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JOHN KING, USA

Interview With South Carolina Senator Jim DeMint; Search for Cruise Ship Survivors Continues; Mitt Romney's Tax Rate

Aired January 17, 2012 - 18:00   ET

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


JOHN KING, CNN ANCHOR: Good evening. I'm John King reporting live tonight from Charleston, South Carolina.

Five more bodies were found in the wreckage of the Costa Concordia. We talk tonight to a survivor who recalls panic screaming as passengers boarded overload lifeboats.

Campaigning here in South Carolina, Mitt Romney finally tells us how much he pays in taxes. And just wait until you hear his definition of not very much money.

And Wikipedia is shutting down in protest at midnight. Should you share its concerns about new rules for the Internet?

We begin, though, tonight with the tragedy in Italy. Today, searchers used explosives to blast through the walls of that capsized cruise ship. They found five more bodies, but no survivors. The confirmed death toll from Friday's shipwreck now stands at 11; 24 people remain missing.

Late today the ship's captain learned he will be placed under house arrest to await charges, trial on charges of manslaughter and deserting his sinking ship.

CNN international correspondent Dan Rivers is in Italy tonight.

Dan, do the searchers now four days later have any hope, any hope of finding anyone still alive inside that wreckage?

DAN RIVERS, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, the fact that they are still out there right now at midnight here local time would tell you that they are still trying their best, anyway, let's put it like that, of recovering people.

I think the reality is, though, after such a long time in such cold temperatures out here with no sound coming from inside the wreck of the Costa Concordia that there is a very, very slim chance now of finding anyone else alive. They have already recovered 11 bodies, as you said, John, five more this morning, four men and a woman, and some 23 still missing.

But they're out there now. We're told there are specialists, cave teams out there, cave rescue teams, because essentially it's like a cave in there. It's dark, it's wet, it's dangerous. And so that's what they're doing day and night in trying to search through the 2,000 odd cabins to see if they can recover anyone else.

KING: And, Dan, as we ask questions about responsibility and accountability, much of the attention is focused on the ship's captain, out of jail but under house arrest. Explain the distinction and whether there's any major significance in the shift.

RIVERS: Well, this was a surprise for a lot of people, because the judgment as far as we were aware was that he would be detained. And then a few hours afterwards, it was revealed that in fact there had been some changes of mind from the investigating prosecutor and he was going to be put under house arrest instead.

He's from a town south of Naples and that's where we guess he is going right now, and could be facing up to 15 years in prison if he is found guilty, if he's charged. At the moment, though, he hasn't been charged. He's merely been brought in for questioning, and then the prosecutor, the magistrate will go away and look at the case.

There's a possibility he may go to some sort of fast track case like we saw in the Amanda Knox case of Rudy Guede, where he gets a one-third reduction on the sentence in return for sort of cooperation and a quick trial. So we don't know frankly at the moment how that's going to play out.

KING: We will continue to watch that, Dan Rivers live for us tonight on the scene of this horrible tragedy. Dan, thank you.

In just a few minutes we're going to play more of those newly released and incredibly incriminating phone conversations from the night of the shipwreck. You will hear the Italian Coast Guard pleading, pleading with the captain to return to his ship.

(BEGIN AUDIO CLIP)

GREGORIO DE FALCO, ITALIAN COAST GUARD CAPTAIN (through translator): Send them on board. Send one person on board to coordinate.

FRANCESCO SCHETTINO, SHIP CAPTAIN (through translator): But I am doing the coordination.

DE FALCO (through translator): I'm giving you an order captain. You need to send someone on board.

SCHETTINO (through translator): We are going on board to coordinate.

DE FALCO (through translator): Exactly. You need to get on board to coordinate the evacuation. Is that clear?

SCHETTINO (through translator): But we can't get on board now... the ship is now. . .

DE FALCO (through translator): Why did you tell them to get down?

SCHETTINO (through translator): What do you mean get down? We abandoned the ship. The ship turned.

DE FALCO (through translator): And with one hundred people on board, you abandon the ship? Damn it!

(END AUDIO CLIP)

KING: Just a short time ago, the chairman and the CEO of Carnival Corporation, the cruise line's parent company, issued a statement saying he is deeply saddened and offering -- quote -- "heartfelt condolences" to the families and the victims.

The statement goes on to say: "While this is a terribly sad time for everyone involved we want to recognize the tremendous efforts of Concordia's crew, who along with the Italian coast guard and authorities helped to evacuate more than 4,000 passengers and crew members from the ship in very difficult conditions."

While the disaster raises all sorts of questions about cruise ship safety and government oversight, the clearest answer may very well be on every cruise ship you have ever seen or perhaps boarded. Just look at the ship's flag, almost never a U.S. flag.

CNN Pentagon correspondent Chris Lawrence spent the day digging into the reasons.

Chris, it looks like most of the cruise ships that leave U.S. ports actually from the Bahamas, right?

CHRIS LAWRENCE, CNN PENTAGON CORRESPONDENT: Yes, John, it's called flying a flag of convenience.

And it means even Radiance of the Seas and its Alaska itinerary are registered -- you guessed it -- in the Bahamas. The Bahamas has registered nearly twice as many ships as any other nation. About 60 ships are registered there. About half that number are registered in Panama. And a little more than 20 are registered in Bermuda.

Only one major cruise ship is registered here in the United States. It's the aptly named Pride of America, but it's not owned by any strong American brand like Disney. It's actually owned by Norwegian Cruise Lines -- John.

KING: And so, Chris, let's go through some of the reasons here. I assume one of them is a simple cost from the carrier standpoint. Is it a lot cheaper to incorporate and fly the Bahamian flag or some other flag than the American flag?

LAWRENCE: All comes down to economics, John. If you want to register a ship in the United States it's got to be built in an American shipyard, staffed by an American crew, and it's got to follow American labor laws, American minimum wage laws, things like that.

I spoke with a maritime legal analyst who says this all comes down to the money.

(BEGIN VIDEO CLIP)

RICHARD ALSINA, MARITIME ATTORNEY: If you fly a U.S. flag, you have to comply with U.S. laws as far as safety, pay. Your crew has to meet U.S. standards. If you don't fly a U.S. flag, none of that becomes a hurdle that you have to deal with anymore.

(END VIDEO CLIP)

LAWRENCE: Look, some of the workers on these ships are working up to 14 hours a day seven days a week for months at a time.

And, look, just to be fair, the cruise lines are not going to be able to sell us cruises for $700 for a seven-day cruise if you're paying American and U.S. wages, John. So it's a tradeoff for what we expect to pay for a cruise vs. how they're going to register the ship and operate it.

KING: Tradeoff a lot of people will be debating after this tragedy in Italy. Chris Lawrence, great reporting tonight. Chris, thank you.

Here in South Carolina today, the increasingly bitter and brutal race for the Republican presidential nomination focused on Mitt Romney's character and his wealth. Rick Santorum pointed at the attack ads Romney's supporters are running and accused the former Massachusetts governor of promoting lies in order to get elected.

(BEGIN VIDEO CLIP)

RICK SANTORUM (R), PRESIDENTIAL CANDIDATE: He's playing dirty, dishonest politics. We don't need someone who supports lies and promotes lies and stands behind those lies in order to get elected president.

(END VIDEO CLIP)

KING: And one subplot to all the attacks on Governor Romney's character is a constant sniping among his rivals about maybe who should drop out? Should one of them get out so anti-Romney forces can unite? Newt Gingrich today suggesting either Rick Santorum or Rick Perry should stand up and volunteer.

(BEGIN VIDEO CLIP)

NEWT GINGRICH (R), PRESIDENTIAL CANDIDATE: I'm respectful that Rick has every right to run as long as he feels that's what he should do. But from the standpoint of the conservative movement, consolidating into a Gingrich candidacy would in fact virtually guarantee victory on Saturday, and I would be delighted if either Perry or Santorum wanted to do that. They have to make that decision.

(END VIDEO CLIP) KING: Speaker Gingrich also attacking Governor Romney for refusing to make his income taxes public. While playing defense today, Governor Romney did reveal his tax rate is about 15 percent. Well, this afternoon, Gingrich pounced on that.

(BEGIN VIDEO CLIP)

GINGRICH: I think that we ought to rename our flat tax. We have a 15 percent flat tax. So this will be the Mitt Romney flat tax, that all Americans would then pay the rate Romney paid. I think that's terrific.

(END VIDEO CLIP)

KING: CNN's Jim Acosta is with the Romney campaign.

Jim, Governor Romney makes this declaration today. We don't have his tax returns, but we now know he pays about 15 percent.

JIM ACOSTA, CNN CORRESPONDENT: Right.

KING: That's a bit more information than we had yesterday, but it's also a bit of a political thicket for the governor, is it not?

ACOSTA: It really is, John.

I mean, Mitt Romney did come out and say that he will release his tax returns for 2011 in April. And that works out for him from a political standpoint in that he may have the GOP nomination wrapped up by then. That's why his rivals are urging him to release those tax records before the South Carolina primary.

But when he made that admission earlier this morning, it sort of raised this other question, which is -- and you just mentioned it -- what exactly is the tax rate you do pay, Governor?

(BEGIN VIDEO CLIP)

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: It is probably closer to the 15 percent rate than anything, because my last 10 years, I have -- my income comes overwhelmingly from investments made in the past, rather than ordinary income or rather than earned annual income.

(END VIDEO CLIP)

ACOSTA: Now, that 15 tax percent rate is very interesting, because if you put it in sort of the political context of where the White House has been over the last six months, obviously they have been hammering this issue of tax fairness.

Warren Buffett has come to the aid of the White House in saying tax me more. He's revealed that his tax rate is roughly 17 percent. Mitt Romney's tax rate obviously if it's around 15 percent, it's lower than that. It's also lower than a lot of middle-income earners, John, which is obviously not the kind of message the Romney campaign wants to get out there. And it's funny because right here at this event that Mitt Romney was at in Florence, South Carolina, earlier today, a representative from the DNC, Brad Woodhouse, a spokesman for the DNC, was there to remind all of us reporters that President Obama when he was candidate Obama in 2008 released his tax returns in march of '08. It was basically a challenge to Mitt Romney: Do the same -- John.

KING: Jim Acosta live with the Romney campaign tonight, noting the Democrats just as happy as some of his fellow Republican to try to keep this tax issue alive.

ACOSTA: That's right.

KING: Jim, thanks.

And there's sure to be plenty of drama and discussion of Governor Romney's taxes at Thursday night's Southern Republican presidential debate. It will be the last debate before Saturday's potentially decisive South Carolina presidential primary. And you will see that debate right here only on CNN at 8:00 p.m. Eastern.

And when we come back, one South Carolina's most influential Republicans says he won't make an endorsement for his state primary. Next, we're going to ask conservative Senator Jim DeMint why not and whether he can live with Mitt Romney was his party's nominee.

And later, you won't want to miss this -- more from the dramatic phone calls between Italy's coast guard and the captain who abandoned his capsized ship while thousands of passengers were struggling to get off.

(COMMERCIAL BREAK)

KING: We're live in South Carolina tonight.

And this is the home state of a man who's become an inspiration to Tea Party activists from coast to coast. Even though some consider U.S. Senator Jim DeMint a kingmaker, among conservatives vying for elected office, he's not endorsing anyone ahead of his state's crucial presidential primary.

But Senator DeMint hardly sitting on the sidelines. He has just published a new book just this month, "Now or Never: Saving America From Economic Collapse."

Senator DeMint joining us from his home base of Greenville tonight.

Senator, after the debate last night, a lot of the Republican rivals criticized Governor Romney's record as the CEO of Bain Capital, suggesting -- my words, not theirs -- that he was heartless, taking money out of companies, causing people to lose their jobs.

Walking out, you told our political reporter Peter Hamby -- quote -- "This Bain stuff is a crock."

Why is it a crock? Is it not fair to question Governor Romney's record?

SEN. JIM DEMINT (R), SOUTH CAROLINA: Well, yes, it's fair to question.

And Governor Romney and all Republicans need to learn how to defend free enterprise. Any difficult business decision could look heartless. I know I was a businessman for years, and I stayed up countless nights worrying about having to let one person go. It's a terrible thing to do.

But it's not nearly as bad as when the government's trying to run our economy. We see that with Solyndra and other money that we're giving away. So, Republicans need to help Americans understand that one of the reasons for our prosperity is that we have a free enterprise system that sometimes is difficult and painful, but, frankly, we need more business leaders who have made painful decisions in Washington, because we don't seem to be able to make any.

KING: As you know, some of these Republican rivals -- and we already hear it from the Democratic National Committee and the Obama campaign -- part of these attacks on Governor Romney is to say, here's a wealthy guy. He doesn't understand blue-collar South Carolinians or blue-collar Americans all across the country.

The governor's been under some pressure to release his income taxes. Today, he said he would do that soon. He says he pays a rate of about 18 percent.

And in discussing his income, one of the things he said, Senator, listen here.

(BEGIN VIDEO CLIP)

ROMNEY: And then I get speaker's fees from time to time, but not very much.

(END VIDEO CLIP)

KING: "Speaker's fees from time to time, but not very much," emphasis on "not very much."

If you look at Governor Romney's financial disclosure form which he filed, in the last year that form covers, he made more than $374,000 in speaking fees in just that one year.

Is an average South Carolinian going to have a problem, Senator, with a man who made $374,000 in speaking fees and then describes that as not very much?

DEMINT: Well, I think the average South Carolinian would like to make that much. And that's how our systems works, is all of us aspire to do better.

I don't know how many South Carolinians will resent that. I guess we will have to find out on Saturday. But I think, for the most part, South Carolinians are willing to stand on their own and work hard. And we don't generally want to take from what other people are making.

KING: We talked a lot in the early months of this campaign. Tea Party activists in your state, Tea Party activists all around the country, many of them, Senator, were hoping you would join the race for president. You decided not to do that.

Now you have decided not to endorse as your state's big primary approaches on Saturday. Some people look at Governor Romney, and they look at his record, they say he's an established politician, but they don't view him as a Tea Party darling. And some people say if he wins South Carolina and he's the de facto nominee of the Republican Party, one conclusion from that will be that the Tea Party fizzled, that it didn't have much influence this cycle.

Is that fair?

DEMINT: No, it's not.

I have got a lot of Tea Party supporters, and they seem to be equally split among all of these candidates. There are a number of them supporting Romney, Santorum, Gingrich, Perry, Ron Paul.

I think people are confused about what the Tea Party is. I mean, they were a broad cross-section of Americans who came together concerned about our debt and our spending. And they're interested in constitutional, limited government. And so they're not one group of people. They're thousands of small groups all over the country.

No one can speak for them. And I certainly can't either. But I see the ones that I have worked with here and around the country pretty well divided because they see things they like and they don't like about all of the candidates. I don't think anyone would say we have got a perfect candidate in this race.

But we have got some good ones that would do a heck of a lot better than what we have got in the White House right now.

KING: Well, it's a fascinating race in your home state right now, Senator, could decide who the Republican nominee is.

We appreciate your time tonight, Senator Jim DeMint of South Carolina. We will see you in a few days, sir.

DEMINT: Thank you, John.

KING: And if you look up -- thank you.

And if you try to look up Senator DeMint or anyone else on Wikipedia tomorrow, guess what? You won't find anything. It's part of a protest that has some of the world's most prominent Web sites going blank. We will tell you why in just a minute.

Plus, if hitting the drive-through is too much of a hassle -- hitting the drive through too much of a hassle? Well, Burger King says it will deliver -- deliver you a Whopper. That's if you live in the right places. (COMMERCIAL BREAK)

(NEWS BREAK)

KING: Up next -- up next: a chilling, chilling account from a survivor aboard that cruise ship fighting to find a lifeboat on a sinking ship along with more than 4,000 other passengers and crew.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: People were hysterical. People were screaming at each other. It really turned into a life-or-death situation.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

KING: In this half-hour: A cruise ship survivor remembers what she calls the terrifying sound of the ship hitting the rocks and the chaos when it started to capsize.

Also, the "Truth" about Mitt Romney's drip-drip-drip approach to telling us about his income taxes.

Plus, a man who made a fortune selling yogurt now stands accused of beating a homeless man who asked him for money.

You're looking at a live picture there. It's about 12:30 a.m. in Italy. That's the Costa Concordia on its side, capsized in waters just off the coast. You see the rocks in the foreground there. Twenty-four people, 24 people already missing from this capsized cruise ship. You see it sitting off the coast there.

Aboard, nearly a half million gallons of fuel that could turn this pristine dolphin-filled waters around that wreck into an environmental disaster.

Searchers today discovered five more bodies, bringing the number of confirmed deaths from Friday's shipwreck to 11.

Tonight the man at the center of it all, the ship's captain, has been freed from jail and is awaiting trial, now under house arrest. Also today, authorities released recordings of the blunt and harsh phone calls between the captain and Italian port authorities in the moments just after the ship capsized.

CNN's Matthew Chance has more.

(BEGIN VIDEOTAPE)

MATTHEW CHANCE, CNN CORRESPONDENT (voice-over): As passengers tried to escape the stricken Costa Concordia, shocking exchanges have emerged between a frustrated Italian coast guard and a captain now accused of abandoning his ship.

An astonished coast guard questions why he left his ship in the first place while his passengers still languished on board.

UNIDENTIFIED MALE: (speaking foreign language)

GRAPHIC: And with one hundred people on board you abandon the ship? (EXPLETIVE DELETED)

UNIDENTIFIED MALE: (speaking foreign language

GRAPHIC: Captain: I did not abandon any ship with one hundred people. The ship skidded. We were catapulted into the water.

CHANCE: Regardless, the coast guard demands the captain returns to the ship to help the women and children still on board.

UNIDENTIFIED MALE: (speaking foreign language)

GRAPHIC: Port Authority: You go on board. It is an order! You cannot make any other evaluations. You have declared abandoning ship. Now I'm in charge. You get on board! Is it clear?

UNIDENTIFIED MALE: (speaking foreign language)

UNIDENTIFIED MALE: (speaking foreign language)

GRAPHIC: Port Authority: Are you not listening to me?

UNIDENTIFIED MALE: (speaking foreign language)

GRAPHIC: I'm going.

CHANCE: But amid the chaos, the captain, now facing charges of manslaughter and abandoning his duties, never returned from his life boat. He may find that hard to explain.

Matthew Chance, CNN, London.

(END VIDEOTAPE)

KING: Stunning, stunning to see that and to hear that.

One of the passengers aboard the cruise ship last Friday was a 28-year-old woman from Bowling Green, Kentucky. Lauren Moore said she was having dinner with friends when the ship hit submerged rocks, calling it, quote, "a terrifying sound, and we knew it wasn't normal." Now safely back home, she's had a little time to put this all into perspective and to remember.

(BEGIN VIDEO CLIP)

LAUREN MOORE, SURVIVOR: All of a sudden the boat started leaning more and more to the side, and people started to jump up from their table and forget about the dinner and suddenly run out of the ding room in fear.

We ran to our room. We grabbed our cell phone and our wallet. And we grabbed our life vests. And that's when we ran to the life boats.

It was something that is straight out of a movie. People were trying to get on life boats that were already full. The passengers that were already on life boats were screaming at other passengers to stay off, because they were fearful that the pulley system would break or the boat would break.

People were crazy. They were crying. People were hysterical. People were screaming at each other. It really turned into a life-or- death situation at that point. It was the most chaotic scene I have ever seen in my whole life.

The crew really had a hard time handling the chaotic scene. It was hard for them to hold people back from the overcrowded life boats and to work the pulley system. You could really tell that they had no real direction.

I was able to see the images of the infrared this morning. Some of those people that you see are probably some of the people that didn't make it back. And it's just so heart-breaking to think that that might be the last image of some people.

(END VIDEOTAPE)

KING: This dramatic, compelling account there. As you listen to survivors and you look at those pictures, one thing becomes more urgent every day, moving the wreck of the Costa Concordia from its rocky perch right now before wind and sea push it out into deeper water.

We asked CNN's Brian Todd to look at the challenges of pulling a megaship from the sea.

(BEGIN VIDEOTAPE)

BRIAN TODD, CNN CORRESPONDENT: John, one of the key questions now is what they're going do with the Costa Concordia once the rescue operation is complete. That might involve a massive salvaging operation. And to discuss the options we came here to Port Everglades, Florida, to talk to one of the top experts in that field. We have Bob Umbdenstock here from the Resolve Marine Group, one of the top salvaging agencies in the United States.

Bob, what are some of the options that they have for dealing with this ship?

BOB UMBDENSTOCK, RESOLVE MARINE GROUP: Well, the options -- the list of options is pretty much the same as it would be for any job this size. I can't say what may be the more attractive option in this situation, but the easiest option, the cleanest would be to hopefully bring it afloat somehow and tow it away. If that's not possible, the more remote or the other extreme would be to have to cut it up and take it away in pieces.

TODD: What involves kind of floating it up and hauling it away? That's got to be a massive job. UMBDENSTOCK: Well, clearly to make it buoyant you have to dewater the hull in some fashion with pumps or air compressors, and you have to concern yourself with stability issues. But the people who are working on it will undoubtedly be relying heavily on very qualified engineering support to address those issues.

TODD: And the environmental concerns are huge, right?

UMBDENSTOCK: Always of a concern. Nobody -- no salver wants to do anything to hurt the environment during the course of the operation. The object, of course, is to take the situation as it is when you arrive and make it safer for the people working on it and for the environment.

TODD: All right, Bob, thanks very much. We appreciate it.

His group has dealt with cruise ships in the past salvaging cruise ships. They've sunk an aircraft carrier. They also pulled a ValuJet plane, the wreckage of that out of the Everglades, so they have a lot of experience in this.

Experts here say one of the things that you have to remember is that this is not going to be a quick job or a cheap job. It's going to take months, they say, and probably cost maybe up to hundreds of thousands of dollars a day -- John.

(END VIDEOTAPE)

KING: As you hear these stories from survivors about the chaos, as you see those dramatic pictures, you can almost hear and see executives from the cruise line industry cringing and worrying.

Amid a rough global economy and the competitive tour industry to begin with, cruise lines now face a black eye they could hardly want. CNN's Alison Kosik here with more of what it all means for the cruise line business.

(BEGIN VIDEOTAPE)

ALISON KOSIK, CNN CORRESPONDENT: Hi, John.

The cruise line industry has been booming. The worldwide market for 2012 is estimated at over $34 billion with a record 20 million passengers expected to sail this year. That's according to figures put out by industry analyst group Cruise Market Watch. Those numbers were put out back in November before the Costa Concordia shipwreck.

We spoke to Cruise Market Watch today, and they say it's too early to project how the accident will affect the worldwide market for cruises. The group suspects cruise lines will begin to offer discounts if they sense the number of bookings falling.

The goal for cruises is to fill every ship, hoping passengers who get a deal on the tickets spend the savings once they climb aboard. So far it looks like cruise customers are treating the disaster as what it is: an unusual, highly rare occurrence for an industry with a pretty good safety record.

Carnival tells us consumers continue to book cruise vacations and are confident in the industry. But Carnival's losses could be in the hundreds of millions of dollars when all is said and done. The company says the damage to the ship could cost up to $95 million, and that's just from the Concordia being out of service all year and the cost to fix it. And personal injury claims and lawsuits will likely cost the company tens of millions of dollars more.

Then there's the damage to its reputation, which is hard to measure. But the industry itself should be able to steer its way through the storm -- John.

(END VIDEOTAPE)

KING: Alison Kosik, thank you.

Shifting now to a developing political story, maybe you're watching the Republican campaign, seeing all these Republican campaign ads attacking each other. Well, guess what? The rough and tumble is about to expand.

CNN has learned the president's re-election team now taking its first steps toward launching their own campaign commercials. Our chief White House correspondent, Jessica Yellin, has the breaking news on that.

Jess, a little early or they think it's time to get involved?

JESSICA YELLIN, CNN CORRESPONDENT: Well, they are taking the first steps, because clearly, they do think that they're just about ready, John. You know, I guess the elections season isn't real until you're inundated with ads from both sides of the aisle.

So what our sources are telling us is that the Obama election team has asked about ad rates in 13 key states. So that clearly means they're not ready to do it just yet. They've emphasized this to us. But they are making the initial asks.

Some of those states include states that will be very meaningful to you, John: Florida, Ohio, Iowa, New Hampshire, and Iowa. So that's just some of them. These are among the battleground states that the president plans to contest, meaning fight hard for in November. They are by no means a sure win for the president.

And of course, all the Republicans who are still in the race are not just running against each other, but their ads are taking aim at the president, as well. And no doubt it that's one of the reasons that the Obama campaign is right now contemplating going up with their own ads to push back against some of the negatives that are coming at him, John.

KING: Give you a good clue as to your travel schedule in the months ahead, Jess. North Carolina, Minnesota, Iowa, Florida, Arizona, Colorado. Pack your bag. Get ready to go.

YELLIN: All right.

KING: Jessica Yellin with another major developing political story. Jess, thank you.

Up next the truth about Mitt Romney's tax rate and why he doesn't want to release his tax returns now.

And the case against Netflix. Why a $90 million pay day has shareholders up in arms.

(COMMERCIAL BREAK)

KING: No one should be surprised to learn, as we did today, that Mitt Romney pays about a 15 percent tax rate. What is surprising is that it's taking him so long to confront the reality he has little choice but to release his tax returns. We're not there yet. Instead, Governor Romney is taking the drip, drip, drip approach.

First he said he wouldn't release, then shifted to probably wouldn't. Then another shift and a pledge to release them sometime around April. And then today, without releasing any documents, the former Massachusetts governor added this.

(BEGIN VIDEO CLIP)

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: It's probably closer to the 15 percent rate that I think, as my last ten years I've -- my income comes overwhelmingly from investments made in the past rather than ordinary income or rather than earned annual income.

(END VIDEO CLIP)

KING: Now, that puts Governor Romney on par with Warren Buffett and many other wealthy Americans who make their money on investments but don't get a traditional paycheck or a salary. It means he pays a lower rate than many working Americans, even though his estimated net worth is between 190 million and $250 million. You can be sure now some of his Republican rivals and the Democrats in the Obama campaign will try to make hay out of that.

The detailed tax returns could include other details that bring tough questions. And there's no law or campaign rule that forces the governor to make his returns public.

But here's tonight's "Truth." His father long ago set the right example on this issue. And Governor Romney would be wise to follow it. Yes, back in 1967, Republican presidential candidate George Romney released 12 years' worth of tax returns, a move if you read news accounts from the time, was described as unprecedented.

Mitt Romney should follow his father's lead, the sooner the better. But he would get and deserve some credit if he did that for transparency. So why wait? Why not even release one year's returns already? Maybe Team Romney is worried he can at times sound tone deaf, like this.

(BEGIN VIDEO CLIP)

ROMNEY: I get speakers' fees from time to time but not very much.

(END VIDEO CLIP)

KING: OK now, take a deep breath and a second. I'm going to give you a moment. You define "not very much." Well, Governor Romney's most recent financial disclosure form showed $374,000 in speaking fees in just one year. On average, more than $40,000 a speech. Truth is, calling that "not very much" is, well, not very smart.

Joining us now to weigh in on Romney's tax return dilemma and the campaign here in South Carolina, GOP political consultant Jim Dyke, "TIME" magazine political correspondent Joe Klein and the Tea Party Patriots co-founder Jenny Beth Martin.

Jenny, I want to start with you. Governor Romney's leading if you study the polls here right now. Tea Party activists have a little grumble about that.

This particular issue of taxes. There's no law that says he has to do it. There's no rule that says he has to do this. Are there any voters out there for whom this is a relevant issue? Or is this a media question?

JENNY BETH MARTIN, CO-FOUNDER, TEA PARTY PATRIOTS: I haven't heard people in the Tea Party movement talk about it. But when you're running for president there are certain things you need to know the answer to. What percentage you pay for taxes, how much eggs cost, how much milk is. I mean, it shouldn't be a surprise to him. And he needs to be able to answer one way or the other, not flip-flopping.

KING: As a smart guy who runs smart campaigns, what would you tell the governor about the drip, drip, drip approach?

JIM DYKE, GOP POLITICAL CONSULTANT: Well, there's sort of two sides to, this interestingly enough. One is that you need to be decisive, as I think Joe would say, and clear, and you need to show leadership. At the same time, we're going to -- may spend the last three days of the South Carolina primary talking about Governor Romney's taxes. I'm not sure it's going to move any votes.

KING: But the South Carolina primary, you don't think it will move any votes?

DYKE: I don't think people particularly care whether he releases his taxes.

JOE KLEIN, "TIME" MAGAZINE: Only on a subliminal level. The guy seems kind of shaky and equivocal. His answer last night during the debate on the tax returns was dreadful.

And so I think that, you know, in a kind of second-hand way it's like second-hand smoke. You know, it creates the aura that's enveloping this campaign, and it may hurt him, especially since Newt Gingrich has seemed very forthright with one major exception.

KING: My question when things like this happen is he's a smart guy, Governor Romney, whether you agree or disagree with his policies. He's a smart guy. He's got a seasoned and smart campaign team around him. So when they do something that doesn't seem to make sense, that prolongs a story, that trickles it out, it makes you wonder why.

DYKE: Well, they're human. Maybe they're more comfortable talking about whether he's going to release his tax records for the last three days in South Carolina primary than all the other issues that may really impact how voters vote when they show up.

KLEIN: A larger policy issue here. And that is are they embarrassed about the fact that we tax capital at a lower rate than we tax labor. You know, many Republicans believe that the investment is important to encourage investment in that way. And that's the argument that Romney is going to have to make. It's a hard argument to make when you have $250 million in the bank.

DYKE: Everybody knows the tax code is a complete mess and needs to be reformed. For the Obama administration that's had several chances at large reform and taken a total pass to take this on. I think it would be a debate we'd be happy to have.

KING: You mentioned the other potential issues. I want to play here a guy who did very well in Iowa, not so well in New Hampshire. Rick Santorum comes to South Carolina, a state where you would think, especially now that evangelical leaders many have said he's preferable to Governor Romney, he has an ad up that raises -- against Governor Romney that raises some of those other issues. Let's listen.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Obama supported the Wall Street bailouts. So did Romney. Obama gave us radical Obama care that was based on Romney care. Why would we ever vote for someone who's just like Obama when we can unite around Rick Santorum and beat Obama?

(END VIDEO CLIP)

KING: Jenny, that is aimed straight at a Tea Party voter. Bailouts, health care.

MARTIN: Right.

KING: If Governor Romney wins South Carolina, what does it tell us about the strength of the Tea Party?

MARTIN: Well, even if he wins South Carolina, he's saying he's going to repeal the government-controlled health care on a federal level. He's talking about fiscal responsibility, so all of the candidates are talking about our issues. And he's going to have to be able to do this; this is part of the primary process. So I'm not surprised by the ad. I'm sure that Ron Paul and Gingrich folks feel like they should be going around their candidate, as well. KING: Is there a sense that 2008 deja vu in the sense that Newt as suggesting today, well, it's up to them, but it sure would be nice if Perry and Santorum would get out. Then you'd have three people, essentially, to Romney's right, like a Huckabee, Fred Thompson effect that we had last time.

KLEIN: Well, the interesting thing about this week is going to be to see whether the other two do drop out after -- after the results of Saturday. This is the Super Bowl for the conservative anti-Romney candidate, and right now it's looking like it might be Newt.

DYKE: That ad was about one thing: not about policy but about electability. Rick Santorum is trying to make the electability argument, telling Newt to drop out, because he's more like -- well, Newt's doing the same to Santorum. And the way this is happening in South Carolina the law of unintended consequences, the beneficiary of all this, I think, is Mitt Romney.

KING: And so if one person's emergence in South Carolina. If that happens and you lose two of them, Perry, Gingrich, Santorum, is it too late? Is it too late? Does Romney then go to Florida state where money matters on TV, than the calendar goes Arizona. He's in pretty good shape there. Nevada, he's in great shape. Michigan, he's in great shape. Is it too late?

KLEIN: Well, I think about the 1976 Republican race where Ronald Reagan got clobbered front end, and then he brought it to, you know, within 15 or 20 delegates at the national convention. So, you know, down the road, I think there are a lot more conservatives and Tea Party supporters in this party than there are kind of moderate, traditional conservative Republicans.

KING: Going to love watching this one play out. Jim, Joe, Jenny, thanks. A few more days here in South Carolina, and we'll see where we go from here. "ERIN BURNETT OUTFRONT" coming up at the top of the hour. Erin is here now with a preview.

Hi, there.

ERIN BURNETT, CNN ANCHOR: All right. Well, hello there, John.

Pretty interesting. Everyone's waiting for the -- all the different factions in the Tea Party to coalesce, come forward. Tonight, we're going to talk about what's happening in Washington. Congress is back. They've had a month off. A lot of them going to nice places like Mexico on taxpayer junkets. Well, we're going to be joined by two members who say they want to work together.

This is interesting, John. As you know, we're going to have a protest vote over the debt ceiling again. We could have another countdown, and we're going to talk about that tonight as they all come back into Washington. And also a big fight over what you can get on line that has the passions of millions involved. We're going to be joined by the man who founded Wikipedia, Jimmy Wales, because at midnight tonight that site is going black, closed. He's going to join us to tell us why it's Washington's fault. Back to you.

KING: That's a fascinating debate, about the rules of the Internet. Looking forward to that, Erin. We'll see you in just a few minutes.

And up next here, a man who made a fortune selling yogurt stands accused now of beating a homeless man who asked him for money.

Plus, the "Moment You May Have Missed." The first lady trades political drama for situation comedy.

(COMMERCIAL BREAK)

KING: Kate Bolduan is back with the latest news you need to know right now. Hello, again.

KATE BOLDUAN, CNN CORRESPONDENT: Hey. Good evening, everyone.

One of the co-founders of Pinkberry Yogurt chain stands accused of beating a homeless man with a tire iron. Los Angeles police say he was arrested last night after months of investigation. He's accused of chasing down and beating a man who asked for money while Lee's car was at a stoplight.

And a class action lawsuit filed in a U.S. district court today alleges movie rental giant Netflix inflated the value of its stock. Reuters reports that Netflix executives sold nearly 400,000 shares of their own Netflix stock while the price was high netting them more than $90 million. CEO Reid Hastings is named as a defendant in the lawsuit. The plaintiffs are seeking unspecified damages.

And a very special birthday is being celebrated today at the White House today. First lady Michelle Obama is celebrating her 48th birthday. While meeting with the World Series champions, the St. Louis Cardinals this afternoon, the team offered a gift for President Obama to give to the first lady.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: We have that for you and a World Series bat.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I'm worried about giving my wife a bat, though, if I -- if I mess up.

MICHELLE OBAMA, FIRST LADY: I'll take that.

(END VIDEO CLIP)

BOLDUAN: I love those unscripted moments. They're absolutely wonderful.

Also, John, you probably know another birthday being celebrated today, Betty White. She turns 90 today, and the men behind the curtain in my ear tell me that her first on-camera appearance was back in 1945, so very special birthdays today. KING: They're lying to you, Kate. Betty White turned 21 today. I can finally buy her a drink. I'm looking forward to that.

BOLDUAN: I need to check my facts. Is that what you're telling me? Got you.

KING: Yes. We're terribly wrong, Ms. White. You're terribly, terribly wrong.

All right. Tonight's "Moment You Might Have Missed." You just saw the first lady getting a baseball bat. Well, the first lady's sit-com debut on the Nickelodeon program "iCarly." Take a listen.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: So, what are you doing here -- your Excellency?

UNIDENTIFIED MALE: You don't call her "your Excellency."

M. OBAMA: No, no, I kind of like it. I came here to say I'm proud of you.

UNIDENTIFIED FEMALE: Why are you proud of us?

M. OBAMA: Because of how much you care for your father and because of what you two did for your friend.

(END VIDEO CLIP)

KING: The "Washington Post" reports the first lady has not appeared on a sit-com since Nancy Reagan on "Diff'rent Strokes" 29 years ago, Kate.

BOLDUAN: I think she had pretty good timing. I mean, that can't be easy if you've never -- well, she is on camera quite a bit, but I think she did a pretty good job.

KING: You know, I'm sure she's having a little fun there. And actually, those kids can't vote, I don't think. But maybe of them can. I don't know. We'll watch to see if Michelle Obama has a second career.

Kate, we'll see you tomorrow.

That's all for us tonight. We'll be live here again in Charleston, South Carolina, tomorrow. Stay with us. Don't forget about our big debate Thursday night, also.