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ERIN BURNETT OUTFRONT

Stock Market Down; Interview with Senator Pat Toomey; Cain Controversy; Earthquake in Turkey

Aired November 9, 2011 - 19:00   ET

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


ERIN BURNETT, HOST: Thanks, John. We're on the "Front Line" at Penn State tonight, a team and a school reeling from a child rape scandal, Coach Joe Paterno out at the end of the season.

And Turkey rocked by a second earthquake today. Dozens trapped in the rubble tonight.

And the "Bottom Line" on the economy, the Dow plummets nearly 400 points. We're paying for the troubles in Europe.

Let's go OUTFRONT.

I'm Erin Burnett. OUTFRONT tonight, U.S. markets fall big time. It was a miserable day on Wall Street. The Dow down 389 points. The Nasdaq and S&P also fell by more than three percent. Now the markets' fear gauge spiked 30 percent. To blame for the fear, mayhem and selling Europe, Peter Costa is CEO of Empire Executions. He's been a trader on the New York Stock Exchange for nearly 30 years, what happened today, Peter?

PETER COSTA, CEO, EMPIRE EXECUTIONS: Well, Erin, you know there's a lot of uncertainty in Europe. I think that when the Italian treasuries went over seven percent, that scared a lot of people. But you know if you're really going to look at it, and I am not negative on the market at all, I think today was a good opportunity to buy.

I think that we will probably have a couple more of these intermittent dips. But you know people are afraid that you know with Italy going through these -- this debt crisis that Greece went through, people are afraid that this is going to cause another recession in Europe and I think that's the major thing, is that you know one-third of our exports go to Europe. And if there is any sort of recession there, you know it could impact the U.S. economy even more than we have already been impacted by what's been going on over the last three years.

BURNETT: And the bottom line though, even though it is volatile and there's real fear from Europe, you still would think it is a buying opportunity?

COSTA: I think it is a buying opportunity because I think that you know what, I think -- my personal opinion is that I think that the situation in Italy is overdone. This is not Greece. I mean the Italians have an economy. They have a legitimate export market. They have an import market. They -- it is a vibrant economy. And you know what their debt problems I think are manageable in the short term if they stay above seven percent on the treasuries --

BURNETT: Yes.

COSTA: -- they can manage that above seven percent. But I don't think it's going to stay there very long. I think the Italians will come to grips with this. I think having Berlusconi resign after this or I think that will be helpful also, and I think you know it is imperative that the French and the Germans back the Italians --

BURNETT: Right.

COSTA: -- because that's a major market for them, too.

BURNETT: All right. Well Peter Costa, thank you very much.

COSTA: Thank you.

BURNETT: And I know you don't just say it because you're an Italian American. As an Irish American, I now we will give a defense of Italy because here are the facts. Italy is big and it is important. It's the eighth biggest economy on earth. It is the third biggest bond market on earth, and its debt is twice as big as Europe's bailout fund.

All right, you know that means. Italy is too big to bailout and its failure will spiral. France and Germany will not be safe from total crisis if Italy falls. In fact their problems aren't getting a lot attention now, but trust me. If Italy falls, they will and France and Germany have a lot of problems. Another reason Italy matters a lot more than say little old Greece banks around the world hold a lot of Italian debt, more than their holdings of the PIGS, Portugal, Ireland, Greece, and Spain combined.

So when fear starts about Italy being a deadbeat, lenders charge Italy more to borrow. And anyone with a mortgage knows that that game can only end one way, surging and unpayable balances. It is very easy to create fear about a borrower and to go on about say how Italians love the good life. By one survey, they get 42 paid days off a year. Yes, that's more than eight weeks.

So if you spend your time talking about that, people start to get afraid. They stop lending and the country will fail and everybody will get hurt, but you know what, it doesn't have to happen that way if we have confidence. That is because that's all lending and borrowing is about. If we stop letting fear rip through the markets and yes the media and start building up confidence, things could be different. When the global economy was booming it was for one incredibly simple reason.

People were confident that tomorrow would be a little bit better than today. And here is the truth. Italy's situation is manageable, thanks to that man, the demonized Italian leader, Silvio Berlusconi. Italy is actually in a position to budget surplus after paying the interest on its debt. And Italy's unemployment rate is 8.3 percent, better than the United States, half of Greece's, and less than France. And Italy makes a lot of valuable and important things like Ferraris and Chryslers.

Italy's Fiat is Chrysler's majority owner. The world's best fashion design, Armani, (INAUDIBLE) Prada and Massoni (ph). In fact when I Googled today, there were 375 million results on Google when I searched good things about Italy. So let's think about the strengths of Italy and stop bringing down country after country because it may feel far away now, but this domino game of attacking countries will come back to roost in all of our pockets.

So the bottom line is that the confidence and stability for the world economy can come from one place, and that place is the number one economy and the number one bond market and the number one stock market in the world, the United States of America. So far the super committee charged with stepping up to the plate and dealing with America's deficit does not have a deal. But if they make one, they won't be what you see on the screen.

They will be super heroes and they could change sentiment around the world and save America from a debt crisis like Europe's. Senator Pat Toomey is a member of the super committee, the architect of the latest Republican proposal to cut the debt and he joins us tonight.

Senator, thanks so much, I appreciate your coming OUTFRONT. I just want to ask you about your plan which I know you've gone through. It comes out to about 1.2 trillion. You get the majority of that still from spending cuts. I believe just more than 60 percent. And you do have some tax increases in there. What's been the Democratic response so far?

SEN. PAT TOOMEY (R), PENNSYLVANIA: Well Erin, I would rather not characterize my Democratic colleagues and their reaction, but I will say that we still have two weeks left on the clock. It's not a lot of time --

BURNETT: Right.

TOOMEY: -- but it is enough time to reach an agreement. I really want to do this. You're exactly right. The importance of restoring some confidence in Congress, in our government, in our ability to start to get our fiscal house in order is so important. And this plan that we've put together it is very pro-growth. It is modeled in many ways after the bipartisan commissions that have recommended that as part of any deficit reduction plan we ought to have a reform of our tax codes to encourage economic growth, simplify the code, generate revenue from closing loopholes and special interest favors. That sort of thing is in the plan, and then certainly there are some spending cuts. At the end of the day, it is run away spending that has created this problem and will exacerbate it.

BURNETT: So let me ask --

(CROSSTALK)

BURNETT: OK.

TOOMEY: So I just think the pieces are there, and I sure hope we can find a way to find a solution.

BURNETT: All right. A few questions -- I want to really talk about this issue of tax revenue because I'm confused.

TOOMEY: Yes.

BURNETT: You keep talking on the Republican side about new tax revenue. The Republicans talk about taxes going up on an absolute basis for some Americans. Are you saying the same thing or are you saying we're going to cut tax rates, get away -- get rid of some deductions so most people will get a tax cut because those are very different things.

TOOMEY: What I have advocated that we do, which I think makes a lot of sense is first of all, and frankly it follows the model of all of the bipartisan proposals that I have seen, lower the nominal rates, lower the marginal rates. I've suggested a top rate of 28 percent and lower rates for all the other rates. And then you offset that lost revenue by limiting the value of deductions, and write-offs and credits and special favors. You limit those things significantly. And in fact I would limit them so much that for the upper income taxpayers, they would end up paying a little bit more than they pay now --

BURNETT: OK.

TOOMEY: -- but we would eliminate the risk of this huge tax increase that's looming out there that's providing a wet blanket on the economy. I think that would create certainty. It would certainly be pro-growth. It would generate some more revenue. Most of that revenue would come from added economic growth.

BURNETT: All right, so -- but I think intellectually that's a big statement. That you're saying some people will pay net more and that's important. But let me ask you this. When you talk about deductions, a lot of people watching will say all right you're going to cut my tax rate but get rid of deductions. What about my mortgage?

TOOMEY: Yes, you know I'm very flexible about how we do this. There are lots of different ideas. There are different mechanisms that we can use. I'm not wed to any particular one. I am interested in more fairness, more simplicity, getting rid of some of the very targeted special favors. You know, there's going to be things that some people aren't going to like. There's nothing that's going to win the support of everybody. But I think there is a way to do this --

BURNETT: Yes.

TOOMEY: -- generate more revenue with lower nominal rates.

BURNETT: Let me ask you one more thing. We've done a very simple breakdown on this show just to show how compromise is possible. You get to a lot higher number than 1.2, which is the minimum obviously the committee is charged with. But if you let the Bush tax cuts go away completely, 2.8 trillion in revenue and you match that with 2.8 billion -- trillion in spending cuts, 5.6 trillion over 10 years that really solves the problem. There's a 1.2 you've got to keep coming back every year --

TOOMEY: Well --

BURNETT: What about that?

TOOMEY: There's a big problem with that in my view, Erin. If we let the Bush tax cuts expire completely, the biggest tax increase in American history by far, cap gains and dividends, the lower rates we have now that drive so much investment, those rates go up to what I think would be a crippling level. I think we'd be guaranteed to have a double dip recession --

BURNETT: Just back to Bill Clinton's level though, right --

TOOMEY: Well we are not in the kind of economy we were in, in the 1990's, when we had an Internet boom and an innovation that was happening at a breathtaking pace. That's not going on now. I think the worst thing we could do is have this gigantic massive tax increase. I think a much better approach is to simplify the code --

BURNETT: All right.

TOOMEY: -- lower rates and generate our revenue through that mechanism.

BURNETT: All right. Well thank you very much for coming OUTFRONT tonight, really appreciate it. As you know we care passionately about the super committee, so we are rooting for you.

TOOMEY: Thanks for having me. Thank you.

BURNETT: All right, the second earthquake to hit Turkey in a month today, death and destruction. Dozens trapped. We're going to go there tonight.

And four women accusing Herman Cain of sexual harassment and some worse, how will he answer his critics at tonight's debate?

And the "Camel Report", still your best source for camel news anywhere on hump day.

(COMMERCIAL BREAK)

BURNETT: The number tonight, 160. That is how many cents one pound of honey sold for in 2010. It was a record high. Now the data comes from the USDA, which tracks things like honey production, the goat population, and how many begonias were sold. Well at least it used to. USDA will no longer track these goods and hundreds of others in a cost cutting move, one of many we're seeing across the government. The honey issue is a serious one. We have a big honeybee problem and that is no joke, but as for tracking goats and begonias, OK.

All right, Herman Cain has dominated the headlines, not so much because of his political prowess, but because of the sexual harassment allegations over the past week. Four women have now accused him of inappropriate behavior. Cain vehemently denied every allegation, claiming to not even know the latest accuser, Sharon Bialek.

Tonight Cain will be speaking again. (INAUDIBLE) have to join (INAUDIBLE) fellow GOP candidates for a debate in Michigan. The focus is on the economy, but will talk turn from joblessness and foreclosures to the Cain drama? Joining us CNN chief political analyst Gloria Borger and contributor David Frum -- thanks to both of you, appreciate it.

David, will other candidates even touch the harassment topic tonight? I'm just thinking back to over the past few days. Mitt Romney is the only one who's really directly addressed it to begin with.

DAVID FRUM, FORMER SPEECHWRITER TO PRES. GEORGE W. BUSH: They're going to be super careful. It remains true that Herman Cain has an intensely committed following. And I just noted from reading the conservative blogs over the past 12 hours or so that that following is digging in. They're now getting ready to do battle, to attack the credibility of these accusers, to attract -- attack the idea that the concept of sexual harassment is meaningful, and I think the people on that stage are not going to want to tangle with that crap.

BURNETT: What do you think, Gloria? I hear you saying --

GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: Yes. I agree. I agree. Also you know honestly, it is also up to the questioners, and I think that your former colleagues and mine at CNBC --

BURNETT: Right.

BORGER: -- are going to want to talk about the economy.

BURNETT: That's right.

BORGER: And I think if they start getting into the whole sexual harassment thing, they're not going to get to the debate that is actually the debate that the American people want to hear. And I think there's a real risk to the other candidates to bring it up for the very reasons David mentioned --

(CROSSTALK)

BORGER: -- which is they want Cain supporters at some point.

BURNETT: Gloria, talking to some of the attorneys today involved indicated to me that we really could get a press conference with more of these women tomorrow. What is your sense of what's going to happen next?

BORGER: You know I don't know if it is going to happen tomorrow. I know that Karen Kraushaar really wants to get these women together. I am not sure how successful she's going to be in getting a whole group of women together at one time to discuss this, and whether they can do it in short order. So you know I think it is something she would prefer. When I spoke with her last night, she made it very clear that this is a personally embarrassing matter and it might be easier for women to deal with it if they did it as a group, but it's hard to say whether that's going to happen and when.

BURNETT: David Frum is he done as a candidate or not? I mean again, we've been saying this for several days, raising this question and the polls have not borne it out. Poll after poll has shown that he's still the top guy.

FRUM: Well it depends on what you mean by done. Is he going to be the Republican nominee? No. And that's never been true and it's never going to be true.

UNIDENTIFIED FEMALE: Right.

FRUM: But will the people who have emotionally invested in him allow themselves at this point to drift away or will they rally? I think they'll rally. We have seen this pattern again and again with Sarah Palin and Michele Bachmann, even with Donald Trump. People who are immediately exposed by the hated media as in some way or other unfit for the office of the presidency, their supporters are so much more hostile to their critics that they then rally around and don't want to give up the ghost.

BURNETT: Yes. What about VP (INAUDIBLE)? This changes that.

FRUM: I beg your pardon.

BURNETT: Doesn't this change the VP calculation?

UNIDENTIFIED FEMALE: Well --

FRUM: What do you mean by VP?

BURNETT: VP, I mean whether he was a candidate --

FRUM: Oh, VP.

BURNETT: VP.

FRUM: He was never a candidate for VP either. If Mitt Romney is for example the nominee, what he is going to want is a fellow governor. He's going to want somebody who helps him with conservatives and evangelicals but who is not going to cause stress. He's going to look at somebody like --

UNIDENTIFIED FEMALE: Hold on a second, David. Before --

FRUM: -- McDonnell from Virginia or Marco Rubio from Florida.

BURNETT: But before this happened why were you so quick to dismiss him as a candidate? People like him. He's charismatic.

BORGER: He doesn't bring anything.

(CROSSTALK)

BURNETT: -- brought the Tea Party. BORGER: Yes, but you know what, the Tea Party voters, if they're going to come out and vote, they're going to -- they're going to -- they're going to come out and vote because they don't like Barack Obama. But if you're a Republican presidential nominee, you're going to look for somebody who can bring you a state like Ohio, say, or Florida, say, so Rob Portman or Marco Rubio, you know you want somebody who can actually help you in the electoral college, and I don't think Herman Cain does that because I assume he would support the Republican nominee no matter who it is anyway and be out there campaigning.

BURNETT: All right. Well --

FRUM: Also Mitt Romney --

BURNETT: OK, final word David --

FRUM: -- in the last cycle, Republicans make a long bomb vice presidential choice hoping that that would alter the dynamic of the race, and Sarah Palin may be the one VP in American history to have hurt her ticket. I don't think Mitt Romney who is about mistake avoidance is going to want to use that play again.

BURNETT: Yes, at this point. I just wonder before all this if it might have been different, but thanks to both of you, appreciate it as always.

BORGER: Sure.

BURNETT: All right, a 5.7 magnitude earthquake has rocked Eastern Turkey tonight. At least three people have been killed. Dozens more believed to be trapped in the rubble. The quake's epicenter was nine miles south of the town of Van, Turkey. More than 500 people were killed on October 23rd by a 7.2 magnitude quake. Joining us now from Istanbul is CNN's Gul Tuysuz. And what is the scene like at the epicenter right now?

GUL TUYSUZ, CNN CORRESPONDENT: Well, the epicenter is -- was already, there were a lot of aid workers and rescue teams present there, so everybody sort of mobilized around these buildings that have collapsed, and you know 25 buildings collapsed, but only three of them were occupied. The Turkish Government Crisis Office has said that four people lost their lives and there are still some people under the rubble.

And remember, this is an area that was devastated just under three weeks ago by a 7.2 magnitude earthquake which claimed the lives of more than 600 people and so it is a very tough area and people are unnerved. But luckily, there was rescue teams already present there.

BURNETT: And Gul we're looking at live pictures now. I want everyone to know these are live that we're looking at from Van, Turkey, a very vibrant town when I visited there about a year ago. We've received reports that one survivor has been pulled from the rubble. Do you have any sense of how many people are missing? It certainly didn't seem to be a town, Gul that was built in any way to withstand this.

TUYSUZ: No, you're right. Turkey has a problem with earthquake codes, and those buildings were definitely not up to par, especially after being hit by a 7.2 magnitude earthquake just three weeks ago. Remember that there were two hotels that collapsed there, and some of these hotels had journalists that had gone over to cover the story staying at them, and nobody knew really that they were unsafe. But we don't really have a sense of how many people are still under the rubble at this point. We do know that some of these people that have been rescued have been airlifted to Ankara for treatment to the Turkish capital city.

BURNETT: All right, well Gul, thank you very much. We appreciate your time.

And OUTFRONT next, the latest details from the Penn State child rape scandal; Joe Paterno out as coach at season's end. NFL Hall of Famer and former Paterno player Franco Harris (ph) comes OUTFRONT.

And Toyota recalls more than a half million cars, a lot of them right here in the U.S. and Wednesday is hump day, right, so that means the "Camel Report" next.

(COMMERCIAL BREAK)

BURNETT: In what is shaping up to be the biggest camel related legal proceeding in history, a man at the United Arab Emirates has gone all the way to federal court to prove his camel's prestigious ancestry. Apparently the man bought what he thought was a regular camel only to discover later that it is probably descended from Walad Mashhour (ph) and Saughan Bint Omeira (ph), two championship racing camels, like Secretariat on steroids.

Good news, right? Wrong. Because when the man went back to the camel market to ask for a camel certificate of authenticity, the merchant refused, claiming that the price he got for the camel no longer reflects the true value of the camel's class. Now like horse racing camel racing is big business. And your camel's pedigree is the difference between a camel worth 13,000 and a camel worth 500,000 or literally millions of dollars.

A camel expert thinks the case could take up to two years because the court requires credible witnesses and medical tests. Two years, this is going to be the camel trial of the century. But as far as we know, we are the only ones reporting on it. Camels deserve better that that and so here's what this trial would look like if camels got the attention we think they really deserve.

(BEGIN VIDEO CLIP)

(CROSSTALK)

(SOUNDS)

(MUSIC)

UNIDENTIFIED FEMALE: Oh, my God, those camels!

(MUSIC)

(END VIDEO CLIP)

BURNETT: Still OUTFRONT the latest from the Penn State child rape sex scandal. We have Hall of Famer Franco Harris (ph); he played for Joe Paterno and Jerry Sandusky in college. He comes OUTFRONT tonight.

And then new fears about Iran with nuclear weapons and what upcoming cuts to our defense budget could really mean to America's safety; former Secretary of Defense William Cohen joins us next.

And one of the stars of TLC's new reality show, "All American Muslim" here to talk about the face of Islam in America.

(COMMERCIAL BREAK)

BURNETT: We start the second half of our show with stories we care about, focus on our own reporting, do the work and we find the OUTFRONT 5.

Number one tonight, just two weeks left for the super committee to step up and deal with America's debt. Tonight, Republican Senator Pat Toomey came OUTFRONT. I asked him if increased revenue meant increased taxes.

(BEGIN VIDEO CLIP)

SEN. PAT TOOMEY (R), PENNSYLVANIA: Lower the nominal rates, lower the marginal rates. I suggest a top rate of 28 percent, and lower rates for all the other rates. And then you offset that lost revenue by limiting the value of deductions and write-offs and credits and special favors -- you limit those things significantly. And, in fact, I would limit them so much that for the upper income taxpayers, they'd end up paying a little more than they pay now.

(END VIDEO CLIP)

BURNETT: Number two: Toyota recalling more than a half million cars, most of them in the United States over power steering problems. OUTFRONT spoke with Toyota who told us there have been 79 reported defects. We're told the first warning sign is a noise followed by a warning light and, finally, steering becomes harder. A list of recalled cars is on Facebook.com/OutFrontCNN.

Number three: Adobe announced its abandoning its flash player for mobile devices. The move makes the Apple CEO Steve Jobs OUTFRONT. He refused to allow flash on the iPhone. And last year, Jobs posted a long note online about flash, saying, quote, "Perhaps Adobe should focus more on creating great HTML5 tools for the future, not criticizing apple for leaving the past behind." Apple said it sets its focus to HTML5. It is all Greek to me.

Number four: a massive snowstorm is pounding the west coast of Alaska tonight. The CNN weather team told us this is the strongest storm to hit the state in nearly 40 years.

And tonight, there are reports of wind gusts over 100 miles an hour. The storm is twice the size of Texas. It feels a lot like a hurricane, with 70 miles an hour sustained winds, waves as big as 50 feet. I mean, that's amazing. No one has been hurt so far.

All right. It's has been 96 days since America lost its top credit rating. What are we doing to get it back? The deficit super committee has two weeks to the day to figure out $1.2 trillion worth of deficit cuts. And if they fail, the Department of Defense will feel the biggest impact.

One person who knows how important the defense budget is, is William Cohen, the former secretary of defense from 1997 to 2001. He directed America's military actions in Iraq and Kosovo, comforted the families of those who were lost during the attack on the USS Cole in Yemen. He was a senator, a congressman, and now, also an author.

His new book "Blink of An Eye" is a fictional thriller about a nuclear explosion on U.S. soil or U.S. waters. Many of the situations in the book, though, appear to be, well, frankly, based on real life experiences.

And Secretary Cohen is OUTFRONT tonight to talk about it.

Good to see you again, sir. Appreciate you taking time to come OUTFRONT tonight.

WILLIAM COHEN, FORMER DEFENSE SECRETARY: Great to be with you, Erin.

BURNETT: The opening chapter of your book is a scene very similar to the incident with the USS Cole. You know, U.S. troops are leaving Iraq, a guy is on a small boat, and he goes to U.S. carrier, causes an explosion.

There was a hearing today for the man accused of plotting the USS Cole attack, the real one. A Saudi man being tried in a tribunal. There's been a lot of controversy about where to put terrorists on trial.

Do you think a tribunal is the right thing?

COHEN: I think it's right and I think it should proceed, and, hopefully, they will convict this individual for a terrible, terrible act. There was a saying in the book, I tried to recreate that scene because it had such an impact on us and me and all of us in the Pentagon and the military, that remember the Cole. And in the book, I change the name to Elkman (ph), but it is remember the Cole that was really on my mind.

And so, I hope the trial will proceed and that he will be convicted.

BURNETT: The attack took 17 lives. And, obviously, it was important to you, an important part of your career. How severe of a sentence does this Saudi man deserve?

COHEN: I would give him the maximum, whatever the maximum is under the rules at Guantanamo. I will give him the maximum.

This individual, this is not the first time they tried to attack one of our ships. They tried a year before, the boat was so heavily laden with explosives, that sank the boat. And they waited a year.

And finally, when the Cole came in, it came in under rules of engagement in which the ship was not really allowed to come in with its guns in preparation for any type of hostile activity. And as a result, the ship was hit.

BURNETT: So you have a scene in your book called "Goodbye Day." By the way, you have a news network in your book which is, I'm not OK with that, all right, that's all I'm going to say.

COHEN: Well, I tried to make it fictional. So, I just changed CNN to GNN.

BURNETT: OK. Google news network.

COHEN: Right.

BURNETT: All right. But in all seriousness, you have a scene called "Goodbye Day," the troops are pulling out of Iraq for good. Secretary of interior and defense in your book is very opposed to that. Is that your position on the situation we're in now where our troops are leaving Iraq for good?

COHEN: Well, my personal view is that I thought the troops should stay there a little bit longer because I don't think the seams of democracy have really settled too deeply in Iraq. And I think that by pulling out every -- all of our troops out, that Iraq is going to be in danger of not being able to really -- fully defend itself, particularly in nighttime operations which al Qaeda elements and splinter groups are now starting to filter back into Iraq.

So, I would have preferred that, but on the other hand the president made the decision, unless we can protect our men and women who are serving under U.S. control, then he was not going to submit to Iraqi government control and I agreed with that.

BURNETT: All right. Well, without ruining the story, you do have a nuclear explosion in the book, a lot is made of Iran as the country to blame.

Yesterday, I got the IAEA report, the latest one, on Iran. They're saying Iran could be building nuclear weapons, which was a step for them. Iran, of course, does its usual, its propaganda, its lies, and it really just starts to feel like deja vu -- this constant same old discussion.

And I'm wondering what you think about what the United States should do. Are we in a position where we either put up or shut up, right? You go to war, and you attack Iran, or you say, let's just deal with Iran as a nuclear power and plan for that as opposed to this little rhetorical game we play?

COHEN: Well, there are three options, and none of them are good. The first option is to intensify sanctions and get the Chinese and the Russians to really come down hard on the Iranians and force them to forego this particular nuclear program they have. Secondly, to consider a military option, either alone or with Israel or Israel acting alone. The third one is deliver the bomb.

Those are the only three options. My hope would be to avoid a military type of attack because we, number one, the military is not convinced it could be successful beyond stalling the program, delaying it maybe a year, 18 months, two years. But then we have consequences in the meantime. That may be the only option.

When Shimon Peres, who is seen as a leftist candidate historically in Israeli politics comes out and says the military option is that much closer, that's something that everybody should be concerned about, especially the Iranians.

BURNETT: I'm curious, when you talk about that even a military attack by the U.S. might only set Iran back by 18 months or two years or something along those lines, because I was curious with these budget cuts. We talk a lot about the super committee on the show. And we are passionate about doing its job and making a difference.

Part of what's going to force them to do that is these automatic cuts that will hit defense if they don't do their job. And these defense cuts, if they're forced, would bring a total of $1 trillion over the next 10 years in cuts. In your view, if that's what happened, what happens to America's defense?

COHEN: First of all, I think it would be irresponsible to allow that happen, to have these kind of automatic, across the board cuts really is not only imprudent, it's reckless in my judgment. We're going to have to do less with less as far as the military is concerned. We can't do more with what we have. We're going to end up doing less with less.

And so, we'll have to prioritize where we're going to be involved, under what circumstances, what are security apparatus and what our security rules going to be in the world.

But having across the board cuts, that's not an act of responsibility, it's irresponsible.

BURNETT: All right. Well, thank you very much. We appreciate it. Your book, "Blink of An Eye," a full thriller, available now.

And for those of you out there, the way to avoid those automatic cuts that he says are reckless and irresponsible, would be for the super committee to do its job.

OK. Now, let's check in with Anderson Cooper with a look at what's coming up with "A.C. 360."

Hey, Anderson. ANDERSON COOPER, HOST, "ANDERSON COOPER": Hey, Erin.

We're keeping them honest tonight in the program.

New developments in the child sex abuse story engulfing Penn State. This is just -- the more details you learn, just the more sickening this gets. The timeline of what allegedly happened to at least -- at least -- eight young boys becoming more troubling almost by the hour.

Now, legendary coach Joe Paterno is retiring. But even that's controversial. We'll tell you why.

We'll also speak with Dr. Phil about how this happened, what warning signs parents should look out for.

Also joining us, a man who says he was inappropriately touched by the alleged child rapists.

In raw politics also tonight, will partisan gamesmanship trump deficit deal-making. Rand Paul is saying Democrats walked away from the negotiating table. Democratic leaders are saying that didn't happen. Senator Paul is my guest. We'll ask him about that.

Those stories and tonight's "Ridiculist" at the top of the hour, Erin.

BURNETT: All right. Anderson, looking forward to it, as always.

And still OUTFRONT, as Anderson said, Joe Paterno's days are numbered. He's stepping down as head coach of Penn State at the end of the season. Former Paterno player, NFL Hall of Famer, Franco Harris comes OUTFRONT next to talk about that rape scandal.

And in Dearborn, Michigan, known as the capital of Arab America, featured in a new reality show. We're going to talk about it.

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

Tonight, we begin in Thailand where there are concerns in the flood stricken capital, Bangkok. That piles of uncollected garbage could taint the water and lead to disease and death.

Liz Neisloss is in Bangkok. And, Liz, how are cleanup efforts going?

LIZ NEISLOSS, CNN CORRESPONDENT: Liz, this is now garbage collecting in Bangkok. This is a typical city side street. It has become a river of toxic bit.

Workers have to wade through with bare legs, bare hands, picking up what they can. This scene will become more and more familiar as workers try to keep ahead of water that's coming into Bangkok -- Erin. BURNETT: Liz, thank you.

And now to Greece where talks between political leaders and the president ended tonight without announcement of a new prime minister.

Diana Magnay is in Athens tonight.

And, Diana, Prime Minister Papandreou was expected to resign today. What happened?

DIANA MAGNAY, CNN INTERNATIONAL CORRESPONDENT: Erin, shades of Groundhog Day here in Athens on Wednesday. There's no new government and still no name of the man brave enough to lead it. The prime minister gave a televised address which sounded almost like his farewell to the nation, but he didn't resign, and he didn't name his successor.

Talks are deadlocked how to get the country out of its deep economic crisis. It's real political drama that would seem almost farcical if the stakes weren't so high, Erin.

BURNETT: That's for sure. Diana, thank you.

And now to London where about 4,000 students poured onto the streets to protest increased tuition. Last year, these same protests turned violent.

Phil Black marched with the students today. And, Phil, how did the protests go?

PHIL BLACK, CNN CORRESPONDENT: Erin, after violence of the student protests a year ago and riots that spread across London in August, police are under pressure to get it right. They followed the crowd of protesters all along their path, ensuring they did not deviate from that approved route.

There were 4,000 protesters, fewer than expected. But there were also around 4,000 police deployed here, ensuring that there was one police officer in full riot gear for every angry student on the streets of London -- Erin.

BURNETT: Phil, thanks to you.

Well, he has the most victories in Division I college football history. For Joe Paterno, though, this is not a game, and there are no winners, in a child rape scandal that has devastated Penn State, its surrounding community and frankly shocked the whole country. Paterno announced he will retire at the end of the season after mounting criticism surrounding his former assistant, Jerry Sandusky, who is charged with sexually abusing eight children.

In a statement, Paterno said he was devastated. And added, quote, "I have come to work every day for the past 61 years with one clear goal in mind: To serve the best interests of this university and young men entrusted to my care. I have the same goal today." Hall of Fame Pittsburgh Steeler Franco Harris played for Joe Paterno and Jerry Sandusky from 1969 to 1971. Michael Weinreb is an ESPN contributor and writer for Grantland.com. They both join us OUTFRONT tonight.

Obviously, terrible circumstances for this. But, Franco, I want to begin with you and start with your reaction when you heard the charges against your former coach.

FRANCO HARRIS, FORMER PENN STATE FOOTBALL PLAYER: It's a horrible situation with Jerry Sandusky. Also as you know our A.D. was also charged with perjury. Right at this time, I think there's too much attention put on Joe Paterno.

BURNETT: And even though as apparently happened, he heard about very explicit events that had happened, reported them up, but when nothing happened, didn't pursue it?

HARRIS: Well, when I look at the situation, I think about 1998 when Jerry Sandusky was part of the football program. And when allegations were made in 1998, was Jerry being part of the program. It went all the way to the A.D. and to the local police.

In 2002, Jerry Sandusky was not part of the Penn State program. And then Joe told his higher ups about what happened. Now, there is some discrepancy about what was said.

BURNETT: Right.

HARRIS: But my feeling is that it doesn't matter what degree of abuse happened, whoever Joe mentioned this to should have taken action. But I can see that, you know, how Joe could get lost in the situation because in 1998, no charges were made. And so, it came again in 2002, as I mentioned earlier, that he was no longer part of the football program, Joe pass onto the university because the university matters are not really a football matter.

BURNETT: All right. Well, let me -- let me ask you, Michael. You grew up in State College. You had one of Jerry Sandusky's daughters in your class, I believe.

Did you have -- are you shocked? Did you have any sense that there was anything off or strange or wrong about this man?

MICHAEL WEINREB, ESPN CONTRIBUTOR AND WRITER FOR GRANTLAND.COM: No. I mean, State College is known as Happy Valley. So, you just -- you don't think that these things could ever happen. I mean, from what I have heard and talking to experts, this is often the way these things are. And then somebody who is a pillar of the community that nobody expects or nobody thinks could be involved in this sort of stuff, who often is.

So, if the charges are true, I don't think it's something that anybody outside the program, you know, ever really knew of or could have anticipated. BURNETT: Franco, did you have a lot of contact with coach Sandusky over the years? I know, obviously, you visit the school several times a year, at least by my understanding.

HARRIS: I visit Penn State a couple times a year. Not a lot of contact with Jerry. Through the years, I have been in touch with him, you know, through his Second Mile program, which really is a great program, in spite of things happening with Sandusky.

But I really haven't had too much contact with Jerry Sandusky in a number of years.

BURNETT: We're looking at some video of the Second Mile, which for those of you who aren't aware, was the charity Sandusky spent a lot of time with, where apparently a lot of these boys he met and where they came from.

Michael, how is the community responding? What words would you use to describe? Are they supporting Paterno or are some people thinking that ethically, morally, given what he was told, he did the wrong thing?

WEINREB: I mean, I think there's more facts that need to come out about this. I think, in general, you know, my parents are still there, they've been there for 30-some years. My dad's a professor there.

I talked to my mom yesterday, she basically said everybody's walking around in a daze, you know? It's just -- nobody knows how to deal with this. Nobody knows what's coming next.

You know, people -- the principals involved in this haven't spoken yet, so we don't know what their side of the story is. And it's kind of frustrating as someone who's also in the media that we haven't heard more from them. I want to hear from Graham Spanier, the university president. I want to hear from Coach Paterno.

BURNETT: Right.

WEINREB: And it's something we need to hear in the next few days.

BURNETT: Right. And to the point when he was supposed to give his weekly press conference, he didn't. And everybody does want to hear from him.

Franco, I know that there's more information we need from Coach Paterno clearly, in terms of exactly what he knew, acknowledged he knew and when he knew it. But do you think that if he knew this happened and didn't pursue it -- he should -- he should coach for rest of the season?

HARRIS: You know what? Joe will do what's good for Penn State. When he mentioned that he will coach to the end of this season, I thought that was the right decision. As Mike mentioned, there's still a lot of information to come out and unfortunately a lot of people are making a lot of decisions based upon just a few details.

So, I would like to see him coach until the end of the season.

BURNETT: All right. Well, thanks very much to both of you. Appreciate you taking the time.

HARRIS: Thank you.

WEINREB: Thank you.

BURNETT: OUTFRONT next: the cast member of a new reality program called "All-American Muslim," a side of Michigan. Yes, Michigan.

Oh, yes? You've probably never seen before.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Once the team is away from Dearborn, they start calling us names, Arabs, terrorists.

UNIDENTIFIED MALE: Arabs. Camel jockeys.

(END VIDEO CLIP)

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BURNETT: The second largest Muslim community outside the Middle East is actually located in the heart of the Midwest, in Dearborn, Michigan.

This Detroit suburb is the capital of Arab-America. And despite the fact that nearly 60 percent of Americans have an unfavorable view of Muslims, which is the worst of any religion, they are American.

TLC is the learning channel and they're debuting a new reality show Sunday night called "All-American Muslim."

Joining us tonight is the show producer, Alon Orstein, and cast member, Nawal Aoude.

And thanks to both of you for being here.

ALON ORSTEIN, VP PRODUCTION/DEVELOPMENT, TLC: Thanks.

NAWAL AOUDE, "ALL-AMERICAN MUSLIM" CAST MEMBER: Thank you for having us.

BURNETT: I had a chance to look at it and I'm excited about it.

Alon, I want to start with you. Before this interview started, we were talking about how interesting it was in light of this show that you're Jewish and decided to come and do the show. Why?

ORSTEIN: Well, you know what? To me, it's sort of irrelevant, you know? I mean, we do all kinds of shows at TLC about all different topics. BURNETT: Nawal, let me ask you, why did you decide to be a part of the show?

AOUDE: TLC approached us and, you know, Nader and I are very fond viewers of the network. And we are just happy that Nader and I got the opportunity to be -- and to open up our lives to the world.

BURNETT: And you did open up your lives, obviously. He's your husband. You had a baby.

And I think in a scene that a lot of people can just understand --

AOUDE: Relate.

BURNETT: -- relate to, you said, when you were pregnant, you said, I'm going to have this baby at 38 weeks, I'm going to do it this way and that way. And he goes, OK.

(BEGIN VIDEO CLIP)

AOUDE: Because I want to have the baby at 38 weeks.

UNIDENTIFIED MALE: I mean, what do you do, like you send him an e-mail or something?

(END VIDEO CLIP)

AOUDE: I am nine months pregnant. I want to get that baby out, you know, and I'm glad it happened when it happened.

BURNETT: There are a lot of people who still look at you and say a Muslim-American woman and they expect you just by virtue of those things to be quiet, to be secondary to your husband. And you seem to be anything but.

AOUDE: Oh, yes.

BURNETT: You're a respiratory therapist. So, you grew up in a family first generation, right?

AOUDE: Oh, yes.

BURNETT: Where it was invested in women's education?

AOUDE: Oh, yes. I mean, my mom came over from the Middle East, and she came here and she started -- I mean, she went straight to school. She's a successful business woman. I mean, I was raised in a family of very strong, willful women.

BURNETT: Alon, is that one of the goals you had showing a different view of women and a stereotypical view that some people still have as incorrect as it may be?

ORSTEIN: Our sort of objective of coming in was let's give people a vantage point and then they can make up their own minds as to what they think about this group of people or characters or their actions. But, you know, it's really about giving people the opportunity to actually experience something.

BURNETT: Do you feel discriminated against?

AOUDE: No, not particularly. No. I mean, I don't walk around with a chip on my shoulder think that I'm being discriminated against. But I mean, I do get looks and I do get questions.

You know what? I mean, I'm open to all questions. I wish there was more dialogue.

And that's why Nader and I signed on to the show. We want more dialogue. And we want people to ask us questions. In public when I'm approached, I want them to come up to me and talk to me.

BURNETT: Right. Well, one of the best parts of the first -- the one that I saw, and I don't want to give it away, but there's a room where you all sit, very sort of Arab-esque, right? And you're all sitting there. One of the women who does not wear hijab says to you, well, you know, you wear hijab and you come back and say I get my hair highlighted, I do all this.

AOUDE: I'm just like everybody else. You just don't -- I mean, I just -- I work it a different way.

BURNETT: A way she said Fendi, Burberry, you name it, they all make hijabs.

All right. Well, tomorrow, we have a big show coming up. We're going to be talking to Sheldon Kennedy, a former NHL player who was sexually abused by his coach to weigh in on the Penn State rape scandal.

And also two-time Oscar nominee Ed Norton. Edward Norton is going to be our special guest tomorrow. So, a big show. We're going to keep focusing on the super committee and keep a very close eye on whether there really is a press conference of the women who have accused Herman Cain of sexual harassment.

Thanks so much as always for watching our show tonight, OUTFRONT.

Up next, though, "ANDERSON COOPER 360" -- it starts now.