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ERIN BURNETT OUTFRONT

Transparency Trap; Russia's Power Play; Battle at the Border; Interview with Senator Menendez

Aired July 10, 2012 - 19:00   ET

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


TOM FOREMAN, CNN CORRESPONDENT: OUTFRONT next, President Obama versus Romney in a war over who is more transparent. We'll tell you what both camps are hiding.

Russia sends a flotilla of warships towards Syria but says it's no big deal. What is the bear (ph) up to?

And your cell phone as an informant. How police are using your Smartphone to spy on you.

Let's go OUTFRONT.

Good evening, I'm Tom Foreman in for Erin Burnett. OUTFRONT tonight, the transparency tornado. President Obama's team is ripping into Mitt Romney for what they call an appalling lack of transparency. They say he's hiding things about his past, his businesses, his finances, and they're hitting hard with a new web video and attacks from the vice president himself.

(BEGIN VIDEO CLIP)

"Mitt Romney is defying calls to release more than one year's worth of tax returns."

UNIDENTIFIED MALE: He wants you to show your papers, but he won't show us his.

(END VIDEO CLIP)

FOREMAN: Democrats have been demanding more financial disclosure from Romney for weeks, and suggesting that he's got secrets he's keeping from voters. Listen.

(BEGIN VIDEO CLIP)

DAVID AXELROD, SENIOR OBAMA CAMPAIGN ADVISER: This is the most secretive candidate since Richard Nixon.

STEPHANIE CUTTER, OBAMA CAMPAIGN DEPUTY MANAGER: Mitt Romney plays by a different set of rules and keeps his bundler (ph) secret like a lot of other things that he keeps secret.

(END VIDEO CLIP) FOREMAN: Governor Romney has released his tax return for only one full year. Critics say even his father released 12 years of returns when he was running for president back in 1968. Romney also holds off-shore bank accounts in Switzerland, the Cayman Islands and Bermuda. To be fair, those accounts could be completely legitimate, but the Dems are whipping up this perception that something shady is going on. But hold on. This storm may be turning back on the president. President Obama has gone to great lengths to brag about his openness, honesty and transparency in his White House.

(BEGIN VIDEO CLIP)

BARACK OBAMA (D-IL), PRESIDENT OF THE UNITED STATES: We have put in place the toughest ethics laws and toughest transparency rules of any administration in history, in history.

(END VIDEO CLIP)

FOREMAN: Transparency, transparency, transparency. We've heard it over and over again. But do his claims add up? He promised to publish the White House visitors log so the public could see who was coming and going all the time. But his administration later came under fire for holding meetings with lobbyists across the street at a townhouse with no visitor records. He promised more protection for government whistleblowers. According to "PolitiFact", he has done that, but his Justice Department has also prosecuted more of them than any previous president.

He appointed a transparency czar and a year later dropped him, saying the White House attorney can handle that work. And you may remember this moment we brought you on live OUTFRONT not long ago, the president was attending a fund-raiser in June at the home of actress Sarah Jessica Parker and what's that truck doing there? The Secret Service parked a dump truck in front of our camera to keep him hidden from view while he visited with the Hollywood (INAUDIBLE). All of that has prompted publications from "The New York Times" to "Mother Jones" magazine to sharply criticize the president for being far from the champion of transparency he claims to be.

Bottom line, it looks like both candidates need help hiding from the transparency twister as it tears through this race. OUTFRONT tonight CNN contributor David Frum, Bill Adair, the creator and editor of "PolitiFact", which has extensively covered both campaigns transparency claims, and CNN contributor Roland Martin. Bill, let me start with you. This wide question of who is being more transparent, if this president any better, any worse, about the same as other presidents?

BILL ADAIR, CREATOR & EDITOR, POLITIFACT.COM: Well he's definitely made considerable progress. Now if you go back he made a big promise. He said he would be the most transparent and open president in history. So he's set a high bar for himself and he's had mixed success. There are definitely some things that he achieved in terms of putting data online, putting data on from the economic stimulus, putting up the White House visitor logs. He has been very good at posting data. Where he has not done well is resisting the gravitational pull of Washington to do things behind closed doors. He promised that he would open the health care discussions to the cameras of C-SPAN. It never happened. And we have compiled some of these, and we found it's a mixed record of 13 core promises on transparency that we track on "PolitiFact". He's got five kept, five broken, and three that we've rated compromised, so it's a mixed record.

FOREMAN: So, David, you know, one of the things I've been struck by is I've looked at this ocean of information coming out of the White House and I've heard many other reporters say the same thing. Yes, there's a lot of information coming out, but when you're releasing the information that you want to release, that's just PR. That's not transparency.

DAVID FRUM, CNN CONTRIBUTOR: I'm a big believer in government accountability, but I think transparency is the most overrated concept in government. It doesn't do what you want it to do. It's not -- it's usually not desirable. It breeds cynicism and, of course, it's counterproductive --

FOREMAN: What do you mean it doesn't do what you want it to do? I'm a voter. I want to know what's going on. I want to know who the president is sitting down with.

FRUM: You think you do, but you don't really because what you want is an effective administration that delivers positive results. And that means the president needs to have some privacy in his deliberation. Think about the publishing of the visitor logs. What does that mean in practical terms? The president wants to hear somebody's point of view or maybe he doesn't even want to hear somebody's point of view. He grants that person the courtesy of a visit. Now it's published. Now he has to invite six other people whose points of view he also doesn't want to hear.

(CROSSTALK)

FRUM: We waste his time and the way we get around it is we meet at the Starbucks across 17th Street.

FOREMAN: OK, that's a fair point, but Roland, if that's the case, and everybody knows it, including President Obama, what did he make all these promises for if he wasn't going to open the doors and bring all the cameras in?

ROLAND MARTIN, CNN CONTRIBUTOR: It's called politics. That's what it's called. I mean frankly I have three words for all of this. Waste of time.

(CROSSTALK)

MARTIN: That's exactly what it is. All this does is this is one of those things that in a long campaign you want to attack your opponent, chip away at their credibility, to say oh, my god, they're hiding something. Look, that's what the Obama folks are doing right here. Let's go back to 2008. You still have from then to now all of these whackos on the right who want to see President Obama's college transcripts, why is he hiding them? What's going on?

FOREMAN: That's a fair point. That's a fair point.

(CROSSTALK)

FOREMAN: Let's go back --

MARTIN: Guess what? None of this has anything to do with housing, with getting a job, with getting education, with health care. All it is, is a campaign move to try to chip away at the person. It has nothing to do with policy, so frankly it doesn't excite me at all.

FOREMAN: Well you know what, Roland, you raise a good point when you say it's a waste of time. Bill, I kind of wonder if both camps love a waste of time like this, the president, because it keeps him from having to talk about jobs which he does not want to talk about, Mitt Romney, because it keeps him from talking about being an out of touch elitist, which he doesn't want to talk about.

ADAIR: Well I think it definitely puts the Romney campaign on the defensive. But I think to respond to what Roland and David said, as a journalist, I need to speak up for transparency. Transparency is good. We want to know what our government is doing. And I think because of a lot of this data being out there, we do know more. We know a lot about the economic stimulus that wouldn't have been possible in the past, so transparency is a good thing.

(CROSSTALK)

UNIDENTIFIED MALE: Tom, you're advocating --

(CROSSTALK)

FRUM: You're advocating the class interests of journalists and the professional interests of journalists. But those are not the same as the needs of the public. Think about it. We know more about what goes on inside these government negotiations than we ever did. And government accomplishes much less than in the days when we didn't know how the highway bill was put together, we got the interstate highways. Now that we do know how it happens, now that the president is even promising to put negotiations on C-SPAN, I mean which is -- which is a guarantee that nothing will ever happen, nothing gets done. Government worked better when it was more discreet. It worked better in the '50s and '60s than it does today.

FOREMAN: So Roland --

MARTIN: Tom, Tom, Tom.

FOREMAN: Roland, in one quick sentence here, what would your message be to both camps right now, the president's camp and Governor Romney's?

MARTIN: Shut up! I would say shut up and focused on policy. OK? We know Mitt Romney is a rich guy, got it. Next, so shut up, focus on policy, and give me concrete plans that you want to move the nation forward, not sitting here saying, oh, where is his account and what his college grades were. I don't care.

FOREMAN: All right. Thanks to all three of you for being here. And we'll see where it goes next. I don't think we've heard the last of it. There's more going to be on the way.

The Russian bear is roaring with warships on the way to Syria. We're tracking them. The dry weather is taking a toll on crops. We'll tell you why that has corn popping all over the planet.

And Casey Anthony's former attorney comes OUTFRONT to give his inside scoop on one of the biggest and nastiest trials in a long time. Stay with us.

(COMMERCIAL BREAK)

FOREMAN: Our second story OUTFRONT the great bear is roaring, Russia's power play in Syria. Today the Russians sent a flotilla of warships to its base in the Syrian port of Tartus, at least four ships are en route right now. Russia says it's no big deal even though it comes just a day after the Russians said they would suspend arms sales to Syria. But a lot of international security analysts are wondering what Russia is really up to.

Russia has been a staunch supporter of Syria in the face of international opposition and is reportedly its biggest arms supplier. According to the Congressional Research Service, Russia sold Syria $4.7 billion in arms from 2007 to 2010. Russia's influence is, of course, key to any resolution. Joining me now is former homeland security adviser to George W. Bush, Frances Townsend. Fran, what do you think Russia is up to here?

FRANCES FRAGOS TOWNSEND, CNN CONTRIBUTOR: Well I think there are a couple of different things going on. Let's talk about the ships going to the port of Tartus first. It's the only Mediterranean port that the Russians actually have access to, so it's a very critically important one. But I think that those ships are really a message to the west to stay out of the problems in Syria. Not to intervene.

Let's remember, you know, recently we've seen senior-level military defections away from Assad and a weakening of the military support for the Assad regime inside Syria. You know, I think that what Russia is signaling to the west is stay out. If Assad is going to crumble and the support for him internally is going to crumble, you don't need to help it and stay out of there.

FOREMAN: When you say that's the message to the west, it's not a gun message, in that we wouldn't expect Russia to fire upon anybody or defend Syria in this case. It's more a matter of saying we're not going to shoot, don't you think about it either.

TOWNSEND: That's right. I mean I actually think I would go one step further than that, Tom. I actually think Russia does not want to be in the position of being the last man standing between the opposition and Assad. If the military crumbles and Assad is left standing there and needs defense, I don't think the Russians want to be in that position. In fact, we've seen recently the Russians have opened up some dialogue with the Syrian opposition. Let's remember, for $4.7 billion in arms sales, the Russians want to make sure they hedge their bets and they're friendly with whoever is going to control the Syrian military, even if that's the opposition.

FOREMAN: And so how do they play that out with their ships being there. Let's say that it all -- it does all fall apart. What do the Russians then say?

TOWNSEND: Well I think we've got to watch it carefully. I mean four military shipments -- ships with arms on them, we've got to be careful. While Russia is telling us they're no longer going to transfer arms to the Syrian military that's -- we're going to have to -- intelligence services from around the world, militaries from around the world, are going to watch that closely to make sure that the Russians aren't tempted to continue to transfer arms.

And I frankly think that the real message here that we ought to take from this is a signal of hope. Assad is losing the support of his internal security services, his military. The defection of the former minister of defense is terribly significant. And so I think that this is all -- you're seeing more Russian involvement, more Russian concern here, for that very reason. And this may be part of the turning point that we've been all hoping and praying for in Syria.

FOREMAN: I'll ask a quick question here. Russia has tremendous problems right now. Putin has tremendous troubles with the flooding at home. A lot of Russians very angry over how that was handled. Is there any chance this is exactly what we see with politicians here? He's in trouble at home so he stirs the pot somewhere else to get attention off of that.

TOWNSEND: Oh I think you can't dismiss that as a possibility, but I think that that's sort of an added benefit to their involvement in Syria. I'm not sure I think that that's going to drive it. Let's remember, Syria's relationship with Iran is a client relationship, right? It's very close. And we know that Russia has not only a close political relationship with Iran, but they also have a very tight economic relationship there, as well.

FOREMAN: And it's interesting to see those ships moving, always interesting to hear from you, Fran Townsend.

TOWNSEND: Right.

FOREMAN: Thanks for being here.

TOWNSEND: Thank you.

FOREMAN: Still OUTFRONT some Democrats are breaking ranks with the Obama camp on his latest tax plan. One member comes OUTFRONT to talk about that.

And homeland security plans to close nine border stations along the Mexican border, claiming these assets would be better used elsewhere. Well, they're not exactly on the border no matter what you've read. We'll tell you how it adds up in just a moment. (COMMERCIAL BREAK)

FOREMAN: This has been the hottest first half of the year the continental United States has ever recorded. It has been unbearable for many of us, but it has been disastrous for corn. Take a look at this map from the National Weather Service. Everything in yellow or orange is in drought conditions. Corn is being hammered by this heat, since a lot of places it is in a critical growth state. Soybeans also being affected in a big way. They mature a little bit later. It is a big deal for them too.

It's so bad, the U.S. Agriculture Department is rating only 40 percent of the corn and soybean crop as good or excellent. That's the lowest rating for this time of year since the last big drought in 1988 and this is not just about crops. Corn is also the main ingredient in the feed for chicken, cattle and hogs. That means you'll likely wind up paying more for everything from burritos to burgers from cold cuts to cola from bacon to -- you know bet your boots this is a big issue and not just for this country.

Tonight's number, 38.8 if I can get it to come up there -- there we go. That's the percentage of the world's corn that we produce here in America. That much. We are by far the single-biggest corn grower on the planet. We also ship a massive amount of soybeans, notably to China, and we supply both commodities as food aid to developing nations, many with their own drought problems right now. So you get it. Our corn is cooking in the fields. In one way or another, almost everyone on the planet is paying a price.

Our third story OUTFRONT battle at the border. The Obama administration's decision to close nine border patrol stations in states like California, Montana and Texas is causing an uproar tonight. Local law enforcement officials say those stations located in towns a few hundred miles from the border provide essential resources to detain illegal immigrants. The administration plans to relocate 41 agents from those stations and place them closer to the southern and northern borders. But does this add up to better border security? Our Ed Lavandera is in Amarillo, Texas with that story.

(BEGIN VIDEOTAPE)

ED LAVANDERA, CNN CORRESPONDENT (voice-over): The border patrol station in Amarillo, Texas sits on grassy prairie land on the edge of town. It's home to two border patrol agents. The office is hundreds of miles from the border, and might not be much to look at, but Potter County Sheriff Brian Thomas (ph) says his deputies patrol Interstate 40, a major corridor for human smuggling and he counts on the border patrol agents for help.

(on camera): What do you think happens now when you come across a group of illegal immigrants that might be trafficked through your home?

SHERIFF BRIAN THOMAS, POTTER COUNTY SHERIFF: If we don't have any criminal charges on them, we have to let them go. I mean there's not any other choice. LAVANDERA (voice-over): Sheriff Thomas fired off a letter to Texas lawmakers, saying the plan is ill thought out, and "we might as well hang a sign on the Texas panhandle that says welcome illegals."

(on camera): This is one of the holding cells in the Randall County jail in Amarillo, Texas. Illegal immigrants that are captured anywhere in the massive 26-county area of the Texas panhandle are usually brought here before they're transferred over to a federal holding facility. The sheriff here in Randall County tells us that on any given day he can see anywhere between zero and 15 illegal immigrants here.

(voice-over): The Customs and Border Protection Agency says it's closing down nine interior border patrol stations to save $1.3 million a year. The decision is part of an overall strategy to, quote, "increasingly concentrate our resources on the border." In all 41 agents will be moved out of nine cities, six in Texas and one in California, Idaho and Montana. President Obama has pushed for this strategy of beefing up border patrol presence directly on the border.

BARACK OBAMA (D-IL), PRESIDENT OF THE UNITED STATES: So we prioritized border security, putting more boots on the southern border than at any time in our history. Today there are fewer illegal crossings than at any time in the past 40 years.

UNIDENTIFIED MALE: This is where the battle has been raised (ph).

LAVANDERA: Randall County Sheriff Joel Richardson argues these interior border patrol stations are second lines of defense in national security. He also worries that human smugglers will have an easier time moving across the country.

SHERIFF JOEL RICHARDSON, RANDALL COUNTY SHERIFF: I understand border violence and the need to secure our borders. But taking two agents and sending them to the border when they already serve an area of about 26,000 square miles just to me -- just doesn't seem to make sense.

(END VIDEOTAPE)

FOREMAN: The border patrol, Ed, currently has about 20,000 agents of various types on the southwest border. The Pew Hispanic Center recently found that largely illegal immigration has stopped. What's the real benefit in the end of moving 41 more people there, especially since these communities are objecting so much?

LAVANDERA: We talked to a great number of people today, and including some of the people who represent the National Border Patrol Coalition, which is the labor union that represents border patrol agents and they say that this is a strategy that has been going on for some time. That many patrol stations like this have actually kind of been dwindling in numbers. They haven't been filling people who leave but they leave their jobs here. That this is part of an overall strategy to beef up that first line of defense. But many of the critics of that strategy say, look, you're leaving these areas unprotected and that's dangerous.

FOREMAN: (INAUDIBLE) time goes on. Ed Lavandera, thanks so much for joining us and there along the border.

A top Democratic senator would like to see a change in President Obama's tax plan. He comes OUTFRONT to tell us what he'd like to see.

Police have been relying on a new informant that reveals personal details about you. You won't believe which details.

And how officials are paying to get your cell phone's secrets. Stay with us.

(COMMERCIAL BREAK)

FOREMAN: We start the second half of our show with some stories we care about from the front lines and reporting, stocks falling for the fourth trading day in a row. The major indices losing nearly a percent. A handful of companies issued profit warnings, dragging down the markets. David Lutz of Stifel Nicolaus tells us market watchers will be taking a close look at the minutes from the most recent Federal Reserve meeting to see whether fed governors used more dovish language in discussing its easing policies. (INAUDIBLE) find out.

An update on an exclusive OUTFRONT investigation. A House Arms Services subcommittee held a hearing today on the state of the Kabul- based Afghan National Military Hospital. The hearing at times was tense with members questioning defense officials about the lack of oversight at the hospital and how U.S. taxpayer dollars are being spent there. The Pentagon has come under fire after it was revealed American generals delayed a probe of alleged abuses such as wounded Afghan soldiers being beaten for requesting pain medication.

We learn more about former Barclays CEO Robert Diamond's pay package. Diamond is giving up $31 million worth of bonuses but will take home about $3 million in pay. Meanwhile, outgoing Barclays chairman Marcus Agius faced a tough grilling in the parliamentary from the inquiry into the rate-fixing scandal.

We monitored the hearing, which focused more on the leadership of the bank. During the hearing, Agius said one reason Diamond had to go was because he lost the trust of regulators.

A coalition of conservation groups filed a lawsuit over Shell Oil's spill response plan for its exploratory drilling in the Arctic. Shell plans to start its exploratory drilling in the Arctic this summer. The suit names the Federal Bureau of Safety and Environment Enforcement which approved the oil spill plans. Those plans include having a flotilla of response vessels near any offshore drilling platform.

One of the groups involved in the suit is Greenpeace, which told us why they are participating.

(BEGIN VIDEO CLIP) JACKIE DRAGON, LEAD ARCTIC CAMPAIGNER, GREENPEACE: The oil spill from the Exxon Valdez is still coming up in the sand, on beaches, 23 years later. There's absolutely no world experience that tells us that we could address and clean up a spill in the unforgiving waters in the Arctic. There's no reason to believe that this is a safe way for us to move forward.

(END VIDEO CLIP)

FOREMAN: You know, make sure you tune into OUTFRONT next week for a special report, "Cold Wars," in which we'll be taking a much closer look at drilling in the Arctic and all that it does or might mean.

It's been 341 days since the U.S. lost its top credit rating from Standard & Poor's. What are we doing to get it back?

Well, apparently not enough. The credit rating agency Fitch this afternoon once again confirmed its top AAA rating for the U.S., but it also stuck with a negative outlook, saying government budget uncertainties and turmoil in European markets makes the future look kind of dicey here.

Our fourth story OUTFRONT: President Obama doubles down, reiterating his pledge to extend the Bush era tax cuts only for people making less than $250,000 a year.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I believe that we should make sure that taxes on the 98 percent of Americans don't go up, and then we should let the tax cuts expire for folks like me, for the top 2 percent of Americans.

(END VIDEO CLIP)

FOREMAN: But here's the thing. Not all members of the president's own party are on board with that idea. Some want to see the tax cuts extended for everyone making less than $1 million a year, $1 million a year, not $250,000.

We asked our political strike team to weigh in. Thirty independent analysts who help us break down the issues of the day. We asked which is better for the Democrats politically, a threshold of $250,000 or $1 million? Fifty-five percent said $250,000. Forty-five percent said $1 million is better.

Democratic senator from New Jersey, Robert Menendez, who agrees (ph) with the president, and he agrees the $1 million threshold is better.

He's OUTFRONT tonight.

Senator, why do you think $1 million is better?

SEN. ROBERT MENENDEZ (D), NEW JERSEY: Well, Tom, I didn't say $1 million is better. I was asked on the show whether or not I thought $250,000 was the right amount. And I said I'd like to get it higher.

But the bottom line is what we really need is to ensure overwhelmingly that middle class taxpayers get the continuing relief. And that's the overwhelming part of America. Now, in a higher-cost state like New Jersey, you might say that the $250,000 is on the lower side.

But certainly what we can't afford is what our Republican colleagues want, which is continuing tax cuts for people who make above $1 million, millionaires, billionaires, the country cannot afford that.

And at a time in which the country needs those who have the wherewithal to help it, I would think that those tax cuts should not continue.

FOREMAN: What kind of number would be comfortable for you? Because clearly, there's a pretty big gap between $250,000, which, as you would know in your own state, there can be plenty of couples out there who worked hard -- they're 50 years old, they're each making $125,000, putting two kids through college. They're living in a fairly expensive area. They don't feel rich but they're not making $1 million a year either.

What number would be more appropriate?

MENENDEZ: Well, I mean, it varies from place to place. The higher-income state like New Jersey, certainly, I probably would like to see it more around $350,000. But the reality is that at a quarter of $1 million, you're going to capture the overwhelming part of taxpayers both in New Jersey and in the country.

And it seems to me that if our choice is between that and extending the tax cuts for people who make $1 million or billionaires, you know, that's a very clear choice for me. I'd rather extend all of the tax cuts for people making a quarter of a million dollars or less, and save the rest of the money for deficit reduction and for some of the critical needs we have.

But if our Republican colleagues hold the tax cuts for middle class hostage to keeping the tax cuts for the richest people in the country who need to help the country right now and who receive the greatest benefits of the Bush tax cuts, that's not a choice we should have to make.

FOREMAN: Do you think there's really that much money to be gained in this whole thing? A lot of people say it's political posturing, because look, the difference in 10 years in this, is, yeah, the deficit gets worse if you include everyone. But it gets worse if you include just the middle class, too. The difference is $3 trillion or $3.7 trillion worth. That's real money, yes, but you see the concern of some people to say this is mainly political posturing.

MENENDEZ: Well, I would disagree with that. The people who are struggling in this country are middle class working families. And relief that we can give to them ultimately provides a ripple effect in the economy, because they're most likely to have the need to spend.

But when you're a millionaire or multimillionaire or a billionaire, the reality is, is that you're not going to spend that much more as a result of the tax cut. Those types of savings can really be used for deficit reduction or some of our critical needs. And so, I think there is a fundamental difference.

FOREMAN: What about -- one last quick question here. What about the ripple effect, though? Because the argument is that the more you hit those upper-income people, the more they say, I am not going to do anything to add extra workers, to spread things out.

On top of which, by the way, there's this other measure of helping small businesses, which there's some concern is being swept away by the storm of talk about the bigger budget. What do you think about that?

MENENDEZ: Well, the reality is that 97 percent of all small businesses would not be affected by even the president's proposal of $250,000. So I think that's a red herring, and a false claim. Ninety-seven percent of all small businesses would not be affected. And so, at that quarter of $1 million and under, it seems to me that you protect 97 percent of all small businesses in the country, and you give middle class working families the continuing tax break they need to be able to meet the very challenges that you talked about before.

FOREMAN: All right, Senator. I appreciate you coming on the air.

For the record, you'd like to see it above $250,000, but for right now, if that's the way it has to go, then you sound like you're willing to go that way. I appreciate you being here and joining us tonight. Thanks so much.

OK. John Avlon is joining us now.

John, what do you make of this talk? Is this about real money or is this about politics?

JOHN AVLON, NEWSWEEK/THE DAILY BEAST: Well, this is about political contrasts in a presidential election year. This isn't about the deficit and debt right now. It's the reason the president keeps using the word "fairness." It's about values.

But the question is, who does the middle class feel is looking out for them? Because they've been squeezed for so long, forgotten for so long. And the real question that -- that our political strike team was asked: what's the right threshold? Because there are regional realities that are fundamentally different.

The reason that Senator Charles Schumer across the river from Senator Menendez is strongly in favor of the $1 million, is that in the tri-state area, for example, you can have a two-earner household, each person making $125,000. This is far from the jet set.

FOREMAN: Yes. It's very different than if they lived outside Tulsa, for example.

But let me ask about this whole thing, though. When we talk about this amount of money and this fight going on here, one thing I think gets kind of lost here is you're not going to do that much to the deficit. I guess it's good to do something to it, sure.

AVLON: Yes.

FOREMAN: You're not going to do that much to it. But I think a lot of middle class taxpayers -- it seems as if people are under the impression, if you punish the rich, somehow the middle class is going to benefit. The same benefit comes through, either way you approve this. It's not like the money is going to come from the rich and be paid to the poor. That's not going to be the case at all. It's just going to the government.

AVLON: This is the argument that obviously Republicans want to say that any differential, anything other than a complete extension amounts to class warfare. And that's the way they want to characterize the president's focus on fairness. The Democrats are trying to say, look, who is looking out for the middle class?

And we do have a problem with the growing gap, not just between rich and poor in this country, but really, frankly, the super rich and working wealthy. So, that's where there does become a discussion. Is there simply a return on the top rate to the Clinton era, is that punitive, is that confiscatory?

You know, we've had this distorted sort of hyper partisan debate where all of a sudden a 3 percent increase in taxes becomes proxy for whether or not you're a socialist which is simply insane.

FOREMAN: Well, I think this debate is far from over.

John Avlon, thanks for being here.

I don't mean to denigrate when I say we just go to the government. My point is, not going back into your pocket.

AVLON: That's true.

FOREMAN: Speaking of which, is that a cell phone in your pocket, or is it a spy? A new congressional report shows companies such as AT&T, Verizon, Sprint and others responded to a whopping 1.3 million requests from law enforcement for information about their customers.

If you're on that list, that includes information on who you called, who called you, your text messages, your location, according to your phone's GPS, the list goes on and on.

And wait, it gets better. Some cell phone carriers are starting to charge for turning the records over. AT&T alone took in $8.3 million in 2011 from police agencies. That's according to Congressman Ed Markey, whose office is looking into this matter. AT&T wouldn't talk about it. However, Verizon and Sprint both told us such revenues just covered the cost of doing what the police ask. So for the 411, we tracked down our own CNN legal contributor, Paul Callan. He is OUTFRONT with us now.

PAUL CALLAN, CNN LEGAL CONTRIBUTOR: With my cell phone.

FOREMAN: Paul -- yes, with your cell phone -- somebody tracking you as we speak, my friend.

Is this a -- is this a nefarious, sneaky thing, or is this a good thing?

CALLAN: Well, you know, my civil libertarian juices started flowing when I first heard about this story. You know, law enforcement violating the rights of American people. But I was talking to a close friend who is a prosecutor in New York, who was just kind of throwing the cold water in my face.

And what he said was, this is ridiculous. He said, you know, they're talking about 1.3 million requests being made, nationwide, we're a country of about 314 million people, I think. So it's less than, you know -- less than half a percent of the population.

By the way, over 2 million people are in prison in the United States. So it's less even than the percentage of convicted felons who are imprisoned. And these are situations where the court, judges have approved court orders and subpoenas and search warrants for these records. So, frankly, I don't see a problem.

FOREMAN: You said earlier, though -- you said to me earlier in the newsroom, this is just like wiretaps of years ago. But my argument is -- my phone years ago didn't follow me around. Yes, you could tap my house, but you didn't know where I was the rest of the time.

CALLAN: Well, that's quite true. But let's talk about following you around. If you have probable cause or reasonable suspicion that you are committing a crime, and you go to a judge and the judge authorizes the police to follow you around, then where is the illegality?

We -- this entire country is based on this concept that the judiciary puts handcuffs on the police to protect our rights and requires them to have reasonable suspicion or probable cause, depending upon circumstances. That's the protection we have built in.

And by the way, that following around thing has saved people's lives. One of the things that came up in one of the congressional hearings was, you know, someone who had been stabbed and was bleeding to death in the basement of a house. They knew where she was because they tracked her cell phone. So, there are -- those are the emergency situations that the cops are being criticized for. They save a lot of lives by following.

FOREMAN: Let me ask one thing about this, as a continuation. We make this short at the end here. Isn't it just a hop, skip and jump before this shows up in civil cases and there is a divorce going on and somebody says, you know what, you've got to give your cell phone records, got to know if Paul was at the hotel, got to know if Paul was at the resort.

CALLAN: Well, I've got to tell you, it already has shown up in those cases. They're using easy pass records to find out if you crossed the bridge into a particular locale, if you went down a turnpike. They're using your Facebook records and cell phone records, text messaging. Those things have already -- they're already popping up in court.

But once again, it has to be in response to a subpoena, sometimes proved by a judge. So, you know, we're losing a lot of our privacy to technology. And I agree, we have to draw a line somewhere. But the place is where do we draw the line? It's a hard thing to decide?

FOREMAN: We'll take our phones tonight and you now go party like it's 1984.

CALLAN: I'm going to start following you and see where you go, Tom.

(LAUGHTER)

FOREMEN: You'll never catch me. Never.

OUTFRONT next. Airport security opens a suspicious bag, and they find a live baby inside. I'm serious about this.

Plus, the man who defended Casey Anthony comes OUTFRONT next. He's no longer her lawyer. We'll find out why.

And later, a rock and roll icon sells out to the man. Well, the men and women of America. And it's all right.

(COMMERCIAL BREAK)

FOREMAN: We're back with tonight's "Outer Circle" where we reach out to sources all around the world.

Starting in Egypt, where the parliament is caught in a political crossfire. The parliament is called into session by the new president, Mohammed Morsi, but shut down later in the day when they were ruled invalid and dissolved by Egypt's high court.

Ivan Watson is in Cairo and told us about the power struggle playing out in Egypt.

(BEGIN VIDEO CLIP)

IVAN WATSON, CNN CORRESPONDENT: Different branches of the Egyptian government are engaged in a very public argument with each other over whether or not the parliament should be reinstated. The recently elected Muslim Brotherhood president, Mohammed Morsi, says the parliament should move forward, convene again, in part because it consists of -- is dominated by members of his own party. And he's opposed by the ruling military council, which has ruled this country for more than a year, as well as the top court.

So the Muslim Brotherhood has brought people out into the streets to -- as a political pressure tactic to help give it some leverage and negotiations, and all sides are engaged in competing court cases and appeals against each other in different courtrooms around the country.

The main thing is, for now, nobody is fighting each other, and that's a blessing in a country that is seeing an awful lot of violence in the streets over the course of the past year-and-a-half.

(END VIDEO CLIP)

FOREMAN: In the United Arab Emirates, an Egyptian couple was caught an airport trying to smuggle their own baby. The couple tried to pass their bag with their baby inside through an airport X-ray screening machine. I asked Mohammed Jamjoom why they did this and what charges they're facing.

(BEGIN VIDEO CLIP)

MOHAMMED JAMJOOM, CNN CORRESPONDENT: The parents have been charged with putting their child at risk and attempted smuggling. It's not yet known what kind of penalty they'll face but the infant is in good condition. The baby was discovered by an X-ray screening at Sharjah International Airport the couple was traveling through.

Now, take a look at the photo from the X-ray screening. You can see the outline of the baby. According to Sharjah police, the family had had arrived in the UAE last Friday but weren't allowed to enter the country because they didn't have a visa for the infant. The parents were then told they'd have to wait two days at the airport until the visa office reopened so that the boy's documents could be processed.

Police say by the next day the father had gotten impatient and persuaded his wife to put the baby in the hand luggage in the hope security wouldn't notice.

And one police officer, Abdul Rahman Shama (ph), told CNN that it was the first time they had seen anything like this and said, "Even if you're in a desperate situation, how can you put your child in a bag?"

(END VIDEO CLIP)

FOREMAN: Wow. Wow.

Let's check in with Anderson Cooper with a look at what's ahead on "A.C. 360" -- Anderson.

ANDERSON COOPER, HOST, "A.C. 360": Hey, Tom.

We're keeping them honest tonight in the program with t his question. What are Mitt Romney's overseas investments and why isn't he making the information public? Or should he have to? We want to make clear no one is accusing him of breaking any laws. But the money invested in the known tax havens, Bermuda, the Cayman Islands, is becoming a growing campaign distraction -- something the Obama White House is focusing on.

We'll speak with the author of the "Vanity Fair" article who lays out Romney's money trail. And political contributor Mary Matalin about the campaign fallout.

Also this, an extraordinary investigation, children begging in subway stations. The stunning thing about this is this little boy is begging for his school, the St. Andrew Missionary Baptist Church School in Oakland, California. There are other allegations of mistreating kids, falsifying records and bilking the government of tax dollars made against the father and son team that run this school.

Gary Tuchman tracked them down looking for answers. That's tonight's report in our continuing series "Ungodly Discipline."

Those stories and tonight's "Ridiculist" all at the top of the hour -- Tom.

FOREMAN: How about that? "A.C. 360", don't miss it.

Our fifth story OUTFRONT: one year after Casey Anthony's acquittal for killing her daughter, Caylee, she remains in hiding, said to be afraid for her life. But is she actually craving the spotlight since leaving jail, she's made that online video diary. There are reports she spends the days searching the Internet concerned about her image.

OUTFRONT tonight, a man who helped her win her freedom, Jose Baez. He's Anthony's former defense attorney and the author of the new book, "Presumed Guilty-Casey Anthony: The Inside Story."

Let me ask you a question. Untoward question to start with.

JOSE BAEZ, CASEY ANTHONY'S FORMER ATTORNEY: No problem.

FOREMAN: How much money did you get for this?

BAEZ: Well, you know, if it becomes a number one best-seller --

FOREMAN: A lot?

BAEZ: I think once I add up the calculations, I'll probably make $4 an hour on this case.

FOREMAN: Yes, yes, that's what everybody says.

What does she do with herself these days?

BAEZ: Well, you know, I stopped representing her in January. It's been a while since we've been in close contact. So, you know, like I wrote in the book she's a prisoner in her own freedom. She does not -- she's not brazen enough to go out to the mall or do things like that. She's basically in hiding and unable to get back into general population.

FOREMAN: I mean, without specifics, in Florida? BAEZ: Yes, she's in Florida.

FOREMAN: Yes. And what about this notion of her checking herself out online, seeing how the image is played? What do you think?

BAEZ: I don't know if they're completely being accurate, the reporting of that. I can imagine -- I can certainly -- I don't see it out of the question for a young 20-something-year-old girl who is locked up in a home to be online. I don't think that's too farfetched.

FOREMAN: You've called her a prisoner of her own freedom, which I guess I understand, with almost any high-profile crime. Essentially your notion is she's really not going to be free, at least not for a long time.

BAEZ: Yes, you know, it's funny in the book I document how this whole thing started and how it's progressed, and how it's gotten so out of control. And there's so many facts that people don't know. And to -- the way the media took a hold of this case and really turned it into something, I don't -- I think people need to know what the facts are.

And people need to be a little more educated as to what this actual case is about, as opposed to just looking or listening to it in a 2 1/2-minute sound bite.

FOREMAN: I'm going to do -- I guess this is a spoiler alert. But I'm going to say, in your book, you don't come up here and say all of a sudden, here's a new theory or yes, she did it, you reassert the idea this was an accident with the pool, that sort of thing?

BAEZ: Yes, and I go into great detail as to the evidence that gives me that opinion. And not only that, I talk about evidence that didn't make it into the trial, evidence that didn't even make it into the discovery. And things that happened around in the backgrounds of the case -- to really give people an inside view. You can tell it's not a skinny book.

FOREMAN: No, it's not.

BAEZ: And it's not short on information, so I don't cheat anyone there.

(LAUGHTER)

FOREMAN: Let me ask you one last question. Are you glad you did this case? Lawyers get all sorts of cases. This is a big, big case.

BAEZ: Well, you know, I've had some tough times in this case --

FOREMAN: People mad at you about this.

BAEZ: Right, and I document a lot of that in there, but I'll tell you this much, you know, I wouldn't be sitting here with you Tom so --

FOREMAN: I can understand what you're saying.

BAEZ: There's a lot to be grateful for --

FOREMAN: Well, thanks for being here. Take a look, if you want to check out the book by Jose Baez, thanks for being here.

BAEZ: Thank you, Tom, for having me.

FOREMAN: OUTFRONT next, a great American story with a kick butt soundtrack.

(COMMERCIAL BREAK)

FOREMAN: Oh, listen to that. Every guitar player on the planet knows that's the unmistakable sound of a Fender guitar in this case in the expert hands of Eric Clapton at Madison Square Garden in 1999. Fenders are so prized by musicians and collectors last month, a rare 1951 Fender Nocaster, as it is called sold for $216,000.

Now, you may think that's crazy, but we guitar players get it. Fenders are just special.

Way back in 1938, Leo Fender opened a radio repair store which he eventually converted into a guitar-making shop, turning out his first Fender Telecaster in 1950, legendary Stratocaster model followed, and rocket into the hands of everyone, from Buddy Holly, to Jimmy Hendrix, to Keith Richards, Elvis Costello, Bruce Springsteen. These days, Fender sales guitars in 85 countries, $700 million worth a year.

This is a great, great American success story. And now, anyone can get a fistful of Fender. Look at Townshend working it out.

For the first time ever, Fender is selling stock. Ten million shares are up for grabs at about $15 a piece. That adds up to $160 million. Fender plans to use the proceeds to pay off debt and to expand overseas. It will be on NASDAQ under the symbol FNDR, if you're ready to rock.

By the way that guy who bought that Nocaster, that's what it's called back then, for $216,000, he could have had 14,000 shares of Fender for that money. But, hey, you know, me? I'd take the guitar myself.

Thanks for joining us. I'm Tom Foreman, in for Erin Burnett.

"A.C. 360" starts right now.