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ERIN BURNETT OUTFRONT

Government on Brink of Shutdown; Congress Negotiating Bill to Continue Government Funding; "National Review" Comes Out Against Possible Gingrich Nomination; Interview with Sen. John Hoeven

Aired December 15, 2011 - 19:00   ET

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


ERIN BURNETT, CNN HOST, "ERIN BURNETT OUTFRONT": Thanks, John. For the first time ever, Google opens its New York headquarters to cameras. Executive Chairman Eric Schmidt gave us an exclusive tour. We talked about whether America is still number one. And yes, he has a categorical answer to that.

Also, free food and what he knows about the U.S. drone in Iran.

Also, developments in the drone story tonight. An Iranian engineer plane scientist knew about a weakness in the drone's GPS and forced it to land. But why didn't it self-destruct once it was hijacked? We get an answer tonight.

And the bottom line on the impending government shutdown. The federal government fails us time and time again.

Let's go out front.

I'm Erin Burnett. OUTFRONT tonight countdown to shutdown -- just 28 hours to go. Disoriented? Feel like deja vu? Me too. I sort of feel like Bill Murray in the movie "Groundhog Day."

(BEGIN VIDEO CLIP)

(MUSIC)

REP. JOHN BOEHNER, (R) HOUSE SPEAKER: The government is due to shut down tomorrow.

(MUSIC)

BARACK OBAMA, (D) PRESIDENT OF THE UNITED STATES: We're now less than 30 hours away from the government shutting down.

(MUSIC)

(END VIDEO CLIP)

BURNETT: Only this isn't "Groundhog Day." This is our reality. This is the eighth time this year that the United States of America has been flirting with a shutdown. Remember August when the misguided debt ceiling debacle ended up costing the entire country the top credit rating in the world, something that will likely mean we end up paying more to get a mortgage?

These shutdowns aren't about politics, they're about money. And why do they keep happening? Because Democrats and Republicans never passed the full budget. This time the government will run out of money tomorrow at midnight unless a funding bill is passed. And now what's strange and especially unpleasant about this particular shutdown is Democrats and Republicans have mostly agreed on a deal. But Harry Reid, maybe politically for smart reasons, is holding up a vote on keeping government running until the payroll tax extension passes.

The bottom line, we need Congress to do three things -- one, compromise on the payroll tax, two, pass the funding bill, three, go home for Christmas and make a New Year's resolution to never have a year like this again.

Senator John Hoeven is a Republican from North Dakota. Senator, thanks so much for being with us. I have to say it's unbelievable it's been eight times this year we've been close to this situation, and it should embarrass everybody on Capitol Hill. Do you feel that sense of embarrassment and drive to get this fixed?

SEN. JOHN HOEVEN, (R) NORTH DAKOTA: Erin, thanks for inviting me to be on your show this evening. We need to get this wrapped up. I think we will, but it's about getting the funding bill done, as you mentioned, and also extending the payroll tax holiday. We need to do both. I think we'll get them done.

But like you, I think we should be getting this done sooner. And we really have to take a comprehensive approach to the things that will help get our economy going and get on top of the debt and deficit.

BURNETT: It's just so frustrating. All the television networks put on these countdown clocks, and I think we all wish that you guys didn't give us an opportunity to do that. The only way anything seems to get done in Washington is when we're a few hours away from a shutdown. And that's part of the reason we got downgraded.

HOEVEN: You made a good summary earlier. I'm on the appropriations conference committee. We're ready to go, and we want to see Senator Reid give us the green light and not only get the funding done get the payroll credit done. And this keystone pipeline project, a tremendous job creator for the country, these are the kind of things that can get people back to work, reduce our dependence on oil from the Middle East.

BURNETT: Like it or not, you got your bill ready to continue funding the government.

HOEVEN: Yes, we do.

BURNETT: I wish we had a whole budget and not all these continuing resolutions, but you've got that ready, right?

HOEVEN: But this is not a CR. This is the appropriation work that we've done through committee.

BURNETT: All right, but then you have this issue of the payroll tax. The Democrats gave up that millionaire surtax and you know that they love that. So to get this done, it's so easy. Just get rid of the pipeline for now.

HOEVEN: Look, we voted down -- they wanted a tax increase. We voted that down in both the House and the Senate. That will hurt job creation and economic activity. We've put forward a whole variety of measures to pay for this payroll tax holiday. So we definitely have compromised.

And remember, this package is about job creation, and that's exactly what the Keystone project does. It doesn't cost the government one penny, $7 billion in private investment that creates thousands of jobs and increases energy security.

BURNETT: All of that may be true. But yet it matters to Democrats and they gave. And people want to feel the sense of compromise. Rand Paul came on this show, Tea Partier, and said, look, I would take the pipeline out. I'll vote for it separately and let the payroll go through without it. Won't you consider doing that?

HOEVEN: That's part of what we needed to get that bipartisan plan passed through the House. It had both Republicans and Democrats on the bill. So this is a key part of get thing compromise done but moving our country forward, as I say, a real big job creator, the kind of thing people want us to get done.

BURNETT: So you're not going to take it out, just to summarize?

HOEVEN: What I'm saying is we are providing a lot of compromise. This is a real opportunity for us to create jobs in this country. That's what we need to do.

BURNETT: Thank you very much, sir. We appreciate it.

Let's bring in James Carville, Democratic strategist. He is not taking the pipeline out, sir.

JAMES CARVILLE, DEMOCRATIC STRATEGIST: You know what, they're not going to pass it. This is a special interest thing that these guys are doing. It's very controversial. It requires a lot of study. We're talking about bringing some of the nastiest kind of energy that you can imagine. It may or may not be a good thing, but they're trying to force this down at the 11th hour and the Democrats aren't going along with it.

And you can see by the way the gentleman was talking, he doesn't want to compromise. What he cares about is not the tax cut for people who are working and trying to raise a family. He cares about this pipeline, which apparently is going to make some big contributors to the Republican Party awfully happy. It may or may not be a good thing, but we're a long way of being able to decide right now.

BURNETT: I guess that's the point. One of the things that seems to frustrating, James, is just that Democrats, you know, the president said he wouldn't give up that millionaire surtax. They gave it up. They loved that thing, and they gave it up. So it seems only fair that the Republicans would give up the thing they wanted and get this done.

CARVILLE: But everybody that's watching this show saw exactly what they were about. That this was something that their supporters and contribute care a lot about. They don't really care about the payroll tax. The Democrats are willing to do this. But every time you look at a poll, people blame them. They're going to compromise. They're not going to shut the government down over this. If they do, they'll end up with 40 Senate Republicans, and they know that. And they know their advisers are telling them that. If they shut this government, the consequences would be unbelievable.

BURNETT: And the final point here on that -- eight times we've gone to the point this year, it really is embarrassing and humiliating. Do you recall a year like this as bad as --

CARVILLE: Well, we had a shutdown back in the '90s. You know what, it's bad. And one of the reasons is it's really divided and the country is kind of broke. And maybe we need an election. And hopefully some of these issues will crystallize. The public is going to weigh in November and has to pick and choose here and hopefully that's what will happen and it will move it in one direction or the other. But right now it's pretty split.

BURNETT: Thank you very much, James Carville.

CARVILLE: Thank you.

BURNETT: We need some optimism about America. When we all get mad at Washington, there's still some amazing things about this country. And Google's Eric Schmidt is going to talk about it.

Next, though, Newt Gingrich, front-runner obviously going into Iowa. But the backlash has begun, and it's coming from the conservatives. One of them speaks out next.

Plus a war of words between Republican Senator John McCain and Russian Prime Minister Vladimir Putin, with Putin calling McCain crazy.

And the latest developments in the case of Florida's missing mom, Michelle Parker. Her father, Brad, comes out front.

(COMMERCIAL BREAK)

BURNETT: All right, AAA reports the national average price for a gallon of regular unleaded gasoline fell. It's down half a cent, but it's down quite a bit recently, down to $3.26, which marks the seventh consecutive decline.

Now if you actually look at this, the average price is down about 86 cents to 21 percent from the record we saw in July of 2008. Remember back then, gas was above $4 a gallon. It's still above $4 in Hawaii, but in New Mexico you've got the cheapest gas in the country. It's $3.02, which brings us to tonight's number, 347. That is how many dollars the average American has saved due to lower gas prices this year. It's actually pretty good when you balance what they'll spend on the holidays. It could help the economy big time.

Conservatives are turning on Newt Gingrich. He may be the front runner, but they don't want him to be their nominee. The latest example is the "National Review" magazine. It calls itself America's most widely read and influential magazine for conservatives, and it's editors have just come out with a scathing new anti-endorsement of the former speaker. We characterize it as such because at the end it says there's three people they think about endorsing.

Take a look at their website right now. At the top of the page in big red letters it says, "Against Gingrich," and cites things like, and this is a very well written piece. And I'm not just saying this because the guy who wrote it is coming up. This was a very well- written piece, just beautiful words. "His character flaws, his impulsiveness, his grandiosity, his weakness for half-baked and not especially conservative idea." In plain language it says, quote, "We fear that to nominate former speaker Newt Gingrich, the front-runner in the polls, would be to blow this opportunity." This is just pretty amazing some of the stuff in here.

So joining me now, the guy who wrote it, senior editor of the "National Review" Ramesh Ponnuru, also Republican strategist and former Mitt Romney adviser Kevin Madden, and CNN contributor John Avlon. Good to have all of you with us. Ramesh, let me start with you. Whatever you think of Newt Gingrich, this was rather beautifully penned, but why the frustration? Why do you think that this guy doesn't have what it takes?

RAMESH PONNURU, SENIOR EDITOR, NATIONAL REVIEW: Well, first of all, let me thank you for the kind words, although I can't take full credit. It was very much a joint effort writing that editorial.

You know, look, I think a pattern you see with Gingrich is that the people who are most familiar with him, the people who worked for him or worked alongside him or covered him extensively, as a lot of my colleagues and I did in the 1990s, are the people least enthusiastic about a Gingrich presidential run because we say that although he's got a lot of virtues, he doesn't have the skillset to be the head of the Republican Party, let alone the commander in chief.

BURNETT: John Avlon, is this something the voters will, at this point, is there still enough time for them to change their minds? Because if they don't, this is Newt Gingrich's nomination, according to the polls.

JOHN AVLON, CNN CONTRIBUTOR: There is absolutely enough time. You're starting to see these attacks take an effect. You're starting to see Newt Gingrich's poll numbers soften just a bit.

But it's extraordinary. The headline really is the establishment strikes back. The conservative movement is trying to throw themselves in front of the Newt bus. Here's the point, because they know he would be a disastrous nominee for the GOP.

What's fascinating is even as you're seeing this consolidated attack, not just the "National Review" but George Will and many others, it's not necessarily translating to increased support for Mitt Romney. But it's a concerted effort by some of the people who knew him best from back in the day to say guys, the populous might like this, but this is a bad idea electorally.

BURNETT: Kevin Madden, I'm sure you like this because you worked for Romney. But here's what Ramesh's "National Review" said about Mitt Romney, "Highly intelligent and disciplined, takes conservative position on all the key issues. He would make a fine president, but time and ceaseless effort have not overcome conservative voter skepticism or general voter skepticism." People just aren't passionate about him.

KEVIN MADDEN, REPUBLICAN STRATEGIST: Well, look, the most important thing that Governor Romney has to do is make the argument to voters, particularly Republican voters in these early contests, about the level of accountability that he welcomes from conservatives and even moderate Republicans as he seeks to be the nominee for the party. And I think what's most important for him to talk about is the anxiety that they have about the economy and how his expertise and his record as a governor has always been to address a lot of those challenges that he had in Massachusetts and the challenges and how he overcame them. Go ahead.

BURNETT: I just want to play a quick sound bite from Rudy Giuliani from this morning. Here he is.

(BEGIN VIDEO CLIP)

RUDY GIULIANI, (R) FORMER NEW YORK CITY MAYOR: There's something wrong when you've been running as long as Mitt has and you're at 25 percent and you don't go much above or much below, and 75 percent of the other Republicans are telling you something about him.

(END VIDEO CLIP)

BURNETT: Before I get Kevin's reaction, does this open up a window for anyone else, Jon Huntsman?

AVLON: I think that's wishful thinking. But the point Rudy is making, and I worked for Rudy for many years, is that Mitt Romney is the only guy in politics with a glass ceiling. He has this 25 percent glass ceiling he's bumping his head on. So the question is whether that other 75 percent will coalesce around another candidate.

MADDEN: I think you have to remember that public opinion is not an event, it's a process. If you look at the consistent fact that he's been up at 25 percent, in many ways it's a floor. As many voters go through the consideration of candidates out there, many of them are parked on other candidates right now, and that's why we have these contests, because he can go out and build upon that 25 percent and get those voters as we go through all these early contests. So I see that as a challenge, absolutely. But I don't believe that just because 75 percent are with them, that that means they're against Romney. I think they're still waiting to see these candidates hack it out, to listen to their ideas, and then ultimately as we go through these contests, those voters will make the decision.

BURNETT: Ramesh, why did you write an anti-Gingrich, an anti- endorsement instead of a pro endorsement? Why didn't you come out and pick one of the three that you think have something going for them, Jon Huntsman, Mitt Romney, Rick Santorum?

PONNURU: Personally I myself think Romney is the best candidate of the available alternatives. Not all of the editors agree with me on that. But what we do agree on is it would be a terrible mistake and a very risky choice to give Newt Gingrich that nomination.

BURNETT: Thank you very much. Appreciate all three of you taking the time.

PONNURU: You're welcome.

BURNETT: We shall see.

The Russian prime minister today called Arizona Senator John McCain crazy. That is correct. That is what he said as a war of words between the two continues to heat up.

This time the verbal sparring had to do with the death of Moammar Gadhafi and drones, those secret spy planes like the ones the CIA have lost over Iran, the ones U.S. Defense Secretary Leon Panetta admitted were involved in the former Libyan leaders death.

At his traditional year-end gaggle today, Putin was asked about a prediction that McCain supposedly made online, one about the prime minister meeting the same fate as Gadhafi. Apparently Putin did not like what he thought McCain said.

(BEGIN VIDEO CLIP)

VLADIMIR PUTIN, RUSSIAN PRIME MINISTER, (via translator): Mr. McCain is known to have fought in Vietnam. I think he has enough blood of innocent civilians on his hands and he probably can no longer live without these horrible, disgusting scenes when television screens across the world show how Gadhafi is being killed, all covered in blood. Is that democracy?

(END VIDEO CLIP)

BURNETT: But as it turns out, the senator's twitter posts were linked to news stories that suggested Russia might be facing it's only Arab spring, slightly different than being killed execution style. And just tonight, McCain told CNN's John King he thinks Putin is really reacting to the demonstrations there where tens of thousands turned out to protest election results that returned Putin's United Russia Party to power. McCain said it will be interesting to see what develops during the next demonstration, which is set for later this month. BURNETT: Still out front, new information about that drone as we continue to cover the story. A really amazing turn today. An Iranian engineer talks and says they knew about a weakness in the GPS of the drone, which allowed them to land it. A lot of people said Iran wasn't capable of this, but on this show you heard they were.

Google's chairman Eric Schmidt says Iran is much more sophisticated that we give them credit for, and that was just one of the things we talked about when he gave us an exclusive look at Google's New York headquarters. That's coming up, "OUTFRONT."

(COMMERCIAL BREAK)

BURNETT: It's Just after 7:20 on the east, 4:20 on the west. It's hard to read with these glasses here, but they're kind of stylish.

So it's time for a story we can't resist. The Magnolia Wellness Center in Orangevale, California, is closing tomorrow for the last time. Not because the rent is too high, but because the customers are. Opened in 2009 as a small medicinal marijuana dispensary, Magnolia Wellness has grown into a community-based collective that in addition to pot offers on site yoga and compassion themed events for 40,000 patients, yep, 40,000.

But no more. On December 6, reportedly at the urging of Orangevale's largely conservative population, the Sacramento County board of supervisors voted four to one to ban any land use which violates federal or state law, i.e., that means marijuana dispensaries are banned. But the dispensary manager, Steven Lee, is surprisingly mellow about the whole thing. He's even holding a holiday party tomorrow complete with baked goods and a free gram of top shelf pot for every customer.

But if you want to partake, you'll need to bring a card with you, a dispensary, not a Christmas card, because the free marijuana offer is only valid to Magnolia's customers. No word on the baked goods, but I'll bet you they'll give you one if you tell them your buds at OUTFRONT sent you. We just couldn't resist.

(BEGIN VIDEO CLIP)

BURNETT: Still OUTFRONT, the OUTFRONT Five.

Mission drone.

UNIDENTIFIED MALE: It's entirely possible there was a malfunction.

UNIDENTIFIED MALE: Of all the craziest rule in our government, the craziest of all.

BURNETT: Google's big idea.

UNIDENTIFIED MALE: This is madness.

BURNETT: Madness? All this OUTFRONT in our second half.

(COMMERCIAL BREAK)

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

First, countdown to shutdown -- feel like deja vu? It's actually deja ocho, the eighth time this year the United States of America has been flirting with a shutdown. The deadline to pass a funding bill is Friday at midnight. Senator John Hoeven, Republican from North Dakota and member of the Senate appropriations committee told OUTFRONT he thinks Congress will get it done, will avoid a shutdown. But also said that despite Democrat's move to drop the millionaire surtax, he will not drop the Keystone pipeline to get the payroll tax cut.

Number two, Arizona sheriff Joe Arpaio has been accused of discriminating against Latinos, according to the Justice Department. A three-year investigation found the Maricopa County sheriff's office targeted Latinos, including racial profiling and also retaliated against anyone who complained. Arpaio, who calls himself America's toughest sheriff, is known for his tough stance on illegal immigrants.

OUTFRONT reached out to his office for comments, but we did not get a respond in time for the program.

Number three, a new defense attorney for Jerry Sandusky said his client may have been teaching boys, quote, "how to put soap on their body in the Penn State locker room." Karl Rominger offered the explanation in an interview with a WHTM channel. In a statement obtained by CNN, Rominger said today he was only proposing one hypothetical scenario for why Sandusky may have been in a shower with young boys.

Sandusky has admitted to showering with the children but denies sexually abusing them.

Number four: Kyrsten Roth, a missing teen in Portland, Oregon, found this morning. Her parents came OUTFRONT last night. Police told OUTFRONT they found the 15-year-old in the apartment of a young man she met on the Internet. Kyrsten says it was her choice to leave her parents' home on December 3rd.

The Roth family issued the statement saying, quote, "We are thrilled to be able to pick up our daughter. Please do not take this lightly because no adult male should ever take a child or keep a child without her parents knowing."

Police say they're questioning the 20-year-old man. He has not yet been charged. As you heard on this show, her parents said she had met him and interacted with him on the Internet and via text message.

It has been 132 days since the U.S. lost its top credit rating. What are we doing to get it back?

Well, the developing drone story continues and we've got developments tonight. Iranian officials say they are going to put the drone, along with six others that Iran says it's captured from Israel on display in Tehran and allow journalists to come and see them.

But this is what is important. In an interview with the "Christian Science Monitor", an Iranian engineer claimed that he knew about a weakness in the drone's GPS equipment and used noise jamming technology to force the bird, as he called the drone, down. Now, a lot of experts have been saying Iran didn't have this ability, that it needed help from China.

Now, Google's Eric Schmidt said on this show this week, he thinks Iran is much more sophisticated at codes and cyber war than people give it credit for. It turns out he may be right.

Also today, U.S. military officials told CNN why the drone was in Iran to begin with. Apparently, it was on a surveillance mission of suspected nuclear sites in the country.

Previously, U.S. and NATO officials had said the drone was just patrolling the border and it veered off course.

A few moments ago, I spoke with Chad Sweet, co-founder of the Chertoff Group, a global security advisory firm, and I asked him if it could possibly be true that Iran had hacked into the drone and brought it down.

(BEGIN VIDEOTAPE)

CHAD SWEET, CO-FOUNDER, CHERTOFF GROUP: Well, I think the proof in the pudding will be in whether they can put up or shut up. We'll see. Secretary Panetta has stated clearly that we'll continue to operate the program along the Afghan/Iranian border. So, they'll have to be able to demonstrate they can replicate this.

BURNETT: But here's the key question.

SWEET: Yes?

BURNETT: Don't we have the ability, this these things lose touch with us, to just automatically destroy them and why might we not have done that if we indeed have that ability? Is it so expensive and so fancy we didn't want to take the risk, you know, if it was in Iranian hands?

SWEET: It's a great question, and believe me, this is something that many at the Pentagon and frankly up on the Hill are going to be looking into. It is an expensive piece of equipment, as you noted. So, to destroy it is a costly decision, however, it's entirely possible that there was a malfunction in the protocol, that they lost signal and instead what kicked in was the emergency landing protocol.

When you look at the way the Iranians have displayed the aircraft, you'll notice that they hide the underbelly of the aircraft, which does indicate if they were so good at getting control of the aircraft, why couldn't they have landed it without destroying or disrupting the undercarriage? So there are a number of signatures that look like they didn't quite achieve the success that they claim.

BURNETT: All right. What about the technology on this drone? You know, we've been focusing that it's able to evade radar and that's something that other countries desperately really want to be able to do, particularly China with their new Joint Strike Fighter. And people say, well, Iran will share this technology with China.

Is that the best technology this drone has? Is there something else that Iran or China might get off of it?

SWEET: It has a number of things that the Chinese would very much like to get. There's extremely sophisticated, as you said, radar-evading paint that could be reverse-engineered. It has extremely sophisticated optical sensors that can positively identify terrorists from several thousand feet away. In addition, it's got obviously, a number of other, we'll call, (INAUDIBLE) and other type of electronic signatures.

It just depends on how the -- this particular UAV was equipped for whatever particular mission it was on.

BURNETT: All right. Thank you very much, Chad. Good to talk to you.

SWEET: Good to talk to you, Erin. Take care.

(END VIDEOTAPE)

(MUSIC)

BURNETT: The use of drones is not just a politically sensitive issue for the United States overseas. Here at home, we've got a whole lot of drones flying around. Police and other law enforcement want to use the drones. They want to find out if people are doing things they shouldn't be doing.

And this has some people worried about privacy.

So, are drones the next big brother? What are they really able to see and who's using them to look at whom?

Joining us to talk about this is CNN legal contributor Paul Callan, and Katherine Mangu-Ward.

All right. Good to have both of you with us.

Let me start with you, Paul. They're using drones and soon, the FAA is going to put out some new rules to say, look, you know, now, you're only allowed to fly drones in some zones and now we should be able to fly them in more zones.

PAUL CALLAN, CNN LEGAL CONTRIBUTOR: Yes.

BURNETT: Can we stop it? Or just we got to assume they're going to be using more and more of them.

CALLAN: The drones are coming. We're not going to stop it. But Americans, frankly, have gotten used to this already. Every time you go into a 7-Eleven to buy something, you're on video.

Now, in the 1950s, maybe that wasn't the case. But there's sort of a lower expectation of privacy that we all have because of all of the surveillance. We have satellite surveillance already. We have surveillance at red lights.

Drones are just making it technologically easier. I don't see it as a radical diminishment of our privacy. There is privacy concern, but let's not get carried away, like the ACLU is.

BURNETT: And the ACLU obviously is filing a suit to try to stop the use of drones for law enforcement.

Katherine, do you share Paul's view? I mean, after all, I guess we have limited privacy now online. And my producer Will Surratt today went online and looked at what television channels were on in his house and he could change them remotely from the office. I mean, no one has got any privacy.

KATHERINE MANGU-WARD, MANAGING EDITOR, REASON MAGAZINE AND REASON.COM: You know, if cops were angels, I would be much more comfortable having them float over me watching me. But the fact is, that these -- all of these technologies are subject to abuse. And cops don't have a great record of, you know, don't worry if you're not doing anything wrong, you don't have anything to fear.

There's a big difference between putting a picture up on Facebook and having a cop watch you when you don't know it.

BURNETT: So, but they're going to -- I mean, Katherine, do you think we can stop it? I mean, you can have lawsuits all you want, but the more sophisticated these drones are, I would imagine they could be incredibly high up or incredibly far away even on an angle, I mean literally. And they could see what they're going to see.

How can you really stop them?

MANGU-WARD: You know, I think the ACLU is doing a great service, just by saying, hey, everybody, freak out about this just a little bit. But I think they could also offer a trade. If the cops get to watch us all the time, maybe we should get to have a little bit more rights, a little bit more protections for when we record the cops or keep our eyes on them.

CALLAN: Well, of course, the truth is we will be watching the cops. The drone will be watching the cops and we've all got our cell phones now.

And I think -- you know, what's happened is, we've gotten used to this. We didn't like it at first, we always talked about 1984 and big brother watching.

BURNETT: Right.

CALLAN: But you know something? We have adjusted. People who are under the age of 25 in this country, they have lived their entire lives online and under surveillance.

BURNETT: Right.

CALLAN: So, I think America's expectation of privacy has changed radically in the last 10 years.

BURNETT: OK, that's true. But here's the big but, these drones are going to become, if they are not already, and we know in some cases they are, powerful enough to see a lot more than who's on the street stealing a car or who is getting equipment for a bomb.

CALLAN: Yes.

BURNETT: They can see in your home. They can see in your bedroom. Will can see his own TV. Someone else could see what you're watching and use that against you.

CALLAN: I could tap into Will's TV if I wanted to. I mean, the technology is there.

BURNETT: Nobody will want to know what was on it, by the way. I'm not going to talk about that.

CALLAN: But if you ghetto the point where one of these small helicopters is hovering outside of your bedroom taking pictures, the police, that's illegal. Under current law, you could see the police. The Supreme Court wouldn't allow evidence to be introduced that way.

So, really, we have laws in place that protect privacy of that level. That level of intrusion. But, you know, there's technology coming out, they can see through walls. And we need new laws to adjust to this stuff.

But, you know, I think in the end, the ACLU's suggested rules here, which is, you know, when they take pictures, throw them away, don't retain them. Well, I think if we're looking for a serial killer, maybe we would like to know if he walked up the street before the night of the murder. Three thousand people died at the World Trade Center. Surveillance might have been very helpful if we could have avoided that tragedy.

So, yes, and I think we're willing to give up a little bit to be safer in this country.

BURNETT: All right. Well, Katherine and Paul, thank you very much.

And viewers, let us know what you think. Please reach out on Facebook and Twitter. This is an issue that matters to all of us.

Let's check in with Anderson.

What do you have on "A.C. 360," Anderson?

ANDERSON COOPER, HOST, "A.C. 360": Erin, we're covering a lot of stuff tonight. Keeping them honest at the top of the program.

One of the nation's most outspoken lawmen, Sheriff Joe Arpaio. We all know him. His department, he heads up in Maricopa County in Arizona, his department is called out by the Justice Department for a, quote, "pervasive culture of discriminatory bias against Latinos." You're going to hear what Sheriff Arpaio has to say about those charges tonight.

Also, Florida A&M under fire for a history of hazing, including the recent death of drum major Robert Champion. Now, Florida's governor, Rick Scott, has strongly recommended the president of the university be suspended.

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

BURNETT: All right. Anderson, I know last night, Jason Carroll talked to the school president. Was he able to talk to him today after the news came down?

COOPER: He wasn't. He did have the interview with the governor and the governor has very strong words on that. You're going to hear from him. He doesn't have the power to make the president of the university to step down but he does say he should step down.

We're also going to look into the prevalence of hazing, not only on this campus but a lot of campuses across the country.

BURNETT: All right. Anderson, thank you. And you see in a couple of minutes.

Still to come, the father of Michelle Parker, Florida's missing mother, comes OUTFRONT as the search continues for her.

And Google chairman Eric Schmidt opens the doors to the company's New York headquarters for the first time ever. An inclusive look and you won't believe what Google guys get for free.

(COMMERCIAL BREAK)

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

And tonight, we go to Iraq where a ceremony was held to mark the official end of the war. U.S. troops lowered the flag as command that flew over the Iraqi capital.

Arwa Damon is in Baghdad tonight.

Arwa, so, finally, U.S. troops leave. What concerns do Iraqi civilians have?

ARWA DAMON, CNN CORRESPONDENT: Erin, their concerns are endless. They're worried about the lack of national unity, despite what is publicly said by officials within those who are lead thing country. They're worried about corruption. They're worried about the lack of basic services.

But perhaps still more importantly, they are worried about security, because even though the numbers are down for Iraq, this is not a numbers game. And they continue to fear that every single time they leave their homes and say goodbye to their loved ones, they may never see them again -- Erin.

BURNETT: All right. Arwa, thank you very much.

Well, it's been almost a month since Florida mother Michelle Parker was last seen. That was on November 17th when she dropped her 3-year-old twins off with their father, Dale Smith. Smith and Parker were engaged, but as we told you, they had a public falling out which happened on the TV show "The People's Court."

The couple sorted out a dispute over the engagement ring. Police still say Smith is the primary suspect, but he has not been charged.

OUTFRONT with us tonight, Michelle's dad, Brad Parker, and her family's lawyer, Matt Morgan.

Good to see you again, Matt. And, Brad, thank you so much for coming on.

Your family just moved this sort of command post from Stanford to Kissimmee, about 25 miles away. Can you tell us why and what's going on tonight?

BRAD PARKER, MICHELLE PARKER'S DAD: Yes. Me or Matt?

BURNETT: To you, Brad.

PARKER: To me?

We're reaching out 25 miles, east to the west of the first command center, which was on Orange Avenue in Oak Ridge. There was over 70,000 flyers posted in Oak Ridge. It was saturated, and we moved up to Stanford for two weeks. We put out flyers up there.

And now, we're moving to Kissimmee, and we'll probably be down there two weeks and we're going to saturate to some area.

BURNETT: And, Matt, what about Michelle's twins right now? There's obviously been a custody battle we've been telling our viewers about since she's been gone. Where does that stand now? And are they still with Dale?

MATT MORGAN, PARKER FAMILY'S ATTORNEY: Yes. And we do have good news on that front. Martin Jim (ph) gave Yvonne and her family his word at the shelter hearing that he wanted what was in the best interest of the children. So, over two weeks of kind of going back and forth, we're able to iron out an agreement where Yvonne will get very liberal visitation to the children. And so we're thankful to Martin Jim (ph) for his efforts and Yvonne is beyond happy to be with those children when she gets to see them.

BURNETT: And, Matt, obviously last time that we spoke, Michelle's phone had been found, her iPhone. Has there been any other traces of her or anymore information that you have found out of what was on that phone that could help you at this point?

MORGAN: I believe that detectives have said that there was information on that phone, which is going to be useful towards their investigation. They haven't released exact details yet, Erin. But I have been informed that there was information that they're going to use.

BURNETT: Brad, what do you think happened here at this point? I mean, I know you're hoping that your daughter is OK. Do you think that Dale had anything to do with her disappearance? Are you frustrated that he has not been taken into custody or not charged?

PARKER: I'm very frustrated. I mean, Michelle dropped the kids off there, and that's the last day she had been seen, in broad daylight. She had a nice Hummer. It was a nice Hummer and Michelle was a pretty girl, and she just disappeared.

And all the evidence at the Orlando Police Department goes right back to Dale.

BURNETT: All right. We hope that this ends in a good way and we'll talk to you both again soon.

MORGAN: Thank you, Erin.

PARKER: Thank you. Thank you for having me on.

BURNETT: Al right, sir, thank you.

Google is next.

(COMMERCIAL BREAK)

BURNETT: Google, a verb, a word, almost everyone on earth, knows. I took an exclusive tour of Google's New York headquarters with executive chairman Eric Schmidt where he opened up about why he thinks America is still the nation to beat.

(BEGIN VIDEOTAPE)

ERIC SCHMIDT, EXECUTIVE CHAIRMAN, GOOGLE: America is the best innovator in the world today, and that's going to continue. America has 18 of the top world's research universities. It's still a place of the best innovation. America is the world's innovation center.

It's still possible for two people, three people with a graduate student's and so forth to create a brand new company that will change everything in the world today. There's every reason to believe that America can grow very, very successfully with the focus on innovation.

BURNETT (voice-over): There is a reason Eric Schmidt is so confident about the future of America. Even in hard economic times, Google is thriving, revenue surged more than 30 percent last quarter, putting Schmidt in a good enough mood to give us a rare glimpse behind the scenes.

(on camera): So this is inside Google, second biggest office for Google in the world?

SCHMIDT: That's right.

BURNETT: In Manhattan?

SCHMIDT: Yes, right in downtown Manhattan, about 3,000 people, one large building and an adjacent building. What's interesting is about half and half, high quality engineering and sales and marketing. Nobody thought you could build the world's best engineering center right in the downtown of Manhattan but you can.

BURNETT (voice-over): Situated in the heart of the meat-packing district of New York, Google's unique office space spans two buildings and entire city block.

SCHMIDT: The old model was you'd have your office and the door would be closed and so forth.

BURNETT (on camera): Yes.

SCHMIDT: But, in fact, this is much better and people are used to it, if they want privacy, they put on their headphones and listen to music while programming. But they literally stare at screens all day.

BURNETT: I can tell these are engineered designed desks.

(voice-over): There are cafeterias and snake stations with free food every 150 feet, an incentive to keep people close to their desk.

SCHMIDT: The only asset that matters is people in a company like this. And so, keeping them here, keeping them motivated. Frankly, they work incredibly hard, we give them connections at home, of course. And they work pretty much all the time.

And after all, they're trying to change the world, so they really care. I don't need to know they're at work. I know what they're doing.

We can also measure by the way what they're doing, because we can see the productivity and know whether they're making progress or not.

BURNETT (on camera): You can literally watch it in real time.

SCHMIDT: And we do.

BURNETT: People get worried. They say China and India are churning out engineers. Are they churning out better ones?

SCHMIDT: They certainly have some of the best in the world, and we try to hire them. We would much rather have those Chinese engineers working here in America for us producing great products and benefits for America.

BURNETT (voice-over): Google is doing everything it can to hire the best and the brightest, all over the world, with 60 offices in 30 countries.

(on camera): What countries would you say right now are the least open to what you do?

SCHMIDT: The most shocking country of all is North Korea. North Korea is very difficult to operate in, but it's a country where there's so little conversation and so few people peering into it, that people really do believe that their dear leader really is God-like, even as people are starving in the streets. And sometime in the next few years, North Korea will open up to, it's the last one.

BURNETT: And then a country like China, do you feel that you have the opportunities you need in China? Because it's amazing when you look there, it's not YouTube, it's Youku, right? . Or it's necessarily Google. It's Baidu.

I mean, they've really encouraged and built their own companies, now the biggest market, or the biggest growing market in the world.

SCHMIDT: In the Chinese model, there's a -- there's a Chinese equivalent of every American firm. There's a Facebook equivalent. There's a Twitter equivalent. There's a Google equivalent which are doing well.

The Chinese laws make it very difficult for American companies to enter China and operate. You have to operate through joint venture and you're subject to these horrendous censorship laws.

After five years of trying to make this work, we decided to move to the other China, you know, they love to say one country, two systems. Well, we prefer the open system of Hong Kong. There is a firewall literally called the Great Firewall, which blocks content that they don't like between Hong Kong and the mainland, forcing them to do the censorship. We just could not abide by their rules.

BURNETT: So, is this really going to be the century for China, China's century prize?

SCHMIDT: China is the world's manufacturer. They do it very well. They do not yet have all of the advanced society functions that they need, an independent judiciary, the kind of political dynamic and creativity, the kind of advanced universities that are needed to do what we've been able to do in the United States. There's an open question as to how long it will take them to get there.

BURNETT: I met a little boy in China this summer, his name was Bill. They named him after Bill Gates. We had sort of done this question as to whether the next Bill Gates or Steve Jobs would be born in China, or in the United States.

Part of that's luck but part of that really isn't luck. Where do you think the next one of those people will be born?

SCHMIDT: I think that the next one of those people will be born in America, and will be a successful American entrepreneur, because it's not just the person. It's the system that they're part of.

Innovators create millions of jobs in America. We need to create them and we also need to welcome them from other countries when they want to come and relocate to America.

BURNETT: And we're still not doing that to the level we need to be, are we?

SCHMIDT: Of all the crazy rules in our government, the craziest of all, bar none, is that we take the smartest people in the world, we bring them to America, we give them PhDs in technical sciences and we kick them out to go found great companies outside of America. This is madness.

BURNETT (voice-over): More than 31,000 people work for Google and New York is the company's second largest office, after its sprawling headquarters in Mountain View, California.

Here the motif is classic New York City, hallways with fake subway grades, conference rooms that look like a meat locker and razor scooters to get from one end to the other.

Video conference rooms lie in the big city streets, and huddle rooms designed after city apartments are there to make people feel at home.

(on camera): Woman's apartment.

SCHMIDT: Yes.

BURNETT: Bra hanging from the bed and a cat, really? And a cat?

(voice-over): While privacy is always an option, Schmidt says the best ideas come from people working together in extremely close proximity.

(on camera): What's the future for Google? I'm just -- I mean you've got the Google TV, you've got the phones, you've got the search. But you also have wind farms, cancer diagnostics, clean power, all sorts of things. Your finger is in a lot of pies, which could be a sign of strength or a lack of direction? Which is it?

SCHMIDT: It's of course both. One of our strengths is our lack of direction. We actually let people invent new things and see how far they go. And if they work wonderfully, then we will continue them and if they don't work so well, we'll try something new.

Google is the largest systematic innovator at scale I know of. What we try to bring out new things and see if they work. We've done particularly well in information technology and information search. It's essentially a math problem and we do that I think better than anybody else. (END VIDEOTAPE)

BURNETT: When I asked him whether Google was a monopoly, he sort of smiled as to the engineer behind him, and he said, "No, I just think we do it better than others."

All right. Thanks so much for watching.

"ANDERSON COOPER 360" starts right now.