Return to Transcripts main page


Flat Tax Plan; Earthquake Survivors; Michael Jackson Trial

Aired October 25, 2011 - 19:00   ET


ERIN BURNETT, HOST: We're on the "Front Line" in Turkey to celebrate as they pull a 2-week-old baby from the rubble, a moment of joy after a devastating earthquake.

And Herman Cain's smoking new campaign ad. There is something you don't know about it and we can't resist telling you what it is and the "Bottom Line" of Rick Perry's tax plan.

Let's go OUTFRONT.

Hello, everyone. I'm Erin Burnett. OUTFRONT tonight, a flat tax from presidential candidate, Rick Perry.


GOV. RICK PERRY (R), PRESIDENTIAL CANDIDATE: It is time to pass a tax that is flat and fair and that frees our employers and our people to invest and grow and prosper.


BURNETT: He calls it flat. But the bottom line is it isn't really. The right word is sort of lumpy. Here's why. A true flat tax would mean all Americans start paying a flat tax of 20 percent. That's Perry's rate on their income with no deductions. That's not how this works though. Perry allows you to keep your current rate or pick his new 20 percent rate.

Now by allowing people to remain in their current tax bracket, Americans will continue to pay different rates. There are six federal income tax rates now. Perry's new plan because we don't currently have a 20 will make it seven. That's lumpy. Second, a poor flat tax doesn't allow for deductions. Perry's does, mortgage interest, charitable contributions, dependents, capital gains, dividends, state and local taxes.

All right, now we're joking a little. We all want bold ideas and politically you can't just wake up and throw out an old system and go to a truly flat tax even if you wanted one overnight. And to tell you the truth, there is something appealing about this.


PERRY: The best representation in my plan is this postcard. This is the size of what we're talking about right here. (END VIDEO CLIP)

BURNETT: But does this plan go in the right direction or not? David Malpass is one of the architects of the plan. He's the president Encima Global, ran for Senate in New York -- David great to see you and appreciate your taking the time to come and explain this. Let me just start with the big question, why did you make the decision -- Governor Perry make the decision to allow people to pick between the current tax system and his new flat tax rate?

DAVID MALPASS, ECONOMIC ADVISER TO GOV. PERRY: Hi, Erin. Well we want to make sure that no one really is going to pay a higher tax amount than what they are in the current system, so the current -- the easiest way to do that is give them the choice. A lot of this program is about freedom, letting people have freedom to choose with their own money.

BURNETT: Is there any situation in which a wealthy person would pay more in taxes than they do right now or it sounds like you're saying no increase for them at all?

MALPASS: Actually, if they make more money, which I think they will, under this system, they're going to pay more tax. The same is true of somebody who's unemployed right now. This kind of a plan is going to create millions and millions of jobs. And all of those people will pay more taxes than what they're paying right now, which is nothing, if they're unemployed.

BURNETT: All right, so and I know a lot of -- in all of these plans, it comes down to economic growth and jobs. So I know that is an unknown in one situation, but it does seem, David that the people are going to comparison shop, you know they'll pick between the old and new. They're going to pick the one where they pay the least. That would just be the rational thing to do. So if most people get a tax cut, we are going to have less revenue, right?

MALPASS: I think most people are going to choose the simple program because they're going to pay less taxes under it and it's going to be a lot easier. And so the savings in terms of paperwork is gigantic. So I don't think that's actually going to become a big problem in this kind of a changeover system. I think people will say, well, it won't collect enough money.

And that gets into do you really want Washington to keep collecting? They already collect over $2 trillion every year. And so that's the argument that we need to have. The whole concept of this program is cut spending and taxes, balance the budget, and get the economy to grow. Cut, balance and grow and that's a powerful concept. You put all of those things together and you create millions and millions of jobs.

BURNETT: Right, so you're saying there will be less revenue, you just think you'll make up for it in terms of the spending cuts that you've put in here, which I know is $100 billion in year one.

MALPASS: I don't think there'll be less revenue because I think there'll be more people working, so I'm sorry. I'm disagreeing a little with you on that.


MALPASS: People will pay a lower tax rate than before, but there's going to be a lot of loopholes that are closed on the corporate side included. You know a huge number of the complexity of the code is just going to go away, those loopholes. And that means the people that are benefiting from those, largely it's going to be Washington D.C. that's benefiting from the loopholes are not going to make as much money as they did under the current complicated system.

BURNETT: Where do the cuts come from? I'm curious because in year one and that was the year where the governor gave the 100- billion-dollar figure. Based off last year's budget that's about three percent of the total budget, interestingly it's half as much as we will spend in interest on our debt. But it doesn't sound like much. And I'm wondering where the cuts are because you said non- defense discretionary which does leave you with programs that affect the poor, veterans and the homeless.

MALPASS: You know I focus mostly on the tax side. As you think about where budget cuts can come, I think we need a real upheaval in Washington in the culture of spending and so that means every cabinet department. I think what President Obama should be doing is calling in his cabinet and asking each one of the cabinet officers to propose 15 percent, you know, a big number cut, and then weed through that because there's a huge number of redundant agencies.

The U.S. government now has 200 independent agencies, meaning they're out from under much oversight. And that's very dangerous. So it's an out of control organization. And so I don't think it's right to -- so I think there can be lots and lots of cuts right off the bat in the first 100 day savings.

BURNETT: But the bottom line is in terms of the principle, the philosophy that you have here it's fair to say that this is one of those classic economic arguments, you think just by cutting taxes economic growth will grow so much that you will make up for the lost revenue in rate in terms just of economic growth, correct --

MALPASS: Remember, it's not just cutting taxes. It's cutting spending as well. And that's a critical part of this mix and also the regulatory component. The economy -- we have a wonderful economy that's being weighed down by friction and so it's stalled. And so the idea is to release that economy and that can be done with taxes, spending and regulation, all three working together.

BURNETT: All right, well David Malpass, good to see you and thank you very much for taking the time --

MALPASS: Thank you.

BURNETT: -- coming on, making a case for it. When you took a poll this afternoon, almost half of Americans have a favorable view of the flat tax. Forty-seven percent in a poll this afternoon, 36 percent hold a favorable view of the 9-9-9. So is this plan going to be enough to save Perry's candidacy?

David Gergen is a CNN political analyst. John Avlon is a CNN contributor, senior columnist for "Newsweek" and "The Daily Beast". I brought along, just in case --


BURNETT: OK, the postcards. Now to be fair, the postcard does expand, both sides and when I compared the font -- I have it over here -- it really is the 1040 easy because this is a very little font. You have to use a magnifying glass. But all jokes aside, what do you think, John?

JOHN AVLON, CNN CONTRIBUTOR: Look, I like a one page. I like a flatter simpler tax code. I think the fact that he's made it optional actually makes it an easier sell, because it's not an imposition on all Americans and it doesn't bother me that he's kept a couple of deductions, politically necessary and I think it's probably the right policy.

BURNETT: And he did try to address the inevitable claims of regressivity by saying I'm not going to tax Social Security benefits anymore. I mean it was clear he was prepared for that and he's trying.


BURNETT: What do you think? Is that going to succeed?

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: I don't think it's going to succeed in a general election. I think it's going to help him in the Republican primaries.


GERGEN: He's going -- the conservative base of the Republican Party will like this plan. Many conservatives have always wanted a flat tax. This is a bold plan. I believe it's a radical plan and they're go rally to him. I think it will help to re-energize his campaign. He's also brought on some strong advisers now. Having said that, the left is going to go after this with pitchforks --

BURNETT: Yes, of course.

GERGEN: Because what they see is, yes -- what are you doing? You're lowering taxes on the wealthy. After all this debate about whether we should raise taxes on the wealthy, he comes along and says we ought to lower taxes on the wealthy. And how do you -- with all those deficits, how do you pay for it? You cut government spending. You cut services on the middle class and the poor.


GERGEN: Now is that a plan that you think a majority of Americans are going to rally to once they understand that?

BURNETT: Sorry, I'm reaching -- I wanted to get --


GERGEN: That's the politics of it. I think it will help him with Republicans in the primary. I think -- I -- we do need tax reform in this country. He's bold to go after it. But at the end of the day, we have the most unequal country we've had since Herbert Hoover. The gap between the wealthy and everybody else is the biggest we have seen, especially people at the bottom is the biggest we've seen. We are the most -- we have the greatest inequality of any developed nation. Are we really going to pursue a policy that's going to make things more unequal? The only -- only -- we have to wait and see one last thing -- I'm sorry, John -- we have to see the economists assess this. If it really brings a lot of growth that would be --

BURNETT: Right, but that's always the big question mark.


BURNETT: I mean you know the jobs created is always --

AVLON: And this is not -- every tax cut does not pay for itself. And the big Achilles heel in this plan of course it's geared to the primary voters not the general electorate, but it doesn't do anything to deal with the deficits or the debt, not really. It has a bank shot and here's the real problem. The Tea Party allegedly was all about dealing with the generational theft of deficits and the debt and this is all about tax cuts. Tax cut theology is winning the policy debate in the Republican primary right now.

BURNETT: Right and they said what though? He's going to cap -- he's going to cap the budget, federal spending at 18 percent of GDP. Now I did the math on that.


BURNETT: If you look at the most recent budget and you know we all know unfortunately we didn't have one this year, $882 billion would have been how much we would have had to cut out of that budget --

GERGEN: Exactly.

BURNETT: -- to cap the spending at 18 percent of GDP. That isn't -- you're not going to get there through cuts in discretionary.

AVLON: Exactly.

GERGEN: You're not and it's going to have to come out of Medicare.

BURNETT: Yes which is --

GERGEN: If you protect Social Security you have to go after Medicare.

AVLON: Yes and they've all been gun-shy about specifics on entitlement reform.


AVLON: Look, if this is a base-pleasing opening bid to move tax reform forward, great. If his rhetoric about closing corporate loopholes can help inspire the super committee to find some courage on this, great. But this is not a balanced plan in terms of dealing with the deficit and the debt and it is largely silent on entitlement reform beyond private accounts, which itself has been litigated to please the base, but doesn't deal with what --


GERGEN: Or you don't think it's --

AVLON: I think it's a good plan politically. I think it's a good opening bid to actually move us towards tax reform. It's not a general election bid.

BURNETT: All right. Thanks to both of you. We appreciate it.

OUTFRONT next, a 2-week-old, yes, baby rescued from the rubble in Turkey. We're going to show you the pictures of the rescue and the latest in the Michael Jackson trial. A witness got sick on the stand and what does Herman Cain have in common with a mobile home salesman? We cannot resist showing you.


BURNETT: The number tonight, 153. That is how many miles per hour over the speed limit Formula 1 racers will be driving when they race down Imperial Boulevard in New Jersey. On average, F1 cars travel at speeds of 188 miles an hour. The speed limit on that road is a paltry 35. The Formula 1 Grand Prix of America, Court Imperial will take place on June -- in June of 2013 (INAUDIBLE) New Jersey Governor Chris Christie.

Well an amazing rescue today at the site of the devastating earthquake in Turkey. Emergency workers pulled a 2-week-old baby girl from the rubble. CNN's Diana Magnay is reporting from the scene (INAUDIBLE) Ercis (ph), Turkey and I spoke to her just a couple of moments before the show and I asked her to describe what was a miraculous event.


DIANA MAGNAY, CNN CORRESPONDENT: Erin, well that's exactly how it felt to witness this a little 14-year-old -- 14-day-old baby girl taken from the rubble. Basically what happened was at about 8:00 or 9:00 this morning the rescue workers working on this site behind me heard some noises. They heard some sounds. They managed to make contact with the mother of this little baby girl and they found out that the baby girl, the mother, and the paternal grandmother were all trapped in the same spot.

And so they worked to try and carve a tunnel through the debris to the three of them. And initially they only managed to carve a very small narrow tunnel through which the mother was able to give a rescuer the little baby girl. And the rescuer worker was chosen because he was so thin and small that he could actually make it through the tunnel. We spoke to him and he said you know I've done this job for 12 years. I've never pulled someone out alive from the rubble and this was an amazing moment for me.

When the mother handed that child over into my hands, it felt like I was having another child myself. He already has a little boy and then they worked on trying to widen the tunnel and the area where the two, the mother and the grandmother were trapped and after a couple of hours they managed to bring them out also in fairly quick succession. It really was an extraordinary moment, Erin, an extraordinary morning.

BURNETT: It really -- it really is and just amazing to think of a child that young and being able to survive without having had food, like I said, it's such a miracle. But Diana, obviously, I see the work going on around you. It's 24 hours. We're all well aware, a lot of the buildings, they're not built for this sort of thing to happen and the death count keeps going higher. Do you have any sense from the emergency workers you've spoken to of how much longer they can keep going, how many more survivors they think they'll find or how high the death toll may go?

MAGNAY: Well that is the trouble. You see the cold at night for example is a complicating factor also. And but I spoke to one rescue worker today who was brought in from Istanbul, he's overseeing the work on various of these sites and he said I have been sent to earthquake zones around the world after disasters. I was in Japan after the tsunami and people can still be brought alive out of the rubble between 17 and 20 days after an earthquake like this.

So there is no reason to give up hope at this point. And although the rescue workers combing through debris are more often than not unfortunately pulling out dead bodies, there is still hope that they can pull survivors out also and just today at another site, a 10- year-old little girl was dragged out, too, Erin. I just want to add one more little detail about the baby though, which I think is really phenomenal. She was actually born premature. She was three weeks premature. So she should theoretically still have been in her mother's stomach rather than being a survivor of a huge earthquake in her hometown, extraordinary, Erin.

BURNETT: Well Diana, thanks so much. Hope you are able to get a little bit of sleep there.



UNIDENTIFIED FEMALE: I'm feeling really, really dizzy and I'm sorry. My vision just (INAUDIBLE) a little blurred, so if you can just give me a minute.

(END VIDEO CLIP) BURNETT: The nurse who treated Michael Jackson for insomnia took more than a minute. The judge let her leave the stand for an hour. She became ill during testimony. Ted Rowlands was there. He joins us from Los Angeles. So Ted, I assume she's OK, right?

TED ROWLANDS, CNN CORRESPONDENT: Oh, absolutely. She needed about an hour to compose herself and then she got back on the stand, and was on the stand for a good part of the morning.

BURNETT: All right, so the judge used these delays to make a pretty crucial ruling, which was one that means jurors will not see the financial terms of Jackson's comeback concert. How serious is that decision to the defense?

ROWLANDS: Well they wanted to establish that Michael Jackson was under excruciating financial pressure here because the contract that he had signed with AEG (ph) was that he would perform these concerts and if he didn't, he was on the hook for all of the production costs up until to the point where the concerts were pulled. And at that point where they were having these discussions and things were going badly, some 30 to $40 million had been spent. So not only would Jackson had not have made a lot of money, he would have owed a ton and he had financial problems. They wanted it in. The judge said no.

BURNETT: All right. Ted, thank you very much. We'll keep an eye on this and see obviously if the testimony finishes this week. Trial has gone longer than people thought.

Still OUTFRONT, Herman Cain's new ad even stranger than you think, we cannot resist showing you exactly why we can't resist it. Plus, President Obama courting the Hispanic vote and he got Antonio Banderas to help out -- could be worse things in life and Jeffrey Kluger here to talk about sibling rivalry.


BURNETT: And now, a story we can't resist. Herman Cain released a strange new campaign ad this week, via YouTube. In the ad, one of Cain's advisers, Mark Block (ph), is seen discussing the campaign before taking a drag on a cigarette and blowing smoke in the camera. And most people commented on how strange it was for someone to be smoking in a campaign ad, but now (INAUDIBLE) we didn't find that that unusual, problematic. What seemed to us was just how familiar the ad seemed and then we realized why that is.

There is a marketing duo called Rhett and Link (ph) that creates really cool commercials for struggling local businesses around the country. One of the commercials they produced in 2009 was for a mobile home company in Alabama called Cullman Liquidation. We put the two ads side by side, mobile home and Herman Cain we noticed a number of striking similarities. We're not sure if it's an eerie coincidence or if the same ad company helped Herman Cain with this one. Cain camp won't confirm who did the ad. But we can't resist showing you the two ads without any edits and letting you decide.

(BEGIN VIDEO CLIP) UNIDENTIFIED MALE: Mark Block (ph) here, since January, I've had the privilege of being the chief of staff to Herman Cain and the chief operating officer of the Friends (INAUDIBLE) Herman Cain. Tomorrow is one day closer to the White House. I really believe that Herman Cain will put united back in the United States of America. And if I didn't believe that, I wouldn't be here.

We've run a campaign like nobody's ever seen, but then America's never seen a candidate like Herman Cain. We need you to get involved, because together, we can do this. We can take this country back.


UNIDENTIFIED FEMALE SINGING: I am America. One voice united we stand. I am America --


BURNETT: We just couldn't resist.

Still OUTFRONT, the "OutFront 5". Obama's must win.


BARACK OBAMA (D-IL), PRESIDENT OF THE UNITED STATES: What happens in this year is going to be more consequential, more important to the future of our kids and our grandchildren than just about any election that we've seen in a very long time.


BURNETT: Where is baby Lisa?

UNIDENTIFIED MALE: I do not think she had anything to do with it or him at this time.


BURNETT: Oldest, youngest or middle child?


BURNETT: Do you have any guess as to what I am in my birth order?


BURNETT: All of this OUTFRONT in our second half.


BURNETT: We start the second half of our show with stories we care about where we focus on our own reporting, do the work and find the "OutFront 5". Number one tonight: Rick Perry's flat tax. He calls it flat. The bottom line is it isn't really, the right word is lumpy. Here is one reason why. A true flat tax would mean all Americans start paying a flat 20 percent, that's Perry's rate, on their income with deductions only for dependents.

That's not how this works though. Perry allows you to keep your current rate or pick his new 20 percent rate by allowing people to pick keep their current tax brackets or not. Americans can pay up to seven different rates. The plan though pretty popular, we're going to have more on that in a moment.

Number two: Hurricane Rina gaining strength off the coast of Mexico. Right now Rina has wind speeds * ERIN BURNETT, HOST: By allowing people to keep their current tax brackets or not, Americans will pay up to seven different rates. The plan, though, is pretty popular. We're going to have more on that in a moment.

Number two: hurricane Rina gaining strength off the coast of Mexico. Right now, Rina has wind speeds just one mile an hour shy of reaching category 3. According to the CNN severe weather team, Rina will make landfall tomorrow night near Cancun. It will then lose strength heading towards the Florida Keys this weekend.

Number three: stocks fell sharply and it was especially pronounced in the last hour of trading. The Dow closed lower by 207 points. NASDAQ and S&P both down more than 2 percent. Dave Rovelli of Canaccord Genuity tells us the focus is all on Europe.

Tomorrow, leaders there supposed to reveal a plan to fix the region's debt crisis. There are doubts that they will be able to get a deal done in time. Yes, we know this feels like deja vu. It is too bad, the whole world needs Europe to get this right and get it right now.

Number four: price of the previously owned homes climbed a little bit, 0.2 percent in August, according to the Case-Shiller benchmark index. That's not great. Year to year, the city index is actually down 4 percent. It shows the housing market has a long way to go.

Now, Detroit stood out, number four, with a nearly 3 percent gain in prices from last year. We did the work. We found the median sale home price in Detroit in September was $52,000.

Well, it has been 81 days since America lost its top credit rating. What are we doing to get it back?

Right now, not even enough to make consumers feel better about the economy. Consumer confidence fell to its lowest level since March 2009 this morning.

President Obama says he likes being the underdog. And judging by his appearance on Jay Leno tonight, he's not afraid of the competition yet.


JAY LENO, COMEDIAN: Have you been watching the GOP debates?

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I'm going to wait until everybody's voted off the island.


OBAMA: Once they narrow it down to one or two, I'll start paying attention.


BURNETT: And while he's playing it cool on TV, he's also spending a lot of time trying to rebuild his numbers, with one group he used to be able to count on, Hispanics. A Gallup poll shows 49 percent of Hispanic voters approve of the president's job. That's down from nearly 70 percent the Latino population that voted for him in 2008.

Could their frustration cost him the election?

Former Governor of New Mexico, Bill Richardson is OUTFRONT tonight to help break this down.

Governor, great to see you -- hopefully, next time in person.

Are you concerned about the president's polling numbers among Hispanics?

BILL RICHARDSON (D), FORMER NEW MEXICO GOVERNOR: Well, I'm a little concerned. But in the end, I believe that he's going to get that close to 70 percent. He got 67 last time.

A Republican has to get over 35 percent. And the reason they're not going to get over 35 percent is all the Republican candidates except maybe Governor Perry are very harsh on comprehensive immigration. They appear to be against the DREAM Act that gives educational benefits to kids of immigrant. They appear to be closing the border -- sending very negative messages.

While the president has taken some positive positions on reforming immigration, like President Bush did, like the DREAM Act, supporting educational benefits, jobs for Latinos. You know, he's very strong with the Latino community. I think that approval rating once the election gets closer is going to move up.

BURNETT: And let me ask you about this because, obviously, you point out the DREAM Act and things like that. I was talking to someone this weekend who is a diehard Obama supporter and was really frustrated with him on immigration. Obviously, it's going to be a key issue on a lot of these states.

But here are the numbers. We look them up. President Obama has deported more than a million illegal immigrants since he took the presidency, 300,000 more than George W. Bush over the same time frame.

Forgetting the impact that those numbers may have on votes, is the president doing the right thing?

RICHARDSON: Well, he has significantly changed that policy to basically say we are drastically reducing the number of deportations. I was concerned about that.

But, in the end, Erin, what the president has said is, look, we have to increase border security. There's a lot of problems, cartels, violence.

Secondly, that he's for what is called a legalization program. Twelve million illegal immigrants in the United States. What are you going to do? You're going to deport them? That's not going to work.

So, you give them responsibility like make sure they learn English, pay back taxes, go through a background check, get rid of those that have background problems, that have criminal problems -- a lot of these deportations were people with criminal backgrounds.

So, I think he's got a good record. And the Republicans have a terrible record, except for Governor Perry, who has lost votes with Republicans by saying he's for the DREAM Act for educational benefits for immigrants. All of that is noticed.

Let's say if Governor Romney is the nominee, I can see all these anti-immigrant positions he's taken in debates played back in the general election --


RICHARDSON: -- that's not -- that's not going to help in key states like Florida, New Mexico, Nevada, Arizona, Colorado.

BURNETT: What about Marco Rubio from Florida? What if he put Marco Rubio on his ticket? Would that -- does that matter now that you've got this new generation of young Hispanics, some of whom are prominent Republicans?

RICHARDSON: Well, you know, you got to give the Republicans credit. They have three elected officials on a state-wide basis, Rubio. They've got one governor in my state and a governor in Nevada.

Yes, I think putting Rubio on, I'd be concerned about that. But president -- voters vote on the presidential candidate. If it's Romney versus Obama, I believe that Obama, because of his positive stance on Latinos and Hispanics.

He's appointed a lot of Hispanics in his administration. He's take a lot of positive position on jobs, on education. The health care bill is going to be a plus. And he's on the right side of the immigration debate.

The problem is Republicans in Congress have blocked on any action. So, you can't really blame the president for taking these principle positions.

BURNETT: All right. Well, thank you very much, Governor Richardson. Always a pleasure to see you, sir.

RICHARDSON: Thank you, Erin. Nice to be with you. BURNETT: All right. And the Hispanic is an important one. But here's another thing the president is probably pretty interested in tonight. Almost half Americans have a favorable view of the flat tax idea. That's from a new ABC/"Washington Post" poll. It's not about Rick Perry's version of a flat tax, to be clear, but just about a flat tax as a concept.

Thirty-six percent had a positive view as you saw of the 9-9-9 plan. Now, the data came out just a few hours after Rick Perry unveiled his plan.

And we're bringing in two people who know the math and are used to sparring with each other.

Douglas Holtz-Eakin is former economic adviser to John McCain. He's already smiling. He's president of the American Action Forum.

Austan Goolsbee, economic advisor to President Barack Obama's 2008 campaign, former chairman of the Council of Economic Advisors.

I miss seeing your two heads like this.


BURNETT: So, we had to have you back.

Austan Goolsbee, does it surprise you that 47 percent of Americans have a positive view of a flat tax?

AUSTAN GOOLSBEE, FORMER CHAIRMAN, COUNCIL OF ECONOMIC ADVISORS: No, not especially because I think in these polls, they are confusing radical simplification with reducing the top marginal rates. Most polls -- and we've known this for 20 years. We're kind of back to the future on this stuff.

When you actually show that the top 1 percent of people get a gigantic tax cut and 90 percent of people's taxes go up, suddenly the support for the flat tax goes way down.

BURNETT: And, Doug Holtz-Eakin, he raises a really good point. I mean, the whole point of his plan, as David Malpass, who is one of the architects of it, is to lower tax. That includes lowering taxes on the wealthiest Americans.

I guess Rick Perry is trying to make up for that by not taxing Social Security benefits, by saying that essentially people under $50,000 won't pay income tax.

But does that feel like a drop in the bucket?

DOUGLAS HOLTZ-EAKIN, AMERICAN ACTION FORUM: Well, I think the key is going to be two things. Number one: the degree to which the Democratic Party regains its roots. It was Democrats who passed the '86 tax reform which had a top tax rate of only 28 percent, 97-3 in the U.S. Senate. And number two, how does Governor Perry address progressivity on the spending side where ultimately we see so much of the progressivity of the federal budget.

So, there are always two sides to this equation. The flat tax has always been popular because it meets a standard of fairness and it does in fact address one of the pressing needs of the U.S. economy, a tax code and policies in general which at the margin favor growth because without growth and jobs, none of the other objectives are going to be met.

BURNETT: Austan, let me ask you, though, from the president's perspective. He's got to be frustrated, right? He was the one who came out earlier this year and said, I want to cut American corporate rates and close loopholes, which now has become something that the Republicans are saying. But he was the one first to say it and now sort of he's not getting any credit politically, it doesn't feel like, for massive tax reform proposals.

GOOLSBEE: Well, I can't speak for the president. I'm back in Chicago.

But I will say, look, if Republicans want to go broaden the base, get rid of loopholes, get rid of deductions and get the corporate rate down to make it more competitive internationally, I think the president -- he is absolutely on record for that. They ought to do that in a bipartisan way.

Now, in some of the proposals that you've seen coming out of the Republican side, they don't actually do that. What they do is they start with gigantic cuts to the corporate rate that are not paid for by eliminating loopholes, and therefore, they lose something like a trillion-plus dollars over the budget window.

We clearly can't afford that when we've got a deficit like we've been running.

BURNETT: Oh, Dough, I saw you got all excited there. I thought you were going to jump in on it.

HOLTZ-EAKIN: No. Well, I'm trying to be polite. But I think what the president's paying for is the fact that, you know, Paul Volcker led a commission which delivered a report. Erskine Bowles led a commission and delivered a report. Both of those reports are collecting dust.

And they were specific plans with specific reforms that would have, in fact, addressed some of these issues. The president has talked, but he's had the opportunity for action and passed on it. I think that's what he's paying for.

BURNETT: All right. Well, thanks very much to both of you. We appreciate it. Austan and Doug, thanks for coming back. Next time, though, you know, there is no need to be shy. All right, no need to be shy?

GOOLSBEE: Hey, we're pals.

BURNETT: That's why I love it. You fight but with kind spirit. All right. Thank you, guys.


Gadhafi is dead and now buried. What was the reaction from the people in Libya and what does it mean?

And the latest in the baby Lisa case. Three weeks since the baby disappeared. We're going to talk to a private investigator who is on that case tonight.

And the sibling effect. Jeffrey Kluger tells us what we can learn -- no. No, no, no, from the Burnetts, three girls. We'll be back. Kardashians.


BURNETT: We do this at the same time every night, our "Outer Circle" where we reach out to our sources around the world.

Tonight, we begin in Libya where the National Transitional Council announced that Moammar Gadhafi and one of his sons had been buried.

Now, this just in -- new video showing about 20 people praying before the bodies of the former dictator and his son, Mutassim.

International correspondent Dan Rivers is in Tripoli.

Dan, what were the circumstances around the burials?

DAN RIVERS, CNN SENIOR INTERNATIONAL CORRESPONDENT: Erin, as expected, Gadhafi's body was buried in the desert at an undisclosed location, in secret, we're told that members of his tribe were allowed to pray over the body before it was moved from the market in Misrata. Now, I think the NTC is hoping to try and draw a line under a very awkward few days surrounding the capture, killing and gruesome public display of the former dictator -- Erin.

BURNETT: Dan, thank you.

And now, to neighboring Tunisia, where two days after an historic election, an Islamic party claims victory.

Ivan Watson is in Tunis tonight.

And, Ivan, I know -- there's been a lot going on. What can you tell us about this party? Are they radical or moderate?

IVAN WATSON, CNN CORRESPONDENT: Erin, I'm here at the party headquarters of Ennahda where you can see the victory celebration were already under way. The party leadership insists that this is a moderate party, it's inclusive, and that it's going to reach out to all sorts of secular parties across the political spectrum to try to organize the future coalition government here in Tunisia.

The big test is going from decades of opposition politics, from persecution and exile and to now the ultimate task, trying to write a new constitution, and actually govern this country.

Back to you, Erin.

BURNETT: All right. Thank you very much.

And now to Saudi Arabia, where today was the funeral for crown prince, Sultan bin Abdul Aziz, the heir apparent to the Saudi throne.

Now, his death raises the complex succession issues at a time of political turmoil in the Arab world.

Rima Maktabi is in Riyadh tonight.

Rima, what is the succession plan?

RIMA MAKTABI, CNN CORRESPONDENT: Erin, Prince Nayef is the most likely candidate. He is the deputy prime minister and the minister of interior here in Saudi Arabia for so many years. Although he was regarded as a conservative inside the Saudi royal court, he is also known to have fought al Qaeda and terrorism inside Saudi Arabia. Whatever the decision is, it has to be taken in a few days only because the king's health, King Abdullah of Saudi Arabia is weak -- Erin.

BURNETT: There have been police searches, extensive family interviews and $100,000 reward. But still, no sign of baby Lisa Irwin. The 10-month-old went missing earlier this month. Her disappearance has captivated the nation. There's no sign of her.

One of the people brought in to help is Bill Stanton. He's a former New York City police officer and security consultant. He's now conducting his own investigation into what happened to the baby.

And, Bill, I really appreciate your being with us.


BURNETT: All right. So, you were brought in by a friend of the family. They said, Bill, why don't you come in and look at this?

STANTON: An anonymous benefactor.

BURNETT: Yes. And you told me you were skeptical and you said, if I think the family's guilty, I'm going to bring them to justice. But you now and you looked into this -- you don't think the family.

STANTON: I went in just like everybody else. You know, even statistically, it will tell you, mom or dad. My team and I, we went in with every reason to believe. And right now, going through our filters and analytic, I am now -- still have an eye on them, but I am strongly looking outside the home.

And what reaffirms this is these new independent witnesses corroborating the same story of a male with a small child walking away from the house at 12:00, at 2:30 and 4:00 a.m. BURNETT: Now, it's interesting, yesterday, we had a private investigator. And he said, oh, I don't know why you're looking at that grainy video, a guy at a gas station at midnight, he's probably going to the bathroom.

STANTON: Going to the bathroom, right -- if you took that in and of itself. But, now, you add the other components of a linear fashion -- witnesses right next door, then like one or two miles down and then three miles away, that is chilling to me. And I'm thinking what is going on?

All eyes need to be on that, that there was a male with a 10- month-old. I heard on another network an investigator said it could have been a small man. Well, you know, unless he's one of the lollipop three, they don't make people the size of a 10-month-old child. You know, we need to pay attention to these type of things.

BURNETT: All right. So, what are the chances that this baby is still alive? Because that's another thing, that most people are just assuming a child of 10 months old, that Lisa Irwin is not alive. You're also not convinced about that.

STANTON: That's right. Statistically again, things look bleak. But the more searches are conducted and they come up negative, negative, negative, that heartens me. That tells me there is a shot that this baby is alive.

BURNETT: What about the cadaver dogs, though, that smelled the decaying human body on the floor boards, by the mother's bed.

STANTON: Well, I'll let Joe Tacopina take that one. But what I will speak to that

BURNETT: Who is the lawyer for the family, yes.

STANTON: Yes, Joe is the defense attorney and one of the best I know. But, I mean, you got to give me more compelling information. I have to hear more from my own metric. I mean, I'm not going to talk bad about the KCPD or the feds. But, you know, baby poo, that's decaying as well. And maybe it hit on that, because I just keep going to the timeline, I don't see how it happened.

Everybody that is saying she did it, and what I'll ask those people is, you tell me how, tell me how she did and I'll investigate it. But yet, I haven't heard anything compelling enough to convince me she's involved.

BURNETT: Have you had a chance to extensively speak to the mother. As the Kansas City police have said, they said the family's cooperated but they want that extensive one on one interview that they say that they haven't gotten.

Have you gotten that? And are you comfortable when you look at her in the eye, that all these scenarios, whether she was drinking and fell asleep with the baby in the bed and these other scenarios are not the case? STANTON: Well, I'm not going to go with the, quote-unquote, "gut feeling" because we all say that and we all bring, whether we want to admit it or not, our own inherent prejudices to those interviews.


STANTON: I will say I've gone beyond that. And I will say at this point, my personal opinion and my professional opinion, and I may get new evidence today or new information today that change it --

BURNETT: And change your mind.

STANTON: But right now, I'm looking outside. I do not think she had anything to do with it or him at this time.

BURNETT: Ad the reward, $100,000?

STANTON: One hundred thousand dollar reward. Someone calls up right now or gives information where that kid is, they will get 100 grand. I want someone to collect that money. Whether it's from their heart or for their pocketbook -- tell us where that baby is.

BURNETT: All right. Bill, thank you so much. Really appreciate it.

STANTON: Thank you.

BURNET: Hope you find her.

STANTON: Ten-four.

BURNETT: All right. Let's check in with Anderson Cooper. What you got on "A.C. 360" -- hey, Anderson.

ANDERSON COOPER, HOST, CNN'S "A.C. 360": Hey, Erin. We're keeping them honest tonight on "360."

Tonight, the birthers are back, if you can believe it, yet again. We thought the issue of where President Obama was born was put to rest. But Republican presidential candidate Rick Perry had the opportunity to distance himself from the controversy several times over the last couple of days, and, guess what? He chose not to. Perry even coyly mentioned the topic came up in a dinner conversation with Obama born here doubter Donald Trump. We'll lay out the facts and keeping them honest.

Also tonight, a "360" follow-up, ungodly disciplined. Kids punished so severely it actually kills them. Tonight, you'll meet 13- year-old Hannah. Authorities say she died of exposure after hours outside in the cold rain. Her siblings told investigators this happened regularly as discipline for her being rebellious.

The parents are charged with homicide. The question is: Did they punish their daughter to death in the name of God? Is religion behind this in some sick way? Gary Tuchman has the "360" story and the investigation. Those stories and tonight's "Ridiculist" at the top of the hour -- Erin.

BURNETT: All right. Anderson, looking forward to seeing you then.

All right. OUTFRONT next, in my family, when the princess in the pea was done as a play, I was the pea. What does that say about our birth order? Jeffrey Kluger is here to talk about his book, "The Sibling Effect." I hope that my sisters are watching.


BURNETT: Jeffrey Kluger wrote the book "The Sibling Effect." I spoke with him a few days ago about whether siblings are more important than parents.


JEFFREY KLUGER, AUTHOR, "THE SIBLING EFFECT": Exactly. And that's something that surprised researchers because siblings were always seen as sort of fungible. You can have any number of them, as many as parents can support and choose to have. You have only one father, you have only mother. You do marriage right, you have one spouse for life.

So, siblings were also seen as bit players. But the fact is siblings are the full time total immersion dress rehearsal for life. What you learn in the play room about conflict resolution, conflict avoidance, compassion, loyalty, confidence -- all of those things are rehearsed again and again before you take them out into the world.

BURNETT: And you notice that this whole discussion that we all love to play, birth order, is highly relevant.

KLUGER: It is highly relevant. And one of the fascinating things about it, is it's one of the rare areas of science in which lay people came to this before the scientists did. And the more the scientists looked at it, the more they found that the beliefs we've always had are true.

First-borns really are more confident. They really are physically taller.

BURNETT: And you say often smarter.

KLUGER: And often smarter.

BURNETT: Higher I.Q.s for the first-borns.

KLUGER: Three-point I.Q. advantage. One and a half points between the second and third, and then it sort of attenuates after that.

BURNETT: So, the youngest is the dumbest. KLUGER: The youngest is the dumbest -- no, well, the youngest is the funniest, the most charismatic, the most charming, the most disarming. This is what scientists call low power skills. You're the littlest in the playroom, you're at the greatest risk of getting slugged. So, you learn these subtler ways of manipulating people around you and anticipating their behavior, so that you can protect yourself.

BURNETT: All right. And then there's something else, which we all know again as lay people, and that's not necessarily a bad thing. But there are favorites. Parents have favorites. And maybe at different points in life one is a favorite versus the other.

KLUGER: That's right. And that's a really important point -- the idea that while it is true that over the course of an entire childhood, there's almost always going to be one child who comes out on top for one parent.

Now, parents may have different favorites, but as long as throughout the course of the childhood all of the kids are favorites in different areas what the scientists call domains. As long as they feel like in this case --

BURNETT: Like we're dogs, we each have a tree.

KLUGER: Exactly. We each have a tree, and as long as we have our own, we're fine. It's only when a child comes of childhood and says, you know what? I was never favored. That's the one that's going to have a problem.

BURNETT: Does it matter -- you know, some people are very close with their siblings and some weren't all.

KLUGER: Right.

BURNETT: Some people say it doesn't really matter. But it sounds like from what you're saying, that would matter a lot -- in terms of what kind of person you are, how happy you are.

KLUGER: Exactly. And it's not only true during childhood, it's true in later life because, again, siblings are the people with whom you have shared history, the archives of your life is shared by only a handful of other people, and your siblings are those people. Now, it's true you can get along well without a sibling if you have to and siblings can get divorced easily, just stop picking up the phone.

But if the relationships are good, they should be kept that way. If they're even salvageable, you should try to improve them.

BURNETT: Well, I've had my share of fights with my sisters, but they are my best friends.

Quick question, just to see -- you know more about this than anyone.

KLUGER: Yes? BURNETT: You're the youngest, right?

KLUGER: No, I'm the middle child.

BURNETT: Bruce was the youngest.

KLUGER: Bruce was the youngest.

BURNETT: Bruce was the youngest and the favorite.

KLUGER: Yes, and the favorite -- mom's adored favorite.

BURNETT: OK. All right. So, you have any guesses as to what I am in my birth order?

KLUGER: Oh, boy, that's so hard to tell. But the fact that you are in the field you are in and you project the energy you project, you would not be consistent with a last born.

BURNETT: I am a last born.

KLUGER: You are a last born.

BURNETT: That's interesting that you would guess that.

KLUGER: And it's very common. Last borns have charm, they have charisma. They really project well.

BURNETT: The scrappy kid in the playground.

KLUGER: Exactly.

BURNETT: All right. Well, Jeffrey, thank you so much. We appreciate it.

KLUGER: Thank you for having me.


BURNETT: Youngest and dumbest, not bad.

All right. "A.C. 360" starts now. A smart show.