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ERIN BURNETT OUTFRONT

House Rejects Senate Bill to Extend Payroll Tax Holiday; Mitt Romney Criticizes Super PACs; Interview with Rep. Burgess; Interview with Homeland Security Secretary Janet Napolitano

Aired December 20, 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.

The Department of Homeland Security is the third largest agency in America. It didn't exist 10 years ago. Should it now? Our exclusive tour and interview with DHS Secretary Janet Napolitano.

And the chairman of the Joint Chiefs of Staff says Iran is playing a dangerous game that could draw America into war.

And the bottom line on the payroll tax cut extension -- the House rejects the Senate's plan. Dysfunction, dysfunction, dysfunction.

Let's go OUTFRONT.

I'm Erin Burnett. OUTFRONT tonight, rejection and dysfunction, the House today rejecting the Senate's plan to extend the payroll tax cut. Now, that means that your taxes are going to go up somewhere between $700 and $2,300 next year unless -- ooh, the big unless -- an all new Congressional committee, and it is an all new committee, comes to the agreement by the year's end. President Obama's approval ratings are up as Congress' fall on this. He seized the moment today.

(BEGIN VIDEO CLIP)

BARACK OBAMA, (D) PRESIDENT OF THE UNITED STATES: But now, even though Republicans and Democrats in the Senate were willing to compromise for the good of the country, a faction of Republicans in the House are refusing to even vote on the Senate bill, a Bill that cuts taxes for 160 million Americans. And because of their refusal to cooperate, all of those Americans could face a tax hike in just 11 days. And millions of Americans who are out there looking for work could find their unemployment insurance expired.

(END VIDEO CLIP)

BURNETT: And just for good measure the White House website prominently tonight displaying a countdown clock, placing the blame squarely on Congress. Quote, "If Congress does not act," it says "middle-class taxes increase." The president is pointing the finger at people, including Representative Michael Burgess, Republican from Texas and a member of the Tea Party caucus who voted today proudly and openly so to reject the Senate's two-month payroll extension. And I asked him just a little bit ago whether his vote was all about politics.

(BEGIN VIDEO CLIP)

REP. MICHAEL BURGESS, (R) TEXAS: I was satisfied that which got the message across that what the Senate did was not satisfactory. People do need more than two months of stability.

BURNETT: Everyone agrees a two-month extension is not acceptable and it speaks to other problems in Washington. But, and this is a big butt, Representative Boehner had come to a deal with the Senate Republicans and said he could get it through the House, this two-month extension. So the passed it and went home. Who raised their hand and said no, I'm not going to say yes?

BURGESS: Well, you have to ask the speaker, and he is perfectly capable of speaking for himself on this. And you have, Erin, identified the problem, that it is difficult the get a resolution on this. Answer me this -- is it going to any easier in 60 days' time?

BURNETT: Why couldn't Congress have this conversation earlier? I mean, did you for example know even when the Senate passed this that you would vote, I mean, that the two month that you would have voted no, no matter what?

BURGESS: Well, if they had asked me, I sure would.

BURNETT: Nobody asked you?

BURGESS: If Harry Reid called me that day and said, look, this is the best we can do, two months, what do you think, I would have said no sale. Get back to work, because that is the correct answer.

And I cannot believe that Majority Leader Reid thought this was an acceptable solution to a problem. They were playing a game of beat the clock and run out the clock, and this is not acceptable. So here we are, and saying it is the week before Christmas and we are willing to work. American people are working Christmas week. We should be working.

BURNETT: You are obviously a member of the Tea Party caucus. Scott Brown, Republican from Massachusetts, had said, quote, "It angers me that House Republicans would rather continue playing politics than finding solutions. Their actions are going to hurt American families and be detrimental to our fragile economy. The Americans are first and now is not the time for drawing lines in the sand."

BURGESS: With all due respect to a new member of the greatest collaborative body in the world, this is now solution. In two months' time, Erin, we will be having the argument again. The big obstacles are the pay-fors, I get that. But surely these are things that can be overcome.

BURNETT: OK, you say surely they can be overcome and the reason that there is a two-month extension, which really stinks is because they couldn't be overcome on something the Democrats like and Republicans like and both wanted to get one year on it. And there are ways to pay for it the people agreed on it. And the reason that we are only getting two months is because you could not agree how the pay for it.

BURGESS: Well, the way to pay for it in the Senate currently is a tax on new mortgages and refinances. And the problem here is that you get two month of relief and the tax goes on for 10 years. We could find the correct cuts somewhere to offset the expenditures in this bill, and that is what should have happened. Any time you enact a new tax, we all know this, you get the short period of benefits, but the tax never goes away.

BURNETT: The tax cut is very hard to take away, whether it is a mortgage deduction or a charitable deduction or something else, and in particular we are talking about a payroll tax. That is what funds our Social Security and people are getting used to it. Now they're saying so taking away their tax break is a tax increase. So do you believe we are now in a position to have that tax so that we will never have a payroll tax again?

BURGESS: Well, it's beginning to look that way. I voted against this concept a year ago because of just the reasons that you articulated. Once you provide some relief on the payroll tax, you have suddenly reset the baseline and people's expectation has been reset.

BURNETT: Well, thank you very much, Representative Burgess, for taking the time tonight.

BURGESS: Thank you, Erin.

(END VIDEOTAPE)

BURNETT: The bottom line -- wherever you stand politically, one thing is true. Congress is kicking the can down the road again by a two-month extension. We reached out to the OUTFRONT economic strike team, 24 CEOs, entrepreneurs, and investors. And coming OUTFRONT tonight is John Dejoria, chairman and CEO of John Paul Mitchell Systems, co-founder of Petron Tequila, member of our strike team. Good to see you again, sir.

JOHN PAUL DEJORIA, CHAIRMAN AND CEO, JOHN PAUL MITCHELL SYSTEMS: Thank you, Erin, and thank you for having me on.

BURNETT: I wish I had you on in a better situation, because this is a pretty embarrassing situation, isn't it?

DEJORIA: Well, it is extremely embarrassing for our nation. Here you have people, give a one-year cut. It's no big deal. What is holding it up? It is called lobbyists. Our last party got us into this mess. The party that is running the nation now whether it's Democrats or Republicans are continuing this mess we are in.

When the president ran he said I will knock out the lobbyists and it never happened. Three years ago he said we will stop all lobbying. Why is this hold up happening? It is the lobbyists. They want the other bills pass. Hold off on this thing so we can get other bill passed and we can embarrass the president.

This is not good for America. Politicians, take your we, the people. I think they should definitely continue this thing for at least one year and decide the other things later on. We have politics going on and one group saying don't listen to environmentalists in San Francisco. It will only please a few people and bring the pipeline in. Listen to the people and maybe it will affect your grandchildren. One doesn't know.

But there is a solution to this. Get the lobbyists out of there. Pass it for one year, all of the other things that you have, settle it in the next few months, but don't hurt middle America anymore, because they have been hurt enough.

BURNETT: And let me ask you, John Paul, because the issue of paying for it and what frustrated me is that this is what they all liked the Democrats and the Republicans and everybody liked it and everybody wanted it and no fight.

DEJORIA: It made sense.

BURNETT: It made sense. And then there was a pipeline issue and could not agree to pay for it. And Burgess was saying, OK, well, now you will start to see the people paying more on the mortgages and we would pay it by increasing mortgage fees and we can't do that. It seems when you talk about paying for it, it becomes a third rail.

DEJORIA: What happens, Erin, they missed the clock. When you had the super-committee who knew nothing about business, some of them about taking care of lobbyists and not one of them ran a business. How do you get $1.2 trillion? They should have been going after where do you cut $5 trillion, get some business people in there and get cameras so everybody listens to what is going on.

And then at the same time ask others to say, hey, how about you guys throw in $1 trillion for the next 10 years and it will further reduce the budget. Here, let's get a balanced budget and get rid of the deficit. We need some business people in politics and not people who don't know anything about businesses.

America is one of the biggest businesses in the world, and the people who run it can't balance their budget. We need business people in there and lobbyists out of there.

So Mr. President, you made that promise and you did not keep it. Mr. President and the administration before, no pork barrel spending. What are you adding on to this bill right now to help the middle- class? Some more things, either pass this or we won't do it. It is not right for America, guys. America works and come together for a little bit and throw the politics out and do the right thing. No one is going to hold it against you if you do the right thing right now, just do it, even if it's at the last minute. America needs you.

BURNETT: And to make the final point here as a businessperson, do you think -- people who have had all kind of numbers from the payroll tax and if we don't extend it, it will hit growth and not enough to throw us back into recession. But what is your take on it, is this tax one that is crucial?

DEJORIA: No, it is not crucial. But that extra $85 a month for people that are kind of struggling right now is a big difference and it won't hurt one bit to last one year. We are enough in debt now. And they should force them to say, wow, we went further in debt now, we're robbing a little bit more from Social Security as all administrations have done for years now, and what can we do to run this like a business and balance it. We, the people, we will help you out and do it for free. If you have to pay us, give us a dollar. Hey, we are here.

BURNETT: All right, said from a man who went from living in his car to the very top. He will do it for a dollar. John Paul, good to see you as always, a member of the strike team. And you can go to the website to find out more about John Paul Dejoria and the other strike team members.

OUTFRONT next, Barack Obama's surge and Chris Christie's way into the election. He has one to slide into the crack.

And the highest ranking officer of the U.S. military says Iran's latest actions could draw America into war.

And the DHS -- we go out front for an exclusive tour with Secretary Janet Napolitano and 4.5 kilos of heroin.

(COMMERCIAL BREAK)

BURNETT: Facebook.com has a new address, and not the website, the company. The 2,000 person staff relocated to new offices in Menlo Park, California, this week. And the new digs are more like a college or a mall than an office. It show the company has a hell of a lot of money. The 10 million, 1 million square foot campus has cafes, on site doctors, and, are you kidding me, free dry cleaning? Just like the "Seinfeld," anyone watch that the other night with the 25 percent discount?

Last week I had an exclusive look at Google's new offices here in New York City, and they were pretty cool, too, but no free dry cleaning. It makes us think that there is some one-upmanship behind all of this, which brings us to tonight's number - 150. That is the number of acres Apple has set aside for its new campus in Cupertino, California. It will increase Apple's current campus from 2.6 to 3.1 million square feet. The new Apple looks more like a spaceship than a building and is set to launch in 2015, but is there free dry cleaning?

Two weeks until the Iowa caucuses. If you are not thrilled with any of the candidates, how about this guy?

(BEGIN VIDEO CLIP)

GOV. CHRIS CHRISTIE, (R) NEW JERSEY: Barack Obama who is probably the weakest president I have seen in my lifetime, has no idea how to use the executive power, and to stand up to utter his name in the same breath as Teddy Roosevelt, are you kidding?

(END VIDEO CLIP)

BURNETT: That is Chris Christie. The New Jersey governor says what he thinks this morning on "Morning Joe." Yes, we know he is not running, but there is a chance that he would be on the ballot, because the group Americans Elect is on a mission to get him on the ballot in all 50 states, a candidate chosen by the people online and not by established parties.

Joining us now is the COO of Americans Elect Elliott Ackerman. Eliot, good to see you. That guy we saw there, Chris Christie, he could theoretically end up on a ballot, right?

ELLIOT ACKERMAN, COO, AMERICANSELECT,ORG: Yes, he absolutely could. And I think they what we are doing at America elects is opening up the political process but I get on the ballot in all 50 states. And I'm talking to you from California we are with are certified and over 1.6 million people in the state of California have signed petitions to get a third choice on the ballot in 2012.

BURNETT: You mentioned California and that was a big one, and you also got on the ballot in Rhode Island I believe today. So how many states are you in?

ACKERMAN: That is right.

BURNETT: And do you think it is reasonable that you would be in the ballot in all 50?

ACKERMAN: We are going to be on the ballot in all 50 states. We have been at this for over a year now, and by new year's, we will have 2.5 million of the 2.9 million signatures that we need to get on the ballot in all 50 states. So we are removing that barrier to entry.

And now the question is who are the American people going to choose and what is the alternative to what the democratic and the Republican parties putting up this election cycle and the continuing and predictable failure of our governance out of Washington, D.C. to do anything.

BURNETT: Chris Christie is a guy that a lot of people are in love with and a lot of people say that his hand was forced too early and he could be drafted, but he told Joe Amica (ph) that he does not regret getting out of the race. But theoretically he could be on the ballot, and what happens if he is on it and he does not want to run?

ACKERMAN: Well, what we're doing at Americans Elect is an innovation. He can be drafted through Americans Elect. So this is an opportunity for everyday Americans whether it be a Chris Christie or another candidate to speak out saying they are not satisfied with the choices and they can participate in drafting for the candidates and show the individuals they have real support out there. And that is going to be starting here in January that the candidates will be able to announce and draft movements and it is going to play out into June of 2012 where every registered voter can sign up at AmericansElect.org and participate in a nonpartisan nominating convention to put a third choice on the ballot in 2012. BURNETT: And so if Chris Christie does not want to get in, he can put a person in his stead, but the person cannot be a Republican or something like that?

ACKERMAN: Right. This is about putting a nonpartisan unity ticket on the ballot in all 50 states. Listening to the guest before, we are seeing the hyper-partisan paralyzing the country. And we need one who does not owe their line to the parties. Right now, we have the party bases are the party bosses, and all of the 44 percent of the independents of the electorate are left out in the cold and politically homeless. None of us have a home.

BURNETT: I like that, "politically homeless." Good analogy.

Now, for those of you who like that idea or, well, not completely fed up with politics as usual and you have hope, this is something that got our attention today.

(BEGIN VIDEO CLIP)

MITT ROMNEY, (R) PRESIDENTIAL CANDIDATE: Campaign finance law has made a mockery of our political campaign season. We really have to let campaigns raise the money they need and just get rid of the super PACs.

(END VIDEO CLIP)

BURNETT: All right, that really upset John Avlon, who is sitting over there, and you should have seen him in the meeting. And also with us is Democratic strategist and national editor of govote.com Jamal Simmons, and Reihan Salam, and the co-author of the "Brand New Party -- How Conservatives Can Win the Working Class and save the American Dream." And take it away, John Avlon.

JOHN AVLON, CNN CONTRIBUTOR: Come on. This is hypocrisy watch 101. Here you've got Mitt Romney on a charm offensive. He's on "Letterman" and everywhere and we can all agree that politics ain't beanbag, but for a guy to talk about how distasteful super PACs are while a super PAC associated with his campaign is dropping millions of dollars in negative ads against his primary rival in Iowa, I mean, come on. This is what drives people crazy about politics.

Yes. And Newt Gingrich is unilaterally disarmed here. The idea that the candidates are powerless over the PACs -- and yes, there is not supposed to be contact. But the candidates set the tone for their campaign, but while they are dropping millions of dollars a day to drop bombs on Newt Gingrich, come on.

BURNETT: One both sides of the aisle, Jamal, it works like this. There are guys that the president didn't have authority over and spent years working for the president and now they run. This is what frustrates people about politics in general, this rhetorical separation.

JAMAL SIMMONS, DEMOCRATIC STRATEGIST: It is frustrating, but you know what else? Mitt Romney, not only does he have this PAC working for him, but in July and August, he was doing events with the super PAC, because there is a loophole to go to the event as long as he did not ask for money. And so they were able to have him at an event.

So, you know, all of the candidates are in it. Everybody's hands have a little bit of dirt on them. And the problem is that the Supreme Court passed the rule a while ago and we are all stuck in the mess. We are basically back to where we were before Watergate, and in fact, it may be even less regulated because it is not in the campaign or the democratic or the Republican parties. It is in the third party reports to not report, and it is a mess.

BURNETT: Reihan?

REIHAN SALAM, FELLOW, NEW AMERICAN FOUNDATION: You know, I have to say that I completely disagree with John and Jamal. The problem is that we tried to regulate the system post-Watergate and every time we try to regulate the system, the money is moving in a different direction.

What Mitt Romney said is sound. When the money is raised by the campaign, then the candidate has to take responsibility for it and you cannot dodge it.

You have a ton of super PACs backed by labor and folks in Hollywood like Jeff Katzenberg, and that is fair game because it is free speech. But if the candidates were raising that money, another great thing happens. The Democrats and the Republican Party can easily raise that money from the interested folks and channel the money to candidates who are not self-funders or rich or military veterans who cannot raise the money from the wealthy friends. And that is what Romney backed, and that is what I was impressed by.

BURNETT: This is the debate in the meeting with John Avlon and I were talking and I hear the frustration, but Mitt Romney hates the super PAC, but he can't say that he can't play with them, and Barack Obama has a super PAC, too. You may hate them, but you have to play.

AVLON: This is part of the "Godfather II" argument, we're all part of the same hypocrisy, senator. But it's not just hate the game, don't hate the player, because you have to own this. Newt Gingrich has made a decision in part because he didn't have the case to unilaterally disarm and say I will only run positive ads. That deserves people's support and you to call it out when other folks are denouncing on the one hand but benefiting from the negative onslaught on the other.

BURNETT: I don't want to use the term "third party candidate," but Americans Elect was talking about a candidate coming on who is not either elected by either party so could be a D or R or I or anybody. Is there any chance, because you have been following this closely, John?

AVLON: Yes, this is going to happen with a major player in the 2012 election. You will have a centrist bipartisan ticket on all 50 states. And this will change the equation and attempt not to be a third party, but process. It is exciting an interesting and so keep an eye on it.

SALAM: I have to say that -- sorry.

SIMMONS: We will see how exciting and interesting, but I don't think it is going to be definitive. The American system is just not built to have a third party president get elected. What is probably going to happen and a little pie in the sky and those guys are friends of mine and I know them, and it is a little pie in the sky, because I wish I could have cookie dough ice cream every day and not gain weight, but you can't have the Democrat and the Republican on the same ticket and expect people to choose between them and not choose the party that they identify with. I mean the Democrats and the Republicans are not going to do that.

AVLON: Jamal, 40 percent of the Americans are independent, and they have rejected the two parties because of the partisanship, and the parties have forgotten that they are not the purpose of the democracy.

SALAM: Most of them are leaning one way or another, and there are a few people who genuine swingers, but they are fair.

SIMMONS: And you can speak to genuine swingers, but I --

(LAUGHTER)

AVLON: That is whole other show.

(CROSSTALK)

BURNETT: And beltway swinging is not a good image.

SIMMONS: We are off of the rails.

BURNETT: We are off of the rails. Let me get back on the rails with you, Jamal. The president's approval rating, 49 percent of Americans now approve. By the way, that has been a big jump for him since last week. Is he playing the payroll right to blame it on Congress whose approval rating is higher than I thought at 11 percent?

SIMMONS: The one place I am consistently critical of the president is the fact that they have not had a consistent message out of the White House for the first couple of years. But over the last couple of years they are dead spot-on and talking about the jobs and the economy and barnstorming the country. And I think the American people now understand that this president is focused like a laser beam on their economic problems.

And meanwhile, you have a circus taking place in Iowa and Republican primaries with Donald Trump and Herman Cain and whoever else is accused of shenanigans and on one side you have the Democrats focused on the circus, and the Republicans focused on something else.

(CROSSTALK)

SIMMONS: Maybe the trapeze at the circus. (LAUGHTER)

BURNETT: OK. Good to have you all back. Thank you, all.

(BEGIN VIDEO CLIP)

Still OUTFRONT, the OUTFRONT five.

Missing.

UNIDENTIFIED MALE: She is out there somewhere. Where?

BURNETT: Homeland security?

JANET NAPOLITANO, HOMELAND SECURITY SECRETARY: This is the department of homeland security and not the department of guarantees. There are no guarantees here.

BURNETT: All of this OUTFRONT in our second half.

(COMMERCIAL BREAK)

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

Up first, federal failure. Today the House rejected the Senate's two-month extension of the payroll cut, instead calling for more discussion to extend the cut a full year. The senators have left town and they say they are not coming back. If agreement is not reached by December 31st, taxes will go up for most working Americans. Congressman Michael Burgess, a Tea Party Republican came OUTFRONT, and we asked him if a deal could be reached in time.

(BEGIN VIDEO CLIP)

BURGESS: I cannot believe that a Majority Leader Reid thought this was an acceptable solution to a problem. They were playing a game of beat the clock. They were playing a game of run out the clock, and this is unacceptable. So here we are, and we are saying that even though it is the week before Christmas, we are willing to work. I am a doctor and I can't tell you how many Christmases I worked. Babies come on Christmas. I was nearly a Christmas baby, and that sort of stuff happens all of time. People are working Christmas week. We should be working.

(END VIDEO CLIP)

BURNETT: Number two, the U.S. said today it has been in touch with North Korean government officials since the death of the country's leader Kim Jong-il. They describe the conversations, though, as, quote, "technical".

OUTFRONT spoke with Victor Cha, the former director of Asian affairs at the White House, he told us China will likely try to use the situation to gain more power in the region, but he also told us that, quote, "One of the risks for the United States is that you'll have a viable North Korean regime that is hell-bent on getting more nuclear weapons."

Number three, OUTFRONT has been speaking with a father of a man who confessed on Iranian TV that he was a CIA spy.

Amir Hekmati's family told us that they were shocked by the recent broadcast aired on Iranian TV with a false information and a forced confession. Amir has never had any affiliation with the CIA and these allegations are untrue.

Well, the family added that Amir, a former marine, traveled to Iran in August to visit relatives and was taken into custody just a couple of few weeks later.

Number four, a promising housing report released today helped send the market up 337 points. And a lot of people are on vacation, but still, you'll take a jump like this where you can get it. New home construction was up 9 percent in November, way better than expect. And housing permits which is a gauge of, well, what you're going to see in the future also were up.

One of our analysts told us that the numbers show a good sign overall, but housing is still volatile. It remains ground zero of our economic slowdown.

Well, it has been 137 days since the U.S. lost the top credit rating and part two of that housing crash. What are we doing to do to get it back?

Well, France is still in danger of losing theirs. Today, the man in charge of regulating France's stock market said it would be a miracle if France was able to keep its AAA rating.

Well, tonight, the highest ranking officer in the United States military says he is worried about Iran starting an all-out nuclear war in the Middle East. The chairman of the Joint Chiefs of Staff said Iran is playing a dangerous game that could draw the region and the United States into a massive and deadly conflict.

This is what General Martin Dempsey told our own Barbara Starr in an exclusive interview conducted in Riyadh, Saudi Arabia.

(BEGIN VIDEO CLIP)

GENERAL MARTIN DEMPSEY, CHAIRMAN, JOINT CHIEFS OF STAFF: My biggest worry is they will miscalculate our resolve. Any miscalculation could mean that we are drawn into conflict, and that would be -- that would be a tragedy for the region and the world.

(END VIDEO CLIP)

BURNETT: It would be. And what would the conflict look like? What would it cost?

We went OUTFRONT tonight and looked at the numbers with the help for the Center for Strategic and Budget Assessments. This is what we learned from Todd Harrison.

If the United States engaged in a air strike only of air assault of Iran that lasted days or weeks, it could cost between $1 and $10 billion. That's the low end, sort of like Libya.

But a much bigger number would be the cost of a real conflict that involves American forces in Iran supporting a change in regime. In that case, possible costs rise to more than $1 trillion.

How real is Iran's nuclear threat and what are the chances American troops will be drawn into another battle?

Joining us now is former U.S. secretary of defense, William Cohen.

And, Mr. Secretary, what's your reaction there to what the general had to say in terms of -- in pretty direct commentary that he thinks that we are really seeing a real ratcheting up, and, obviously, we have already been seeing an arms race in that region.

WILLIAM COHEN, FORMER U.S. SECRETARY OF STATE: Well, several things occur to me.

Number one, I suspect that he is concerned that the Iranians may think that our attention has been diverted because of what's going on in North Korea.

Secondly, this is our last day. We have pulled out of Iraq that perhaps they are going to send a signal that they are the ones who are going to dominate the region. So, they may miscalculate and do something provocative and draw us into a conflict.

And the third thing is that there seems to be something going on inside of Iran in which they have been miscalculating by allegedly at least planning to assassinate the Saudi ambassador to the United States.

BURNETT: Right.

COHEN: If that had taken place, that would have led a U.S.- response that would have meant a regime change for sure in Iran.

So, there are a number of contingencies that would take place to draw us into a conflict with Iran.

BURNETT: And I'm curious about that very instance, because I know a lot of the Americans -- they say, all right, well, the U.S. government has come out with a lawsuit accusing people in the Iranian government of planning an attack that would have resulted in the death of American civilians in a terrorist attack in Washington, D.C. We allege they are doing it, and we take it to court which is not enough to cause a conflict.

In that case, is it true America really just doesn't want a war?

COHEN: Of course, we don't want a war. We want to avoid war if it's possible. And listening to your introduction about the costs of war, we -- I wish we had the calculations in the beginning of the war in Iraq. It was supposed to be a cakewalk. It was going to be over in the matter of a few months. It wasn't going to cost that much. We would have the Iraqi war paying for the effort itself and now here we are $1 trillion later.

So, I think you have to be careful talking about how costly or inexpensive a war is going to be. It's always more expensive but -- not only in terms of treasure, but blood, in this particular case, how many we've lost and how many have been wounded, not to mention how many we have killed innocent Iraqis in the process.

BURNETT: What would conflict with Iran look like? Isn't it almost certain that a full conflict would involve on-the-ground troops and a long-term commitment, too?

COHEN: Well, I'm sure the Pentagon has dusted off whatever concept of operations would take place. We have concept operations for many different contingencies and they are constantly being updated.

I would assume that the most important thing would be to keep the Persian Gulf open during any kind of a conflict, should that ever occur --

BURNETT: Right.

COHEN: -- because the world's economy would depend upon it. So, how to do that is actively under consideration at all times. It would involve potentially air strikes, those from the sea and elsewhere, and we would try to minimize any boots on the ground as such. They might become necessary, but we are going to try to avoid going to war if at all possible.

If it becomes necessary or if we're provoked and drawn into it, then I think we'd have to have the full panoply of options available to the president of the United States to consider.

BURNETT: All right. Thank you very much, Secretary Cohen. Good to see you again, sir.

COHEN: Good to be with you.

BURNETT: And coming up in tonight's "Outer Circle," we go to Egypt where demonstrators are staging a million women march to protest assaults on citizens and women.

And the latest development in the case of Maine's missing toddler. Aunt of Ayla Reynolds comes OUTFRONT with an update.

(COMMERCIAL BREAK)

BURNETT: Each night, we reach out to our sources in the our "Outer Circle" around the world.

And tonight, we begin in the Philippines where the country's president declared a state of national calamity after visiting areas devastated by this weekend's tropical storm.

Maria Ressa is on the phone from Manila.

And, Maria, why such a lack of preparation for the floods?

MARIA RESSA, JOURNALIST (via telephone): Erin, this part of the Philippines is rarely hit by storms. So, although there were warnings, many officials and residents didn't take it seriously. Also, a lot of the rain fell nearly four times what is normal for the entire month of December -- Erin.

BURNETT: Pretty amazing and the pictures are unbelievable.

Well, now, to Iraq where the country's Sunni vice president spoke out against charges in his arrest warrant. He is accused of organizing a death squad to target government and military officials.

Arwa Damon is in Baghdad.

And, Arwa, what did he say?

ARWA DAMON, CNN INTERNATIONAL CORRESPONDENT: The vice president is saying that he is innocent and that these charges are politically motivated, part of an ongoing campaign led by Iraqi Prime Minister Nouri al-Maliki, a Shia, to systematically take out his mostly Sunni opponents.

Many Iraqis are warning about the ramifications that this could potentially reopen the sectarian fissures in this country with some Iraqi politicians going so far as to say this could be the beginning of the end, warning that more bloodshed could lie ahead -- Erin.

BURNETT: Arwa, thank you.

And now, let's check in with Sanjay Gupta. He's on "A.C. 360" tonight.

What's on your rundown, Sanjay?

DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: Well, Erin, as we do every night, we are keeping them honest.

Ahead on "360": beating down democracy in Egypt. That's probably the best way to describe it. Take a look at this video. Some of you may have seen it, but until tonight, the generals running Egypt claimed this brutal beating was an isolated incident.

So, we are going to speak with an activist, Erin, who is on the ground over there and seen firsthand how security forces are targeting women.

Also tonight, something I'm fascinated by. It's the first installment of our series on junk science. We'll meet a man who is behind bars convicted of killing his wife. The jury was swayed about the pattern of blood on his t-shirt. And he said he did not do it, and there are new and troubling questions about science that was key in his conviction.

So, we'll those stories and a lot of more, including the "Ridiculist," Erin, at the top of the hour.

BURNETT: Sanjay, quick question, and the man that was convicted of killing his wife, if he didn't do it, then what's your sense of who did?

GUPTA: Well, yes -- I mean, this is fascinating. The defense team says that the science was there, but the science -- they got it wrong in this case. What they think is that the woman committed suicide and that in fact the man was trying to save her life and that's when his t-shirt got the spatters of blood from administering CPR.

So, obviously, two different stories, Erin. Gary Tuchman is going to be joining us. He takes us inside of the lab try to figure out how the science works and really putting it to the test, Erin.

BURNETT: All right. Looking forward to seeing you and Gary, ran into the hall, I want to see that.

All right. Maine police and the FBI are going door-to-door in their search to find 20-month-old Ayla Reynolds. The last person to see the missing toddler alive was her father, Justin DiPeitro, who told police that his daughter vanished after he put her to bed on Friday night. The Waterville police say they remain optimistic that the little girl will be found.

(BEGIN VIDEO CLIP)

JOSEPH MASSEY, WATERVILLE POLICE CHIEF: The FBI is conducting that canvassing of the neighborhood, actually knocking on door-to-door talking to folks, asking them if they've seen anything, all in attempt to do everything we can, leave no stone unturned, to make sure that we get all the possible information.

(END VIDEO CLIP)

BURNETT: At the time Ayla disappeared, she was wearing a cast on her left arm from a recent fall. The police are canvassing the area still. They followed over 100 tips.

Jessica Reynolds is Ayla's aunt and she is OUTFRONT with us tonight.

Jessica, thank you so much for coming OUTFRONT.

Let me just start by asking you how your sister, Ayla's mother, is doing.

(INAUDIBLE)

BURNETT: Go ahead. I'm sorry. We just had a little bit of an audio problem.

Can you hear me now?

JESSICA REYNOLDS, AYLA'S AUNT: I can, yes.

BURNETT: OK. I'm sorry about that.

I want to ask you again, because we had an audio problem, how your sister, Ayla's mother, is doing.

REYNOLDS: She's holding up well for the circumstance. She's really just -- oh, she just wants her daughter to come home. I mean, just like any other mother in this craziness I can imagine would want the same thing.

BURNETT: They certainly would, and I know that, obviously, Ayla's father was the last person to see her. What can you tell us? Is there anything that's important to know about the relationship between your sister and him?

REYNOLDS: I can't say that there was much of a relationship. Other than they share a child together. He wasn't too involved the first 18 months of Ayla's life, being a dad was fairly new to him.

I can tell you that they are not friendly if that is -- they are not going to sit down and have a coffee or hang out, you know?

BURNETT: Do you feel he is a good father?

REYNOLDS: Any time they talked was when -- I can't say yes or no to that question. I have never seen him interact with my niece. I personally have only met Justin twice. One time I was handing Ayla over to Justin for his visit and the next time I saw him, he was removing Ayla from my home in October.

BURNETT: So, what do you think happened at this point to Ayla?

REYNOLDS: I am praying to God that they have put her with a relative or a friend or -- I'm hoping that this is all a sick game that someone is playing and it's sad that Ayla has to be the pawn. I'm just -- I wish they would say something and bring her home so that my sister can sleep easy.

BURNETT: All right. Well, I thank you very much for coming on. I know it was hard for you, but we appreciate your talking to us tonight, Jessica.

REYNOLDS: No, thank you for helping trying to find my niece.

BURNETT: All right.

Well, still OUTFRONT, we are going to go inside of the Department of Homeland Security for an exclusive interview with the Secretary Janet Napolitano. As you are ready to fly, are you safe?

(COMMERCIAL BREAK)

BURNETT: The Department of Homeland Security is the third largest agency in the U.S. government with a budget of about $57 billion. It's incredibly big. It includes the U.S. Coast Guard, FEMA, the TSA and the Secret Service.

We spent a day with Secretary Janet Napolitano.

(BEGIN VIDEOTAPE)

BURNETT (voice-over): Fortunately, this was only a training exercise, but it's a scenario the U.S. Secret Service must be prepared for everyday.

This sprawling 493-acre campus, about 30 minutes outside of Washington, D.C., is where U.S. Secret Service agents train.

There is everything from a mock town to a replica of Air Force One. It was all part of the tour we took with the secretary of homeland security.

JANET NAPOLITANO, DHS SECRETARY: All right. Excellent.

BURNETT (on camera): Third biggest department in the United States didn't even exist 10 years ago. Does it need to exist?

NAPOLITANO: Yes. And I can say that as someone who worked as a U.S. attorney in the '90s. So, I saw the pre-911 iterations of a lot of these agencies and departments. To leverage resources so that we're not duplicating things all through the federal government makes a lot of sense.

BURNETT: Do you think it's become bloated just because you're so young and it's grown so quickly?

NAPOLITANO: We are always looking at what we are doing and reassessing. And we have actually stopped some major projects on the theory that we shouldn't throw good money after bad. Things really have to be value-added where safety and security are concerned.

BURNETT (voice-over): The Secret Service has 3,200 agents doing a lot more than just looking for counterfeiters and protecting the president.

(on camera): If someone is willing to kill themselves, they're going to find a way to do it, right? There's no way you can become foolproof.

NAPOLITANO: This is the Department of Homeland Security, not the department of guarantees. There are no guarantees here. What we are about is making sure that we spread across the country kind of a safety net of capacity where security is concerned.

BURNETT (voice-over): The safety net includes the Transportation Security Administration. That's the TSA, where 52,000 officers screen an estimated 1.8 million passengers at airports every day.

(on camera): The TSA is a lightening rod.

NAPOLITANO: Yes.

BURNETT: Yes, it is. All right, $57 billion in 10 years. These are just numbers I have, $8.2 billion what you wanted this year -- second biggest cost for you at the Department of Homeland Security. Is it worth it?

NAPOLITANO: I think so. I think so for a number of reasons.

I begin with the threat. Aviation remains a goal. It worked before 10 years ago, but it worked before there have been continual attempts since then, including Christmas Day of 2009 passenger plane, and October of 2010, a cargo plane, which could have been -- that cargo could have gone on a passenger plane.

BURNETT: Could the underwear bomber happen again?

NAPOLITANO: No, for a whole host of reasons. One of which of course are the new types of screening machines, but also because we have really repaired the intelligence holes that he was able to exploit before he even got on to that plane.

BURNETT (voice-over): The new advanced imaging technology is controversial and costly. Secretary Napolitano says the screening machines are here to stay.

NAPOLITANO: This checkpoint is actually one of only many layers that we use to protect airline passengers. It begins even before you get to the airport when you purchase your ticket. There is explosive trace detention. There are canines in the airport environment.

So, by the time you get to this checkpoint and the men and women here, they're really our last line of defense.

BURNETT: In the last year, the TSA has discovered more than 125,000 prohibited items. And it's not just drugs and guns.

(on camera): They screen every single bag, not every checked bag?

NAPOLITANO: Yes.

BURNETT: Every single one?

NAPOLITANO: Yes.

How big of a concern to you is rogue dirty bombs, parts for those bombs coming into the U.S.?

NAPOLITANO: It's a key concern. We are constantly making sure that we can detect and find dirty bombs and we do it in multiple layers. Our system of protecting the country begins with good intelligence and analysis. Every step along the way, we're looking at what we need to do to make sure that we maximize our ability to minimize risk that something like that could get into the United States.

(END VIDEOTAPE)

BURNETT: All right. Still OUTFRONT: we're going to introduce you to a man named Naz.

(COMMERCIAL BREAK)

BURNETT: So yesterday while we were in Washington, we met a man named Nasir Abasi (ph). He goes by Naz (ph). He's a Muslim who came to America from Pakistan 21 years ago. And while we were chatting about this and that, I asked him what his plans were for the rest of the week. His answer surprised me. He's celebrating Hanukkah with his kids.

So, about 10 years ago, one of his friends introduced him to a woman named Danodai (ph). You see her there. She moved to this country from the Ukraine. She is half-Christian and half-Jewish. They fell in love and got married.

Rather than settling on one fate, they decided to embrace the beliefs and practices of all three. This year, like every year since they met, Naz, his wife, and their children, you see them there, will be celebrating Hanukkah and Christmas and eat. It's really good for the kids, right? All kinds of presents.

But when I asked about it, what it was like to celebrate so many different holidays, so many religions that don't always get along, Naz said, quote, "God bless America where everybody regardless of their background can sit, eat, live, and share their ideas without any fear" -- which is something that struck me at a time when America is fighting itself, can't get things done in Washington, so much hate and us versus them and what group you're in. So many people seem to be questioning whether this country is a great one.

But in this case, you realize it really is. The American Dream is alive. The freedoms and dreams of this country are amazing and doing well. It was just an inspiring moment that we wanted to share with you, and show you Naz and his family.

Well, thanks so much as always for watching our show you tonight. We'll see you same time same place tomorrow night.

Sanjay Gupta is next meantime with "A.C. 360".