth.

Normally, the answer to that should be to increase public expenditures to stimulate growth. That's not possible, because they have so high debts. So it's a serious situation. And we all have to support efforts by the IMF and also by the European Union to organize packages, economic assistance to help those countries who are really in deep trouble.

MORGAN: You're making a speech at the Clinton Global Initiative about climate change. I'm sure as you're aware, many of the Republican candidates for the nomination to take on the president in the next election in America believe that climate change is an invention of mad scientists. How would you feel if one of them became president?

STOLTENBERG: I believe that it's dangerous to say that all those scientists are telling us that this is dangerous were wrong. Of course, we can never be certain. But to wait until we are certain can be too late. I think it's a good approach to do something and to have some kind of insurance -- to be willing to pay an insurance premium to reduce this -- to reduce the risk of really dangerous consequences of global warming.

MORGAN: Prime minister, thank you very much indeed.

STOLTENBERG: Thank you so much.

MORGAN: That was Jens Stoltenberg, the prime minister of Norway. That's all for us tonight. "AC 360" starts right now.