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JOHN KING, USA

Herman Cain Under Fire Over Sexual Harassment Allegations

Aired October 31, 2011 - 18:00   ET

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


JOHN KING, CNN ANCHOR: Good evening, everyone.

Up first tonight, breaking news -- new information and important contradictions as Herman Cain forcefully denies sexual harassment allegations now threatening to derail his presidential campaign.

(BEGIN VIDEO CLIP)

HERMAN CAIN (R), PRESIDENTIAL CANDIDATE: In all my over 40 years of business experience, running businesses and corporations, I have never sexually harassed anyone.

(END VIDEO CLIP)

KING: A day after suggesting it was all a reckless smear, Cain does now acknowledge he was twice accused of inappropriate behavior when he worked as head of the National Restaurant Association.

(BEGIN VIDEO CLIP)

CAIN: I was accused of sexual harassment -- falsely accused, I might add. I was falsely accused of sexual harassment. And when the charges were brought, as the leader of the organization, I recused myself and allowed my general counsel and my human resource officer to deal with the situation.

And it was concluded after a thorough investigation that it had no basis.

(END VIDEO CLIP)

KING: Now, the Restaurant Association tonight says it won't and can't comment on personnel issues from 15 years ago. Cain in his trademark outspoken style asserts in this lunchtime conversation he had no idea about the organization paid two women to settle their complaints.

(BEGIN VIDEO CLIP)

CAIN: I hope it wasn't for much, because I didn't do anything. But the fact of the matter is, I'm not aware of a settlement that came out of that accusation.

(END VIDEO CLIP)

KING: What you heard there is very, very important. Right there you heard Mr. Cain say he was not aware of any settlement.

Well, here is where tonight it gets puzzling. Now "The Washington Examiner" quotes a taped interview to air later on the FOX News Channel in which Cain not only says he was aware of the settlements, yes, he was aware of the settlements, he goes on in that interview to talk about them in considerable detail, saying he discussed the payments to one woman with the general counsel of the Restaurant Association.

Cain recalls being told the woman initially wanted a giant sum of money, but then settled for two or three months' salary. Remember, the same Herman Cain said repeatedly earlier in the day he knew nothing about any settlements.

And after saying for more than a day he couldn't respond to anonymous allegations, the "Examiner" story says he's now recounting one of those encounters with a woman Cain describes as in her late 30s or 40s that led to one of the sexual harassment complaints.

His shifting explanations tonight just downright bizarre and the timing couldn't be worse for Cain. The conservative Georgia businessman has catapulted from nowhere to the top of the Republican nomination battle and leading now in most national polls and in contention in the early test states of Iowa and South Carolina.

(BEGIN VIDEO CLIP)

CAIN: And as a result of today's big news story, I really know what it feels like to be number one.

(LAUGHTER)

(END VIDEO CLIP)

KING: The Politico news organization reported that two female employees of the Restaurant Association complained to colleagues and supervisors about sexually suggestive behavior by Mr. Cain they found unwelcome, unprofessional and inappropriate.

In one of the cases , the woman complained of an unwanted sexual advance by Cain at a hotel where the restaurant group was holding an event. At today's Press Club event Mr. Cain took an indignant tone.

(BEGIN VIDEO CLIP)

CAIN: Per the article, two anonymous sources claiming sexual harassment, we're not going to chase anonymous sources when there's no basis for the accusation.

(END VIDEO CLIP)

KING: Maggie Haberman is one of the Politico reporters who broke the story. She's with us now from New York.

Maggie, I want to get into this in as much detail as we can because of the sensitive nature of the allegations. Mr. Cain says these are anonymous sources and he can't respond to anonymous sources. But in your article you say this. "His campaign staff was given the name of one woman who complained last week, and it was repeated to Cain on Sunday. He responded -- quote -- 'I am not going to comment on that.'"

At least in one of the cases this is not at all anonymous. He knows the name.

MAGGIE HABERMAN, POLITICO: That's exactly right.

And Jonathan Martin, my colleague who provided the name to Mr. Cain on Sunday outside of a TV show, also asked him directly if he had ever been accused of sexual harassment. And Mr. Cain's response was, have you ever been accused of sexual harassment?

They did have opportunities to address this.

KING: You say in at least one case you looked at the documentation. Was it a he said/she said or was there corroboration? In such an episode, there would be an investigation. Were there corroborating witnesses who saw anything?

HABERMAN: We saw documentation involving some of the allegations and also of a formal settlement from the NRA which involved a five- figure payout to two separate women in this one case specifically.

I think what I can safely say is that these women felt very, very distraught about what had happened. They were unhappy about what had happened and there is also language in these agreements separating them from the National Restaurant Association, barring them from discussing specifics.

KING: I want to read something from the article.

"The women complained of sexually suggestive behavior by Cain that made them angry and uncomfortable, the sources said. The sources which include the recollections of close associates in other documentation describe episodes that left the women upset and offended, in one case, a sexual advance at a hotel at a Restaurant Association event."

Separate incidents, do you know how far apart they were?

HABERMAN: Again, I'm just going to stick to what we reported in the article. But he was the chairman of the board of the NRA between '96 and '99. So we're talking about a three-year tenure.

KING: He says he has absolutely no knowledge of these settlements. Is that plausible? Anything in the documentation or in your reporting that would lead you to believe he did know?

HABERMAN: Without going into specifics of that, I do think that it's unusual that there would be a settlement that someone wouldn't know. Whether it's within the realm of possibility I suppose it is. But again, Mr. Cain has gone from saying that he didn't -- wasn't aware of the allegations or the story itself was untrue to acknowledging that there were allegations made.

KING: Is there anything in your reporting that would suggest that this had anything to do with him leaving the Restaurant Association?

HABERMAN: He left the Restaurant Association somewhat abruptly. It surprised some people. But as of now, I think I'm just going to let it stand as we said. He went on to other endeavors. He had been looking at running for president that year and he had a lot of other things that he was looking forward to.

KING: As you know, the timing has many people asking why now. Mr. Cain himself thinks he's being targeted because he's gone from nowhere to the top of the polls. Listen to him at the Press Club today.

(BEGIN VIDEO CLIP)

CAIN: I told you this bullseye on my back has gotten bigger. I have no idea. We have not idea the source of this witch hunt, which is really what it is. We have no idea. We've been busy trying to get my message out.

(END VIDEO CLIP)

KING: He says witch hunt there. As you know, some of his aides have said the liberal media going after a leading conservative. We have both been in the business a long time. I'm not going to ask you anything at all about your sources and I never would.

But when you hear him say witch hunt, when you hear others saying it's the media going after a conservative, how would you answer that?

HABERMAN: I think we reported the story really thoroughly. I think if you look at the story, it's a very tightly done and very supported and well-researched story. I think that any candidate running for national office goes through a vetting process that many candidates have complained of as grueling, including a large number of candidates who opted not to run because this is the hot light under which all candidates run nationally.

This is very different than Mr. Cain's past campaign. In 2004 he ran for Senate in Georgia. He did not become the nominee. I think it's very, very different when you're in a presidential race and when you're running closely.

KING: Maggie Haberman of the Politico, it is excellent and well- documented reporting today. Maggie, thanks for your time.

(CROSSTALK)

HABERMAN: Thank you.

KING: For a more personal perspective now, I'm joined by Sibby Wolfson, Herman Cain's former executive assistant from 1997 to 2004.

Were you aware of these accusations?

SIBBY WOLFSON, FORMER HERMAN CAIN EXECUTIVE ASSISTANT: No.

KING: Not at all? He never mentioned them or nobody brought them to your attention?

WOLFSON: Not that I recall.

KING: So when you see the headline and you see the news reports and a man you worked very closely with for seven years is accused of some sexually suggestive language, some other inappropriate comment, one of the women alleges that he made an unwanted sexual advance at her, anything in Mr. Cain's behavior in your presence that would suggest he's capable of that?

WOLFSON: No, absolutely not.

KING: He jokes himself on the campaign trail. He says it's time to let Herman be Herman. He says he tries to have a sense of humor. If you have been following the campaign, some of the things he thinks are funny maybe voters won't find so funny. But that's part of his interesting personal characteristics.

Any situations at all where maybe Herman being Herman or Mr. Cain being brash, being blunt might have rubbed somebody the wrong way?

WOLFSON: Absolutely not.

He wasn't brash. He wasn't even blunt. I think some of the bluntness has come with doing the radio show, which I think he kind of had to cultivate in order to be a good radio talk show host. He was never controversial. He was never argumentative. He was never anything other than charming, pleasant, interesting, so on and so forth.

KING: And today he acknowledged these two accusations, and he said that he recused himself and he turned it over to the H.R. department and to the general counsel and that he was not aware of any settlements. We know two settlements have been made.

You don't recall any conversations at that time where he came to you and said, wow, Sibby, these women, and they're investigating these things and I can't believe it?

WOLFSON: No.

You know, I think it's possible that I remember some talk about it, but I think if there was, it was actually before I ever worked for him. So it was never a topic of conversation when I worked for him. It may have come up at one point. I may have heard it somewhere.

KING: When he traveled to the events on behalf of the Restaurant Association, did you travel with him at all?

WOLFSON: Just one time, I went to a National Restaurant Association event in Chicago and my recollection is that we handled a book signing that he did during that Restaurant Association show. But that was the only one.

KING: There are women all around the country, men all around the country, too, but I'm assuming more so women who are hearing this today and they're asking, is this possible? This is someone who has gone from nowhere to the top of the Republican presidential pack.

I just want to give you a moment to talk about how did Herman Cain interact with you. I assume you were with him in tense situations where you're dealing with crises or you're dealing with big projects with deadlines. How did he behave around you in terms of how he carried himself and when he was frustrated, did he have a temper, things like that?

WOLFSON: He kind of makes it his own personal message to bring positivity where there's negativity.

He's just -- he's charismatic. He's funny. He's fun to be around. Certainly when we're doing business, we're dealing with the business at hand, but in a way that is just a pleasure, even during the times where there were deadlines and when because of deadlines it was stressful.

KING: And you worked with him at his side for seven years and you mentioned some of those situations are stressful or at least they're hectic and busy. Was there ever once in that seven years where you said, Herman, that's not appropriate language, Herman, I don't like your tone, Herman, you crossed a line?

WOLFSON: Absolutely never.

KING: Never?

WOLFSON: Never.

KING: Do you keep in stuff with him?

WOLFSON: I do.

KING: When was the last time you talked to him?

WOLFSON: I think the last time I actually talked to Herman on the telephone was probably -- I don't think it's been a year, but it's definitely been longer than six months.

KING: What are your politics? Are you a Cain for president supporter, Republican, Democrat, independent?

WOLFSON: Yes, I'm registered -- I'm usually registered as a Democrat. I have voted for Republicans in the past.

There are many, many things about Herman's political beliefs that I am 100 percent with, some not as much with. And I think if I were to have to vote today, I would vote for Herman.

KING: And you say you agree with some of his positions, not with others. I want to close this by asking you a character question, a character question. When you look at this man whose character now has been called into question, you would say?

WOLFSON: I would say he is a man of character, and that I just don't believe anybody who would question that.

KING: Sibby Wolfson worked at Herman Cain's side for seven years.

Thank you for your perspective tonight.

WOLFSON: You're welcome.

KING: When we come back, more on this breaking news. Again, at lunchtime today Herman Cain said he was aware of no settlements from the organization he once worked at from two women who accused him of sexual harassment. Tonight not only does he say he was aware of although one of those settlements, he talks about it in great detail. A conflicting recount, what does that say about Cain's crisis management?

(COMMERCIAL BREAK)

KING: Herman Cain tonight is learning a lesson many who have walked the national stage before him know all too well. The test in a campaign crisis goes beyond the facts.

How a candidate and how a campaign handle a major challenge is a leadership test. Presidents after all have to do a fair share of crisis management.

Let's walk through the evolution of Cain's answers when asked about allegations of sexual harassment Sunday morning.

(BEGIN VIDEO CLIP)

(CROSSTALK)

QUESTION: (OFF-MIKE) Have you, sir?

UNIDENTIFIED MALE: That was the last question. Thanks. Thanks. Last question. Thank you.

QUESTION: Have you ever been accused of sexual harassment?

UNIDENTIFIED MALE: Have a nice day.

(END VIDEO CLIP)

KING: Hard to hear, maybe, but notice he did not answer yes or no to the question of whether he had ever been accused of harassment. Then this morning.

(BEGIN VIDEO CLIP)

QUESTION: Did you engage in unwanted sexual advances toward members of the Restaurant Association? Did you ever engage in innuendo with any members of the Restaurant Association? HERMAN CAIN (R), PRESIDENTIAL CANDIDATE: No.

(END VIDEO CLIP)

KING: A few minutes later, though, he was seated and ready for an interview on FOX News and Cain did tell a much more complete account. He said he had been accused. He said that they were baseless accusations, but he did recall two accusations.

And then tonight, now tonight, we're getting even more information. Mr. Cain said in a lunchtime speech at the National Press Club he had no recollection, knew nothing of any settlements by the National Restaurant Association.

Tonight in a taped interview that will air later tonight on FOX News, we're told he not only says he was aware of those settlements but he discusses at least one of them in considerable detail.

Is this response helping or hurting?

Let's ask three veterans of crisis management in politics, from Phoenix Democratic strategist and adviser to former President Bill Clinton Paul Begala, here in Washington, Eric Dezenhall. He's the CEO of a crisis management firm. And CNN's chief political analyst Gloria Borger.

Eric, I want to start with you.

First, you help people when they're dealing with issues like this. Yesterday, he wouldn't say yes or no to the accusations, had you ever been accused? In a way I almost understand that if it were new. But they had 10 days. Politico said they had asked them 10 days to try to get a response. He still won't say, yes, there are allegations, they're baseless. He waits until he sits down for FOX News.

Then at the Press Club he says I'm not aware of any settlements. And tonight in a conversation with Greta Van Susteren on FOX, he's not only describing the settlements. He says she wanted a big sum, I talked to the general counsel, we got her down to two or three months' pay.

ERIC DEZENHALL, PRESIDENT AND FOUNDING PARTNER, DEZENHALL RESOURCES: Here is the deal, these are very easy allegations to make. I see this almost the time.

And as a cost of doing business, people often pay them off. It doesn't mean you're guilty. But what works in business doesn't always work in politics. The couple of variables you have to look at in something like this are, number one, are there optics, are there people diving in front of cameras to make it more sexy?

Number two, does the story become too interesting by virtue of changes? As a general rule, contrary to what people say about these situations that the more you tell, the better it is, no. The real rule is the simpler it is. When you start getting into complexities and changing stories, that extends the half-life.

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: But he's not getting into complexities. He's just changing his story. That's his problem, particularly when you're running a presidential campaign. He didn't know of a settlement. He knew of a settlement.

DEZENHALL: I agree.

BORGER: Again tonight on PBS he says he was aware of a settlement. This is a presidential candidate. People cannot think you're lying to them.

And he could clear it up, by the way, by telling the National Restaurant Association that he waves his confidentiality and let them release any documents they have.

KING: They may not be able to do that if the two women involved are also parties to it.

But, Paul Begala, I won't get into the details, but you have been through rodeos somewhat like this. I will just leave it at that right now. But this morning he says -- yesterday and this morning he's talking about these are reckless and anonymous allegations. I can't talk about it.

And then here is what he tells FOX News tonight, apparently, quoting "The Washington Examiner" -- "I can't even remember her name. But I do remember the formal allegations she made in terms of sexual harassment. I turned it over to my general counsel and one of the ladies that worked for me, the woman in charge of human resources. They did investigate and it was found to be baseless."

Can your story continue to evolve? Suppose he's telling the truth. Suppose these are baseless accusations and they were investigated and as Eric says the price of doing business, they just decided to pay a settlement to get rid of it. Why not say that yesterday and end this?

PAUL BEGALA, CNN POLITICAL ANALYST: Well, first off, good for you for pointing out that this is still America. We're innocent until proven guilty. I'm a Democrat. Mr. Cain is Republican. But this is beyond that.

They are allegations and they're old allegations. The problem in a campaign is it's a new story for us. It's a really old story for Mr. Cain. It was at least I guess 10, 12 years ago. It is hard. He should have had his story ready. He should have been ready. But he's not a veteran politician actually.

And maybe that's why he's kind of bouncing around here.

KING: So some of this is basic common sense though.

DEZENHALL: Some of it is.

But I think one of the things to keep in mind is that when you are the subject of a crisis, you are 10 steps behind everybody else. A human being in crisis is not acting with Machiavellian rationalism. A human being in crisis is very, very shaken up.

And he's now been thrown into this situation. As a general rule though in terms of what he does going forward, Truman Capote once said a party is not thrown for someone, it's thrown against someone. And I think that sometimes the best you can do in a situation is to say, you know what goes on in business these days? We don't build companies. We spend time dealing with allegations like this.

(CROSSTALK)

BORGER: But that's what your staff is there. The person in crisis may be 10 steps behind, but the people who run your campaign should be 10 steps ahead and should be leading you and debriefing you and saying to you, tell us everything and then we will figure out how to tell it to the rest of the world.

KING: If it were even a reasonably efficient campaign, Paul, they would have already known about this, right? Because they would have sat down with their candidate at the very beginning with a bunch of people in the room including lawyers, and said, spit it out. What have you ever done? Who have you ever crossed? Who doesn't like you out there? Who will say you did something even if you never did it, right?

BEGALA: And that's what they should have done.

It is -- look, we talked about this last week. Instead of being in Iowa or New Hampshire, Mr. Cain was at a dog track in La Marque, Texas, last week. It's a completely unconventional campaign. There's great charm in that. But here is great peril.

They didn't have their act together. He should have known this was coming. It always does. You remember George W. Bush like 20 years or more before he ran for president was convicted of drunk driving in Maine. He never told. And that's why when it came out three days before the election, it did real damage to him. If he had put that out at the beginning of the campaign, he could have I think weathered that storm much more successfully. I'm not saying Mr. Cain should have announced it, said, oh, by the way, I was accused of sexual harassment.

(CROSSTALK)

KING: I don't want to go back to the Bush DWI. But here is what I don't understand. Here is a guy who has tripped over a few things in this campaign. He's got some abortion language he tried to clean up. He's said a few other things he's tried to clean up.

Yet he goes and gives a -- you have to assume he knows about this, he goes and gives a lunchtime speech and he says I'm not aware of any settlements. There was no vagueness in the language. It was very direct. Then he says this tonight.

Not only does he say he was aware of them. This is a conversation with Greta Van Susteren. "My general counsel said this started out where she and her lawyer were demanding a huge financial settlement -- I don't remember a number -- but then he said because there was no basis for this, we ended up settling for what would have been a termination settlement."

"When van Susteren asked how much money was involved, Cain said, 'Maybe three months' salary. I don't remember.'"

He taped that interview within a couple of hours of giving a speech in which he said I'm not aware of any settlements.

DEZENHALL: But you have to remember, this is not a politician, this is a corporate CEO. The problem with corporate CEOs who become politicians is they go from people who are giving orders to people who are punching bags. It's not at all surprising to me that he's having this difficulty, even his staff is sharp.

KING: This is either a lie. He either lied at lunch or he had some epiphany.

(CROSSTALK)

DEZENHALL: No, I think that that might be the case.

BORGER: Even CEOs have to be consistent about telling a story.

DEZENHALL: There's no question.

BORGER: And if you're on his campaign right now, if you're running his campaign right now, Paul, you have been in a situation not completely similar to this, but you're running a campaign now and you're discovering things as you go along that you didn't know and your candidate is changing his story, it's very difficult to extricate your candidate out of this.

KING: What does he do tomorrow?

(CROSSTALK)

BEGALA: If I were advising him, I would say focus on the opportunity cost. In other words, instead of just changing your story and shifting your story, first off, he put out -- maybe you found her -- I don't know -- but the character witness, that woman Sibby Wolfson I think is her name who you just interviewed, very strong character witness.

But beyond that, get off it. In other words, every day he's talking about this is a day he's not talking about his tax plan or any other ideas he might have for leading the country. I think that's a better way of jujitsu than just saying I hate the liberal media. It's better to say, look, I came here to talk about X. I have answered those questions. There was a settlement. Let's move on.

(CROSSTALK)

BEGALA: I think Eric's advice is really good. The deeper he gets into this, the worse it will get.

DEZENHALL: He has to be consistent. But there's no correlation between how much you talk about something and whether the problem goes away. Quantity is not the answer here.

(CROSSTALK)

BORGER: But leaving unanswered questions out there is not a great idea, I don't think.

KING: Gloria, Eric, Paul, hopefully the Cain team is listening. That was some pretty good advice there. Maybe they will take it.

Like everyone else, Herman Cain is entitled to his own opinion, but not his own facts. Up next we put Cain's own words to tonight's truth test.

(COMMERCIAL BREAK)

KING: Part of Herman Cain's appeal as a candidate is that he's unscripted, Herman being Herman as he likes to put it.

It's appealing, especially when distrust and disgust with politics and politicians is running so dangerously but understandably high. But like everyone else, Mr. Cain is entitled to his opinion, but not his facts.

And here is tonight's "Truth." He's at the edge if not over it already of what I will call the presidential level discipline test. Now, this has nothing to do with today's headlines about sexual harassment allegations, although his conflicting accounts today might add to that.

This has to do with the pattern of shrugging off policy blunders. Once or twice is acceptable, maybe even amusing, especially for someone new to the national stage. Mr. Cain talked of electrifying the border fence and smiled at the thought of electrocuting those illegally trying to sneak past the border. Then he said it was all a joke. Then maybe not a joke. He told my colleague Wolf Blitzer he was open to swapping terror detainees for an American hostage, then said, of course, he would never negotiate with terrorists.

And today, more evidence either Mr. Cain is trying to have it both ways or simply keeps talking in circles on one of the most emotional issues in politics: abortion rights. This is today at the National Press Club.

(BEGIN VIDEO CLIP)

HERMAN CAIN (R), PRESIDENTIAL CANDIDATE: Part of an interview I did was taken out of context. I am pro-life from conception, period. I have been that way for many, many years. I have not changed, and I don't plan to change.

(END VIDEO CLIP)

KING: Pro-life, period. Got it? And would he support federal legislation outlawing abortion?

(BEGIN VIDEO CLIP)

CAIN: Yes, I would.

UNIDENTIFIED MALE: And there would be no exceptions allowed? Would that be the federal and state level?

CAIN: Can't determine the state level, but I would support that at the federal level if that legislation were to come to my desk.

(END VIDEO CLIP)

KING: That's clear, crystal clear. But wait.

(BEGIN VIDEO CLIP)

PIERS MORGAN, CNN ANCHOR: You've had children, grandchildren.

CAIN: Yes.

MORGAN: If one of your female children, grandchildren was raped, you would honestly want her to bring up that baby as her own?

CAIN: You're mixing two things here, Piers.

MORGAN: Why?

CAIN: You're mixing two things.

MORGAN: But that's what it comes down to.

CAIN: It comes down to it's not the government's role or anybody else's role to make that decision.

Secondly, if you look at the statistical incidence, you're not talking about that big a number. So what I'm saying is it ultimately gets down to the choice that that family or that mother has to make, not me as president. Not some politician. Not -- not the bureaucrats. It gets down that to family, and whatever they decide they decide. I shouldn't try to tell them how -- what decision to make for such a...

PIERS: Questioning the view...

(END VIDEO CLIP)

KING: No edits there. And no, Mr. Cain, nothing taken out of context. Today was against abortion. No exceptions. But you just heard that same man tell Piers Morgan if a daughter or granddaughter was raped, whether to have an abortion, quote, "ultimately gets down to a choice that that family or that mother has to make." A choice means an exception; a choice means a right to have an abortion.

And remember, today Cain said he would sign legislation outlawing abortion. Back to that exchange with Piers Morgan. (BEGIN VIDEO CLIP)

CAIN: I can have an opinion on an issue without it being a directive on the nation. The government shouldn't be trying to tell people everything to do, especially when it comes to social decisions that they need to make -- to make.

(END VIDEO CLIP)

KING: So today it was, "I would sign a law outlawing abortion. Twelve days ago it was, "The government shouldn't be trying to tell people everything to do, especially when it comes to social decisions they need to make."

We're going to post this on our Web site so you can listen again and again if you like. But there's a word for what you get when you match up the then and now, on both the question of an exception for rape or support for a federal ban on abortions. That word is not, as Mr. Cain suggests, context. No, it is contradiction.

And the truth is the evangelical voters, so critical to Mr. Cain's odds in Iowa and South Carolina, well, they tend to see this issue with clarity, and they frown on contradictions.

Up next, another clean energy company with government loans goes belly up.

Plus a Virginia Republican group sends a controversial Halloween e-mail depicting a graphic image of President Obama. What will the fallout be from that? That's ahead.

(COMMERCIAL BREAK)

KING: Welcome back. Here's the latest news you need to know right now.

NATO's mission in Libya ended at the top of this hour, which was midnight their time. The NATO secretary general was in Tripoli today to congratulate the Libyans on winning their freedom.

Also today, Libyans' governing body elected a new prime minister. Abdul Rahmin El Keep has lived in the United States he will serve eight months now and oversee the writing of a new constitution and the election of a national assembly.

The United States today cut off all contributions to UNESCO. That's the United Nations Educational Scientific and Culture Organization that cut off because that organization accepted a Palestinian as a member -- accepted Palestine as a member.

Another clean energy company with government loan guarantees has gone bankrupt. Massachusetts-based Beacon Power Corporation received a $43 million loan guarantee from the Energy Department, that on top of more than $20 million in stimulus grants.

The financial firm run by Jon Corzine, New Jersey's former Democratic governor and U.S. senator filed for bankruptcy protection today because of losses brought on by Europe's debt crisis.

Renewed worries about the European debt crisis sparked a big sell-off on Wall Street today. But for the month, the Dow Industrials up 10 percent. NASDAQ and S&P 500 gained 11 percent.

"ERIN BURNETT OUTFRONT" coming up at the top of the hour. Erin, with all this big Cain news you've got a great guest, somebody who knows national politics and crisis management quite well, the governor of Mississippi.

ERIN BURNETT, CNN ANCHOR: That's right. He sure does. Both of those things. Of course, we're talking about Haley Barbour. He's going to be our guest, going to weigh in on Herman Cain. Obviously, he's a king maker in the Republican Party and a big rainmaker, as well, in terms of money raising for candidates. But he hasn't yet formally said who he's going to endorse. We're going to talk to him about all those issues.

We're also going to be talking about the next al Qaeda. Al Shabaab is sort of an offshoot group, but it's growing and growing, more and more Americans are involved. A lot of their money coming from Americans. And now there's the threat of attacks on American soil. We're going to talk about that story tonight.

Plus, John, there is a vigil going on downtown. It's not related to Occupy Wall Street, not even to the Halloween parade. Another kind of vigil. We're going to explain to you what it is, because we can't resist. That's -- that's the only hint I give you.

KING: I like when you can't resist. I'm curious now. I'll stay on this. See, you got me. If that's how it works, that's how the business works.

BURNETT: One by one. All right, see you, John.

KING: See you in a little bit, Erin.

When we come back, it's damage control time in the Cain campaign. Why do his conflicting accounts about sexual harassment allegations complicate his effort than focus more on the economy and taxes. That's next.

(COMMERCIAL BREAK)

KING: Herman Cain insists he's been, quote, "falsely accused" of inappropriate behavior toward two female employees back when he was the head of the National Restaurant Association in the 1990s. Earlier today, at the National Press club, Cain said he does not know the source of what he calls, quote, "this witch hunt."

With us now, Republican strategist Ed Rollins, former campaign manager for Michele Bachmann; Democratic pollster Cornell Belcher, polling for the Obama campaign in 2012. And Republican Ken Blackwell served on the National Commission on Economic Growth and Tax Reform alongside Herman Cain. Ken Blackwell, a personal supporter of Texas Governor Rick Perry. I want to start by listening. Earlier today, No. 1, Mr. Cain at the Press Club said he was not aware of any settlements. Now he's talking in detail, at least one of the settlements. So there's a bit of a contradiction there that, frankly, just has me a bit confused.

He also talked today about one of the incidents. There were two accusations when he was head lobbyist with the National Restaurant Association. He says they are baseless. Listen to how he recounts one of them in a conversation with Judy Woodruff.

(BEGIN VIDEO CLIP)

CAIN: One incident with the one who made the formal charge, the only one that I could recall after a day of trying to remember specifics was once I referenced this lady's height and I was standing near her, and I did this saying, "You're the same height as my wife, because my wife is 5 feet tall, and she comes up to my chin." And this lady is 5 feet tall and came up to my chin. So obviously, she thought that that was too close for comfort.

(END VIDEO CLIP)

KING: Ken Blackwell, you're a Perry supporter, but you know Herman Cain well. I had his former executive assistant on the top of the program. She says no way, no how. She can't believe any of this would ever happen. If that's the case, if that's the case, and this is just not true, why is Mr. Cain making it very hard on us by having conflicting and evolving accounts?

KEN BLACKWELL, RICK PERRY SUPPORTER: Well, Ed Rollins and I have done a lot of campaigns together, and I think we would agree on this. You tell the truth, you tell it quickly, you tell it all and you try to structure where you only have to tell it once.

Because as you dribble it out, you find that you contradict yourself and that just gives the story more life interview after interview after interview. I think you have to start with telling the truth, full disclosure, and do it once.

KING: Ed, I assume you agree with that advice. So what are we seeing instead?

ED ROLLINS, REPUBLICAN STRATEGIST: Well, first of all, I don't think he knows the full story. If he doesn't, he needs to sit down with his lawyer, who's the same lawyer who was at the restaurant association when he was there, and say, "Give me the file. Let me look at it. Let me review it. What was I charged with? What was our settlement?" Otherwise there's no credibility to any of this. I mean, saying, "I think, I don't know, whatever."

Herman is -- and I hope he's innocent. I really do. I think he's added a great deal to this campaign. But I will tell you this, that if he doesn't get it right, he has an inexperienced staff who's never been in presidential politics. You now have the media base looking at all elements of his life. He's a perfect stranger to the vast majority of Americans, and he's going to get defined by this if he doesn't do it right.

So he needs to get, as Ken said, my old friend, get the story, tell the truth, as painful as it may be, and get it behind you and get moving forward. But he's had a habit of talking through things. He's a great communicator. He stands up today in the National Press Club and sings "Amazing Grace." That isn't going to work. This is a big league that he's playing in. He's now a potential front-runner, at least by polls. At the end of the day, everybody wants to know everything about him. And they're going to find out everything about him. So it better be a truthful story from start to finish.

KING: You're a Democrat and you're not a Herman Cain supporter, but as someone who's worked in campaigns that, you know, have the blender moment and everybody's going a little bit crazy, what's he doing right and what's he doing wrong?

BELCHER: Right. As a political professional, this drives -- this drives me nuts because somewhere along the line in the campaign you have to sit down with your candidate and say, OK, what is there that's going to come out in this, especially when you're running for president. In that he doesn't have enough campaign infrastructure around him to sort of have figured this out already is really, really bothersome.

The other part about this, you know, and my colleagues on the other end of this know this well, it's a rolling disclosure. I mean, every hour seems like something else comes out. And that just always looks bad. Because a rolling disclosure means what's at the end of this may, in fact -- the smoke actually may, in fact, be leading to fire at the end of this. So this really looks really bad for him.

KING: And the timing is curious. We can all agree on that. The story comes out, and Politico says ten days ago or so they approached him at a time when he's rocketing up in the polls. So you can agree the timing might be a little curious, and somebody may have slipped Politico some opposition research.

But Ed Rollins, as a candidate in the campaign, you can't worry about that, right?

ROLLINS: You can't worry about that. The bottom line is you ought to do opposition research on yourself before you do it on anybody else. I had it done on Michele Bachmann before we started the campaign. I've had it done in every campaign I've ever been involved in. And if you don't, you pay a heavy price.

I always say, and no offense to any of my non-Catholic friends, pretend I'm your priest. Confess all your sins to me. I'll tell you whether they are mortal or venial.

You need someone else to look at this with a jaundiced eye and tell you from a political perspective, as Ken can, or my good friend on the other side can, is this a serious, serious charge, and will this come out and will this hurt you?

KING: Ken, you know the man. Again, I know you're a Perry supporter. But you know the man. I was asking his former assistant earlier. He says let Herman be Herman. He can be pretty blunt. He can be brusque. He is unconventional. He reminds me -- Ed won't want me to say this, but a guy Ed worked for a long time ago, Ross Perot. Thinks the rules maybe don't apply to him. Can you think of anything about him that where, just the way he conducts himself that might have made somebody feel uncomfortable?

BLACKWELL: Look, I think that Herman is starting to distill what happened and he says that he -- what he recollects is that he said, "You're about the same size as my wife."

Look, at the end of the day, folks have said that this was inappropriate behavior. Even in the disclosure there was not a charge of sexual harassment. It was one of making someone feel uncomfortable.

Be that as it may, Ed is totally right. Ed has done opposition research on me when he was -- when he was guiding my campaigns. So that's -- this is -- you know, he's gotten a lot of points out of saying that he's not a politician. But at the end of the day, this is a political game. This is normal political fare, and you have to be ready for this sort of scrutiny of everything that you've said, any slip that you've made.

And you have to be ready and -- you have to be ready for people to actually twist what you've said in the past. And I hope that he, in fact, puts it together. He has had a marriage for 43 years, and I think that speaks volumes itself.

BELCHER: John, can I say something quickly? Is that this is also different from a lot of other accusations. Sex sticks in a way that nothing else sticks. I mean, you can go bankrupt as a candidate. You can have financial problems as a candidate and still get over that. You can even have felony charges and still get over that.

But there's something about sex and the American public that sticks to you in a way that's really unique. And particularly for a minority candidate, it is particularly problematic.

KING: He needs to fix it.

BELCHER: He needs to fix it.

KING: Cornell, Ken, Ed, stand by. When we come back, we're going to move on to another Republican candidate in the spotlight trying to prove himself. He's the source of tonight's "Number." That would be $15 million. That's how much Governor Rick Perry has in his campaign war chest. And guess what? He's beginning to spend it on television in Iowa. He's the first candidate up. This is wave one.

Wave two began spending some of this money. Is that the key to Perry 2.0? That's next.

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KING: While Herman Cain tonight is in damage control mode, Rick Perry is trying to get more aggressive. He's blanketing Iowa with a new round of TV ads and that advertising about to expand into South Carolina.

Let's get back to our conversation with Michele Bachmann's former campaign manager, former Reagan hand. You probably don't like being called that, I bet. Ed Rollins. He goes back a little bit before the Bachmann campaign. Democratic pollster Cornell Belcher with us, as well. And Republican Ken Blackwell, who's indoors. Rick Perry -- sorry about that, Ed, but we have a little chuckle.

ROLLINS: Let me be a Blackwell -- let me be a former Blackwell campaigner.

KING: Former Blackwell campaigner? That's good.

ROLLINS: I'm proud.

KING: That works. Let's start -- let's start -- look, it's -- I think we can all agree, Rick Perry has had a tough few weeks, and so they're trying to have a little Perry 2.0. And they think the way to start is to just reintroduce yourself to the people of Iowa. Here's a snippet from his new campaign ad.

(BEGIN VIDEO CLIP)

GOV. RICK PERRY (R-TX), PRESIDENTIAL CANDIDATE: If you're looking for a slick politician or a guy with great teleprompter skills, we already have that, and he's destroying our economy. I'm a doer, not a talker.

In Texas, we created 40 percent of the new jobs in the entire country since June of 2009.

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KING: Let's drop it -- let's drop it out there, so we don't get -- we gave Governor Perry about 20 seconds of a free ad. We won't give him the whole thing.

Ken Blackwell, that's a talkative, casual, relaxed guy, not the guy people have seen at the debates. He's got a tough hill to climb. Statewide polling in Iowa, he's way down, 10 percent, one, two, three, four, fifth place, or tied with Newt for fourth place. Among evangelical voters critical to his success, Ken, he's in single digits.

Are you convinced -- you've now endorsed Rick Perry. Are you convinced Perry 2.0 is ready to take off?

BLACKWELL: He can do it. Look, this is about defining and advancing. The four of us have always been familiar with the fact that you have to have message, you have to have money, and you have to have muscle or organization.

Perry will have organization. He has the money. He has to define himself with a message, and he has to inspire and motivate. Look, Perry has -- Perry has the opportunity to advance. It looks as if Romney has hit a ceiling of about 23, 25 percent. But that 25 percent can win if there are six people dividing the rest of the pie.

The reality is, is that he has to put enough money on the ground behind a message to inspire enough organizational muscle to show -- to scare off some of these people, or it's going to be a very tough hill to climb.

KING: Well, Ed Rollins, you used to think Michele Bachmann was going to win Iowa. I was just reading something. You're quoted on ABC today saying you think she's out of gas and out of steam and out of ideas. If Michele Bachmann doesn't have a prayer, in your view, to win Iowa, does Rick Perry?

ROLLINS: Well, the bottom line is one of them can win. Perry has the resources. Unfortunately, Michele doesn't have the resources.

At the end of the day, what Perry has to do is run two statewide races. He has to run a statewide race in Iowa. He has to run a statewide race in Iowa. He has to run a statewide race in South Carolina. He spends all of his money winning those two races. He's won statewide three times in Texas. He's never been defeated in 25 years in Texas. Both of those states combined are smaller than Texas. He knows how to run a statewide race. And that's what he has to do.

Forget the national stuff. Go win Iowa. Go win South Carolina. And the same advice I would give me Michele, except she doesn't have the resources. At the end of the day, whoever comes out of there becomes the challenger to Romney. And lots of things happen after that.

KING: You're shaking your head.

BELCHER: I think, you know -- I'm not completely disagreeing with Ed, because lord knows you shouldn't disagree with Ed. But I would modify it a little bit. I would say this.

If I were Perry, yes you compete in those states, but quite frankly, he's got to have the long view. He's got to weather to storm. If he can get this -- if he can get this through the first couple of states and get into the long run with Romney and let the others fall off, look, the conservatives are looking to coalesce around the candidate. If he can get in a one-on-one battle with Romney, I've got to tell you, I like Perry's chances.

KING: That reminds me, though, he's got to win somewhere first, though, doesn't he? Ken, that reminds me of the Rudy Giuliani strategy. I'm just going wait in Florida. I'm going to wait in Florida for somebody to come to me.

BELCHER: No. It doesn't work like that.

BLACKWELL: I think if -- if Romney wins Iowa and New Hampshire, it's over. If Romney wins any two of the first three, it's over. So I mean, the fact of the matter is, I really think from a Perry standpoint, you have to double down in Iowa and South Carolina.

KING: Ed Rollins, does he have to win Iowa?

ROLLINS: He has to win Iowa. In our party, you have to win two out of those first three. Since 1980, that ends up being the nominee. And unfortunately, there is going to be a challenger. Whoever comes out is going to be the challenger. It may be short-lived; it may not be long-lived.

KING: How long do the positive ads last? When does Rick Perry have to go negative?

ROLLINS: We'll see how long they work. The bottom line here, is you literally have two-thirds of the voters in Iowa who have not made up their minds yet. And so it's very fertile ground for him. The conservatives want someone other than Romney in that state, and they've not settled in yet.

BELCHER: And the other focus on the negative is that who is he going to attack? I don't know if he's going to attack Romney, because quite frankly, Romney's voters aren't his voters. He's got to get those Tea Party voters.

KING: And get the conservative base of the part. Ken Blackwell, Ed Rollins, Cornell Belcher, appreciate your coming in tonight. We'll talk more in the future. One campaign is just starting to heat up.

That's all for us tonight. We'll see you tomorrow. Happy Halloween. "ERIN BURNETT OUTFRONT" starts right now.