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ERIN BURNETT OUTFRONT

Man Arrested in New York City for Terrorist Plot; Congressional Super Committee Fails to Reach Deficit Reduction Agreement; Interview with Governor Scott Walker; Interview With John Kerry

Aired November 21, 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, "ERIN BURNETT OUTFRONT": Thanks, John.

We're in Washington, D.C. tonight with breaking news. The super committee is a super failure. Charged with cutting $1.2 trillion from the debt, they accomplished nothing.

And then we go out front in Madison, Wisconsin, 30,000 people taking to the streets demanding the recall of Governor Scott Walker. He's our guest tonight.

And the NYPD arrests a lone wolf terror suspect just before he finished his first bomb. His targets -- veterans, police, and the post office. Let's go out front.

I'm Erin Burnett. Out front tonight we're live from Washington as we get ready for the big debate tomorrow night. There's a super failure tonight, such failure that the leaders of the super committee didn't even face the press. They issued a statement which read in part, quote, "Despite our inability to bridge the committee's significant differences, we end this process united in our belief that the nation's fiscal crisis must be addressed." They didn't say by someone else, but they kind of did. They agreed on one thing that they who had the mandate to do a deal with a simple majority would all kick the can down the road even though we are in a crisis. That is pretty audacious.

Super committee, you had the power, as they say. If not you then who? If not now, then when?

The super committee was told to cut 2.6 percent of the budget over 10 years. That's it, 2.6 percent, and they couldn't do it. The president did approach a camera to say he would veto what John McCain had suggested, which was to halt the automatic spending cuts.

(BEGIN VIDEO CLIP)

BARACK OBAMA, (D) PRESIDENT OF THE UNITED STATES: I will veto any effort to get rid of the automatic spending cuts, domestic and defense spending.

(END VIDEO CLIP)

BURNETT: And while the credit rating agency Standard & Poor's says it won't downgrade America so long as the automatic cuts stay in place, the nation's biggest bond investor says that's just luck that will run out. Bill Gross of Pimco telling me this afternoon, quote, "Cowardly lions ultimately need to find courage or give their franchise to the market wizards."

Unlike a lot of people, we were hoping against hope that the committee would succeed, because, quite simply, the pain of cuts now would be better than the pain later. It's going to be like losing a finger versus having both your legs cut off. Well, until the last minute this afternoon I idealistically thought our elected leaders in Washington would ultimately do the best thing for their country and make a deal.

John Kerry saw this coming. Listen to what he seed on "Meet the Press" on Sunday.

(BEGIN VIDEO CLIP)

SEN. JOHN KERRY, (D) MASSACHUSETTS: There is a real threat that not only will there be a downgrade but the market on Monday will look again at Washington and say you guys can't get the job done. And just the political confusion and gridlock is enough to say to the world America can't get its act together.

(END VIDEO CLIP)

BURNETT: He was right, but he didn't do anything about it. Today's markets just a taste of the long-term consequences of the partisanship and bickering in Washington. U.S. stocks fell, as you can see, 249 points, 2.1 percent.

I say just a taste because when the day of reckoning comes and that day may not be immediate, we may get lulled into a sense that nothing matters at all in Washington, but that is not true. It does matter. When the day comes markets and our retirement nest eggs will be smaller. Interest rates will be much higher. Experts say 18-plus percent. America's standard of living will be lower.

So instead of listening to 12 super committee members blaming each other, the nation needs to hold them to account. Everyone in this country needs to fight back and do exactly what Howard Beale said in the movie network.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: We need to get up right now and go to the window, open it and stick your head out and yell, "I'm as mad as hell and I'm not going to take this anymore."

UNIDENTIFIED FEMALE: I'm mad as hell I'm not going to take it anymore.

UNIDENTIFIED MALE: I'm mad as hell and I'm going to take it anymore.

UNIDENTIFIED FEMALE: I'm mad as hell I'm not going to take it anymore!

(END VIDEO CLIP)

BURNETT: I am mad as hell.

Peter Boockvar, market strategist at Miller Taback also mad as hell. Peter someone said to me that if there had been the surprise of a deal that we could have seen a true market surge. What do you think?

PETER BOOCKVAR, EQUITY STRATEGIST, MILLER TABCK AND COMPANY: Probably because the market last week got a taste that there was unlikely to be one. But today was a very strange market day because yes, the stock market was down 250 points. But the U.S. treasury market, which is the ultimate arbiter of the creditworthiness of the United States actually rallied. U.S. government borrowing, the cost went down today. So yes, some went backwards, but it was European issues and problems and concerns that actually bailed out the U.S. treasury market today in the face of what should have been a sharp selloff in treasuries and rise in interest rates.

BURNETT: And so explain how this happens, because people are going to point to that and say fail, fail, fail and still borrowing costs in the United States dropped. If that's the case why should we worry about Washington ever getting the fiscal house of the United States in order?

BOOCKVAR: Right now that is fair, again, because the U.S. treasury market is benefiting from the problems in Europe. Investors around the world want cash and cash equivalents. And that is the U.S. dollars and U.S. treasuries. U.S. treasury sold a two year note today. The demand for the note was the greatest in at least 20 years. So go scratch your head in light of what happened and wondering why is there this demand? Again, that is problems outside of the U.S.

But be sure this is coming back to us when Europe is somewhat calm and our politicians are not going to be off the hook as a result.

BURNETT: We'll come back and it will bite, and it will bite badly. All right, thank you very much Peter Bookbar, appreciate your taking the time.

Let's turn to David Gergen, senior political analyst for us here at CNN as well as John Avlon, contributor and columnist for Newsweek and "The Daily Beast." Thanks to both of you. You were here on Friday. We were all angry and upset and hopeful that thereby a breakthrough. But John Avlon, no.

JOHN AVLON, SENIOR COLUMNIST, "NEWSWEEK"/"THE DAILY BEAST": No. This is a profile in cowardice. This is a new low for this dysfunctional, divided government, and people should be furious. They put party over country and now we're going to have a lot of trouble ahead. They had the power to do something about it.

And the fact that they put out a statement saying hoping we can deal with the fiscal crisis and shouldn't pass this to the next generation, that's incredibly insincere, pathetic, and folks should be furious and mad as hell because all that rhetoric about deficit and debt, they put tax cut theology over dealing with that. I'm just furious.

BURNETT: David Gergen, I'm furious too. And you know what's amazing, in the deafening silence that was today and Max Baucus came out and said maybe there's a last minute idea and all we got was a statement. They didn't even come to the cameras. And a lot of them frankly appeared had gone home. Then we get 15 statements from all kinds of people coming into the e-mail of blame game. It is shocking.

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: Erin, it's hard to capture in words just how angry the American people are going to be. I think most people look at this and say those folks in Washington have gone nuts. They're out of their minds the way they're conducting things.

This is -- nobody can be quite sure as we just heard what's going to happen in the marketplace. But this is a reckless gamble. Coming in the midst of all the problems in the Eurozone, to throw this on top of it, is going to increase nervousness in the markets. There's no question about that.

We know that eventually it will come back to haunt you. Look at the kind of interest rates now France and Spain and Italy have to pay. They've risen dramatically because of their deficit problems. You're going to find consumers in this country, their optimism was starting to rise a little bit. It will go back down. You will have fewer shoppers in the store.

But I think the question is where do we go from here? What can you do? I do think that the way people have to show disgust is through voting. Maybe there are -- maybe the centrists can get a referendum going or some sort of petition going saying I'm going to vote against you unless you cut the deficits before the 2012 elections.

BURNETT: Jon Avlon what do you think about that? We're going to talk about a recall effort in the state of Wisconsin, people coming forward and saying what they think in a more vocal way. It is -- because this is shocking. And by the way, we have to remember, you had, what, 130, 140 members of Congress come out and sign a piece of paper saying they wanted spending cuts and revenue increases, i.e. taxes, on the table. That includes Democrats and Republicans in Congress.

AVLON: That's exactly right. We had that gang of 150 telling them to be bold, go for $4 trillion. At the end of the day they couldn't even deal with $1.2 trillion.

So it is up to now to straighten our civic backbone and call it out. The problem is in recent days you've seen cynical party strategists tell people in their parties, you know what, if it fails, it's OK. Democrats, we can run as the saviors of Social Security and Medicaid because we didn't agree to put forward any entitlement reform. And Republicans can be ideologically pure. They can say they upheld their pledge to never raise taxes.

But the American people, two-thirds of them we've seen in the two-thirds were OK with raising taxes on the wealthy, significantly cutting spending, and a growing number were willing to deal with the entitlement reform. This is such a lost opportunity. The only way to get their attention is to vote them out of office.

BURNETT: David Gergen, will this be put off until the election or do you think the president will be forced to use his veto when it comes to the automatic spending cuts, which we should make clear don't take place until after the election either?

GERGEN: It does seem to me, Erin, I'm trying to figure this out where to go from here. The president has a couple of things to get done before the end of the year. He does want to extend the payroll tax cuts as that's important for the economy. He does want to extend unemployment benefits. That's important for a lot of people who are hurting out there. He has to somehow get this organized.

He's been extremely passive in this. He put out a proposal and left town and sort of like, did he still have his hand on the tiller.

It does seem to me that when the Congress comes back after thanksgiving, he does need to call the leadership and say we've got to come up with action to get some things done before the election. I do not think it's permissible just to wait for the election to sort some of these things out. And it's in the president's and, frankly, their interest to get some kind of action going before the elections, not just simply leave this until November a year from now.

BURNETT: All right, thanks very much to both of you. I'm sorry it was such a depressing conversation, but hopefully it will motivate people, right? I'm not going to take it anymore. That's how we all feel.

All right, well, still out front, 30,000 protesters taking to the streets of Madison, Wisconsin. Why? They want the recall of their governor. Scott Walker is with us next.

And the NYPD arrests a lone wolf terror suspect allegedly planning to attack veterans and the police. And actor Hugh Grant testifies in a phone hacking story, saying, well, the press was bullying citizens. We'll be back.

(COMMERCIAL BREAK)

BURNETT: The number tonight -- 324. That is the number of games that have been canceled because of the NBA lockout. Obviously the teams and the players are feeling a little bit of the impact. The fans are too, by the way. Companies like Buffalo Wild Wings are going to take a hit, too. They get so much of their business from people watching the games. We're told that if there are no NBA playoffs, sales at restaurants could drop three percent just because of the NBA.

Washington is consumed with partisan bickering and finger pointing that makes us mad as hell. Budget battles at the state level are like hand to hand combat.

And 30,000 took to the streets in Madison, Wisconsin to push for the recall of the state's governor, Scott Walker. Governor Walker led a very public and messy fight earlier in the year to balance Wisconsin's budget by forcing public sector unions to contribute more to their pensions and healthcare, and also, well, he cut the collective bargaining process.

Governor Walker joins us now from Madison. Governor, thanks very much for taking the time to be with us. This is a story that riveted the nation earlier in the year when you had all the fights going on. Now you've got people out in the streets. You got 60 days. They have to get 540,000 signatures to force a recall. They think they'll get a lot of fake signatures. They're going to get they said 700,000 just to be safe. Do you think they'll be successful in kicking you out?

GOV. SCOTT WALKER, (R) WISCONSIN: Well, I don't think they'll be successful in that regard. But I do think there's a likelihood that they'll get the signatures. If they pay 10,000 people as they've done in other states and activists to come in here and get an average of one a day for the next 60 days, that would be enough. That's still just a number reflective of 25 percent of the people who voted in the last gubernatorial election.

A year ago, the majority of the people in the state elected me ultimately to do what I have done, and that is to balance the budget, to do it without raising taxes, to still protect core programs. We added a billion dollars more in Medicaid to protect needy families and seniors and children. We put more money back in the classroom through our reforms so kids like my kids that go to public school benefit from that. All of those are things we campaigned on, and all of those are things unlike the people in Washington, we kept our promises, and I think the majority of the people in the state still want us to move forward and get the state back on track.

BURNETT: Now, obviously, some of the Democrats on the other side of the aisle would take issue with it. They say you cut $1.6 billion to education. Did you make the right choices when you made the decision on where to cut? Do you have any regrets in saying hey, wait I did too much here?

WALKER: Unlike nearly every state out there, Democrat and Republican governors cut budgets and education. The difference is those other states gave the local government no other option. In our case many of our schools have been the same or better than they were before because we gave them the tools not only to have a healthcare and a pension contribution, one that I might add that matching your pension and paying 12.6 percent of premium for health insurance is still less than what the average taxpayer pays.

But even things like opening the market to compete for health insurance coverage, those things have saved anywhere from hundreds of thousands to in some cases millions of dollars when it came to healthcare. We gave them the tools to put more money in the classroom to hire and fire based on merit and pay based on performance so the best and the brightest in the classrooms and our local government across the state. We did what other states wish they could have done. Illinois to the south has been an abysmal failure. They raised taxes. They still have a multibillion deficit, and they had to ultimately pursue layoffs of public employees and shutting down facilities because they didn't make the changes and reap forms we did in Wisconsin.

BURNETT: Do you think there's anything good that unions do for society?

WALKER: There's anything what?

BURNETT: Anything good that unions do for society.

WALKER: Oh, I think private sector unions without a doubt. Private sector unions are a partner in economic development. The difference was that the government level, I was a local official for eight years prior to being governor. I saw repeatedly in times it when we had tough budget, we try to make reasonable concessions with them, even at one point asking for one week a month for a 35-hour workweek to avoid 400 or 500 layoffs. They said forget it. Lay them off.

We made changes, saw what was happening in December before I took office. They wanted to ram through a contract that would lock in the higher benefits and ultimately higher taxes. We said no. We've got to respect the taxpayers in our state and respect the economy. That's what we did.

BURNETT: All right, Governor Walker, we're going to be watching this very closely, ground zero for the future of our country there. Thanks for taking the time to be with us.

WALKER: Thank you. My pleasure.

BURNETT: New York City police say that is exactly the kind of damage that could have happened if Al Qaeda sympathizer, Jose Pimentel, was not stopped. But he was, arrested Sunday an hour before police say he was finishing his first bomb. His goal was to attack U.S. military service members, the police, and the post office. He is now facing multiple terrorism-related charges.

Pimentel is American. That's a profile that's been the case in many recent terror attack attempts. Michael Bloomberg, the mayor of New York City, said his motivation came from overseas.

(BEGIN VIDEO CLIP)

MAYOR MICHAEL BLOOMBERG, (I) NEW YORK CITY: The suspect was a so-called lone wolf, motivated by his own resentment of the presence of American troops in Iraq and Afghanistan as well as inspired by Al Qaeda propaganda.

(END VIDEO CLIP)

BURNETT: Joining me now is CNN national security contributor Fran Fragos Townsend. Fran, thanks for being with us. And we know the NYPD counterterrorism unit had the man under surveillance for about two years, but he was in touch with other radicals before he was killed. What do you think is going to happen here?

FRANCES TOWNSEND, CNN NATIONAL SECURITY CONTRIBUTOR: Well, I mean, you know, it will be interesting to see how did they USE this informant, Erin. Why did it go on for two years? What was the turning point? We heard at a press conference yesterday that the killing of Awlaki in a drone strike seemed to set this guy, Pimentel over the edge, and actually change it from apparitional to operational.

But it's interesting he took inspiration overseas and the he looked at the internet and the "Inspire" magazine to get the materials. He was going to target U.S. military personnel returning from overseas. And so why wasn't the FBI involved. And where were the feds in all had?

BURNETT: Let me ask you this. When this show went on the air, I interviewed Defense Secretary Leon Panetta. And he talked about this whole issue of lone wolf. He said his biggest fear, Fran, that it woke him up in the middle of the night was worrying about a lone wolf strapping some sort of a suicide vest and blowing themselves up in a public place, a subway or something like that, homegrown terrorism. Are you concerned that we just keep seeing more and more American citizens as the perpetrators?

TOWNSEND: They're very difficult give to detect. One of the things you see, that's why I say how did they use the informant to get into this guy? What we're seeing in the Pimentel case is that Awlaki, who is dead, his ideology lives on. He had sermons that are audiotapes, there is materials on the Internet. Even when you kill them, their inspiration, ability to recruit Americans and inspire them remains.

So this threat isn't going away. We have to still be able to get into -- we have to watch the organizations and the website and try to trace back to the individual who may be inspired and want to be affiliated with that.

BURNETT: All right, Fran, thank you so much for being with us.

TOWNSEND: You're welcome.

BURNETT: When we return, a new poll has Newt Gingrich leading. That's right, the leader now, the Newt. So does that hurt him coming into the GOP debate tomorrow?

And then actor Hugh Grant testifying at an inquiry into a phone hacking scandal. You'll hear from Hugh coming up in just a couple of moments.

And Pakistan's problem with athletes foot -- it's a story you can't resist out front, next.

(COMMERCIAL BREAK) BURNETT: Now a story we can't resist. Pakistan's telecommunications authority has told the country's cellphone companies to begin blocking text messages which include terms considered obscene. Now, the list of almost 1,700 phrases - wow -- 1,100 in English and 600 in Urdu, includes all the usual four letter offenders we won't say and most of their derivatives, but it doesn't stop there.

The list also includes words like "naked," "barf" and "monkey crotch," and a few that, frankly, I am not comfortable sharing on the air.

The decision has been met with opposition from both mobile customers and carriers. But the authorities said the move is legal under Pakistan's spam law which prohibits people from transmitting messages that are false, indecent, fabricated or obscene.

The ban was actually supposed to take effect today but it's now been deferred because Pakistan's cellphone companies have asked for more clarification.

We can't resist doing the story for a lot of reasons. First we've learned a lot of new obscene words and phrases courtesy of Pakistan's telecommunications authority. And second, it gives us an excuse to play the infamous George Carlin routine, "Seven words you can never say on television."

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: The first day in fact, I had a call from an English language purist. You got on the phone. He tells me --

(END VIDEO CLIP)

BURNETT: Yes. So we had a lot of those too. "Dolphins," "weasels" and "axes" also combined in certain ways to make the ban list. Check it out.

(BEGIN VIDEO CLIP)

BURNETT: Still out front, the out front five. Big wig investigator.

UNIDENTIFIED MALE: Leaving no stone unturned, without any fear or favor.

BURNETT: Hugh on hacking.

HUGH GRANT, ACTOR: I don't find that lovable and naughty. I find that cowardly and bullying and shocking.

BURNETT: Billion dollar backroom deals.

UNIDENTIFIED MALE: Even the government to government trade, the so-called clean or formal trade is, interdependent with the black trade, the completely illegal trade. BURNETT: All this out front in our second half.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

BURNETT: We start the second half of our show with stories we care about. We do our own reporting. We make the calls and find the OUTFRONT 5.

Number one tonight, the United States putting new pressure on Iran. Tonight, the U.S. naming Iran and its central bank as, quote, "primary money-laundering concern." Treasury Secretary Timothy Geithner announced that 11 entities have been blacklisted for helping build Iran's nuclear program. He also warned financial institutions to think hard about doing business with Iran.

(BEGIN VIDEO CLIP)

TIMOTHY GEITHNER, U.S. TREASURY SECRETARY: If you are a financial institution anywhere in the world, and you engage in any transaction involving Iran's central bank or any other Iranian bank operating inside or outside Iran, then you are at risk of supporting Iran's listed activities.

(END VIDEO CLIP)

BURNETT: All right. This comes on the day Britain cut all of its financial ties with Iran. China and Russia continue to do business with the country. And they (INAUDIBLE) of its oil.

Number two: What's next with Saif al-Islam Gadhafi? He, of course, is the son of Moammar Gadhafi who has been on the loose. The interim government wants to put Saif on trial in Libya. And the International Criminal Court has said Saif should be handed over to go on trial at The Hague.

Mike Newton is a law professor at Vanderbilt. He tells OUTFRONT one solution would be an ICC trial which mandates Saif be acquitted and be transferred to Libya for trial.

Number three: President Obama, just a few moments ago announcing the pardon of five individuals, Leslie Berry, Jr., for selling marijuana, Dennis Bulin for trying to sell more than 1,000 pounds of marijuana, Ricky Collette caught with 61 marijuana plants, Martin Kaprelian busted for stolen property, Thomas Ledford, conducting an illegal gambling business. And the president issued a commutation to Eugenia Jennings for distributing cocaine. Lot of pot pardons there.

Number four: sales of existing homes rose by 1.4 percent in October, to a rate of 4.97 million units, much better than had been expected. The number of homes on the market fell to 3.33 million. That's an 8-month, the best since January.

Economists say it was a positive report that we spoke to. Housing market, though, has a long, long way to go before recovery. We're still 30 percent off the highest hit in prices in the summer of 2007.

Well, it has been 108 days since America lost the top credit rating. What are we doing to get it back?

Super committee did not do anything. But S&P says it isn't going to downgrade America as long as the mandatory cuts remain in place. Moody's says the super committee's lack of success is informative but not decisive yet in determining the U.S. credit rating.

All right. Well, we're not doing anything right now. The super committee, a super failure as we've called it, ending all negotiations after failing to reach a deal to reduce America's debt. Now, the committee has six Democrats and six Republicans.

They didn't actually publicly address the crisis. They didn't come to the cameras, as they usually do. Instead, they released a statement which said, in part, quote, "We are deeply disappointed we've been unable to come to a bipartisan deficit reduction agreement."

Well, not nearly as disappointed as we're going to be if we don't begin reducing our debt. As we told earlier in the show, this is bad news for our economy. A lack of certainty, the uncertainty, and the gridlock will mean we don't get hiring now, it sent the market down 250 points today. That means smaller retirement nest eggs for everyone and overtime when the day comes.

And one thing we know is we don't know when that day will exactly be. That's the whole problem. But interest rates will go a whole lot higher.

All right. Well, what can we do about it right now?

Joining us from the left and the right side, we've got Kevin Madden, of course, works with Mitt Romney. And, Bill Burton, head of the super PAC for President Obama, and also, of course, was in the Obama White House.

Great to have you both with us.

UNIDENTIFIED MALE: Good to be with you.

UNIDENTIFIED MALE: Thanks.

BURNETT: All right. Your former boss, he came out. He said he's going to veto anybody who tries to rollback these automatic cuts, which is obviously a really important thing for the credit rating. But let me just ask you this one question. Why was he so quiet until now?

BILL BURTON, PRIORITIES USA SR. STRATEGIST: Well; I think that the president was working behind the scenes, his White House was working behind the scenes. And as Senator Kerry has said, they asked that the president not be too vocal in how we participated here because it would politicize the process in a way that would stop them from getting the deal. Anybody who knows the president knows that he likes to work hard. He likes to dig down deep into the details and there's no shortage of ability there. But if making a deal meant staying away from the limelight, staying way from the public viewing of his participation, then he was obviously willing to do it. But, you know, the fact that Republicans wouldn't take yes for an answer on anything that the Democrats brought to the table is why we're in the place we are light now.

BURNET: Something to be said for the fact that Congress' approval ratings are so low, that, you know, whatever their political party may be, you get in with the pigs, the pigs have fun and you just get muddy. Just stay away from them?

BURTON: Well, I don't think it's that, as much as the president wanted to get a deal here. He wanted to reduce the deficit. Everything was on the table but Republicans just refused to make a deal.

BURNETT: Kevin Madden, what about the Republicans? I didn't see any of the candidates, Republican candidates, standing up and taking a real stance on this either. I mean, they were probably like, hey, thank God, we don't have to touch this.

KEVIN MADDEN, REPUBLICAN STRATEGIST: Well, like you said -- Washington, right now, does look like one big pigsty and everything is dirty in this mess.

Republicans, in large part, recognize that the contours of this debate are playing out in 2012. Regardless of what the super committee does, the deficits, spending, tax cuts, the tax rates, all of those are an important part of the debate. So, you see many of these candidates out there on the campaign trail talking to those big issues and they're not encumbered by a lot of this partisanship here in Washington. And that's a good place to be politically.

And I think the bigger part of this, I think, which is really hard for the president, is that he right now owns a lot of this because what's bake into the cake is the performance of the economy. And the overall economy right now is not performing well. And you're seeing a lot of uncertainty and you're seeing a lack of confidence right now, particularly in the American public.

And I think Washington, in the end, is going to be judged very harshly. But the president is going to be judged particularly hard.

BURNETT: How do you deal with the fact, Bill, and this isn't just the president, this is Democrats, this is Congress -- not the guys that want to come in, but the guy who has the job and the Democrats and Republicans -- deal with the fact that there just seems to be something so inherently dishonest about we have automatic cuts after the election. The Bush tax cuts are going to go away after the election.

It just -- it just doesn't taste good to a lot of people. Not good at all. BURTON: I tell you what -- look, like I said before the president was there. You know, you talk about who is willing to make big cuts. And the president already made a huge cut to Medicare, half a trillion dollars -- something that Republicans demonized out on the campaign trail all over -- all throughout 2010.

And this time around, Democrats are willing to make cuts all across the board but they wanted to have a real conversation about it and find a way that they can do it in a way that made sense. And this, you know, as we all concede, none of this looks good to anybody out there in America.

MADDEN: I think that's right. I think, you know, people are looking to Washington for answers. They're looking for solutions. They're looking for trajectory in the right direction. They're not getting it.

I think the institutions are going to be judged very harshly, Congress. But the president still is the president. He has this bully pulpit.

And I think this has been a bipartisan criticism. Even Michael Bloomberg today came out today and said the president has to step in here, should have stepped in and done a better job, taken greater steps to get something done and he didn't.

BURTON: I appreciate that. But Michael Bloomberg, he's a busy guy. I know he's got a lot of things going on up in New York City. But -- so maybe he doesn't know that Republicans ask that the president not participate in these talks because it would politicize it too much.

But as the point was made, Mitt Romney wasn't exactly out there providing any leadership on this either, pushing Republicans to the table to make a deal.

BURNETT: Quickly before we go, speaking of Mitt Romney, Newt Gingrich is now number one. What do you think?

MADDEN: Well, I think we've seen a lot of volatility in these polls. I think a lot of folks have gone up and they've gone right down.

The good thing about Governor Romney is he stayed consistent the whole time. And I think one of the things we've seen on these polls, too, is when you ask Republicans who they think is going to win, they think it's Governor Romney. That's in large part because he's been the most vocal and has the best message on the economy, which is the number one issue.

So, I think he has a lot more growth here in this very critical phase of about the next six weeks as we get closer to Iowa and New Hampshire.

BURNETT: I think that's something you both agree on. He'll probably be the nominee, although, Bill, you've been preparing for him to be the nominee. I'm sure you'd prefer it to be someone else.

MADDEN: I think we're going to be hoping and wishing, I guess.

BURNETT: For very different reasons.

All right.

BURTON: The process of elimination eventually comes to an end at some point.

BURNETT: All right. Good to see both of you in person.

MADDEN: Good to be with you.

BURTON: Thanks, Erin.

BURNETT: All right. Well, actor Hugh Grant went after British newspapers during his testimony today that went on in Britain before a government-backed inquiry into press ethics. The probe was launched after Rupert Murdoch's tabloid paper "News of the World" shut down this summer. Well, the reason was because it was revealed that reporters were hacking into people's cell phones, which is a vile act. We would never do it. Seriously.

All right. Teenage murder victim and relatives of British soldiers killed in Afghanistan all have been the victims of these hacks. So, there were a lot of terrible stories. Grant testified the British press has been allowed to get away with intimidation and bullying too long, saying now is the time to stand up and put an end to it.

(BEGIN VIDEO CLIP)

HUGH GRANT, ACTOR: And you see them glamorizing themselves as though we might be naughty but, you know, we get the story. But when the story has been obtained by hacking the phone of a murdered school girl or the family of a soldier killed in Afghanistan, I don't find that lovable and naughty. I find that cowardly and bullying and shocking.

(END VIDEO CLIP)

BURNETT: Very well-said. Well, Grant also said he believed he was the victim of phone hacking, accusing "The Mail," which is a non- Rupert Murdoch paper, of hacking phone messages and writing stories about his girlfriend at the time. His accusation -- why didn't the scope of the hacking scandal which had mostly involved Murdoch papers? It means it goes beyond that. As we said, petty vile practice.

Well, now, let's check in with Dr. Sanjay Gupta who is filling in for Anderson Cooper.

Sanjay, what's coming up on "A.C. 360"?

DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: Well, we are keeping them honest. As you might, Erin, a lot to talk about. On Capitol Hill, a super failure by the bipartisan super committee tasked with cutting the U.S. deficit.

Now, you've been talking approximate this. They've announced they can't reach a deal to cut at least $1.2 trillion dollar from the budget. But, you know, instead of explaining why on camera, they issued a statement. Wait until you hear what it says.

Also ahead, deja vu in Egypt. Deadly protests on the streets of Cairo. Egypt's cabinet offers to resign. But will the military, that really controls the country, will they allow this to happen? We're keeping them honest on that.

And new details about Jared Loughner. He's the man accused of firing a bullet through Congresswoman Gabrielle Giffords' brain in January. What prison records revealed about his mental state today. A lot of questions about that.

Those stories and much more as well, Erin, at the top of the hour.

BURNETT: All right. Sanjay, looking forward to seeing you.

And OUTFRONT next, the latest from the Penn State rape scandal. A new investigation into the allegations launched. Jerry Sandusky, the coach, at the center spotted going about his business as normal.

And we shine a light on the global arms trade. Just how bad is the corruption and backroom deals there? Hint: it might make the super committee look good.

(COMMERCIAL BREAK)

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

And tonight, we begin in Egypt, where military forces unleashed gunfire and tear gas on protesters gathered in Tahrir Square in Cairo.

Ivan Watson is there.

And, Ivan, how significant are these protests?

(BEGIN VIDEO CLIP)

IVAN WATSON, CNN CORRESPONDENT: Erin, this is the worst violence Egypt has since the uprising a little bit more than nine months ago that overthrew former President Hosni Mubarak. At least 24 people killed in the last three days. The government here, the civilian government, has already submitted its resignation to the ruling military council. And all of this has put into peril the first round of parliamentary elections which were scheduled to take place next Monday -- Erin.

(END VIDEO CLIP)

BURNETT: Thank you very much, Ivan. And now to Syria where the government crackdown on civilians is escalating. President Bashar al-Assad warning the military intervention against his country would lead to very dire repercussions. What does he mean?

Arwa Damon is following the story from Beirut.

And, Arwa, can international pressure on the Assad government work or not?

(BEGIN VIDEO CLIP)

ARWA DAMON, CNN INTERNATIONAL CORRESPONDENT: Well, Erin, it would be difficult because not only does the Syrian regime still to a certain degree have the support of Russia, but also of China, which would make it incredibly difficult if not impossible to pass any sort of U.N. resolution.

The government also has a very strong ally in a regional powerhouse, and that is Iran. So, while some are saying that the Syrian regime is feeling the impact of various sanctions imposed by the U.S. and by Europe, others say that the Syrian government is certainly behaving as if it believes it still has the upper hand -- Erin.

(END VIDEO CLIP)

BURNETT: Arwa, thank you.

Well, another investigation has been launched in the Penn State's handling of the child sex abuse allegations. Now, one of the alleged victims has been forced to switch schools after being bullied and teased. And the man at the center of it all, former assistant football coach Jerry Sandusky, who has been charged with sexually abusing eight boys, he's been seen around town acting as normal.

Sara Ganim was a reporter to "Patriot-News" and a contributor for us. She's OUTFRONT tonight from Penn State.

Sara, I want to ask you about both of those issues. First of all, what can you tell us about victim number one's decision to switch schools and how he is being treated, and whether it was explicitly link to this case?

SARA GANIM, CNN CONTRIBUTOR: Erin, it was linked today this case. Basically, students at that school weren't getting any education from teachers and from staff and were pockets of immaturity at the school basically were lashing out against victim one, calling him names, very derogatory names related to the case, also blaming him and bullying him because of the firing of Joe Paterno. And, apparently, it got so bad that his mother decided that not even halfway through the senior year, she's going to pull him out of a school, put him into a different school, somewhere where they're going to have some education for students on what to do if you encounter a victim and how to move forward from this. BURNETT: Sara, last week, we heard his mother say that, you know, expressed great frustration with the fact that her son has to remain in hiding while Jerry Sandusky, she said, is walking around as he pleases. I know there's been reports of him being seen around town shopping, living a normal life.

What can you tell us?

GANIM: Well, we talked to his neighbors last week. And some of them said that because Jerry Sandusky is free, they're living in a kind of jail. And that's because, there's a lot of -- it's a very private road that Jerry Sandusky lives on. And now, it's filled with media, filled with gawkers who are just trying to get, you know, a glimpse of his house where these allegations are said to have happened.

And it has become a zoo. I mean, you go down that road. It's a narrow road. There's a road closed sign and there's all these unmarked cars just kind of circling because they can't stop.

And it's caused this kind of situation where these neighbors are afraid to come out of their house. They don't really want to look at that house because they don't want to be constantly reminded of what's going on. So, it's caused a lot of heartache for them.

BURNETT: All right. Sara, thank you very much. We appreciate it.

And now, we want to go more on the super committee.

Senator John Kerry joins us now on the phone, joining us tonight.

Senator Kerry, thank you so much for being with us. I really appreciate it. And thank you for calling in. Obviously, you know, we've been so very frustrated with the super committee and so many in America are.

Can you tell us -- when push came to shove at the last moment today, what happened or didn't happen?

SEN. JOHN KERRY (D), MASSACHUSETTS (via telephone): Well, what didn't happen was the job didn't get done for the United States of America because what was a deficit reduction committee became a tax- cutting committee. And we got totally hung up by people who were insisting that not only could they not raise any additional revenue from the wealthiest people in the world, but they wanted to give them an additional tax cut. I mean, this is insanity.

And what we couldn't get past them was their resistance to doing any -- we had $1.3 trillion in cuts on the table. We put serious things on the table that we were very, very -- you know, it was very difficult for us. I had thousands demonstrate against me for the things we put on there.

But we also put $1.3 trillion of additional revenue. They said, no, that's too much. And then it turned out that $1 trillion was too much, $900 billion was too much, $ 600 billion was too much, $250 billion was too much.

We wound up not being able to get this because they wanted to know that the tax cut for the wealthiest people in the country was going to be made permanent, protected. And we just couldn't do that in good conscience. You can't ask some senior citizen living on a fixed income or some kid on Medicaid -- you can't ask them to be paying more when the wealthiest people in the country are actually going to get a tax cut. It's unconscionable.

BURNETT: And you sound extremely angry. Would you say that everyone felt that angry?

KERRY: I think people are upset. I think everybody in the country is upset. They're looking at Congress and saying, why can't these guys get something done? But it's not enough for people just to say, oh, it's broken. You got to ask, OK, why? What is the matter that it is broken?

I don't think it's broken when a lot of people are putting up major cuts. We just cut $917 billion, almost $1 trillion of cuts a few months ago. We didn't get revenue in that. There were no additional taxes.

So, at some point, you have to have a fair balance in how you're governing our country. Every major group before us, the Simpson/Bowles commission, the Rivlin/Domenici commission, the gang of six, which includes incidentally sitting Republican senators all agreed you need about $2 trillion of revenue. We were just looking for one, let alone a fraction of that. And we couldn't get it because the Republican Party wants to guarantee that the wealthiest people in the country are going to get yet another tax cut.

BURNETT: I'm trying to understand because I know a lot of the supercommittee members have been coming on this show and some of the Republicans said, look, we're OK with a revenue increase and we recognize in exchange for what we want, which is closing loopholes, we're going to end up with -- and obviously they wanted a lower tax rate with that. But they said very explicitly when asked the question that that would mean that some of the wealthiest Americans would pay more in taxes when you were done on this committee than before.

So, it seemed like they were willing to compromise. They did not even be willing to do that.

KERRY: They did talk about loophole closing, and they wanted that in tax reform. And there would have been loophole closing in tax reform, but they were unwilling in the total amount that would have been raised from that tax reform, they were unwilling to do anything, we call it static revenue. It's just the basic revenue that the Congressional Budget Office can measure. They wanted that revenue to be measured just by growth in the economy, not by the fact that people were really going to pay more at the higher level.

So, you don't -- you can't even measure that revenue. It would not have been a legal way for us to get credit for reducing the deficit. And so, you know, it's easy to come on your show and say, well, we want to close the loopholes, we want to have tax reform.

We all want tax reform. We offered them today expedited tax reform today expedited tax reform by next December. They could have had it if they would have just put the tax cut for the wealthy aside and let it be decided in that process. But no, they want it --

BURNETT: But does it have -- yes.

KERRY: --decided up front.

BURNETT: Doesn't it have to be, though, taxes for everyone, when you look at the CBO numbers, right? If you raise taxes only on people who make $250,000, you get $670 billion, $680 billion in additional revenue. If you let them expire for everyone, you get $2.6 trillion, $2.8 trillion in revenue.

To really make the math work, if you're doing it through taxes, doesn't it have to be on a lot of people not just doing what is politically easy, which is doing it on the wealthy?

KERRY: Well, you get more revenue faster. But at this moment in our economy, with the recession, and the other problems we have, I don't think you want to do that to the 98 percent of Americans who have not seen their income growing rapidly over these last years. You know, we just had a study that came out that showed that the top 1 percent saw their income go up 275 percent while the bottom 20 percent of America saw only 18 percent increase over 20 years.

So, I mean, who are you going to help here and who are you going to, you know, kind of -- who are you going to done? It seems that if people saw their income go up 275 percent, they ought to be able to help.

That's not what the Republicans wanted to do. They want to give a tax cut to that wealthiest top percent. And everybody else would pay more in their Medicare, in their Medicaid, in their health, and education and student loans. You name it.

That's just not a fair distribution. What we want is shared sacrifice. A shared effort by Americans to all be part of the solution.

BURNETT: All right. Well, Senator Kerry, thank you so much for calling in to the show tonight. Appreciate it.

KERRY: Appreciate it. Thank you.

BURNETT: All right. That was Senator John Kerry, as we said, from Massachusetts.

Senator John Kerry from Massachusetts had seen the top of our program and decided to call in and give us his side of the tale as to why the super committee failed in reaching a deal on such a significant issue for all Americans today.

We are going to go to break, Andrew or? OK. We're going to take a short break. Sorry about that. We'll be right back on the other side.

(COMMERCIAL BREAK)

BURNETT: All right. Thanks so much for watching. Please let us know your feedback on what Senator Kerry had to say and on the super committee on our webpage and our Facebook page, OutfrontCNN.

Thanks so much for watching.

"ANDERSON COOPER 360" starts right now.