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Romney's Tax Issue; Violence in Egypt; Interview with Representative Mike Rogers; Interview with Senator Scott Brown

Aired February 2, 2012 - 19:00   ET


ERIN BURNETT, HOST: Thanks, John. Well, there is a loophole that means everything to Mitt Romney. We get to the bottom of that tonight.

And a second day of violence in Egypt in response to the deadly soccer riot falling apart in Cairo tonight. Defense Secretary Leon Panetta, meantime, said this today. Israel could attack Iran this spring.

Let's go OUTFRONT.

Good evening, everyone. I'm Erin Burnett and OUTFRONT tonight, a burning question for Mitt Romney. Today, he got an endorsement from Donald Trump, but he was all smiles, but another day has gone by without an answer to a crucial question. Does Mitt think we should pay more taxes?

All right, here are his returns. Sorry, this is always a little unwieldy, from 2009 and it's estimated -- for 2009 and estimated for 2010 and '11. It turns out that 30 percent of Mitt Romney's income, $12.9 million, comes from one very specific thing in these tax years, 2010 and 2011. It's called the carry and here's how it works. Partners in private equity and hedge funds invest money for their clients and they get a significant cut of the profits that they make.

That cut, the carry, is taxed at 15 percent. Not 35 percent like regular income. Now, many people think that it is right to reward people for investing money, for taking risks with a lower tax rate. They argue that this encourages people to start businesses and create jobs. But almost no one says it is right to award the guy who invests other people's money with a lower tax rate.

After all, Romney didn't take the risk. Someone else did. We're knocked down with OPM (ph). It's legal and he didn't do anything that isn't standard, but it's a loophole and it adds up. Mitt Romney would have paid $4.5 million in taxes in these two tax years if the carry were taxed at ordinary income rates. That is more than double the $1.9 million that he paid.

We called a lot of people in the industry to try to see if anyone could justify this loophole, which really affects private equity managers solely. Outside the private equity lobbying groups, no one even tried. Same (ph) hedge fund manager Leon Cooperman had this to say to OUTFRONT today. Said quote, "It seems to me that a preferential tax rate should pertain to one's own risk capital and the reallocation from the investor's capital should be earned income, taxed at the ordinary rate. A simple and straightforward opinion not worth a TV appearance." All right, Leon, I'm sorry you couldn't come on and say that, but you made your point.

The burning question, where does Mitt Romney stand on this issue? When asked, he's kind of confusing. Here he is with Larry Kudlow.


MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: I'm not looking to single out some group of people and say let's raise taxes.

UNIDENTIFIED MALE: So you keep the carry --

ROMNEY: If it's actually a capital investment and it's fairly priced at the time people invest in it and then it rises in value as a capital gain, then you treat it as a capital gain. If someone turns it into what looks like ordinary income or a bonus, why then obviously it's not a capital gain.


BURNETT: Yes. Keep the carried interest, but no, not if it's ordinary income. Yes, no, yes, no, yes, no, Governor Romney, can you help me? We've asked the governor to come OUTFRONT because we all want to hear more about his economic plans. The OUTFRONT "Strike Team", as you may be aware overwhelmingly thinks he's got the best in the Republican field when it comes to an economic plan, but we hope that the governor can take a stand on OUTFRONT when it comes to carried interest because this issue is not going away.

David Frum is a CNN contributor. Gloria Borger is chief political analyst here at CNN. And Michael Waldman is a former speechwriter for President Clinton. All right, thanks to all of you for being with us. David Frum, let me start with you. This is tough. It's just -- this is a loophole, fair and standard in his industry that almost nobody really defends. Michael Bloomberg's come out against it, Leon Cooperman, lots of people. So he's going to have to take a position on it, isn't he?

DAVID FRUM, CNN CONTRIBUTOR: No. He does not have to take a position on it. In fact --


FRUM: It would be -- the loophole was there. He used it. The longer he is talking about this, the less time he has for anything else. There is nothing he can say that will satisfy anybody, so --


FRUM: So often in a political campaign everybody comes to a campaign with strengths and with vulnerabilities. BURNETT: Right.

FRUM: You talk about your strengths. You talk about the things that are going to make you -- that are going to connect you to people and you do not offer excuses for things in your past that other people may find difficult. You just soldier on and allow the voters to decide how important it is.

BURNETT: What do you think, Michael? Can he soldier on through this or am I right in thinking that taxes are going to be more important in this election than that?

MICHAEL WALDMAN, FMR. CHIEF SPEECHWRITER FOR PRES. CLINTON: I think in some other year perhaps he could. But this isn't really something like having a bad sense of humor or an odd hair style or something like that in an election. This is a core issue of public policy that existed before he was the Republican front-runner and will continue to exist. The idea that there's something wrong with this particular loophole's been talked about for years and there's something very fundamental. You know Andrew Jackson, President Andrew Jackson has this slogan, equal opportunity for all, special privileges for none. It's very -- kind of basic idea and this -- people might see this as really hitting up against that.

BURNETT: And of course Bain Capital, Gloria, lobbies against closing this loophole, along with other private equity firms. In fact, there have been seven attempts to close this loophole in Congress in recent years. Democrats and Republicans together influenced by that private equity lobby have chosen not to do so.

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Right. You know I -- look I think the wealth gap is going to be a big issue in this campaign. I think President Obama made it an issue in the State of the Union, saying that there ought to be a minimum you know 30 percent tax rate and he's raised the "Buffett Rule", et cetera, et cetera, so it's going to be there. But there's -- you know "The Wall Street Journal" wrote something very interesting the other week after Romney's taxes came out and they said look, there's a way that he could actually turn this around, Erin, and that is to say use his own tax return as exhibit A and say you know what? This is why we need tax reform. This is why we need lower taxes. This is why we need flatter taxes and by the way, if you lower the corporate tax, then maybe you take away this loophole --

BURNETT: Interesting point because David Frum, this is something Mitt Romney has indicated, right, that he wants to close loopholes. This particular loophole, it's a loophole, so he could actually say I would close it. Now, of course then, so say he does that. Strategically what's he left with though, because he already got the benefit from it?

FRUM: Right. He does not want to be talking about himself. And that's true for any candidate with any kind of background. It would be -- you know every candidate comes with these problems. And (INAUDIBLE) Bill Clinton had problems. Bill Clinton did not --


FRUM: Bill Clinton did not spend a lot of time reminding people what his problems were --


FRUM: -- apologizing for his problems.


FRUM: He moved on and said let me tell you what I will do for you. One of my favorite political stories, Karen Hughes in her autobiography tells this. Walking down the beach seeing one of those planes goes -- carrying an advertising slogan and the slogan said Jill, come back. I am miserable without you, Jack. And she said that slogan, Jack, too much about you. Not enough about her. And I think that's something -- that's something --

BURNETT: Should have said Jill, I love you, you're amazing, Jack, right?

BORGER: But it's going to be raised -- Erin --


BORGER: Erin, it's going to be raised any way. I mean I agree with David in theory, but in practice, Barack Obama is clearly going to raise this one where another particularly since Romney seems so uncomfortable in talking about his own wealth, right? So, he has to have -- he has to have a plan ready and say OK, let's make the case for reform. I didn't break any laws. You want to change them, let's just make the code flatter and fairer.

BURNETT: That makes sense, doesn't it? Close the loopholes and by the way, everyone, that would mean people like me are going to pay more money and I'm for that, but I don't want to raise overall tax rates, right? He could thread that needle.

UNIDENTIFIED MALE: Romney -- Mitt Romney could get out of this in some respects by proposing tax reform, by proposing a system that's more fair.


WALDMAN: That's where he's really in a pickle because anything he were to do that's like that, runs right up against the orthodoxy that's currently strong in the Republican Party that nobody's taxes ever should ever go up, ever, which he himself repeated. Until that hammer lock the sort of Grover Norquist pledge mentality --


WALDMAN: -- can be shaken off he's going to be stuck with this and it's absolutely right. This is not occurring in a science lab in a vacuum. You know President Obama, Barack Obama is going to make this an issue. It's very popular, the public polls very well and so he's going to pound at it and you know --

BURNETT: It seems to me David he's going to be forced somehow to talk about it.

FRUM: He can talk about it, but not in the context of himself.


FRUM: Gloria -- I agree with Gloria, if you're offering a plan, if you're offering a concept, but don't apologize. Don't look embarrassed. You didn't break the law.

BURNETT: That's right.

FRUM: And by the way, it was a coalition of Democrats and Republicans --

BURNETT: I made that very clear --



UNIDENTIFIED FEMALE: Chuck Schumer among them, yes.

FRUM: This is about -- this is about the New York Senatorial Delegation more than it is about anything else.



BORGER: But can I also say that President Obama has to be careful here because when you look at the polling of Americans, they don't begrudge anybody their wealth. They like the fact that people get wealthy in this country. It's part of what we're about. What they want is fairness.

BURNETT: That's right.

BORGER: So the president can't seem to be on you know an argument for class warfare. He's got to talk about fairness and you know that's a pretty delicate balance he's got to strike as well.

BURNETT: All right, well thanks to all three of you. It seems like (INAUDIBLE) come up with something --


BURNETT: Come up with a tax plan that was creative and got rid of loopholes and maybe that might do it. Governor Romney, all right let's hear it. OK, Barack Obama meanwhile is turning up the heat on the governor at a prayer breakfast. Jesus -- Jesus apparently may be on Obama's side. We're going to get to the bottom of that.

And police and protesters clashing in Egypt, yesterday's deadly soccer riot led to some horrible violence going on at this hour in central Cairo and Secretary of Defense Leon Panetta said something pretty shocking today, Israel attacking Iran this spring.


BURNETT: Violence raging in Egypt tonight. In Tahrir Square, more than 600 people already injured. The outburst following that deadly soccer match last night, in which 79 people died. It's still unclear whether the riot started as a sports rivalry or political strike, but it is clear that Egyptian police stood by while fans attacked each other with rocks and weapons. CNN's Ben Wedeman has been covering the story. As you know, he's in Cairo tonight. Ben, good to see you again, so what's happening there right now?

BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well what we have at the moment is several hundred people have made it through. They've knocked down a barrier in one of the roads. They've clashed with security forces and they've made it basically to the outside walls of the Interior Ministry. Many of these protesters blaming the Interior Ministry and its security forces for not providing adequate security at the Port Said game, many of the protesters actually accusing the minister and its forces of allowing it to happen, basically working with what they describe as thugs in the crowds, in Port Said, who allowed -- basically allowed this bloodshed to happen -- Erin.

BURNETT: So Ben, let me just ask you. You've had another day. I know yesterday you said a lot of this was a result of the political upheaval, lack of authority and control in Cairo. Any sense that that's getting worse today?

WEDEMAN: Well, certainly what we're seeing is that the government is on the defensive, but one bright point today is we saw that there was this emergency session of parliament to discuss the bloodshed in Port Said and it was broadcast live on Egyptian television and we saw one deputy after another get up and blast the government, blast the Interior Ministry, blast the Supreme Council of the Armed Forces for its mishandling, not only of the situation in Port Said, but in Egypt in general given that there's been a deterioration of security in the country.

And Egyptians were glued to their screens watching this because they like myself were accustomed to the parliament under Hosni Mubarak where half the deputies were asleep and the other half were simply just wasting time. So they are really a vivid display of democracy at work, so that does show people that there has been a change. There has been an improvement. But there are worries about security and the general state of political instability in the country -- Erin.

BURNETT: All right, well Ben Wedeman, thank you very much. I guess we'll leave it with the glass a little bit full tonight.

Well now the high stakes showdown against Iran. There was a stunning prediction today from Defense Secretary Leon Panetta. It hit my inbox and I opened it up and said really. This is amazing. He said he believes there is a quote "strong likelihood that Israel will strike Iran in April, May or June of this year."

Now, the military operation would target Iran's nuclear program. A program that Israel and obviously many others including the United States is developing nuclear weapons. OUTFRONT tonight Mike Rogers, Chairman of the House Intelligence Committee and good to see you, sir. Appreciate it.


BURNETT: Do you have any sense of what Leon Panetta was saying in terms of how significant his comment was, right? I mean how big of a strike this might be, how unusual, what the repercussions might be.

ROGERS: Well, little surprised he was as aggressive in his talk as he was. We had lots of conversations in classified settings. I was a little taken back by how clear he was about what his prediction might be about Israel's intentions. But I'll tell you this, Erin. One of the things about Iran is they're really pushing the envelope. We know that they're aggressively pursuing a nuclear weapon program.

They've announced as much by saying they're taking enrichment facilities to Gnome (ph), which is very, very difficult to get at militarily. We know that their external operations have been in high gear, including by the way a political assassination attempt here in the United States, so what Israel has to decide is what is our red line?

What is the line that Iran crosses where we say we can't have that happen? It's too dangerous. A Middle East nuclear arms race is dangerous for Israel. It's really dangerous for the region and dangerous for us. So that's what I think all of this talk is right now about where Israel is.

BURNETT: And would you support an Israeli strike on Iran?

ROGERS: I think a unilateral strike by Israel is not helpful and I think it takes Middle East allies to the United States and makes them have to oppose Israel. It comes with a pretty high cost. Now, we have a defense treaty that will support Israel if they're attacked and we will live up to that. I would hope that we could do this if necessary to try to slow the program, sanctions are taking hold. You know the U.S. Congress passed very tough sanctions --

BURNETT: Right -- right -- of course.

ROGERS: Yes and that's really starting to take hold. The one thing that's missing here is I -- we're not sure that Iran really believes when the administration says everything is on the table. If we can make them believe that everything is on the table with sanctions, meaning everything, meaning the possibility of military strikes --


ROGERS: -- that could be the thing that tips us over and backs them down. BURNETT: And it sounds reasonable as you say it, although interesting David Sanger, a friend of mine over at "The New York Times", has covered Iran for a long time, has talked about how in election year, we always hear the rhetoric turn up on Iran. Here's just a quick sense of what I mean this year and other election years.


BARACK OBAMA (D-IL), PRESIDENT OF THE UNITED STATES: We cannot tolerate a nuclear Iran. It would be a game changer.

UNIDENTIFIED MALE: That old Beach Boys song "Bomb Iran" -- bomb, bomb, bomb, bomb -- anyway --

UNIDENTIFIED FEMALE: Whatever stage of development they might be in their nuclear weapons program in the next 10 years during which they might foolishly consider launching an attack on Israel, we would be able to totally obliterate them.


BURNETT: Obliterate, bomb, bomb, bomb -- obviously that was 2008. I mean I'm just saying it sort of sounds like we're hearing that again. Has the threat really changed or is this just hey, election year, Iran.

ROGERS: Well one thing we've learned that McCain can't sing. That's the one thing we've learned --

BURNETT: Join the crowd.

ROGERS: Yes, exactly. The one thing that concerns me here though is that Iran has clearly made steps to become a nuclear weapons state. And that's why this anxiety is out there. This is different than election year rhetoric mainly because the president has been really behind this. The U.S. Congress pushed him to do sanctions. We have been arguing that you can't let Israel get to their red line so that they unilaterally launch an attack and right now, they look back and aren't sure where the United States is and that's what this big unknown causes uncertainty and I think that's why you see so many people, Erin, are just so nervous about what happens in the next few months.

BURNETT: All right, well Chairman Rogers, thanks very much. Appreciate your taking the time to be with us.

ROGERS: Thanks, Erin.

BURNETT: All right, well a man returns home from his honeymoon alone, charged with murder, his wife's murder. And the Super Bowl days away, Nick Safes (ph) and Madonna and Mara Burnett (ph) are next.


BURNETT: So, I remember when my older sister, Mara (ph), made me my first mixtape. She gave it to me on my seventh birthday I think and then she took me to the beach. That's how I first heard "Celebration" by Cool and the Gang (ph), a song she was still raving about this afternoon, and heard my first Madonna song "Holiday". I remember that birthday. The "Material Girl" is still getting it done. In the past few months, she's built schools in Malawi, started a feud with Elton John, directed a movie, and oh yes she -- I mean that was such a good song -- she recorded an album, too and tonight she premiers her new music video on "American Idol".

This weekend, she's going to be playing the halftime show at the Super Bowl, which brings us to tonight's number, 555. According to Nielsen's sound scan, songs played during the Super Bowl halftime show have enjoyed an average of 555 percent increase in sales the week after the game. And that's not all. Past performers like Black-Eyed Peas and Bruce Springsteen also saw a 478 percent increase in sales of their albums. Madonna is expected to play six songs at this year's Super Bowl including "Vogue," "Like a Prayer" and "Ray of Light". We'll see what kind of Super Bowl sales bump she gets. Hopefully "Holiday" gets some even though apparently she isn't going to be playing it.


BURNETT: Still OUTFRONT the "OutFront 5". What would Jesus do?

OBAMA: For me as a Christian, it also coincides with Jesus' teaching that from to whom much is given, much shall be required.

BURNETT: Honeymoon death.

UNIDENTIFIED MALE: The one thing that we're focused on is seeing justice done by her and for her.

BURNETT: All this OUTFRONT in our second half.



BURNETT: We start the second half of our show with stories we care about, where we focus on our reporting, do the work, and find the "OutFront 5". Up first, Mitt Romney scored an endorsement from Donald Trump today, but the presidential candidate let another day go by without answering my burning question. Does Mitt think he should pay more taxes, 12.9 million. Thirty percent of Romney's income in the past two years came from carried interest.

Check out our blog, learn more about it. He paid a 15 percent tax rate on that legal and standard, but many people call that tax rate on carry a big loophole. Today prominent hedge fund manager Leon Cooperman told OUTFRONT "income earned from carried interest should be taxed at an ordinary rate, calling it a "simple and straightforward opinion." Romney has not said whether he thinks the loophole needs to go. The issue, though, is not going away.

Number two, members of the House and Senate met again to discuss extending the payroll tax cut. We watched, there wasn't a lot of talk about the actual tax cut. Instead, the panel of 20 discussed smaller panel issues. The clock is ticking.


REP. XAVIER BECERRA (D), CALIFORNIA: But the little secret that all 20 of us know in this room that most Americans don't know is that we really don't have 27 days. In the House, we have no more than 13 legislative days left before the end of this calendar.


BURNETT: The secret is out -- 13 working days left to reach a deal on a tax cut that would save most Americans about $1,000 a year.

Number three, mortgage rate has dropped to a new record low -- 30-year fixed rate mortgage, this is unbelievable -- 3.87 percent for 30-year fixed mortgage. The 15-year fix is down to 3.14 -- holy cow.

We look at the numbers and compared them to a year ago. Homeowners now save about $50 for every $100 borrowed. Someone with a $300,000 loan would save about $2,000 a year. The problem, of course, is qualifying for those mortgages. A lot of homes in this country is still underwater. That's the problem.

Number four, initial jobless claims dropped by 12,000 -- 367,000 now is number. Overall, experts tell us the trend is a solid improvement in the job market. Economists are mixed on what the unemployment rate will be when the Labor Department releases it tomorrow.

Someone told us they think it's going to go up, 8.6 percent. Others think it's going to go down to 8.4. Well, a betting to them. And right now, it's 8.5 percent.

It has been 181 days, though, since America lost its top credit rating. What are we doing to get it back?

Well, today, Federal Reserve Chairman Ben Bernanke told Congress the pace of economic recovery has been frustratingly slow. He also warned that we need a credible plan for cutting the deficit in this country.

Well, sadly, the super committee that was supposed to cut the deficit in November didn't. As a result, America is facing $1.2 trillion in automatic spending cuts next year: $500 billion from the Pentagon's budget, on top of an already scheduled $487 billion from their budget. That adds up to serious money.

And today, top Senate Republicans tried to spare the military from some of the cuts by proposing a plan to freeze federal worker's salaries and reduce the federal workforce instead.


SEN. LINDSEY GRAHAM (R), SOUTH CAROLINA: You could take the whole Defense Department budget and take it off the table and still not get us out of debt. But if you did that, if you gutted the Defense Department, not only would you not achieve financial solvency, which is a goal of everyone, you would render us ineffective threats that we face.


BURNETT: Democrats say, no way, all this sets up an election year battle, where neither party wants to budge. So, wait, Groundhog Day again, huh?

Oh, yes, there he is. That's Punxsutawney. He is a fat, cute little thing. And it is Groundhog Day for real.

Massachusetts Senator Scott Brown is on the Armed Services Committee. I mean, it's like he's posing. Nose is sticking out.

All right. He comes OUTFRONT. I'm not talking about you, sir. I was just looking at Punxsutawney. He was kind of --


BURNETT: -- preening there for the cameras today.

All right. We make light of this Groundhog Day issue in terms of the parties here. But I know you voted in front of the Budget Control Act of 2011, which set up those automatic spending cuts, and you did it so that the super committee would do their jobs so we wouldn't be in this position. But they did. So, here we are.

Is a deal a deal? We should go ahead with these automatic cuts?

BROWN: Well, listen, I don't think there's anybody that wants to have our military gutted and the Select Committee did fail to do their job. And it's up to us now to go in and revisit. I understand Senator McCain and others filed a bill to step back and strategically address these very real concerns.

And as many of you know, you know, Senator McCain's a mentor of mine. I look forward to reading the bill. But we just got off the STOCK Act and now we have to move on to the postal bill and we'll also be working on this as well.

BURNETT: So, your parties proposed sparing the defense cuts and instead, freezing federal pay and cutting the workforce by about 5 percent.

All right. Regardless of where you come out on that politically, the numbers are about $127 billion in savings over 10 years, which is eight-tenths of a percent of our current debt.

Now, I know numbers add up, and both sides can make that argument. But doesn't the idea need to be bolder?

BROWN: Well, listen, there's going to be a lot ideas. We need to do a lot to step back from our increasing debt and deficit, but we're not doing really a whole heck of a lot right now. That's why the Select Committee missed that opportunity and we have to go in and work together because we are Americans first. We need to work together to step back from our debt and deficit and the increasing numbers that we're seeing.

When I got down here, it was $11.9 trillion. It's up to $15.3 trillion and rising, and we need to move quickly or we're going to end up like some of these European countries.

BURNETT: You just passed a bill tonight in the Senate or a bill passed that you've championed.


BURNETT: This is, of course, the STOCK Act, Stock Trading on Congressional Knowledge -- something that seems like common sense to a lot of Americans.


BURNETT: First question is -- and, basically, it means you're not allowed to use information you get in Congress to profit. It makes it a crime.

BURNETT: Right. It's same as obviously every other else, every other American lives by that. And you can't use insider information for personal profit. Pretty simple. You're right.

BURNETT: It is pretty simple. But let me ask you about this amendment that didn't go through. This is something I've never understood over the years.

So, if you are on the Banking Committee and you are overseeing the rules on, say, Bank of America, you're still allowed to own shares in Bank of America. I don't understand that.

BROWN: Well, I voted for that amendment, for Sherrod Brown's amendment. It failed. The House may put it back in, certainly. I know committee members are going to look into those things, but -- so I don't know what to say. I mean, I voted for the amendment.


BROWN: It's my bill. It's a stronger bill than it went in being.


BROWN: And I want to commend obviously the leader and the president for obviously pushing it forward and Senator, obviously, Lieberman and Collins and I marshaled it and Senator Gillibrand. So, it's a good, strong bill and I challenge the House to get a bill out soon so I can get a bill to the president's desk by the end of this month.

BURNETT: Why do you think people voted down that amendment? I mean, obviously, you voted for it. So, you don't think someone who's on that committee should be able to own shares of Bank of America. Yes, that's clear.

But why would that not have passed? I don't get it.

BROWN: I don't know. As I said, I voted for it and there are other amendments that failed and others that succeeded. So, we need to obviously get over to the House, see what they're going to do and get it through the committee.

But, listen, this is a victory for the people of America. This -- I sit in what I consider the people's seat and right now, we need to help reestablish the trust between the American people and the members of Congress, and, you know, the fact that I saw the "60 Minutes" piece, filed it. We got this done within 90 days -- and you were just talking about the gridlock.

This was record time. It was a full and fair and open amendment process. We must have done between 15 and 18 amendments. It was a good day in the United States Senate, and I'm very thankful that we've taken a little step to move forward to reestablishing that trust.

BURNETT: All right. Senator Brown, thanks very much. Good to see you again.

BROWN: Erin, by the way, one more thing. Go, Patriots!

BURNETT: I got to say, I picked them. I picked them, which is --

BROWN: Good.

BURNETT: I hear my earpiece screaming and getting angry.

BROWN: You should. That's right. Yes, OK. Go, Pats. Thank you.

BURNETT: You're right. You might need a security detail when you come to New York. All right.

BROWN: It's OK. Thanks.

BURNETT: All right. What would Jesus tax? This is a real question today because the president at a prayer breakfast in Washington this morning raised the very issue.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I think to myself, if I'm willing to give something up, as somebody who's been extraordinarily blessed, give up some of the tax breaks that I enjoy, I actually think that's going to make economic sense. But for me as a Christian, it also coincides with Jesus' teaching that for unto whom much is given, much shall be required.


BURNETT: All right. Just how much is required from those who are given much?

OUTFRONT now, former director of the Congressional Budget Office Doug Holtz-Eakin, Jamal Simmons, and Reihan Salam.

Good to have all of you with us.

Jamal, let me start with you.

JAMAL SIMMONS, DEMOCRATIC STRATEGIST: Sure. Of course, you want to start with me.

BURNETT: Of course, I do. I want to ask you what you think of a politician, happens to be the guy that support, but a politician bringing up Jesus as on their side in the tax debate.

SIMMONS: Yes, you know, I'm not that in favor of it. I think as progressives, many of us, or those of us who are more center-left, many of us have said Republicans have spent too much time infusing religion in their policy arguments. The president is on really safe ground talking about the fairness argument. I'm totally supportive with him.

And, in fact, as a Christian, I agree with him on theological grounds. I just don't think the president of the United States should necessarily be making those arguments, that, in fact, those of us who are outside the government can make, I want government and the religion to be separate from each other.

BURNETT: Church and state, separate. Shouldn't have gone there?

REIHAN SALAM, THE DAILY: Oh, I think it's a legitimate point. But here's the thing -- I actually think that the president wasn't giving Jesus enough credit, because I think one way of thinking about people is that you care about inputs. You're showing you care by spending more money.

Another way is to show you care by delivering actual results.

Funny thing about America since 1970 is that we have tripled the amount of money we spent per pupil on public school students. That sounds great. We tripled the amount of money. Hooray. We care more.

But the thing is -- that the high school graduation rate has gone down by 5 percent. Actually, we're spending more money and we're doing a worse job.

So, the issue is not, hey, let's get people to pay more taxes. The issue is, wait a second, isn't something broken here? Maybe these schools aren't actually helping the poor kids.

We want to uplift. That's the real problem. And I think Jesus would think, gosh, we're not doing a really good job of helping those who are downtrodden with this government that's not working super well.

So, why will we focus exclusively on how to extract more money from folks who are creating jobs, and doing other stuff? Middle class folks who are going to have to be taxed to pay for a government that's going out of control.

BURNETT: I must say, I do feel somewhat uncomfortable talking about Jesus in a primetime show.


REIHAN: Reihan Salam, not a Christian, yes.

BURNETT: Yes, all right. There, you said it. Not me.


BURNETT: OK. Doug, let me just ask you this.


SIMMONS: Hot potato, hot potato, hot potato.

HOLTZ-EAKIN: Every graduate program in economics has a course called what would Jesus do. Everyone. BURNETT: Right.

HOLTZ-EAKIN: We know the answer. The answer is he maximizes the dynamic, general equilibrium value of good works. And, you know, it doesn't include the Buffett Rule. That's how it works.

BURNETT: You know, obviously, majority of Americans support taxing the wealthy. So, there is that. You know, people agree with the concept here, whether the use of Jesus makes them uncomfortable or not.

Doug, you looked at the numbers. If he does this, he taxes the wealthy more, how much money gets raised?

HOLTZ-EAKIN: It's on the order of $35 billion a year. To give a sense of the magnitudes involved, we got a deficit of over $1 trillion. So, this is about 2 cents or 3 cents on every deficit dollars. It's nothing.

BURNETT: Jamal, I want to ask you -- just to follow up on that. A guy named Adam Davidson was on our show last week. And he raised a really interesting point.

Just looking at the numbers. You taxed millionaires at 100 percent, according to his math, you'd raise $700 billion in one year. And, of course, they have no money left. If you increased taxes on everybody by 8 percent, millionaires and the middle class, it has a bigger impact than taxing millionaires at 100 percent.

How do you -- how do you get your arms around that issue that the middle class is part of the solution here?

SIMMONS: You know, it does seem that in order to solve this problem, you're going to have a figure out a broad tax overhaul that makes sense. So, you know, Doug and some others look at the 30 percent millionaire tax, and say, oh, it's only going to raise about $40 billion or $50 billion a year, it's $500 billion, $400 billion to $500 billion over 10 years.

But you know what? Last year, the Republicans who came into Congress, the Tea Party, they were looking for $50 billion, $60 billion cuts out of the current budget, so it's the same thing. So, if you want to cut the budget by $50 billion, I think that's the same argument as willing to raise taxes by $50 billion. Both things are sort of equal to me.

But I think ultimately, you've got to do a lot of things and you've got to grow the economy. I don't see a way out of this problem unless you do something on entitlements, do something on spending cuts and do something on taxes and grow the economy. Just doesn't seem like the math works.

BURNETT: Final word quickly, Doug.

HOLTZ-EAKIN: I think I agree. One of the reasons we have millionaires paying less than 30 percent. By the way, on average, they pay 30 percent, so it's a very misleading debate.

But some pay less because they contribute in other ways. They contribute in charity, they contribute by providing growth. Tax policy has lots of objectives.

I think growth should be number one right now.

BURNETT: All right. Well, thanks very much to all three of you. We appreciate it.

SIMMONS: Thank you.

SALAM: Thank you.

BURNETT: All right. Now, let's check in with Anderson with a look at what's coming up on "A.C. 360." Hey, Anderson.

ANDERSON COOPER, HOST, "A.C. 360": Hey, Erin. You touched on the story, we're digging deeper in the breaking news ahead on "360". Israel could launch an attack on Iran within months rather than allow Iran to build the nuclear weapon. What would an attack look like and what would be the fallout? We'll talk it over with our panel.

Also tonight, a "360" follow up, doctors who cheat to get certified. This is incredible. They pass their exams because they've already had many of the questions and shockingly, they have the answers to.

Drew Griffin's initial investigation was on how this has come in practice for inspiring radiologist. Well, tonight, how it's happening in other fields of medicine as well. It's pretty shocking stuff.

Those stories and tonight's "Ridiculist" at the top of the hour. BURNETT: All right. Thanks very much to you, Anderson.

Next, the latest development in a honeymoon murder. A man accused of killing his bride going on trial.

And a woman who was rejected and again and again and again finally made millions by going it alone. Our "IDEA" segment OUTFRONT.


BURNETT: It was supposed to be a adventure of a lifetime -- newlyweds from Alabama on honeymoon, scuba diving trip to the Great Barrier Reef. Less than two weeks Gabe Watson and his bride Tina were married, Tina's life, though, came to a gruesome end off the coast of Australia.

This chilling photograph, you may have seen before. It's sort of lodged in my mind. What it shows is what prosecutors say is Tina's body in the background. It's on that circle as we pan out. Lifeless on the ocean floor.

Gabe, her husband and diving buddy, said it was a tragic accident. Investigators did not buy his story.

In 2008, he was arrested and pleaded guilty to manslaughter in Australia. He served 18 months in prison. He was extradited to Alabama in 2010 and now faces capital murder charges. His trial begins next week.

Brett Bloomston has defended hundreds of murder suspects. He is the criminal defense attorney for Gabe Watson. He's OUTFRONT tonight.

Good to see you. Thanks for coming on.


BURNETT: I want to show everyone that haunting photograph again because I think for many people, it is something they remember and makes them remember.

Gabe was a certified rescue diver, which is part of the reason that some people have, there was suspicion here in the first place -- went to the surface instead of staying with her when she was in desperate need of help. Why did he do that? Do you know?

BLOOMSTON: Well, Gabe's classification as certified rescue diver has been much overblown. Gabe took a crash course four years before this dive which taught him basic retrieval and safety things and he got a slip of paper that said he was a rescue diver.

He had never worked on those skills before. He had never had to use those skills to actually rescue anyone. He wasn't the guy that someone would call if there was an emergency, call Dave Watson. Call Gabe Watson, he can save you. He wasn't a rescue diver. He made a split decision when his wife panicked and started to sink, to find an expert. Find somebody who could help and he went to the surface.

BURNETT: Obviously, I understand the manslaughter conviction in Australia showed no intent to harm Tina, his wife. But still, to some watching, it may be hard to understand why Gabe would plead guilty to taking his wife's life then.

BLOOMSTON: Well, he didn't plead guilty to taking her life. He pled guilty to being a bad dive buddy and the highest courts in Australia determined that he did nothing intentional to cause her death. He just simply made a split second decision to leave her and to get help at the surface. He pled guilty to what he did, and that was he left her.

BURNETT: All right. So I guess abandonment is what you're saying. Let me just add something here, Tina's family obviously has made it very clear that they think that Gabe murdered her. Listen to this.

Do we have it? I don't know if we have the sound bite, but let me just tell you exactly what it said, Brett.

The father, Tina's father said, "The one thing we're focused on is doing justice by her and for her. And until that day comes, until he actually faces evidence for the fist time in a criminal trial before a jury, there can be no rest and no peace for anyone in our family."

What's your reaction to that? Yes?

BLOOMSTON: It's certainly a tragedy. Tina's death was a tragedy for her husband, for her parents and for all that were involved and knew and loved her. However, their blame of Gabe is absolutely misplaced.

The investigation in Australia was fraught with problems. It started off on the wrong foot by bungling investigators in the Australian police. And they basically convinced the family that there was some foul play here. Otherwise, we wouldn't be here today.

BURNETT: You've known Gabe now for a long time. What's he like? And is it possible that, although you were obviously personally convinced of his innocence, that he could be hiding anything from you?

BLOOMSTON: Not all. I have no doubt in my mind that he's innocent. He's a guy's guy. He's a sweet guy, he's a big teddy bear. He's been described by his friends as just that, the guy you call when you need something.

He's doing the very best he can with these allegations that have been hanging over his head for nine years now, almost nine years. He's remarried to a lovely woman who is a school principal. They have a wonderful relationship, a healthy relationship.


BLOOMSTON: And there's nothing to indicate that he's a devil that did this.

BURNETT: All right. Well, Brett, thank you very much for coming out.

BLOOMSTON: Thank you.

BURNETT: All right. A writer rejected over and over and over and over again until she finally comes one the one idea that vindicated here and helped her make millions. She comes OUTFRONT next.


BURNETT: There's a pretty good chance you have never heard of tonight's "IDEA" guest. She was a college dropout, making less than $18,000 a year, using her free time to write love stories about magical trolls. But no traditional publisher wanted Amanda Hocking's stories.

So, she posted her paranormal stories online as an eBook. Within six months, Amanda sold 150,000 copies. Within 20 months, more than a million. Total profit, $2 million.

Tonight, Amanda has a multimillion dollar deal with St. Martin's Press, a big Hollywood movie deal and her first book "Switched" can be found in her hometown library.

Amanda came OUTFRONT to tell me how she not only beat but a lot of people say completely changed the industry that rejected her.


BURNETT: Amanda, great to have you with us. Tell me how you got through, you know, incredible setback. You were set on writing, and just need to do what's in your heart, right?


BURNETT: But then you submitted your book a lot of times. And you got rejected.

HOCKING: The first rejection was incredibly hard. I took it really personally. It was like, kind of a really bad breakup. You have this idea that it's all going to work out and it doesn't. And I was kind of devastating, kind of stepped back from writing for a couple of years. But then you give yourself time and you start thinking about other things and I kind of got over it, and I realized that I want to write and I need to do this.

BURNETT: What made you decide to publish eBooks?

HOCKING: I had tried kind of everything I can think of, the traditional route and I wasn't really getting anywhere. I really focused in 2009, I had set out and wrote several books and I had really sent out letters and I was doing everything I could, and I wasn't really making any headway.

And then in early 2010, I heard about authors having success with eBooks. And so, I thought I would try it out. I didn't have anything to lose. I wasn't making any headway the other way. So --

BURNETT: There's been all these stories done about how eBooks is the future and you're proof. You're an entrepreneur and a self starter. You go from nothing to $2 million in books on your own. You know, a lot of people look at you and say you are proof that there's a new model, we don't need old style publishers anymore. Yet, you signed with St. Martin's, why?

HOCKING: Because the self publishing was really time consuming, the publishing aspect of it was taking up so much of my time, when I would rather be writing and working on more books. And also, I wanted to be able to reach the large portion the market that doesn't have eReaders, or isn't reading eBooks yet.

BURNETT: That's people like me, by the way.


There's a lot of people that just aren't into eBooks. And I think that some people never will be. So, I thought, I wanted to reach everybody and I wanted to put the best quality product I could that would reach the most people. And I think that St. Martin's is the way to do that.

BURNETT: When did you realize that you were a hit?

HOCKING: I think it was towards the end of 2010, I started selling like (INAUDIBLE). I think in December, I sold over 100,000, and then in January, I sold over 400,000 books. And it was kind of like this insane, crazy moment when I saw that it didn't make any sense, it was kind of mind-boggling and I thought this was really, really taking off.

BURNETT: This is the big leagues.


BURNETT: What the next characters are going to be? Are you going to stick with the trolls and the Scandinavian heritage of Minnesota? Or --

HOCKING: I have a new series come out with St. Martin's starting in August and that one is about sirens, about a really an interesting Greek mythology. So --

BURNETT: Sirens like the ones that sang and tempt you.


BURNETT: And that will be based on Greek mythology? HOCKING: Yes. There's still some twists to it. I didn't take it completely literally, but I kind of based it on that. So --

BURNETT: All right. Well, thank you so much, Amanda. Thanks for telling your story. And good luck.

HOCKING: Thanks.


BURNETT: Amanda has some advice for those of you looking to follow on her footsteps. And she said, ignore mean people. Pretty amazing.

We'll see you tomorrow at 7:00 and 11:00. And tonight at 11:00.

"ANDERSON COOPER 360" starts right now.