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ERIN BURNETT OUTFRONT

Doom & Gloom: Does It Add Up?; Change at the Top for Romney; Whistleblower on Neglect, Abuse at Hospital

Aired July 6, 2012 - 19:00   ET

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


ERIN BURNETT, HOST: OUTFRONT next, the June jobs report is out, and it's not good. But does it add up to all doom and gloom?

And claims of abuse and neglect at a hospital backed by American taxpayer money. Tonight, the whistleblower speaks out exclusively to OUTFRONT.

And McDonald's, the only branded food you'll find at the Olympic Village in London. The fast food chain says it has healthy options. Does that add up?

Let's go OUTFRONT.

(MUSIC)

BURNETT: Good evening, everyone. I'm Erin Burnett.

And OUTFRONT tonight, summer blues. Depression set in early today, and it set in hard. There were only 80,000 jobs added in this country in June, and the 8.2 percent unemployment rate didn't budge.

Yes. The stock market plunged, politicians and analysts alike sounded like they were on the edge of a cliff.

(BEGIN VIDEO CLIP)

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: There's a lot of misery in America today. And these numbers understate what people are feeling, and the amount of pain which is occurring in middle class America.

(END VIDEO CLIP)

BURNETT: Peter Boockvar, equity strategist at Miller Tabak tells OUTFRONT the jobs numbers are, quote, "pathetic".

From IHS Global Insight chief U.S. economist Nigel Gault, quote, "another month, another subpar employment report."

Mitt Romney had it right. There is a lot of pain in a lot places, but does all the doom and gloom at up? Because yes, the jobs numbers weren't great, but this is a glass we're choosing to see a little bit more half full.

And most Americans agree with us. A new CNN poll shows 60 percent of people are optimistic and think economic conditions next year will be good. One reason for this is housing. It's a little ironic, perhaps, because the housing market is what got our economy in this crisis back in 2008.

But here are a couple of numbers that really might add up. Pending home sales in May hit their highest level in the past two years, according to the National Association of Realtors. And we saw gains across the entire country, and not just specific regions.

And the most recent S&P Case-Shiller Index, which really is the benchmark for housing prices, shows that home values rose on a month- to-month basis in April for the first time this year. Now, you add on to all of that, 30-year mortgage rates. When you look at those, they're at a record low. We're about a percent lower than we were a year ago.

Homes are more affordable.

Stuart Miller is the CEO of homebuilding giant Lennar. He's also a member of our strike team and he told us today, quote, "Housing is at least stabilizing. I think that if housing continues its current trajectory, it will assume its traditional role of leading a domestic recovery."

So is housing the knight in shining armor?

OUFRONT tonight: Jim Bianco, president of Bianco Research Investment Analysis, and Dan Gross, economics editor at Yahoo! Finance.

Great to see you both.

Dan Gross, and obviously the numbers today were grim. I know some people found a couple of little shards of a silver lining. But what about this take on housing? It's sort of been sneaking up consistently as improving?

DAN GROSS, ECONOMICS EDITOR, YAHOO! FINANCE: Well, this is a little drum that I've been pounding on, and I'm glad to see you take a bigger mallet to it.

It's not just the home prices. It's housing-related activity. It's the volume of sales, because that translates into money for brokers and insurers and taxes that are paid. And it's the volume of new housing starts, up 25 percent through the first five or six months.

We've seen these mini recoveries, but nothing sustained like this. And so, the data shows numbers are way below where they were at their peak --

BURNETT: Right.

GROSS: But bouncing off their bottom in a sustained way. The great thing about housing, it's this overwhelmingly domestic sector.

BURNETT: Right.

GROSS: All the jobs, the contractors, the landscaper, the mover, broker, the lawyer, all that's a domestic job.

BURNETT: You can't outsource it.

Now, Jim Bianco, do you think housing can sustain the recovery. I mean, everyone said at the peak, you know, you can't have a recovery without housing. And, you know, for so long now, we haven't had people building new homes. We've been working through this glut.

Are we finally going to be there?

JIM BIANCO, PRESIDENT, BIANCO RESEARCH: I hope so. I hope it will be a 2013 story. It's still a little early to tell whether or not we're there. We're kind of bumping along towards the bottom. We've seen this over the last couple years, where housing appears to stabilize, and then it kind of slips back down.

But if you're looking for the economic engine, it's really got to be in the new starts and in the construction area. When a home is built, it creates five times as much economic activity than a home that is sold. So hopefully, we're going to get the new home sales, the permit numbers will go up as well, too. And that will be an engine for recovery, provided, of course, it happens.

BURNETT: And, Jim, I know provided, of course, it happens, obviously is the crucial caveat that you're giving. But when it does, it could be pretty incredible, right? Is I mean, because we've just been at such a low level for so long, that the uptick in terms of construction, construction jobs, all of this, could really just be -- you're looking at jobs and things. These could be big numbers, right?

BIANCO: Oh, yes. There's two things about that. One, when you have a market like housing that's down as much as it has, it typically will overshoot. So, it will go too far the other direction. So when it comes back, it will come roaring back.

And remember that housing will create the last vestige (ph) of -- let's call it -- unskilled labor. Where does somebody go that's got a high school degree or some college degree to get a decent job and good wages. Usually housing is a place or construction is a place that you can get a job that you can make good money at. And if they come back, that could be really good jobs for people that are desperately in search of those jobs.

BURNETT: And that would be a great thing for this country. Dan, today's jobs numbers. Did you see a silver lining?

GROSS: You have to look very hard.

BURNETT: Right.

GROSS: The number of hours worked in a typical week bumped up, and the wages bumped up by a pretty decent number, almost one half of one percentage point. You put those two together, it means more people getting paid. What that meant was, as companies had more demand, instead of hiring new people, they kind of asked their employees to do more. BURNETT: Right.

GROSS: And agreed to pay them a little more. In a normal recovery, in a normal expansion, that's the type of activity that happens. But that is frequently accompanied by jobs being added at a more rapid rate.

BURNETT: Jim Bianco, did you see anything good in this jobs number, or how would you grade it?

BIANCO: I would grade this jobs number overall probably around a C minus. It's really not that good. But if there was one good spot, it was in the manufacturing area. We are starting to create jobs. We've had a great manufacturing productivity boom that has cut jobs from manufacturing for the last 30 years. And right now, we seem to be stabilizing in the manufacturing sector right now. And maybe we'll be creating more jobs as we go forward.

BURNETT: I'm going to leave that on a silver lining on a lot of fronts. And hopefully we made you see there is a different way to look at that bad headline today.

Still OUTFRONT, Mitt Romney is making big changes in his campaign. And one man taking on new responsibilities is OUTFRONT.

And Scott Peterson, you remember him, sentenced to death for killing his wife and unborn son. Now, he's appealing that sentence. Our Paul Callan thinks there is a chance he could win.

And is it possible for airlines to keep fares low and fly safely?

(COMMERCIAL BREAK)

BURNETT: Now our second story OUTFRONT: a change at the top of Mitt Romney's team. Influential conservative voices, including "The Wall Street Journal", "The Weekly Standard" and Rupert Murdoch have criticized the campaign this week from everything from staffing to messaging.

It looks like Mitt Romney may be taking some of those words to heart, announcing today that senior adviser Kevin Madden will take on a bigger communications role, starting -- drum roll -- right now.

(BEGIN VIDEOTAPE)

BURNETT: Hey, how are you, Kevin?

KEVIN MADDEN, ROMNEY CAMPAIGN, SR. ADVISER: Great to be with you, Erin.

BURNETT: All right. So tell me. Obviously, you were a senior adviser before. So, tell me what you're going to be doing differently.

Obviously, you do TV. You do well on TV. Viewers know who you are, they've seen you on this show and others. So, I assume your elevation in communications is an acknowledgment that they needed more of those skills.

MADDEN: Well, you know, I think that this is -- we're entering that critical phase of the campaign. We're looking at 19 weeks to go, about 120 days. I think right now a lot of voters are beginning to focus on the campaign. We're going to be doing a lot more travel.

So I expect that as the press corps begins to travel more with the governor, I'll be working with the press corps that's traveling with the governor, to articulate his message to the American people about how he wants to see a stronger economy and what his plans for a stronger America are.

So I think this is a natural part of this campaign. I don't really think it's big news, because this is what happens at this juncture in the campaign. More senior folks come on and help because the bandwidth needs to get larger as you get to this critical point in the campaign.

BURNETT: OK. So, let me just say, you know, in case you were on vacation this week, something that happened this week that made me think that, you know, maybe there was something to this, naming you in this role. Here is Eric Fehrnstrom, also a senior adviser, and Mitt Romney.

(BEGIN VIDEO CLIPS)

ERIC FEHRNSTROM, ROMNEY SENIOR ADVISER: The governor believes that what we put in place in Massachusetts was a penalty. And he disagrees with the court's ruling that the mandate was a tax.

ROMNEY: The Supreme Court is the final word, right? Isn't it the highest court in the land? They said it was a tax, didn't they? So it's a tax, of course. That's what they say it is.

(END VIDEO CLIP)

BURNETT: So are you going to clear that up, Kevin?

MADDEN: Well, I think, look, the governor spoke on this. I think for all the emphasis that we put on staff -- staff really don't matter. What matters at the end of the day is the candidate, his vision, his words.

And Governor Romney made very clear what he believes. He's made very clear that this is an election that voters are looking for a choice on the issue of Obamacare. You have one candidate that wants to keep it and believes that the taxes, the regulations, the size and scope of it are good. And one candidate that believes it's not helpful for the American public and wants to repeal it and replace it with more patient-centered care. That is what is on the ballot in November.

So, all this talk about penalties and taxes, that's not as important as whether or not we're going to continue with that policy. And Governor Romney has said that on day one, he would act to repeal it. BURNETT: See, you're already doing your job, you know? You've diverted the conversation. I think viewers see exactly what you're doing. Final question, Kevin, quickly.

MADDEN: Yes.

BURNETT: "The Wall Street Journal," Jack Welch, Rupert Murdoch, all have criticized Mitt Romney for his staffing. Has there been a conversation about this in the campaign? I mean, I know the answer to that is yes. But how much?

MADDEN: Campaigns get a lot of people saying good things about us, saying we're doing a great job and there are other folks that are saying we need to do a better job. I think the most important thing for every campaign is to put it in perspective, to take all that information in, process it, and make sure that what you're doing every single day is living up to the expectations, the high expectations, that people have for your campaign.

And that comes from people that are observing it as reporters, and pundits, and that comes from people observing as supporters, people that want to see Governor Romney win. So, I think as a campaign, we're very focused on living up to those high expectations, and we listen to that advice, whether it's constructive criticism or whether it's praise and we do our best.

The most important thing we can do is go out there and articulate Governor Romney's message for what he wants to do for the country.

BURNETT: All right. Thanks very much to Kevin Madden. We appreciate it.

MADDEN: Great to be with you.

BURNETT: All right. John Avlon worked on Rudy Giuliani's presidential campaign. Michael Waldman, of course, worked on President Clinton's 1992 campaign.

Good to see both of you.

JOHN AVLON, CNN CONTRIBUTOR: Good to see you.

BURNETT: All right. So, I have to say, Michael, he's doing his job. He's already diverting. Forget how they're disagreeing. He's going to repeal it. Move on, people.

MICHAEL WALDMAN, BRENNAN CENTER FOR JUSTICE, NYU: I miss Eric Fehrnstrom, who they have probably locked into a sound proof room, because he kept accidentally speaking the truth on camera. And, you know, when does that happen?

The problem for Mitt Romney is not shifting spokespeople. It's that he's pinned between the demands of the right wing in the Republican Party, which is extremely powerful, and extremely vocal, and a message he might want to talk to the country about and policies he might want to talk to the country about. So he's got to explain why his signature program of individual mandate-based universal health care in Massachusetts is somehow different from what President Obama did, and is somehow good and bad at the same time. And that's not about spokes people. That's about philosophy and policy.

BURNETT: And so, John, does he need to do that explaining or can he do what Kevin Madden is clearly trying to do, to say forget all the nuance? We're going to repeal it.

AVLON: I think Kevin madden gave a good view what they are going to do.

BURNETT: Right.

AVLON: It sounds like the role he's going to play inside the organization is something like a traveling communications director. In proximity to the candidate is enormously important when you're at this stage of the campaign because that's the access you need. That's what you need to really drive the message.

Look, I think all these calls for a major contain campaign shake-up have been a mistake, and for people outside the campaign with their own agendas. It's enormously important to have a campaign team that understands the candidate as a person, who the candidate trusts and vice versa.

BURNETT: Which his team does.

AVLON: Which his team does. By bringing Madden on a more senior role, who was with him in 2008, who knows the governor well, they're doing exactly what they should do. They're broadening the base of senior leadership, but they're not grafting on to an entirely new personality, because that would have really I think undercut a campaign in a critical moment.

BURNETT: And does this happen, Michael, in every campaign? You know, because Mitt Romney had momentum. Now, Barack Obama has the momentum. He's had a couple stumbles. So, people just come out and, you know, start shooting and say shake it up?

WALDMAN: Every campaign, every campaign. And John is right. It was a real strength for Obama last time that he had a loyal team based in Chicago. It's been a strength for Romney that he has a loyal team based in Boston.

In the past, having your campaign outside of Washington was a way to insulate it from the kind of second-guessing in the coat room at the Palm (ph). Same with Clinton in '92 when we were all down in little rock. But now everything is done on Twitter, and you can't get away from the know it always.

So I think this ultimately will not have much of a difference when it comes to voting in November. I don't think.

BURNETT: All right. Thanks so much, John and Michael. Appreciate it.

And OUTFRONT next, an exclusive investigation into allegations of abuse and neglect at a hospital backed by you, American taxpayers.

And is saving a few dollars on an airline ticket actually putting your safety at risk?

(COMMERCIAL BREAK)

BURNETT: Our third story OUTFRONT: an exclusive OUTFRONT investigation, egregious neglect and abuse at Afghanistan's main military hospital, a hospital that's backed by more than 100 million American taxpayer dollars.

Pentagon correspondent Barbara Starr has been looking into this story. And we want to warn you that some of the images that we're about to show you are difficult to watch.

(BEGIN VIDEOTAPE)

BARBARA STARR, CNN PENTAGON CORRESPONDENT (voice-over): Afghan soldiers, starving, lying in dirty beds with festering wounds, denied pain killers. All of this at the Kabul National Military Hospital, a hospital the U.S. paid more than $100 million to help the Afghans run.

SCHUYLER GELLER, RETIRED AIR FORCE PHYSICIAN: Things as simple as dressing changes are not done. Patients become infected and they die.

STARR: These days, a world away, Schuyler Geller, a retired Air Force doctor, tends to his Tennessee farm.

GELLER: This will be kind of a little haven.

STARR: From February 2010 to February 2011, he oversaw training of Afghans at the hospital. These photos were taken by his American military staff.

GELLER: There are patients that are starving to death because they can't buy the food. They have to bribe for food. They have to bribe for medicine. Patients were beaten when they complained about no pain medicine or no medicine.

STARR (on camera): And you're not supposed to worry about that.

GELLER: That's what we were told.

STARR (voice-over): Pentagon officials do not dispute that the photos from 2010 show hidden, but deliberate abuse by Afghan staff. But they insist that after a U.S. inspection, conditions have improved significantly.

In this memo to Congress, Geller alleges, two senior U.S. generals who oversaw Afghan training, Lieutenant General William Caldwell and his deputy, Brigadier General Gary Patton, in 2010, delayed bringing in Pentagon investigators because of their political concerns over the looming midterm U.S. elections. Geller says Caldwell was angry his staff wanted the inspector general to investigate. And that Patton ordered a delay out of concern it would embarrass the Obama White House.

GELLER: And then he said, but we don't want to do -- we don't want to put that request in right now, because there is an upcoming general election. And we wouldn't want this to leak out.

REP. JASON CHAFFETZ (R), UTAH: That's just not acceptable.

GELLER: Congressman Jason Chaffetz's House Oversight Subcommittee is investigating the general's alleged behavior.

CHAFFETZ: That's a very serious allegation. But it didn't come from just one high-ranking military official on the ground, it didn't come from just two. We have several of them who have stepped forward and said, yes, this was indeed the case.

STARR: Geller says he wants the truth to come out.

GELLER: The biggest frustration is our own leadership's response, and how slow that was and how inadequate that was.

(END VIDEOTAPE)

BURNETT: All right. Barbara Starr is with me now.

Barbara, those pictures were awful to look at. What has the response been to the allegations?

STARR: Well, Erin, I don't think it's going to be a surprise. Spokesmen for neither general would offer a comment. Neither man is commenting, because of the new review now going on at the Pentagon about these allegations.

So far, there's no indication the White House knew anything about any of this, and the Pentagon still insists, things are getting better.

BURNETT: So they're insisting things are getting better. What is Congress saying to you?

STARR: Well, next week, there will now be the first hearing about all of this, looking into what happened at the hospital, the allegations about it, and what may happen now.

Dr. Geller's point is, he wants to know how this all happened. It's fine it's getting better, perhaps, but how did it even happen in the first place -- Erin.

BURNETT: A lot of people are asking that tonight. Thanks very much to Barbara Starr.

And OUTFRONT next: McDonald's says it's offering healthy options at the Summer Olympics. But does it add up?

And Scott Peterson was sentenced to death for the murders of his wife and unborn son. But now, he's appealing that sentence. Why Paul Callan thinks he might win.

(COMMERCIAL BREAK)

BURNETT: We start the second half of our show with stories we care about, where we focus on our own reporting from the front lines.

Well, George Zimmerman walked out of a Florida jail this afternoon after posting $1 million bond. It comes after Zimmerman's legal team announced today that it received $20,000 in donations since yesterday, which was when the judge set Zimmerman's bond at $1 million and set a number of restrictions, including curfew and electronic monitoring.

Zimmerman is charged with the murder of 17-year-old Trayvon Martin.

Benjamin crump, an attorney for the Martin family, said he preferred Zimmerman stay in jail but respected the judge's ruling.

Well, the World Health Organization is struggling to find out what illness is killing children in Cambodia. At least 61 children have died from a mystery disease that's affecting mostly children below the age of 3. Initial symptoms are high fever, respiratory issues, and then inflammation of the brain. We have learned that initial tests have ruled out H5N1, SARS and Nipah.

This afternoon, President Obama signed legislation that prevents student loan interest rates from doubling. Rates on federal subsidized Stafford loans will stay at 3.4 percent until next year. The White House estimates the move will save the average student $1,000 in debt.

But we looked at the numbers in a recent report from the New York Fed which found the average student has $23,000 in debt. So, the $1,000 savings is less than 5 percent of a student's total debt.

We found an example of the struggle with student loans. Elizabeth Gott told OUTFRONT she is selling a valuable baseball to pay off her son's nearly $200,000 in student loans. Lou Gehrig hit this ball for a home run in the 1928 World Series. It's been in the Gott's family ever since. Gott said she reached a point to sell it to help her son pay for medical school.

Online bids are currently around $30,000 and a live auction is on Tuesday. Hunt auctions estimates the ball could go for between $100,000 and $200,000.

Well, Tomas Lopez, the Florida lifeguard fired for saving a swimmer, will be honored next week. OUTFRONT has learned that the city of Hallandale Beach is going to present Lopez with a key to the city on Monday. He's 21 years old, and as you're probably aware, he was fired for leaving his post to help save someone who was outside of his zone.

His boss, Jeff Ellis, offered Lopez his job back on OUTFRONT last night. He declined, saying he's going to move on and focus on school. Ellis is reviewing his company's policy that led to the firing.

Well, it's been 337 days since the U.S. lost its top credit rating. What are we doing to get it back? Well, as we told you earlier, the jobs market is still struggling. Only 80,000 jobs added in June. The unemployment rate stayed flat at 8.2 percent.

And now our fourth story OUTFRONT: McDonald's. Not loving it. That's the message from someone some London lawmakers who want to ban the company, among others, from sponsoring the Olympic Games. You may remember a few weeks ago, we pointed out what we saw as an irony, that McDonald's is building its biggest restaurant in the world in Olympic Park.

In fact, McDonald's will be the only branded food available in Olympic Park during the Olympics. McDonald's told me they were, quote, "surprised and disappointed" with my comments. McDonald's wrote me they provide, quote, "choice and variety on our menu with items like grilled chicken, yogurt, oatmeal, fruit, salad, smoothies and wraps. And, of course, we're proud of our iconic burgers."

Now, we know that McDonald's has tried to be healthier, they use canola oil now and they banned trans fats. But we wanted to know if it claims of health added up.

So we did this. Assume I'm a reporter going to the Olympics and I'm working really hard during those 17 days. During that time, I'm in Olympic Park, on the run, eating McDonald's.

We put together a menu and tried to make healthy choices. Oatmeal, a small iced coffee and large O.J. for breakfast. Calorie count, 710. Lunch suggested by McDonald's P.R., a side salad, small mango pineapple smoothie and chicken snack wrap, calorie count, 580.

And a dinner that includes what I love when I go to McDonald's, a Big Mac, medium fries and a soda and shake for dessert. Calorie count, 1,710. Obviously, that's the big whammer, and that's your RDA or just before your RDA for the entire day.

The grand total for that day, though, is 3,000 calories. That's 76 percent more than the USDA recommends. Put it another way, 3,000 calories, 79 teaspoons of sugar, that's three times the daily recommendation, six teaspoons of shortening, which is pretty much like you get straight out of a Crisco container, and 10.4 packets of salt, almost twice what the American Heart Association recommends.

So, we sent this analysis off to two expert nutritionists to find out if they agreed, and they did, and went a little bit further. They said on this hypothetical diet, I would gain six pounds in the 17 days of the Olympics. Obviously, if you do the math, over a year, if I ate that every day -- it would get boring to eat the same thing every day -- but it would be 136 pounds.

Still, without McDonald's, Coke and Heineken, the only food and beverage providers at Olympic Park, the Olympic Committee says the games wouldn't exist. And McDonald's says they're sending 200 kids and families, for example, to see the Olympics.

Joining us on the phone, Jenny Jones of the Green Party and member of the London City Council. She sponsored legislation to ban McDonald's and Coke from sponsoring the games, and Katherine Mangu-Ward, managing editor of "Reason" magazine.

OK. Great to have both of you with us.

Jenny, let me start with you. What made you decide to this? I mean, obviously, it's too to late to ban any of these guys from sponsoring the Olympics. So, why did you decide to do it now?

JENNY JONES, LONDON ASSEMBLY MEMBER (via telephone): Well, what we really want to do is have the mayor of London, the government, the British government and, of course, the London Organizing Committee for the games to actually recommend in their post-games briefing that sponsors such as McDonald's and Coca-Cola really should not have any links with such a sporting event that's basically about supreme athleticism, supreme fitness, while they are promoting terrible junk food.

BURNETT: You know, Jenney -- Katherine, let me ask a question, because I know you opposed this kind of legislation in the past and I know there's Olympic athletes, you know, Usain Bolt, he says, hey, I love eating McDonald's. But those numbers that we showed are pretty troubling. And more so to have that be the exclusive food available at the ultimate sporting event on Earth.

KATHERINE MANGU-WARD, MANAGING EDITOR, REASON MAGAZINE You know, it's clearly a weird circumstance here, where it's the only food available in the Olympic park. But this debate is really about, you know, is it McDonald's fault that we're fat? And, you know, the fact is, everywhere else in the world, all the time, you would have to make a pretty weird choice to eat that diet two days in a row, much less 17 days. There are always other options.

This is about personal responsibility. Big Macs do not have a strange hypnotic effect that causes you to have to eat them forever until you're 10 million pounds.

BURNETT: Well, I might disagree, because I love eating them. But I get your point.

But you do -- you do admit, there is an issue, or something about having this be the only food you can get is McDonald's at the Olympics.

MANGU-WARD: You know, I think it's actually a pretty small payoff or it's a pretty small tradeoff for what McDonald's is doing here, which I think should be getting them karma points, should be getting them credit. They're promoting exercise, which is at least as important as calories in, calories out. Go swimming, do a cart wheel.

JONES: You cannot possibly interject it because, of course, that's complete nonsense. McDonald's actually promotes deep-fried, highly processed, high-fat, sugar, salt, chemical-filled junk food and make it absolutely tasty, so people keep coming back. They absolutely don't give you the full story on all this.

And quite honestly, Britain could have had the Olympics without Coca- Cola and McDonald's as sponsors. We actually didn't need them. And it's utterly depressing to think that children in Britain who are already becoming obese and their parents are becoming obese, are going to have to put up with endless ads on television, seeing these companies that they have no interest in our health. They only have interest in their profits.

BURNETT: And, Jenny, you're saying -- I just want to make sure one thing you're saying is different than what the Olympic committee says. You're saying that they don't need -- they could have done without -- it's nearly $1 billion from these few key sponsors, one of which is McDonald's. You're saying they could have put the games on without them?

JONES: We absolutely didn't need that money. In fact, it's nearly 2 billion -- it's 2 billion pounds. Although in fact we here in Britain only get a third of the business. So we get a sixth of the money.

So the rest is raised in taxpayers and people who are paying for their tickets. We could have done it without them. And we could have done it perhaps with a little less glitz, a little less dazzle. But we could have done it. So they were not necessary.

The advertising they're getting for their paltry donations, I think, is phenomenal. And the IOC should be embarrassed at being linked to these companies.

BURNETT: Katherine, do you think there's going to end up being change on this future, now that there's more and more focus on healthy eating and better choices?

MANGU-WARD: You know, I frankly would rather have a billion dollars from McDonald's than a billion dollars from taxpayers. This is money freely given, presumably by a company that believes in the importance of the Olympics. I don't see any reason not to slap a couple of golden arches somewhere.

And, you know, again, I think it's very, very important to emphasize here, seeing a McDonald's logo does not somehow automatically result in high fructose corn syrup flooding into your veins. You still have to buy the burger, you have to choose it. Burgers are delicious. Swimming is fun. Why not have both?

BURNETT: All right. Well, thanks very much to both of you. We appreciate it. And please, everybody, take to Twitter and let us know what you think about this.

All right. Well, you remember this man. Scott Peterson. He was convicted eight years ago and sentenced to death for murdering his pregnant wife, Laci, and dumping her body into the San Francisco Bay on Christmas Eve.

It was a case which received intense, to say the least, media coverage. And now, there is a chance Peterson could be spared the death penalty. His attorney is claiming overwhelming publicity, errors and other mistakes deprived Peterson of a fair trial.

OUTFRONT tonight, Paul Callan.

So do you think there is -- there is something here? That this appeal could work for them?

PAUL CALLAN, CNN LEGAL CONTRIBUTOR: Well, there is a great chance that the death penalty will not be imposed in this case and then it will be reversed. And I say that, because: (a), his attorneys made a compelling case, 423-page brief outlining prejudice that occurred during the trial.

But the bigger issue is, California courts and the federal court out there are very liberal on death penalty issues. I mean, frankly, the death penalty hasn't been imposed in California since 2006.

BURNETT: Right. And that was -- that brings me to that -- there's 725 inmates on death row in California right now. Scott Peterson being one of them.

So -- I mean, is there something to be said for would his turn have come up anyway?

CALLAN: Well, I don't know. Try to picture the carnage if all of a sudden the California courts say, OK, we're now going to start imposing the death penalty. Are they really going to put over 700 people to death? The federal court that he's going to wind up in is the Ninth Circuit Court of Appeals --

BURNETT: Oh --

CALLAN: -- which lawyers think --

BURNETT: Famous or infamous, depending on your point of view.

CALLAN: Well, that's right. You know, no God and Pledge of Allegiance and all of these other things that people have criticized.

So, my only point is, regardless of the merits of the case, whether he deserved to be convicted or not, this is a jurisdiction where I think it's unlikely that you're going to see the death penalty imposed.

BURNETT: OK. So presume then he wins that appeal. What happens then? Does that change his sentence, just becomes life in prison or could the entire sentence itself be up for discussion?

CALLAN: Well, there are really three possibilities. One possibility is that the death penalty just gets thrown out. He would then default back to what would have been the sentence, which would be life without parole.

The other possibility, of course, is the court could look at this and say, you know something, he was deprived of a fair trial. One of the claims is that 93 percent of the jurors in the jury pool had a strong opinion about guilt or innocence and yet were allowed to serve on the jury. New trial could be ordered in that scenario.

And you know, this was a shaky case. I mean, there was a lot of motive for him -- remember, he was having an affair.

BURNETT: Right, right.

CALLAN: It was a horrific case. But the actual physical evidence linking him --

BURNETT: They never found --

CALLAN: It was minimal. So, he could -- a new trial would be a possibility years later. You never know what might happen on that scenario. So my point is, maybe he doesn't get the death penalty. And there's at least the possibility of a new trial.

BURNETT: Well, Paul Callan, thank you very much.

For 25 years after its original run, my little pony is back on the air, and this time it is not just for little girls.

And airlines keep cutting costs to keep airfares down. But are those cuts putting all of us in danger?

(COMMERCIAL BREAK)

BURNETT: As children of one generation start having kids of their own, toy makers often re-release, you know, vintage toys to capitalize on nostalgia. That's why in the past few years, we've seen toys return, characters from the 1980s. So, you can see there, all my favorite, strawberry short cake. And then there's this one.

That brings me tonight's number, 1987, which is the year the TV show "My Little Pony and Friends" went off the air, 25 years ago almost. But the ponies are back. The second season, "Friendship is Magic" just haired on the TV network the Hub. The main character is Twilight Sparkle, a unicorn pony sent to the town of Poniville to study the magic of friendship.

It is very popular. Last weekend, more than 4,000 fans of the show gathered for a "My Little Pony" convention. It was a huge event with panels, galleries and a giant merchandise area.

And the most unusual part of this, everyone, was that most of the attendees were male. It's true. One of the fastest-growing segments of the "My Little Pony" audience is actually men. They call themselves bronies as in bros who like ponies. Get it?

All right. So, the bronis like the new "My Little Pony" show. This weekend at BronyCon, for Brony Convention, of course. We spotted them buying pony art and wearing pony costumes. It was a really diverse group.

One guy told us he was in the Navy. Another came from Canada. One guy hopes to write for television.

So we asked, why do you love my "Little Pony"? And almost every single one of them said, I love the story. Stories like the time Apple Jack tried to tackle the entire harvest alone. And sure, we know some of you are saying guys who like my "Little Pony"? Yes, they do. And we celebrate people who have enthusiasm and passion for something. Besides, it might be good if there was a little brony in us all.

I love that pony.

And now to tonight's "Outer Circle" where we reach out to our sources around the world. We begin tonight in Britain where police announce today they arrested seven men on terror charges, bringing the total number of terror arrests in the U.K. this week to 13. Police are preparing for what they call the largest peace time operation in British history, with just three weeks left before London kicks off the Summer Olympics.

Matthew Chance is in London and I asked him about the rise in suspected terror activity.

(BEGIN VIDEO CLIP)

MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: Erin, there does appear to be an upswing in the level of vigilance in Britain as the country prepares to stay the 2012 Olympics. Police say seven men arrested today, in anti-terror raids, after weapons were found hidden in a car. Items recovered from the car say police are undergoing forensic analysis, and searches being are carried out at the addresses of those in custody.

Earlier on Thursday, police arrested another six people. This time in London, suspected of terrorism offenses. Those arrests relate to a possible plot involving Islamist extremists with potential U.K. targets.

Neither raids say policy is linked to the Olympics. But it's understood, security services are doing everything they can at responding to every credible threat to make the games secure -- Erin.

(END VIDEO CLIP)

BURNETT: All right. Thanks to Matthew Chance.

And now we go to Libya, where the first elections since the overthrow of Moammar Gadhafi will be held tomorrow. The national congress will appoint a new government and draft a new constitution.

Jomana Karadsheh is in Tripoli, I asked her what issues are most important to voters.

(BEGIN VIDEO CLIP)

JOMANA KARADSHEH, CNN PRODUCER: Erin, the biggest concern election day is g going to be security, especially in the eastern part of the country, in the city of Benghazi, where a small but vocal group of federalists have been calling for a boycott of the vote and demanding more representation in the national congress. Their protest turned violent at times this week. For decades, the eastern part of the country, the city of Benghazi, was marginalized by Moammar Gadhafi and many there feel now yet again they are being marginalized and sidelined by the central government here in Tripoli.

So all eyes will be on the east tomorrow, on the city of Benghazi, where the majority of people are saying they are going to go out and vote, and will not let anyone disrupt their big day -- Erin.

(END VIDEO CLIP)

BURNETT: Our thanks to Jomana.

All right. Our fifth story OUTFRONT: Dangerous descent, a frightening thing is happening while you're flying, according to a new book. At a time when flights are fuller than ever, the airline industry relies on regional carriers and it outsources 71 percent of its maintenance. Are the airlines cutting corners at the cost of safety? And is anybody watching over them?

OUTFRONT tonight, William McGee, author of "Attention All Passengers". He's a former consumer advocate at the U.S. Department of Transportation.

Appreciate your taking the time, William, to come and talk to us.

So, where are they cutting corners, according to the research you've done?

WILLIAM MCGEE, AUTHOR, "ATTENTION ALL PASSENGERS": Well, we all see it when we see things like checked baggage and paying for pillows and Cokes and window seats.

What I'm much more concerned about corners behind the scenes, particularly with maintenance. We have seen an epidemic of outsourcing of maintenance in the airline industry over the last 10 years. In some cases, in the United States, in many cases overseas, El Salvador, Singapore, China, Mexico.

The big concern is the FAA providing proper level of oversight.

BURNETT: I want to give they are response to this and get your response to them. We asked them about this, on maintenance, and they said, "FAA standards are the same no matter where the maintenance is performed. The FAA conducts at least one comprehensive in-depth inspection annually. And a facility could lose its certificate if it doesn't comply with FAA requirements."

That's what they say. Is that what they do?

MCGEE: Unfortunately, I've had this conversation before with senior FAA officials. What we found is that in fact in reality, there are often two standards. For one thing, mechanics in the United States are required to undergo security background checks, alcohol and drug screening. In many cases, it's not the same thing overseas.

In addition, what we have seen is that traditionally, the airline model requires all mechanics to be licensed by the FAA. What we have seen in recent years is that in many of the outsourced shops, they have unlicensed mechanics.

Now, according to the FAA, that's OK, because they say as long as one licensed mechanic signs the log book and says, yes, they did a good job --

BURNETT: It doesn't matter who did the work on the engine.

MCGEE: Right. I think the average person would say, well, wait a minute, how can 10 unlicensed people do the same work as 10 licensed people. The FAA says, no, as long as the certification is the same and somebody is swearing it was done right, it's fine with us.

BURNETT: I can understand why a lot of people would feel nervous hearing that.

Let me ask you about this. There's other specific things that happen. People try to save money when they fly, so there is always people have the conversation -- well, if my child is under 2 or 3, can I hold them in my lap? Because if not, you got to pay full fare, some discounts are available, but basically full fare.

You're saying that's another problem.

MCGEE: Absolutely. For more than 20 years now, the National Transportation Safety Board has said to the FAA, please, ban lap children. But right now there is a loophole. There has been forever. Basically all passengers over the age of 2 are required to be restrained. Those under 2, it's up to whoever is traveling with them.

When I was -- when my son was young, I was guilty of this too. I didn't know it. Unfortunately, there is a huge education gap on this topic. So two years ago when I was on the DOT panel, I convened a panel of experts. I asked them all: is there any case in which a lap child is as safe or safer than a child in a restraint? The answer came back, no, unanimously no.

And yet --

BURNETT: You could hit a pocket, we hear about huge air turbulence pockets and a child could die --

(CROSSTALK)

MCGEE: It may not be serious to an adult, but, you know, if an infant hits a bulkhead.

Now, what the FAA, to its credit, the FAA has increased some education efforts in this area. But the real answer is the same thing with cars. In other words, every state in the Union has a law that requires you to have a child restraint.

BURNETT: Right.

MCGEE: Unfortunately, the FAA won't do it for the airlines.

BURNETT: But let me -- that brings me to something here, part of the reason the airlines are in this situation is that they have got to make money. And when you have to make money, you start charging for pillows and not hard to imagine you're cutting corners on other things that are much more serious than that.

So is this an argument for we should be regulating airlines or safety comes before profits. I know they say it doesn't. But ultimately, if they don't make money, they go bankrupt. So, they've got to make money.

MCGEE: I've been around this industry for 27 years. I worked in it before I started writing about it. I can tell you, Erin, that a few years ago, I would have thought no way we shouldn't reregulate. But now I and many others are saying, you know what? The industry is not doing a good job policing itself. The FAA is not providing adequate level of oversight in many cases.

And we do need to have a national dialogue about this. We haven't really discussed the airline industry on a national level in 34 years since it was deregulated.

BURNETT: People come back to you and say, look, it is so safe, it's so safe, the record of flying in general is safe, and in this country, the safest in the world.

MCGEE: Yes. Absolutely, it is safe. But the people that I'm speaking to on the frontlines -- this is not my opinions. These are opinions of people that are FAA inspectors, mechanics, pilots, and they're all saying we're losing that safety net.

We have the world's most enviable airline system, but unfortunately in the last eight, nine, 10 years, we have been cutting corners on standards, on training.

BURNETT: You think it could be a huge cost, a catastrophic cost?

MCGEE: Absolutely. This is what the FAA inspectors on the front lines are telling me, that they're not getting to the places where the work is being done. And so, now, in many cases, we're relying on the airlines to self-report. That's unprecedented in the airline industry.

BURNETT: All right. Well, thank you very much. We appreciate your taking the time, William McGee.

MCGEE: Thank you.

BURNETT: Mitt Romney is planning his first foreign tour. Five countries made his list. We'll see how it stacks up against our list.

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BURNETT: So Mitt Romney is planning his first big foreign tour. Reports say that he'll visit five countries and three continents.

Reno, Nevada, for a speech at the Veterans of Foreign Wars. London, England, for the start of the Olympics. Meetings in Israel, and then, Germany and Poland.

Now there are a couple of things that I find a little strange about this plan. First, Reno? I don't think you're allowed to include a city in your own country when you're planning a foreign tour. And also kind of per continent on this list.

So, we're assuming they're going to add a country. But the bottom line is that this list is a little too old school.

And since I love to travel, I have a list for you, Mitt. Five countries, four continents, not counting our own. And this is a real list because it assumes limited time and it has you traveling consistently in one direction. I spent so much time planning trips, trust me on this one, Mitt.

So you're going to start in London, England, because I'm going to let you go to the Olympics. I know you got a history with the games, and you want to be there. So, that's one.

After that, Germany. I agree with you, they run Europe, they're fighting with Europe, Europe is our biggest trading partner, that's a good move.

From there, go to Israel, sure, you know, you got to -- got to do that, kiss the ring.

But then go to the UAE, because it's basically America's biggest Arab ally in the region.

Then, China. Now, yes, you've said you'll label them a currency manipulator but we know you don't really mean that. You've got to go to China. It's the present, it's the future, and a big speech there about America is smart.

Now, China just passed the U.S. as Brazil's largest trading partner and that is why I'd make South America the fourth continent for your trip. Brazil has the next Olympics. They've got the World Cup. Like China, Brazil is the future and it's a crucial to give a moving speech about America's hemisphere and its friends and its future there.

And, Mitt, the best part about this advice is not just that I got you more countries and one continent, I got you all in one direction instead of the bounce around thing that you're doing, is that my advice was free.

"A.C. 360" starts now.