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Newt Gingrich Swears Off Negative Campaigning; Nationwide Phone Ban While Driving?; Iranians "Controlling" U.S. Drone?; Woman Beheaded for Witchcraft; Gingrich Tax Plan A Windfall For Rich?; Paul Gains Ground In Iowa

Aired December 13, 2011 - 16:00   ET


WOLF BLITZER, CNN ANCHOR: Happening now: no more mudslinging, Newt Gingrich swearing off initiating attacks on his White House rivals. Some question, though, if he can make good on that promise.

Plus, a closer look at his tax plan. Who stands to gain the most?

Also, federal accident investigators are calling for a full nationwide ban on cell phone texting while driving unless they are built into the car.

Plus, the shocking end to an equally shocking case in Saudi Arabia, a woman beheaded for witchcraft.

I'm Wolf Blitzer. You're in THE SITUATION ROOM.

Just 24 hours ago, the mud was flying between Republican presidential front-runners Newt Gingrich and Mitt Romney as they campaigned in the first primary state of New Hampshire. Now Gingrich is vowing to run a clean campaign and refrain from initiating the kind of attacks that have come to characterize the modern race for the White House.

Some question, though, whether Newt Gingrich means it, whether he can live up to that commitment.

CNN's Joe Johns is working the story for us.

Joe, what are you finding out?

JOE JOHNS, CNN SENIOR CORRESPONDENT: Well, Wolf, the last few days have certainly been ugly, but now both candidates are saying they're going to do what a lot of voters have said they want, and that is have a campaign that is free of negativism.

Of course, Newt Gingrich, the former speaker of the House, running for president, has gone as far to put his words actually in writing, though a lot of people out there these days are saying they want to see how long this kind of thing can last.


JOHNS (voice-over): Politics has many unwritten rules, among them, do as I say, not as I do. This rule was at work as former House Speaker Newt Gingrich released an expansive letter to his staff ordering a clean campaign based on positive solutions.

He said, "It's critical the Republican nominee emerge from the campaign unbloodied to face President Obama." In fact, the night before, Gingrich had even praised his opponent Mitt Romney for taking the high road as well.

NEWT GINGRICH (R), PRESIDENTIAL CANDIDATE: I think what we're about is too important to weaken anybody who might defeat Barack Obama and to give Barack Obama ammunition that he shouldn't have.

But how they got here was another story entirely. Romney has been on the attack lately, ripping Gingrich every chance he could get in order to close the polling gap with the front-runner. And then there was a nasty exchange after Romney said the former speaker needed to give back the $1.6 million he'd gotten consulting for Freddie Mac.

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: I think a fair question is asked. Why did he profit as Freddie Mac failed?

GINGRICH: I would just say that if Governor Romney would like to give back all the money he has earned from bankrupting companies and laying off employees over his years at Bain, then I would be glad to then listen to him. And I bet you $10, not $10,000, that he won't take the offer.

JOHNS: So, just to be clear, in the space of about 24 hours, Gingrich went from a rhetorical body-slamming match with his former opponent for the nomination back to the place where he started, Mr. Good Newt, promising to play nice with others.

RICH GALEN, REPUBLICAN STRATEGIST: I think Newt is being Newt. He is incapable, really, of stopping himself from using whatever rhetorical armament he has available to him when he gets into one of these situations. If he thinks of it, he will say it. And then he doesn't have the best capacity for buyer's remorse. He won't apologize.

JOHNS: Rich Galen, who worked with Gingrich for years, says it's almost unthinkable for presidential candidates who want to win to just play nice.

GALEN: Negative attacks are part in parcel of campaigns because they work. Everybody pretends they hate them. Some people actually do hate them, but the fact of the matter is that negative ads, negative attacks are nothing more than highly distilled gossip. And we're all hard-wired to love gossip.


JOHNS: Gingrich has even said he doesn't want people contributing to any super PAC that might run negative ads, which sounds very altruistic, but the truth is, the candidates don't and can't control what super PACs do. So that part of the statement may have been good public relations, but didn't have any real teeth -- Wolf.

BLITZER: And as you point out, in his memo that he wrote to his staff and his supporters, he was very precise, Newt Gingrich, as he always is, when he said don't initiate in his words attacks on other Republican candidates, but then he went on to say -- he says they should "reserve the right to respond when my record has been distorted."

In other words, he's not going to start it, but if they start it, he's going to slap right back.

JOHNS: That's right.

And he's actually responded already, in fact. So you have to consider that. He's not -- he's being very precise with his words.

BLITZER: As he always is. Thanks very much for that, Joe Johns, reporting.

Donald Trump now says he will not -- repeat -- not moderate a December 27 Republican presidential debate. In a statement, Trump says -- and I'm reading the statement now in part -- "The Republican Party candidates are very concerned that some time after the final episode of 'The Apprentice,' I will announce my candidacy for president of the United States as an independent and that unless I conclusively agree not to run as an independent, they will not agree to attend or be part of the Newsmax debate. I am not willing to give up my right to run as an independent candidate."

As you know, only Newt Gingrich and Rick Santorum have signed on to take part in that Newsmax debate. It's unclear whether or not Newsmax will still have the debate. We're waiting for a statement. We will see what happens.

We're also following developments on Capitol Hill right now, where a House vote on extending the payroll tax cut could come in the next few hours. Republicans have attached something else to the measure, provisions to speed up government approval of a controversial oil pipeline from Canada to Texas.

And that has President Obama vowing to veto the bill if it were to make it to his desk.

Let's go to Capitol Hill. Our congressional correspondent, Kate Bolduan, is joining us.

Kate, what is the latest on the vote? When does it happen in the House?


The House is set to vote still this evening. It could be -- and you know this can always slip, but it could be in the next hour, hour- and-a-half, two hours. And Republican leaders in the House, they are confident they have the votes to pass this measure. But over in the Senate, which it would need to, of course, go next, Senate Majority Leader Harry Reid, he said they are wasting valuable time because the Republican measure, he says, will not pass in the Senate. One major obstacle is that controversial provision that you mentioned that Republicans have added to their bill in the House, this provision having to do with the Keystone oil pipeline project.

Add to all of that that the White House just this afternoon issued a veto threat to the House bill, this clearly shows at this point, Wolf, they are no closer to a compromise and the clock is very quickly ticking down, Wolf.

BLITZER: Kate, what about plans for members of Congress to escape Washington? They're supposed to leave this weekend, but it's unlikely they're going to get all of their business done. Is that what you're seeing and hearing?

BOLDUAN: They are supposed to be. Their target date to head out of town was supposed to be this Friday. It's not looking very good for members of Congress and all of us who cover them because this is why.

This whole issue is now getting messier and getting more contentious, as Republicans are now accusing specifically Senate Democrats of holding up a massive government funding bill until they say Republicans give and negotiate more on the payroll tax issue.

Now, the government is set to run out of funding on Friday. And they had all along been working on this massive appropriations bill, this government funding bill to kind of go all the way through to fund all of the fiscal year 2012. And it had not been a related issue until this point. Listen here to the top Republican in the Senate, Mitch McConnell.


SEN. MITCH MCCONNELL (R-KY), MINORITY LEADER: The president and the Democratic majority leader, my friend Harry Reid, are now saying they'd rather shut down the government than allow this job-creating legislation to become law. That's what would happen if they succeed in blocking this bipartisan funding bill from coming to the floor for a vote.


BOLDUAN: Now, Democrats, they reject this. They say that this does not have to do with the payroll tax issue, that there still are a handful of outstanding issues that have to do with this massive government funding measure that need to be worked out before they can sign off on it.

Senator Harry Reid says that he hopes that will happen soon, but he also made the point to say today more than once that the top priority is extending the payroll tax cut and that no one should be leaving town until they do so. Listen here to Senator Reid. (BEGIN VIDEO CLIP)

SEN. HARRY REID (D-NV), MAJORITY LEADER: Republicans seem eager to get out of town. Some have even suggested they're willing to leave before we reach a compromise on the payroll tax cut and other things. We're not going to do that.


BOLDUAN: And so, honestly, you can see, Wolf, that it just seems to be as I said getting messier and more contentious and that they're no closer to compromise at this moment. The clock is ticking down and they're coming up now against a new deadline that we need to watch, that the government will be running out of funding come Friday. It really seems that it's time for the leaders to sit down and really start hammering out a compromise. Unclear if they're ready to do that quite yet -- Wolf.

BLITZER: Yes. It's clear the president would have to delay his personal departure for Hawaii. He's supposed to leave this weekend for his Christmas/New Year's vacation and his family. But he may have to delay that as well. It wouldn't be the first time for him, as our viewers will recall.

Kate, thanks very much.


BOLDUAN: Thanks, Wolf.

BLITZER: Let's go to Jack Cafferty right now. He's got "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: With three weeks to go until the Iowa caucuses, the pressure is squarely on Mitt Romney. It wasn't supposed to go this way at all, you know.

The Republican presidential nomination was supposed to be a coronation for Romney. But, instead, Romney finds himself chasing Newt Gingrich and Gingrich is pulling away. In New Hampshire, Romney and current front-runner Gingrich took off the gloves, threw some direct jabs at each other.

But Romney can no longer simply remain above the fray, because, you see, the fray has frayed his lead rather badly. New Hampshire was once considered a sure thing for Romney. Now it could be a make-or- break contest for him. One New Hampshire pollster told "The New York Times" expectations are so high for Romney in New York that Gingrich could lose by 10 points there and still spin it as a win.

Gingrich, who is leading in the national polls, as well as in Iowa, South Carolina, and Florida, has narrowed the gap in New Hampshire to just nine points in one recent poll. What's working in Romney's favor is New Hampshire voters think he's much more likely to beat President Obama than Gingrich. But these voters don't appear very excited about Mitt Romney and the momentum is clearly on Newt Gingrich's side. Gingrich held a town hall-style meeting for 1,000 people, an overflow crowded at a New Hampshire high school last night. And the applause was described as deafening. They like what they hear from this guy.

Meanwhile, Howard Kurtz writes for The Daily Beast that it's not time to rule out Romney just yet. Kurtz suggests Romney's still a plausible president in these tough economic times and that his campaign is financed for the long haul. Maybe so. But, remember, Romney already lost this race once. He's the same guy that voters rejected for the job four years ago.

Kurtz says Romney needs to demonstrate real passion, can't simply wait for Gingrich to self-destruct. And he probably ought to stop making $10,000 bets too.

Here's the question. What does Mitt Romney have to do to recapture his front-runner status?

You go to and post a comment on our blog or go to our post on THE SITUATION ROOM's Facebook page -- Wolf.

BLITZER: You know who could surprise a lot of people in Iowa, Jack?


BLITZER: Ron Paul. He's got a fabulous organization there. He's got a lot of passionate supporters. He's got some money. He could surprise a lot of folks in Iowa. We're going to be speaking with him tomorrow here in THE SITUATION ROOM. But don't be surprised if Ron Paul does a lot better than people are thinking he might do in Iowa. We're talking about Iowa.

CAFFERTY: I think he will do well in Iowa. I don't think he's going to be the nominee, but I think he will do well in Iowa.

BLITZER: I write about it in my blog today, THE SITUATION ROOM blog. Check it out. I think it's -- if it hasn't been posted, it'll be posted very, very soon.

All right, Jack, stand by.

Millionaires save 20 percent, lower-income Americans save 3 percent. We're taking a closer look at Newt Gingrich's tax plan. Stand by for that.

And imagine not being able to use your cell phone in the car at all, not even with a headset, unless, unless that cell phone is built into the car's system -- why the federal government wants a nationwide law to ban phone use by drivers. We're taking a much closer look.

And the outrage at Saudi Arabia -- get this -- for beheading a woman, yes, killing her, executing her. She was accused of witchcraft and sorcery. (COMMERCIAL BREAK)

BLITZER: There are new questions emerging right now about what the Iranians are doing with the U.S. drone that almost literally fell into their hands.

CNN's Brian Todd is looking into the story for us.

Lots going on, Brian. What do we know right now?

BRIAN TODD, CNN CORRESPONDENT: Wolf, some curious remarks by the Iranian president about this drone. Mahmoud Ahmadinejad told a Venezuelan TV network that his country, quote, "has been able to control the aircraft." He didn't specify what he meant by controlling the drone, but he said the people who have been able to control it, quote, "will analyze the plane's system."

For the first time, U.S. officials have publicly acknowledged that Iran has a drone. Two U.S. officials have said that a missing drone was part of a CIA reconnaissance mission in Afghanistan. American officials have not confirmed that a spy plane shown on Iranian video is actually the same aircraft.

President Obama said the U.S. has asked for it back. Most U.S. officials don't expect that to happen. Some experts believe the Iranians will now reengineer this drone, taking the technology from it. They are very good at that kind of thing.

Defense Secretary Leon Panetta did not rule that out.


LEON PANETTA, DEFENSE SECRETARY: It's a little difficult to know just frankly how much they're going to be able to get from, you know, from having obtained those parts. I don't know the condition of those parts. I don't know exactly what state they're in.


TODD: President Ahmadinejad claims the systems of Iran's own spy planes are just as advanced as those in this one. So, we'll see if Iran comes out with a model that mirrors American technology or not.

Wolf, I think U.S. officials going to be watching that very closely to see if maybe some other U.S. adversaries might start to have this technology, as well.

BLITZER: I was stunned yesterday when President Obama -- he didn't want to discuss it, but then he went on and said, we have asked that -- we're asking the Iranians to return that drone to the United States.

TODD: That's right.

BLITZER: Why ask the Iranians to return it if it isn't the real thing or whatever? It makes no sense at all. It was just the unusual statement by the president of the United States.

Is there any indication, though, and I suspect the answer is no, that the Iranians might return what they have?

TODD: It's really the opposite. The Iranians are saying that this is now their property. One official said that the U.S. owes Iran an apology. Another called this an act of invasion and belligerence.

I mean, they're going to make a big -- they may literally make a display of this thing in some museum for all we know, but they're not going to give it back by most indications.

BLITZER: That wouldn't be the problem. The problem is the Chinese or doing reverse engineering or others -- that would be a problem for the U.S. That's why Dick Cheney here on CNN last night and others said the U.S. should've blown it up, sent another plane over, another drone, just blown it up, rather than letting them have it complete intact or whatever they have.

Thanks very much, Brian, for that.

The U.S. Air Force, by the way, says another American drone has gone down. This one in the Seychelles Islands in the Indian Ocean. It crashed at the country's main airport. No one was hurt. The U.S. military recovered the debris and is investigating the cause of these accidents. I guess these drones go down from time to time.

Something that flies in the face of everything that we know in the 21st century. A woman accused of witchcraft and beheaded for her so-called crimes.

CNN's Mohammed Jamjoom has details from Abu Dhabi -- Mohammed.


MOHAMMED JAMJOOM, CNN CORRESPONDENT: Wolf, it's a case that has outraged human rights groups and put the justice system in Saudi Arabia under the spotlight once more.

(voice-over): The verdict: shocking; the sentence: even more so. A Saudi woman beheaded. Her crime: practicing witchcraft and sorcery.

According to Saudi Arabia's Ministry of Interior, Amina bint Abdel Halim Nassar was executed on Monday.

(on camera): London-based Saudi daily "Al Hayat" quotes a source in the country's religious police who authorities searched Nassar's home, finding books on sorcery, and a number of talismans and glass bottles filled with liquids commonly used for the purposes of magic.

The source added Nassar was selling spells and bottles of the liquid potions for about $400.

(voice-over): CNN could not reach Saudi Arabia's religious police or Ministry of Justice for comment.

Amnesty International issued a statement calling the execution deeply shocking, saying it highlights the urgent need for a halt in executions in Saudi Arabia. Saudi Arabia, an absolute monarchy, practices a puritanical version of Islam. In the deeply conservative kingdom, sorcery, witchcraft, and blasphemy are all offenses that can be punishable by death.

And this is not the first sorcery case in Saudi Arabia to draw the anger of rights groups. In 2008, Lebanese TV host Ali Hussein Sabat was arrested on charges of sorcery while in Saudi Arabia on a religious pilgrimage. In 2009, he was found guilty and sentenced to death. While Sabat has not been executed, he remains in prison.

Saudi Arabia's judicial system also made headlines for the sentence imposed on Australian national Mansor Almaribe. He was convicted of blasphemy and sentenced to 500 lashes and a year in prison. The Australian government is pleading Almaribe's case.

In its statement, Saudi Arabia's Interior Ministry said Nassar had been investigated before her arrest and that she was, quote, "convicted of what she was accused of based on the law."

(on camera): Now in a statement, Amnesty International went on to say the number of executions in Saudi Arabia has almost tripled this year, and that so far at least 79 people including five women have been executed there -- Wolf.


BLITZER: Mohammed, thanks very much. Mohammed Jamjoom reporting for us from Abu Dhabi.

Police on New York's Long Island find a body of another missing woman. Could it be tied to a possible serial killer?

Also, quick work in court today for Jerry Sandusky. His lawyer makes an unexpected move in the sex abuse case.

A lot of news happening today right here in THE SITUATION ROOM.


BLITZER: A bloody assault in Belgium today. Lisa Sylvester is monitoring that and some of the other top stories in THE SITUATION ROOM right now.

What happens, Lisa?


Well, a prosecutor in the Belgian city of Liege says one man was responsible for a rampage that killed two teenagers, a woman, and the gunman. Police say 119 other people were injured in the grenade and gun attack. The prosecutor says the man was wanted for questioning about drug and arms charges.

Three men face charges in the wake of another alleged hazing incident within Florida A&M's marching band. All three are charged with hazing and felony battery. The charges stem from several alleged beatings of a fellow band member. Drum major Robert Champion died November 19th in a suspected hazing-related incident.

And police in Suffolk County, New York, believe they have found the remains of Shannon Gilbert, a New Jersey woman whose disappearance touched of a search last year that led them to the remains of 10 other people. A police commissioner says the investigation revolves around a possible serial killer.

And Jerry Sandusky's defense team waived his right to preliminary hearing on charges he sexually abused young boys. Prosecutors had planned for 11 witnesses, including some of Sandusky's alleged victims. Sandusky also entered a not guilty plea and awaits a January arraignment -- Wolf.

BLITZER: Thanks very much, Lisa. Thanks for that.

A boon for the economy or a windfall for the rich? We're digging deeper on Newt Gingrich's tax plan with former Labor Secretary Robert Reich and Stephen Moore of the "Wall Street Journal." The debate coming up.

Plus, just three weeks before the Iowa caucuses, a surprise rise in the polls for Rick Perry. What's going on? We'll assess.


BLITZER: Newt Gingrich's campaign is dismissing a new analysis of this tax plan. That analysis by the Tax Policy Center says Gingrich's proposals would provide huge tax breaks to the wealthiest Americans and increase the deficit.

A Gingrich spokesman says the study doesn't take into account the economic growth and the new jobs his plan would create.

Let's dig deeper right now. Poppy Harlow of

Poppy, what is Newt Gingrich proposing in this tax plan?

POPPY HARLOW, CNNMONEY.COM CORRESPONDENT: Well, it's interesting, Wolf. This isn't a new proposal. It came out in May from the Gingrich campaign, but because he's soaring in the polls, the Pew poll today showing him at 35 percent in topping that poll.

People are looking at this very carefully. That's exactly what the Nonpartisan Tax Policy Center has done. Here's a crack to the plan for you, your personal tax rate, you would have an optional flat tax, a 15 percent, you would also get a $12,000 per person deduction, much more than we have now.

It would and this is critical, eliminate the estate tax and completely get rid of capital gains taxes. When you look at the corporate side, the corporate tax rate would decline significantly from 35 percent to 12.5 percent.

To give you some context, that would put the U.S. among the lowest tax rates of all industrialized countries. It would put the U.S. on par with Ireland where you have a lot of corporations headquartering. You have a lot of pharmaceutical companies there for obvious tax reasons.

Now here's what the Tax Policy Center said about this plan. They said it would mean that 70 percent of all Americans would pay lower taxes. And get this, for the wealthy Americans, this is a huge boom. The Tax Policy Center says 99.9 percent of Americans that make more than a million dollars a year would pay lower taxes.

Now, they also said that when you take a look at millionaires under this plan, they would get about a 20 percent tax cut. If you look at regular folks, people making less than $100,000 a year, what the Tax Policy Center is estimating is the maximum tax cut they could see under this plan is about 3.1 percent.

Now what's also critical is that the Tax Policy Center says under the plan, the government would take in $1.3 trillion less in revenue in the first year this would be implemented. They're saying that would be 2015.

When you look at that, Wolf, and you look at the state of the economy and the massive deficit, it's a 35 percent reduction. So it's a huge decline in revenue that we would be taking in, Wolf.

BLITZER: What is Newt Gingrich's campaign, Poppy, saying about this analysis?

HARLOW: It's interesting. I talked to Peter Ferrara. He is Newt's economic policy adviser. He's not paid by the campaign, but he told me he's a long time friend and adviser of Newt.

He said and this is a quote, "This plan is designed to maximize economic growth, jobs, wages, incomes, and not revenue neutrality." This is also interesting. He went on to say, look, the Tax Policy Center did not have the details of our plan.

The campaign did not provide them with many details because it does not recognize them as an independent arbiter of tax policy information. What they're saying basically is disregard this. This is not a fair analysis.

I asked Peter Ferrara for the details of the tax plan. He said they can't give them to us at this point in time. The campaign will be releasing details in a few weeks along with an independent analysis they have underway.

If you think about 9-9-9, Herman Cain's plan, they did a similar thing. They released an independent analysis. That's apparently what we're going to see from Newt's camp.

I do want to say one thing, Wolf, the person who led this analysis of the Tax Policy Center told our Charles Riley of CNN Money that this is basically like Rick Perry's plan on steroids -- Wolf.

BLITZER: On steroids. All right, thanks very much, Poppy for that.

So here's the question, is Newt Gingrich's tax proposal a stroke of genius or an utter miscalculation? It's a subject of heated debate.

And joining us now Robert Reich, professor at the University of California Berkeley, the former labor secretary during the Bill Clinton administration.

Also joining us, Stephen Moore of the "Wall Street Journal," senior economy writer. Guys, thanks very much. Let's get right to the Newt Gingrich tax plans.

And you tell me, good ideas, bad ideas. Let me start with you, Steve, first of all. He says he wants to cut the highest individual tax rate from 35 percent down to a flat 15 percent rate. Good idea or bad idea?

STEPHEN MOORE, SENIOR ECONOMICS WRITER, "WALL STREET JOURNAL": Yes, I love the idea of a flat tax. You know, this is the old Steve Forbes flat tax idea, although it's even lower rate.

He would also make it an option so people could stay in the old system or move in the new system. And he also wants to cut the corporate tax rate to 12.5 percent, which would make, Wolf, the United States overnight go from the highest tax rate country on our corporations to the lowest.

I love it. I think it's very pro-growth and I think it will create jobs.

BLITZER: Robert Reich, what do you think?

ROBERT REICH, FORMER LABOR SECRETARY: I think it's totally nuts. I mean, already the highest income earners in this country who are getting a higher share of total income than they have in 80 years are already paying the lowest marginal tax rates they've paid in about 40 years.

To take those marginal tax rates down to 15 percent, I mean, you're going to blow a gigantic hole in the federal budget over $1 trillion in one year.

And on top of that, you know, the biggest beneficiaries according to the independent Nonpartisan Tax Policy Institute, the biggest beneficiary, the lion's share goes to the wealthy of this tax cut.

You know, the people who are at the top 1/10th of 1 percent, earning an average of $8 million a year, get 25 percent of all of these benefits of this tax cut. This is absurd.

BLITZER: Let's get -- hold on, Steve. Answer the question, the Tax Policy Center, this group that did this study, they say it would create $1.3 trillion in additional deficit in one year if it went through.

MOORE: Yes, well, they're not looking, Wolf, at the spending side of the aisle. That's the other part of the fiscal plan that Newt Gingrich has. He wants to cut a lot of spending.

But the other thing that tax policy center doesn't look at, Wolf, is the idea that if you cut these tax rates and you make America the lowest tax rate country in the world, you'll get a lot of capital, a lot of jobs in this country.

I think it actually will raise revenue. And Bob, where you are wrong is on the idea of the big tax cut for the rich because remember, the Gingrich plan gets rid of all of the loopholes, gets rid of all carve outs, and all the special interest provisions.

So now Warren Buffett and Bill Gates don't have anywhere to hide their money. Everybody's going to have to pay that 15 percent, no longer will Warren Buffett be able to pay lower than his secretary.

REICH: Well, the point is that nobody is going to have to -- if you're very rich, you don't have to worry about tax shelters anymore or loopholes because you're paying 15 percent. In other words, you know, this is the same rate that the people who are secretaries and sanitation workers and people who are, you know, who are child care workers are paying.

You know multimillionaires will be paying, at 15 percent, Steve, this is the most unfair, stupidest tax plan I've ever heard. And it just creates the gigantic hole in the tax budget. Again, this is the independent, nonpartisan tax policy center giving us these data.

I mean, this is -- this is taking supply side economics to a bizarre extreme. And nothing trickled down from the Bush tax cuts, we know that, most people got no benefits at all. And now what is Gingrich doing? Let's take the Bush tax cuts and magnify them 500 percent.

BLITZER: Hold on a second. He goes even further, Newt Gingrich, and says eliminate completely all capital gains taxes, all estate taxes, as well. You love that idea, don't you?

MOORE: Yes, this is a tax cut plan. It's on steroids in terms of economic growth. Imagine what this would mean for America's competitiveness and that's the big issue, competitiveness against other countries.

Let's take the example of the corporate rate. If you can go from being the lowest corporate tax rate, you're going to bring jobs and businesses back to the United States. You and I, Bob, talk a lot about the problem of outsourcing jobs. This is going to bring in sourcing jobs back for the United States.

REICH: Steve, look at history, we've had this gigantic Bush tax cut, we had no increase in competitiveness. Actually the median wage dropped. There was no trickle down. And on top of that, you say we need a corporate tax cut right now?

I mean, big corporations are sitting on $2 trillion of cash. They don't know what to do with the cash. It's the problem is on the aggregate demand side. The problem is consumers are not spending.

I mean, this tax plan just gives more money to people at the top, creates a huge hole in the budget deficit, creates more unfairness. This is the worst tax plan and believe me, I've seen some bad ones. This is the worst one I've ever seen.

MOORE: That's what you said about Reaganomics. You didn't like the Reagan tax cuts and they actually led to more tax payments by the rich. They led to the creation of about 18 million jobs. I think that worked out pretty well. This is the next logical extension of Reaganomics.

REICH: Yes, Reaganomics. We can debate Reaganomics, Steve, but this is taking the Bush tax cuts, which were even worse than the Reagan tax cuts and it is basically -- I mean, look -- any rational person is going to look at this.

And look at the rational nonpartisan analyses both on the corporate side at the individual side in a time in our history when we have giant budget deficits.

A time in our history when the rich have a higher percentage of total income and total wealth and we've seen in 80 years and they're going to say this is totally absurd! This is beyond absurd.

MOORE: You know what Americans think is totally absurd. Bob, they think the current tax system is totally absurd. They don't think it works for America because it's way too complicated, way too time consuming, and way to anti-jobs.

And one of the reasons Newt Gingrich is doing so well, he wants to blow up the tax system and start over and I give him a lot of points for doing that.

REICH: I give him negative points. I'll give you a simple tax system that's based on progressivity. People at the top have paid the exact same marginal tax rates they were paying in the 1960s and 1970s when we had very, very good economic growth.

And that is if you're earning over $1 million, 70 percent marginal tax on everybody --

MOORE: Bob, you don't want to go back to 70 percent tax rates.

REICH: Of over $1 million.


REICH: Money over $1 million. And I'd link the capital gains to the same way. We get rid of the budget deficit. We'd have a fair tax system. We could lower everybody else's taxes. Steve, that's what we ought to do. It's exactly the mirror image. It's the opposite -- MOORE: If you want to go back to the '70s. I want to go back to the '80s and '90s.

BLITZER: Quick political question to wrap it up. First to Steve Moore, politically speaking, getting into an election, let's say Newt Gingrich has his flat tax 15 percent versus President Obama's got his own tax plans. As you know, who wins with the American public on that debate?

MOORE: Well, Obama wants to go to 45 percent to 50 percent on the tax rate, Newt Gingrich wants to go to 15 percent. So you're talking about a massive difference in philosophy and governing philosophy, and I will say this. I think Newt wins that fight and I think that's what this election will be about. Do we want growth or do we want envy?

BLITZER: Robert Reich?

REICH: Well, look, and I think the election is going to be about paying their fair share. Are the wealthiest in this country paying their fair share to bring the budget deficit down and make sure that there is enough money left for schools and equal opportunity and investments and infrastructure for everybody else?

Steve Moore and Newt Gingrich want to go back to what we had pre-1930s when we had a very unequal society and a society that did not -- and was not able to invest --

MOORE: Bob, you keep saying rich aren't paying -- the top 1 percent pay 40 percent of the income tax.

REICH: Steve, I think most people understand what's really going on. They know there's no trickle down. They know there's no trickledown economics.

MOORE: They know we can't tax our way --

REICH: They know the game is rigged in favor of the rich and powerful.

MOORE: That's why we're going to flat tax. We agree. That's why -- people gain the system.


BLITZER: All right, gentlemen, I think we've -- we --

MOORE: Overall, rejected.

BLITZER: A good debate, a solid debate. I suspect we're going to be hearing a lot more on this debate in the coming weeks and months. Steve Moore, thanks very much. Robert Reich, thanks to you as well.

If the federal government now has its way, get this, people in the United States may be flipping their cell phones off for good, at least while they're behind the wheel. New information coming in.

And when we come back, a new proposal that could mean a nationwide ban on texting or talking under certain conditions while driving.


BLITZER: Imagine not being allowed to use your cell phone in your car at all. It could happen. It could happen if the federal government were to get its way.

Lisa Sylvester is taking a closer look at a new recommendation from the National Transportation Safety Board. Tell our viewers calmly, precisely, what this means for those of us who are driving and may have a little bluetooth in our ear talking or hands free device. Go ahead and tell us what they're recommending.

SYLVESTER: Well, we are all very well accustomed to having one of these in our car. Most people would have a bluetooth device of some sort or a hands free device, but the National Transportation Safety Board wants a nationwide ban on all hand held devices while driving.

That means all cell phones, even if you wear a headset. Now, this is the most far reaching recommendation by the NTSB. They say that distracted driving is, quote, "the new dui." So under the recommendation, only phones that are installed as part of the vehicle can be used.

That means your iPhone with the headset and ear piece, that wouldn't be allowed. Your cell phone in a car with a built-in bluetooth that also won't be allowed. GPS systems or on star systems would be OK.

Now this recommendation was prompted by a chain reaction accident in Missouri back in 2010, which involved two school buses, two people were killed in that accident and 38 people were hurt.

In that crash, the driver who caused the crash exchanged 11 text messages 11 minutes before impact, 10 states already banned all use of hand held cell phones and 35 states banned texting while driving.

These NTSB recommendations are also calling for the same laws across the country. But it's important, you know, to remember that these are only recommendations.

The NTSB is urging the laws be passed in all 50 states and in D.C., but right now we're talking recommendations to the states.

BLITZER: Yes, they can only make the recommendation to the state and the state can say yes or no, ignore it, or do whatever they want.

The disadvantage of just having talking on a cell phone through the system that's in your car -- and I have it in my car, everybody who's in your car hears all of your conversation. Somebody calls you. They're hearing what you're saying. It can be very annoying. SYLVESTER: Yes. And that's one of the downsides and you can imagine there's going to be a fight. It's going to be asking people to change their behavior, to do something they are not accustomed to.

The NTSB is leaving it up to the states to decide on this. But you're right, that is the downside. If you're a passenger in the car, if you've got other people in the backseat, they can hear your conversation if it's piped through the car itself.

BLITZER: The other disadvantage if you have it installed through the car, you can't listen to the radio. If you've got Sirius XM radio listening to CNN, if you're on your phone, listening to both, you can't do it.

SYLVESTER: But, you know, the counter argument to that is they have more than 3,000 fatalities last year due to distracted driving. So you could see the reason why the NTSB is saying something needs to be done.

BLITZER: Everybody can understand texting or even talking with a hand held with the device, but if you're hands free and you have a thing in your ear what's the difference between that and talking into some microphone that's built into the ceiling?

SYLVESTER: I think that there's going to be this discussion is going to go on. But the NTSB has a conversation going.

BLITZER: Important stuff. We don't want people to die. Thanks very much.

The Iowa caucuses just three weeks away. Some interesting poll numbers now rolling in. Standby.

Could a candidate who was all but written off make some sort of comeback? We'll assess in our "Strategy Session."


BLITZER: Let's get right to our "Strategy Session." Joining us, our CNN political contributors, the Democratic strategist, Donna Brazile and the Republican strategist, Mary Matalin.

Mary, these numbers from the American Research Group, look at this likely Iowa caucus goers, Gingrich, 22 percent, Romney and Ron Paul 17 percent. Rick Perry 13 percent.

But I'm struck by Ron Paul, 17 percent, and I blogged about this today on our SITUATION ROOM web site. He could surprise a lot of folks, Mary, and actually win Iowa.

MARY MATALIN, CNN POLITICAL CONTRIBUTOR: Well, from the very beginning, people on the ground, particularly people on the ground said he had -- he had a very serious organization and that's -- that is his ceiling, but it's also his floor. He's not going to go beneath that. So where he fairs, how he fairs depends on where everybody else shakes out in the end. I'll say this. He is a solid message candidate. That message is not going to go away.

It is really solidified in the way that Ross Perot message solidified. The message is the limits and the overreach of government and Paul owns that message. Whatever his political outcome, he owns that message.

BLITZER: And everybody tells me, in getting the caucus goers to come out, Ron Paul has a much more organized operation in Iowa, Donna, than Mitt Romney has or that Newt Gingrich has.

DONNA BRAZILE, CNN POLITICAL CONTRIBUTOR: That's correct, Wolf. As you know, there are over 1,600 caucuses across the state of Iowa. And in order to caucus that, even on the Republican side, they do much like a straw poll where they put their ballot in a box.

They have a conversation, and if you have people who are devoted to you and Ron Paul supporters are extremely devoted to Representative Paul, they will not only turn out their voters.

Remember they know where they live, eat, pray, and play, but they will speak on his behalf, and they will be able to perhaps count on those votes. I think Ron Paul supporters are very, very solid going into the final days of this campaign season.

BLITZER: Let's not forget caucus goers, it's not just going into a booth and taking a minute or two to vote. It's hours, commitment, you've got to go in there, listen to speeches, listen you have to have a commitment to show up.

Look at these other numbers on this American Research Group poll. In November, Gingrich was at 27 percent, he's gone down to 22 percent. Romney from 20 to 17. Ron Paul 16 to 17.

But look at Rick Perry, all of a sudden he's making a little move. He's gone from 5 percent to 13 percent in Iowa. Is Rick Perry over the next three weeks? He still has millions. Can he surprise a lot of us, Mary?

MATALIN: That's not a little move. That's big move. That's way outside the margin of error. He always had the building blocks. That didn't go away. It's not just the money.

He has the organization. He has a solid team. He has a very good authentic outsider message. He's attracted to the voters, the religious right. He's improved markedly his debate performance, and he's been on the ground.

And he's been touching the right people with the right message and he's got -- he knows he's got this shot or no shot. So he's -- pedal to the metal and he's really recovered from his back surgery. Yes, I think he's recovering there.

BLITZER: Likely caucus goers from Newt Gingrich, Donna, what do you think?

BRAZILE: I think the fallout from Herman Cain is finally hitting the ground. And Rick Perry has been able to pick up a lot of those supporters. You know, I thought Michele Bachmann would be in a better position to grab those Evangelical Christian voters.

But it looks like right now they're going to park their enthusiasm with Rick Perry. But you know, we still have a long way to go and Mr. 9-9-9 is out, we still need somebody who can count to three without saying oops.

BLITZER: Donna, Mary, guys, thank you.

President Obama, is he now the underdog in the race for the White House? Standby.


BLITZER: Jack Cafferty's back with the "Cafferty File" -- Jack.

CAFFERTY: The question this hour is what does Mitt Romney have to do to recapture his frontrunner status? Chris writes, "Romney can only regain his frontrunner status if he shows conservatives that he won't flip-flop on the social issues that dog his candidacy.

Newt Gingrich may very well self-emulate and hence leave voters with no other logical choice, but in the long run, that benefits the president. Romney needs to establish positions on health care and the role of government and the stand on abortion, which is crystal clear. As a conservative, I'm not entirely clear what he stands for. At least Newt is willing to take the heat for taking a stand."

Dan writes, "I'm a lifelong Democrat so my opinion's a bit biased, but I don't think Romney can overcome the fact that right wingers don't like Mormons or anyone who doesn't like a campaign that isn't accusatory, inflammatory, or militaristic. Both he and Newt have a lot of convincing to do in order to make people believe their past beliefs and practices no longer exist."

Elizabeth in Toronto, "All he has to do is stay the course, folks will see eventually he's the best competition for Obama." John in Houston writes, "All he has to do is switch parties. There's no way Republicans will let a Mormon be their frontrunner. They'd rather have a cheating Christian."

Dan in Long Island, Mitt Romney should shut up and wait for Newt to implode. Mitt's best strategy is to keep quiet. When he opens his mouth, he contradicts himself, which means that Mitt's biggest challenge comes when the dust settles and he stands there alone. Then he'll face his most formidable opponent, Mitt Romney. What that collection of candidates. Is Pat Paulson still alive?

Rick writes, "Demonstrate he has a better plan than anyone else, of course, which he has not done." And Ace writes, "Take a page from the Wizard of Oz. Grow a heart, find a brain and/or master up some courage. But, hey, Romney is starting to prove he's in fact capable of human emotion, like anger."

If you want to read more about this, go to my blog., or through our posts on THE SITUATION ROOM'S Facebook page.

BLITZER: Jack, thank you.