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ERIN BURNETT OUTFRONT

Markets Rally on Jobs Number; Put up or Shut up; Interview with Mark Warner

Aired August 3, 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 stock market reacts big- time to that July jobs report. And Harry Reid not backing down, not even an inch, on claims Mitt Romney did not pay taxes. Tonight, Romney fires back, again.

And baseball legend Cal Ripken Jr. speaks out for the first time since his mother was kidnapped at gunpoint. Let's go OUTFRONT.

Good evening, everyone. I'm Erin Burnett and OUTFRONT tonight the market looking for the slightest bit of good news, got a little bit of it today and surged. The Dow is up 217 points, the reason the jobs numbers for July were better than anyone was looking for. The total number, 163,000 jobs created last month. As you can see, the prediction was 100,000. That's trouncing (ph) in this environment and here's the context.

We need about 125,000 jobs created per month, just to keep up with population growth. So this report does that. But look at the rest of the year. I mean, we haven't been able to clear that hurdle since March. It's been a really grim stretch. So there was a little bit of relief today. The bottom line is this. The American economy only has to add another 316,000 jobs to get back to where it was in January 2009 when Barack Obama took office. Now, that would mean that he breaks even.

But remember, in January of 2009, the economy was in a really bad place, and what he needs to do to make people feel really good, like the economy is recovering, is not just to get -- break even for himself, but to get back to where we were before the financial crisis. And to get there, he needs another 4,700,000 jobs. OK, that's not going to happen before Election Day. That's just a fact, barring some sort of an unforeseen bizarre miracle -- no, not even that.

One thing though that he may be able to do though is to break this streak, that no president since World War II has broken, nobody's been re-elected with unemployment above eight percent. The latest polls, though, show that Barack Obama is ahead of Mitt Romney by 10 points nationwide, and in swing states, which we have up here, it's a lot closer, four percent. So it's still outside the margin of error, but it is closer. He's down four points in those 12 states that are considered battleground by the Pew Research Center (ph).

And in a lot of those crucial swing states, the economy has been getting better. Unemployment is actually now below the national average in many, which of course is not helpful when Mitt Romney's trying to run on an I'm going to be Mr. Fix-it compared to Barack Obama. Jim Steele is co-author of "The Betrayal of the American Dream", former Chief Budget Office Director Doug Holtz-Eakin joins us and John Avlon -- great to see all of you and I really appreciate it.

Doug, I got to say this is sort of a tough order here for Mitt Romney. It's not that things are great or that they're anywhere near where they need to be, but they're getting a little bit better and the polls seem to be getting a little bit worse when you look at it from Mitt Romney's perspective.

DOUGLAS HOLTZ-EAKIN, FORMER DIRECTOR, CBO: Well, I think the key is that today's report might have looked good for the top line jobs number, but if you dig inside it, we did see you know another 150,000 people give up looking for jobs entirely. We did see more people get unemployed. And for those who had jobs, we saw hours of work flat and weekly earnings of production workers actually fall. So the important thing to remember is that the majority of Americans have jobs. And for them, the key is income growth, a better standard of living. We haven't seen that in this recovery. Disposable incomes have grown very slowly and today's report was another report like that.

BURNETT: Jim, you know when Doug raises that point, it brings me to you, your book, "The Betrayal of the American Dream", the lack of income growth, the -- yes, more people are employed than aren't, that was true even at the depth of the financial crisis, but yet the way people feel is very grim, right?

JAMES STEELE, CO-AUTHOR, "THE BETRAYAL OF THE AMERICAN DREAM": It is very grim, but it's not new. And this goes back a long time and that's what the book deals with. So much of our preoccupation has been with the fallout since the great recession of 2008 and so forth. But as we show in the book, and as people we talk to, the middle class has been hammered by policies going back really three decades. The meltdown from 2008 was just the latest of what's been hitting them over and over again.

And this job report, if you were unemployed on June 30th and you got a job in July, of course, this is a great report. But it's not, certainly what the kind of growth everybody would like to see. Will Obama get blamed for this? In my book, he shouldn't be blamed for this. Part of this he inherited a condition that was quite unique in this country. And two, you have a Congress, half of whom members are focusing on deficit reduction.

Deficit reduction is not -- should not be the issue right now. Deficit reduction will never create jobs in this country. So until we get off that and until we realize we need to make some investments in this country, the economy in our book will limp (ph) along, and it's not really his fault. Until you get that kind of backing, you're not going to see any significant growth.

BURNETT: Doug, I know you'll probably take issue with that, with that premise, that deficit reduction will never create jobs.

HOLTZ-EAKIN: I think there's a big difference between deficit reduction and the kind of budget reforms we need to avoid what is an impending debt crisis. And so, there you have to focus on the longer term issue, the big-ticket items like Medicare, Medicaid, Social Security. And if we did Social Security reform, for example, we would have no near-term impact on spending. Retirees would not be affected.

Those near retirement wouldn't be affected, but we would in fact control the explosion of future debt that is the biggest threat to this economy. And that's what we should focus on. I think that's entirely appropriate. It's also appropriate I think to recognize that if you do that you have a lot less pressure on the discretionary spending, which are the core investments, the national security basic research --

BURNETT: OK.

HOLTZ-EAKIN: -- infrastructure, so those are entirely consistent.

BURNETT: What about the perception people have at this moment, though, John Avlon, though? We're talking about in the swing states. Is the economy getting better? Right now you can see that Florida, Ohio, Pennsylvania, getting better, those numbers are overwhelming, 66 percent in Florida, 73 in Ohio, 65 in Pennsylvania.

JOHN AVLON, CNN CONTRIBUTOR: Yes. That is an undeniable sense of optimism about the direction of the country. And the key thing in presidential election years it's the trend. It's the trend. It's whether people feel things are getting better. And in these three states, these three crucial swing states, you see a pretty clear verdict.

And indeed in a state like Ohio, unemployment rate is far below the national average. So these numbers do bear well for the president, despite the fact that he's heading into historic head winds. I mean you know this unemployment rate, if he is re-elected, that will be an historic feat, because traditionally over eight percent should be a deal breaker for an incumbent.

BURNETT: So Doug, what should Mitt Romney do? I mean you know he's got to come out with a clear measure that says OK, it's getting better, and by the way, I celebrate that. I'm not hoping it's worse just so I can win.

HOLTZ-EAKIN: Absolutely --

BURNETT: And here's what I'm going to do and he's come out with this 12 million jobs number which doesn't seem to bear up to much scrutiny, but that's not really the point. The point is what's the clear concise message that he should come out with and say I'm going to do this and it's going to be so much better that you want my vision.

HOLTZ-EAKIN: I think he has to go to Mr. Steele's point. He has to say I can provide for the American middle class. I can make them better off and that's a more than jobs argument. That, in fact, especially in the swing states, is about incomes. It is about the high price of gasoline, which if your income's not growing, matters a lot. That's why food prices are actually going to be a big deal, as we go through the year.

(CROSSTALK)

HOLTZ-EAKIN: And he has to go to those -- yes -- he's got to go to those pocketbook issues and say, look, you might have a job, but we're not getting better. I know how to make this economy grow. That's got to be the argument.

AVLON: But he's got to go beyond bumper stickers. This is the thing. The middle class -- Jim is exactly right -- the middle class has felt squeezed for decades now and that's because they have. And part of that is the growing gap between the super rich and the middle class in America, so it's not just enough just to say, I feel your pain. He's got to say I have a plan. And the problem is and certainly in the last Republican administration, the middle class fell further behind, even while the wealthy were doing well.

(CROSSTALK)

AVLON: So there really does need to be a --

(CROSSTALK)

STEELE: And I think in his tax plan, it just continues to exacerbate the problems facing the middle class and the inequality in this country. I mean, his plan is to cut the income tax rates to 20 percent? I mean, you're going to give a further tax cut to those at this very top? I mean, this is just throwing more kerosene on the fire at this point. I mean, we've had this now for year after year after year, and allowing the 2001/2003 tax breaks to continue, to me, is just outrageous. I mean that is continuing adding to the problem, it's adding to the deficit. It's not doing anything to create jobs in this country.

BURNETT: All right, well, we'll pause there.

(CROSSTALK)

BURNETT: Final word, quickly, Doug, if you can. I know you rebut this.

HOLTZ-EAKIN: I think Mr. Romney has to actually point out that Barack Obama had the House, the Senate, and the White House for two years, he didn't put in place a plan that worked, and so the notion that Mr. Obama's plan is working is wrong, and what's his plan for the second term? Not a word.

BURNETT: Thank you very much. Appreciate all three of you taking the time on a Friday night.

And still OUTFRONT, the day is here, today. It is 365 days since U.S. lost its credit rating and there was a bizarre leap year problem thing going on in this too, so you know, the math was tough, a leading senator, a statesman, OUTFRONT tonight to say we're on the verge of another downgrade.

Plus Mitt Romney escalates his tax talk war with Harry Reid. And Chick-fil-A protested across the nation, but are activists going too far?

(COMMERCIAL BREAK)

BURNETT: All right. Our second story OUTFRONT put up or shut up. That's again a quote from Mitt Romney. He said it for a second time to Senate Majority Leader Harry Reid over accusations that he hasn't paid taxes in a decade.

(BEGIN VIDEO CLIP)

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: Harry Reid really has to put up or shut up, all right? So Harry, who are your sources?

(END VIDEO CLIP)

BURNETT: Senator Reid says his source is an investor at Mitt Romney's former firm, Bain Capital. The two men have been engaged in a war of words over Romney's decision to not release more than two years of tax returns. Senator Reid is not backing down either.

(BEGIN VIDEO CLIP)

SEN. HARRY REID (D-NV), MAJORITY LEADER: The word is out that he hasn't paid any taxes for 10 years. Let him prove that he has paid taxes, because he hasn't.

(END VIDEO CLIP)

BURNETT: All right. Today Mitt Romney denied the allegations, again, as you saw. Political analyst Roland Martin has been following this story for us. He's OUTFRONT along with "National Review" senior editor, Ramesh Ponnuru -- good to see both of you. Appreciate it.

Roland, you know Mitt Romney has said look I have paid taxes every single year. Anyone saying anything to the contrary is wrong put up or shut up. But Senator Reid is not backing down. Why?

ROLAND MARTIN, CNN CONTRIBUTOR: Again, because what they want to do is, is to force Mitt Romney to own up to these potential tax shelters, to reveal the information. And, so, remember, his dad set the precedent when he released 12 years of tax returns. And so Romney is trying to get away with a couple of years, because he doesn't want the scrutiny. And so Reid has jacked up the pressure by throwing this out there and it certainly has caught the attention of the Romney campaign.

BURNETT: Ramesh, I mean have we gotten to a point now where even if Mitt Romney were to say, you know what, I am really, really angry, but the way to stop all of this is to prove all of you wrong, so here's my thousands of pages and -- you know, but can he not put his taxes out now without looking bad? RAMESH PONNURU, SENIOR EDITOR, NATIONAL REVIEW: Well I think it would look weak and it wouldn't solve anything because he'd put out two more years of tax returns, all of the same critics immediately say well why not three, why not four? What's he hiding? They will never be satisfied. And so I think that Romney thinks this is just a political diversion. This is a strategy based on the idea that we're going to get people scared about something in Romney's tax returns and they're not going to focus on the economy, which I think is an absurd strategy that's not going to work.

BURNETT: So what do you think the bottom line is, Ramesh? I mean in a perfect world, Mitt Romney would have done what?

PONNURU: Well look, I think I was in favor of his releasing more, but at the same time, I think this is a trivial issue. And I sympathize with his attempt to just brush off people who are not making good faith demands on him. And in the case of Harry Reid, are telling flatly unbelievable and evolving stories.

MARTIN: Was this actually a -- was it trivial when Newt Gingrich said release it back in the Republican primary? Was it trivial --

PONNURU: Yes, of course it --

MARTIN: -- when Rick Santorum --

(CROSSTALK)

MARTIN: But here's the deal --

PONNURU: Yes, of course it was trivial.

MARTIN: Here's the deal. Here's the deal. You have a number of conservatives who have, on the record, the last two or three weeks saying, look, release the taxes. Because what you do not want, you don't want to go into August and September and October with the same questions. That's why in politics, they say get it out of the way early. And so, you have Romney -- and look, here's the other piece, Erin.

We're talking about getting rid of these tax loopholes, in terms of the rich take advantage of, and so what Democrats are trying to do, they're trying to say, all right, Mitt, did you actually take advantage of this? You know, what was your tax rate and so it's a dance. Is it a policy dance? No. But it certainly is a political one and the GOP will be doing the exact same thing if the shoe was on the other foot and we know it.

BURNETT: Well, that (INAUDIBLE) true.

(CROSSTALK)

PONNURU: It's interesting that Harry -- that Roland is not defending Harry Reid's tactics.

MARTIN: I don't have to. PONNURU: And making the unsubstantiated charges, changing the charges as he goes along, and then saying it's up to Romney to prove that the charges aren't accurate all the while not releasing his own tax returns.

MARTIN: Well, actually, it sounds like you know the people -- that sounds like Donald Trump, who's beloved by the GOP when it came to the birth certificate, even though we actually saw one that was released. Again, this is an attempt to drive Romney's negatives up and to also cast doubt on him in terms of his truthfulness. That's exactly what this is all about. It's called politics and it's called big boy politics and you've got to play it.

BURNETT: I mean, it is ugly, though, Ramesh, I mean right? I mean --

(CROSSTALK)

BURNETT: -- say something if it's not true, if he doesn't have a source that's a legitimate source, it is a pretty horrific allegation to make --

PONNURU: Well, remember, Reid says, first a Bain investor somehow knows Romney's tax returns, which is hard to believe in itself, and told him about it. Now he says --

BURNETT: Well, it could have been a senior partner, right? A senior partner who was aware of some of the tax shelters and --

PONNURU: Hold on, now he's saying that a number of people have told him this, a number of people, which he didn't say the other day. He somehow forgot to mention he had multiple sources. I think he's just making this up.

MARTIN: Well, there's one way to find out. And that is, Mitt Romney, release about five years of tax returns and we'll see or --

PONNURU: Is that -- is that -- is this the new standard --

MARTIN: Hold a second, one second -- actually, the standard is the one his dad set. Release -- his dad was the first candidate to do it --

PONNURU: Wait -- so --

MARTIN: -- so like father, like son.

PONNURU: -- you accept -- you accept you can just make any charge and say anyone in public life prove that I'm wrong.

MARTIN: No.

PONNURU: Is that a standard you can live with yourself?

MARTIN: Well actually -- actually --

PONNURU: Is that a standard -- Harry Reid --

(CROSSTALK)

MARTIN: One second, one second --

PONNURU: You know what Harry Reid isn't paying taxes.

MARTIN: OK. Ask a question and I'll give the answer. It is very simple. It is the standard that many folks on the GOP side used for three years when it came to a certain birth certificate. All I'm simply saying is this here, Mitt Romney use the same standard your dad used. Is that fair?

PONNURU: And at the time did you accept --

BURNETT: Ramesh, Roland raises -- you know what Roland, you were sort of losing me, but you make the point about the GOP did it over the birth certificate, Ramesh, they did.

PONNURU: And what did Roland say about that demand at the time, did he say this is perfectly reasonable or is he --

BURNETT: He may have taken your side completely --

(CROSSTALK)

BURNETT: -- guy ended up having to fork it over.

PONNURU: I said at the time --

MARTIN: Sure did.

PONNURU: -- the birth certificate thing was ridiculous and I'm saying this thing is ridiculous too. It is an attempt to distract people from the actual issues in this election.

MARTIN: And like I said, Erin --

PONNURU: And I think everybody understands that if the party labels were reversed, as Roland pointed out, there's not a single Democrat or liberal pundit who would be defending this below-the-belt tactic on the part of Harry Reid.

MARTIN: And that's politics. The bottom line is if the shoe was reversed, I guarantee --

PONNURU: So why are you playing it Roland --

MARTIN: -- you the "National Review" and the GOP would be all over the Democrats saying release your taxes and you know it.

PONNURU: The "National Review" said that Romney should release his taxes.

MARTIN: OK.

PONNURU: That doesn't make this not a McCarthyite (ph) low blow on the part of Harry Reid.

MARTIN: (INAUDIBLE)

PONNURU: You've got to call these things as you see them, not just for your --

MARTIN: I do.

PONNURU: -- for your team, Roland!

MARTIN: No, no, first of all, I do and I'm calling this politics. And when you play big boy politics this is what you have to deal with --

PONNURU: Is that what you said about the birth certificate? Oh this is just politics? This is just big boy politics?

MARTIN: That's all that was. That's all that was.

PONNURU: I don't believe it.

BURNETT: Ramesh --

PONNURU: I don't believe that's what you said at the time.

BURNETT: Ramesh, I'm --

PONNURU: You're not even saying you did!

BURNETT: Ramesh, I'm curious, though, I mean so say you're totally right, it's nasty, it's silly, it's stupid, it shouldn't have happened, but then it did. And sometimes then you just have to lay things to rest. You got to go out and say, well, here's what it is, even though you're in the right.

PONNURU: Or you can say, look, Harry Reid is making baseless allegations in bad faith. I don't think there is a single voter in America who is going to change his mind about who to vote for, for president on the basis of what may or may not be in tax returns. If voters want to hold that against me, fine. Let's move on. If you want to side with Harry Reid, McCarthyite (ph) lies, fine. If not, I've said what I'm saying on this.

BURNETT: All right.

MARTIN: Had Mitt Romney done what he was supposed to do back in March guess what, Erin, we wouldn't even be having this conversation.

BURNETT: We wouldn't, but you know what it was a very enjoyable one for both of you. Thank you.

And next how good news on the job market is actually forcing a state to lay people off, we're going to explain that one because it's pretty amazing.

And baseball's iron man, Cal Ripken Jr. speaks out for the first time about his mother's abduction at gunpoint.

(COMMERCIAL BREAK)

BURNETT: So at the top of the hour, we told you the unemployment rate ticked up slightly to 8.3 percent, but that's the average across the country. And we were curious about the state of the states. So from the most recent breakdown available, and on a state basis, that's June, the highest rate right now is 11.6 percent in Nevada, the low is 2.9 in North Dakota. Another state that caught our eye was Michigan. At its peak in August 2009, the unemployment rate in the Wolverine state was 14.2 percent.

But between then and now, Michigan has added a lot of jobs, and the unemployment rate is now all the way down to 8.6 percent. I mean that is a plunge, which brings us to our number tonight, 400. That's the number of Michigan state government workers being laid off and their job, literally, was to handle unemployment claims. So at the height of the recession, Michigan received more than 500,000 jobless claims every single week.

So the state hired extra people to process all of those claims. Now, though, with the unemployment rate dropping so precipitously and claims plunging, the staff is getting downsized. There is always two sides to every story. And that's our third story, OUTFRONT, Hall of Fame infielder Cal Ripken Jr. speaking publicly for the first time about his 74-year-old mother's mysterious kidnapping last week.

(BEGIN VIDEO CLIP)

CAL RIPKEN JR., FORMER BASEBALL PLAYER: The law enforcement needs your help. The investigation is moving along. If you know anything about the case, if you know anything about the identity of the person in the photos, the sketch, I would encourage all of you to call in and report what you know. Mom was taken at gunpoint from her own house and she was tied up and she was driven around and for what we know right now, from what I know, we don't know why. And so that's -- it's bizarre on many levels and it's unsettling on many levels. But it's strange, to say the least.

(END VIDEO CLIP)

BURNETT: Maryland police are still looking for a man who they say showed up at Violet Ripken's home on Tuesday, forcing her into her own car and driving off. She was actually found the next morning near her home. She was still in the backseat of the car and her hands were bound. Police released this surveillance video of a suspect at Walmart. They believe that he drove around all day with Cal Ripken's mother. Police are still looking for a motive and have not found evidence of ransom demands. It is a bizarre story.

(INAUDIBLE) it has been 365 days since the U.S. economy got downgraded. Obviously, such a thing could not happen without some sort of commemoration, celebration would be perhaps the wrong word. We have a leading senator who says we could be on the verge of another big problem and a town's police force has its cop cars wiped out by one angry man with a tractor trailer. (COMMERCIAL BREAK)

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

First, according to a report from the U.S. Southern Command, 12 service members brought prostitutes back to their hotel rooms in Cartagena, Colombia. We've reviewed the report and it's only partial and portions were redacted. But we did learn a few things. One service member brought a prostitute back to his hotel room in the first week of April. The 11 others each brought prostitutes back to their hotel rooms on the same night, that was April 11th.

The report also states that national security were not at risk. That all the women were born in Colombia, and all were over the age of 18.

Well, a new report from the CDC is showing an increase in a new strain of swine flu found in humans. Sixteen people have been infected with the influenza A strain of the swine flu in the past three weeks. A total of 29 have been infected since July 2011.

No one has died from the flu and everyone in these most recent cases had contact with pigs, most at county or agricultural fairs. The flu does not actually come from food. It's transmitted like other flus. So it comes from coughs and sneezes and the symptoms are the same.

Officials stress the importance of washing your hands, always good, especially after you use the bathroom.

Well, a Vermont man has been arrested for using a tractor-trailer to drive over seven police cars. Roger Pion was reportedly upset over a recent arrest for resisting arrest and marijuana possession. The Orleans County sheriff's office tell us five marked and two unmarked cars were damaged. The cost was $250,000 to $300,000. Other Vermont sheriff's departments have offered to lend their cruisers to Orleans County, in the meantime.

Well, the ongoing rates manipulation scandal has been widening. This is the manipulation of that key interest rate to which American mortgages are often indexed, it's called LIBOR. In a regulatory filing, Bank of America says it has received subpoenas and information requests from both the Department of Justice and the Commodities Futures Trading Commission.

The bank has also been named as a defendant in lawsuits from investors. There could be other banks involved in this lawsuit, but Bank of America was the one named by name. The Royal Bank of Scotland, meantime, has confirmed that the company has dismissed staff over this scandal. RBS also admitted it's facing lawsuits as well.

Well, it's been 365 days since the United States lost its top credit rating.

It's a sad day. What are we doing to get it back? And it brings us to our fourth story OUTFRONT, because, yes, you did hear right. It's been a year since we lost our top-notch rating. And yet, Congress is in another bitter battle over spending, just like the one that led to the downgrade a year ago. Then, like now, the signs are obvious.

Here's a conversation that I had with Wolf Blitzer last August 1st, just days before the downgrade.

(BEGIN VIDEO CLIP)

BURNETT: This puts the ratings agencies in a very tough spot. We all know, over the past few years, they've lost a lot of credibility by getting the mortgage mess wrong. They want to prove themselves. They've said they need more cuts. They put us on watch for a downgrade.

So, it would seem that the right thing for them to do right now, Wolf, would be to go ahead and do that downgrade.

(END VIDEO CLIP)

BURNETT: All right. Well, sadly we were right about that. Four days later, we know how the story ended.

We've been lucky so far. Despite all the serious problems in this country on debt, the United States is relatively better off than Europe. So, some of the serious pain that can come with losing a credit rating, like paying higher interest rates to borrow hasn't happened yet. It's still ahead of us.

But if history is any indication, it could be years before we get back into safe territory and get that rating back.

The shortest time it has ever taken a country to get back to AAA once they lost it is 10 years. Canada and Finland did that successfully. It took Australia 17 years and Denmark 18.

OUTFRONT tonight, Democratic Senator Mark Warner of Virginia. He's a member of the gang of six who tried, failed to make a grand bargain last year, but he tried and has made a lot of deals and progress with Republicans across the aisle.

I started by asking him how long he thinks it's going to take for America to get that AAA rating back.

(BEGIN VIDEOTAPE)

SEN. MARK WARNER (D), VIRGINIA: The challenge is, if we don't act by the end of the year to avoid the sequester or if we simply kick the can down the road further, we could even see a further downgrade of our debt, which could mean it might be decades before we could get it back.

So, I know there was a lot of folks last year who thought we were a little, you know, the little boy who cried wolf. We said if we don't do this, we'll get a downgrade and it will have a negative effect. We got the downgrade, and we didn't see the stock market reel terribly, but clearly consumer confidence was hit. Then the supercommittee failed, and last fall, and again, we didn't see a real negative effect.

But I do feel like that story of the little boy who cried wolf. The first two times he cried wolf, nothing happened. The third time, and this is the third time with the fiscal cliff, I think if we don't act, we could see not only another debt downgrade, but we could see a real decline in our economy.

BURNETT: Treasury Secretary Geithner was giving an interview to Bloomberg and he was so much more sanguine when he said, look, they're only charging us 1.5 percent to borrow money for 10 years. Look, we've borrowed over $1.5 trillion in the past year and a half since we got downgraded.

You're a senator, you're a businessman. Things can change very quickly when it comes to those rates, right?

WARNER: Erin, we're in pretty good shape until the bond market turns against us. You know, in a strange way, we have not been hit as hard, because Europe has looked even worse.

BURNETT: Yes. And so, let's talk a little bit about that. Because part of the fallout, obviously, as you said, from the debt ceiling debacle and the subsequent downgrade was this the sequester that's now looming. You're in a tough spot given that you're from Virginia, which is such a defense-heavy state.

But if there is a sequester, would you keep it as structured or would you support the shift to say, well, look, let's not make those defense cuts, but make some of them more from the services side of the equation, like some of your Republican colleagues have pushed for?

WARNER: Erin, first of all, I think it's kind of ironic that some of the very congressional leaders who have put together the so- called sequester, these automatic cuts to try to force us to act, who are the ones who are the shrillest, sometimes, about trying to cut back on government spending, are now saying we want to cut back other spending, not this spending.

BURNETT: It is a great irony, yes.

WARNER: It is a great irony. And listen, I don't want to have the sequester. I don't want to have the defense cuts, especially in a state like ours, but there's going to have to be cutbacks. And what I think is rather than just fixing the defense cuts or just kicking the can down, none of this gets any easier. Every day we failed to act, we add $4 billion to our national debt.

Let's come back, brush off our gang of six plan, the Simpson/Bowles plan that raises revenues, looks at our entitlement programs to make changes there so we don't have to make all of these cuts. BURNETT: I'm only going to say this, because I've noticed you're a little bit hoarse, and maybe it's from yelling at people -- you're losing your voice, that they won't actually get this done. I mean, is there a chance -- you were the group of six, you had a deal, you and Tom Coburn have come on this show together, the left and the right and said, look, we have a deal. And yet here we are.

I mean, is there any chance of us getting a grand bargain? Sometimes it feels like, you have a voice of reason like you or like Tom Coburn, and yet we're going to end up going off this cliff, seeing our debt go down further, because nobody's working together.

WARNER: You know, I actually think we will solve this problem. I think the necessity of doing it will force us. Anybody that thinks there's going to be a Democrats-only solution or Republicans-only solution is just not dealing in reality. So there are a large group of us, more than the gang of six. We have about 45 senators saying, we want to get something done. We're going to lay it out.

And you know, when I get depressed, I always go back to that wonderful Winston Churchill quote that said, you can always count on the Americans to do the right thing, after they've tried everything else. Well, we've kind of tried everything else, it's now time for us to do the right thing.

BURNETT: And I know you said you've got a number of new ideas, and I get it, you don't want some of them shot down, because that's how this incredibly polarized environment seems to work. But can you give us a sense of what's in there? I mean, is this just a rehashing of the different packaging of a Simpson/Bowles, group of six, or is there going to be a couple of new things. And if so, can you tell me about one?

WARNER: I think we need to focus on the retirement side, the health care side, to get the kind of sustainable savings hat we need, we've got look not just as Chairman Bernanke of the Fed has said, not just looking the kind of silly way Congress does budgets on a 10-year basis, you've got to look on a longer term, because some of the changes we will be proposing will be phased in over a longer period of time.

So if you get a lot of savings in year 12 or 13, we've got to figure out a way for that count. I also -- this is just my personal view -- believe we need a plan that not only reforms our entitlement code, or our tax code, to generate more revenues, to lower some of our deductions, but we need an approach where every American can find a way to chip in, even a little bit, into the solution set on this problem.

This is an area where --

BURNETT: This is a broad-based kind of concept?

WARNER: Just kind of broadening the base, but with the sense that everybody needs to make some level of contribution. BURNETT: One final question, when you talk about taking everything on and you're someone who's taken the heat, you know, on your own side, stood up for things, Virginia, on this issue of defense. I mean, you know, your state's put out all of this information saying, look, we've got about a million jobs from the defense industry, one of the top three states in the country. The Department of Defense, obviously, is your largest employer vis-a-vis the Pentagon, nearly 20 percent of your state's economy.

So -- but you're willing to say, look, I don't like the sequester, but I recognize the need for more defense cuts. That's a pretty courageous thing to say when I look at your state.

WARNER: The defense budget has doubled in the last decade. We need to make sure that America keeps the strongest defense in the world, but as the former chairman of the Joint Chiefs of Staff said, Admiral Mullen, the biggest threat to our national security is not the terrorists, but this debt and deficit.

So the idea that we're going to be able to exclude any part, I don't want to do the sequester. I think we can avoid the sequester, but not by simply kicking the can down the road, but by actually putting a comprehensive plan.

Let's go where we are really going to solve this. We've got to generate some more revenues and we've got to find a way not to spend as much on the entitlement programs and make sure that they are sustainable over a 20, 30-year period.

BURNEETT: All right. Senator Warner, always a pleasure. Thank you so much.

WARNER: Thank you, Erin.

(END VIDEOTAPE)

BURNETT: All right, next, a new stealth weapon being used in the search for war lord Joseph Kony.

And later, Chick-fil-A gets a big kiss off. But, does it matter?

(COMMERCIAL BREAK)

BURNETT: We're back with our "Outer Circle", where we reach out to our sources around the world.

And on this Friday, we go to Uganda, where one of five prisoners getting treated for a suspected case of Ebola escaped from a hospital. Health Officials are worried that the prisoner's test results, that they could come back positive and who knows what happens from there.

David McKenzie had an exclusive look inside the hospital in Kigali. It's ground zero in fighting over the Ebola virus which has killed 16.

(BEGIN VIDEO CLIP) DAVID MCKENZIE, CNN CORRESPONDENT (voice-over): Plastic overall, aprons, hoods, and a face mask. Not a single inch of skin can be exposed. Touching fluids, a patient, or even an object can put you at risk.

UNIDENTIFIED MALE: If you can't do that, you can rip it.

MCKENZIE: Within 24 hours of the first case, Doctors Without Borders was on the ground.

There is no cure for Ebola. And up to 90 percent of the people who catch it will die. So managing the fear factor is key.

This is the inner-most exclusion zone. Eighty suspected cases of Ebola, two confirmed cases of Ebola. The sickest, too dangerous for us to get close enough to film. There is no treatment. All the doctors can do is give care, all the patients can do is hope.

We're allowed a few minutes inside and have to leave. It's the front line in the fight against the Ebola outbreak. So no risk is worth taking. The goal, to stop the spread in Uganda and even beyond.

(END VIDEO CLIP)

BURNETT: Wow.

Also in Uganda, Secretary of State Hillary Clinton said that she hopes drones will be able to help track down warlord Joseph Kony. He's the leader of the Lord's Resistance Army, which is known for kidnapping children, taking young girls as sex slaves, and disfiguring victims. Clinton made the comments at a military base after a meeting with Uganda's president.

Meanwhile in Washington last night, the Senate passed a resolution condemning Kony for crimes against humanity.

And I asked our foreign affairs reporter, Elise Labott, how the U.S. is trying to help in this effort to catch Kony.

(BEGIN VIDEO CLIP)

ELISE LABOTT, CNN FOREIGN AFFAIRS REPORTER: Erin, finding Joseph Kony is a huge priority for the United States. You'll remember last year that the U.S. dispatched about 100 Special Forces to Central Africa to aid in the search for Kony.

And, of course, there was that video from earlier this year that went viral, really publicizing for people in the United States, the atrocities that Kony had unleashed in the region.

Now, today in Uganda, Secretary of State Hillary Clinton said she hopes that U.S. drones will soon be able to be used in the search for Kony.

Clinton met Uganda's president, Museveni and also visited a U.S. military base, where Ugandan and U.S. soldiers showed her U.S. drones that are now patrolling the skies over Somalia, searching for al Shabaab militants. Clinton hopes those drones will be able to look over the lush vegetation in the region and help in the search for Kony -- Erin.

(END VIDEO CLIP)

BURNETT: All right. Thanks to Elise. That would be an incredible achievement.

And our fifth story OUTFRONT tonight is Chick-fil-A. So, an Arizona man was so outraged against Dan Cathy's position against gay marriage, that he tried to make a point with this video when he went to Chick-fil-A that he posted on YouTube.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Chick-fil-A is a hateful corporation.

UNIDENTIFIED FEMALE: I disagree. I wouldn't -- we don't treat any of our customers differently. We don't discriminate in the hiring process.

UNIDENTIFIED MALE: I know. But you -- but the corporation gives money to hate groups. Hate groups. Just because people want to kiss another guy.

UNIDENTIFIED FEMALE: I must stay neutral on the subject.

UNIDENTIFIED MALE: Sorry?

UNIDENTIFIED FEMALE: I have to stay neutral on the subject. My personal beliefs shouldn't be in the workplace.

UNIDENTIFIED MALE: No, I understand. I believe that too. I don't believe corporations should be giving money to hate groups.

UNIDENTIFIED FEMALE: I'm really uncomfortable that you're videotaping me.

UNIDENTIFIED MALE: I totally understand. I'll take my water.

UNIDENTIFIED FEMALE: It's my pleasure to serve you, always.

(END VIDEO CLIP)

BURNETT: The reaction in YouTube has been overwhelming in support of that young employee. And as gay rights advocates stage a nationwide same-sex kiss day at Chick-fil-A restaurants today, the company responded with this statement. "At Chick-fil-A, we appreciate all of our customers and are glad to serve any of them at any time."

So is Chick-fil-A winning the P.R. fight by not taking the bait?

OUTFRONT tonight, a man who knows Dan Cathy and his family, the Reverend Albert Mohler of the Southern Baptist Theological Seminary. His son also works at a Chick-fil-A restaurant. And CNN contributor L.Z. Granderson.

OK, great to see both of you.

Reverend Mohler, let me start with you. You know the Cathy family. Are you handling this the way you would expect? And did they the acknowledge that they caused a massive firestorm here?

REV. ALBERT MOHLER, PRES., SOUTHERN BAPTIST THEOLOGICAL SEMINARY: Well, they're a wonderful family. And, you know, both Truett and Dan Cathy and the whole family. And the company's been known for standing for Biblical values for a very long time. This is a business that doesn't even do business on Sunday because of their Christian convictions.

They spoke -- in this case, Dan Cathy spoke, as a Christian, to a Christian journalist, about his understandings of marriage, and he had every right to do so, and I think the company is demonstrating the very kind of kindness and winsomeness that you would expect, not only of an American restaurant company, but of people who genuinely love their customers, and are very glad to do business with everyone that walks in and does business with them.

BURNETT: L.Z., has Chick-fil-A sort of prevented people who are for gay marriage and in a gay community from getting traction in the dispute by -- well, not taking the bait? I mean, that young woman was there, whatever your view point on the story, very poised and polite to that man.

L.Z. GRANDERSON, CNN CONTRIBUTOR: Absolutely. She was definitely (INAUDIBLE) and I was embarrassed watching the video. That was not how I think that she shouldn't have been brought up to someone so young, and obviously not a spokesperson to the company.

But to the Reverend Mohler's point, I do think that the family has done a good job in trying to stay above the fray, because of the way that the conversation has been phrased, and characterized thus far. If you're looking at strictly upon what he said, then he absolutely does have a right to say whatever he wants to say. This is America, freedom of speech.

The real issue is where the money is going. That's what we really need to focus in on, because I think once the American people find out where some of those dollars are going and how they're being utilized, I think you'll see why so many people in the LGBT community are upset.

BURNETT: And, L.Z., what do you mean specifically? Are you talking about some of the organizations that, you know, that I've seen have supported, for example, you know, policies, programs, supposedly turn you straight if you're gay?

GRANDERSON: Absolutely. Some of these organizations that receive Chick-fil-A money involve reparative therapy, which have been denounced by every significant mental and health organization in this country. In addition to that, the Family Research Center, as well as the American Family Association have both come out on the record they believe gay people should be thrown in jail in this country. So, those are the sort of organizations supported by the Chick-fil-A money and that should be the main focus in terms of why people are upset, not what he said.

BURNETT: Reverend Mohler, do you think this focus like he's talking about will make your friends change their mind, not about their Biblical beliefs, but maybe about some of these specifics, the reparative therapy, for example?

MOHLER: Well, reparative therapy, by the way, as supported by organizations that Chick-fil-A may have contributed to, or any other credible organization, is simply dealing with persons who come to the organization asking for help in terms of aligning their sexuality with biblical convictions.

This is not something addressed to the homosexual community writ large. This is something that is entirely voluntary, as people come. And as Christians, we believe Christ who redeems us also gives us the power to change. Every one of us is sinners has things we desperately need to change --

BURNETT: Change their sexuality?

MOHLER: Any part of us. No one should suggest this is an easy thing any more than many other forms of our own sins we struggle with, would be difficult to overcome.

BURNETT: But that's crazy.

MOHLER: What's crazy?

(LAUGHTER)

BURNETT: Saying that someone who's gay can just become straight.

MOHLER: No one just said just become.

(CROSSTALK)

BURNETT: Because people around them want to. But to say they can change -- that's where it's OK to be for gay marriage or straight marriage or whatever, but to say that, that's what appears to be -- and, L.Z., I'm curious -- that's what appears to be more hateful.

MOHLER: Well, you put words in my mouth. That's not what I said. I said persons who want to change, I'm confident as a Christian that Christ gives us the power to change. I'm not specifically talking about sexuality, but any --

GRANDERSON: With all due respect, Reverend Mohler, with all due respect though, I mean, some of these individuals do not have a choice. There are children being brought to these organizations by their parents because they've been told as a young child, they're suffering some sort of mental illness. It isn't necessarily someone over the age of 21 who by free will is showing up to these organizations.

We're talking about children. In fact, right here in this network, "ANDERSON COOPER 360" a comprehensive study and show what happened to a young man who was being subjected to this reparative therapy that was being -- done by the gentleman who was in charge of the Family Research Center at the time.

So this isn't just about free will. This is something that's also being imposed to young children who don't have those choices.

MOHLER: We do understand the right of parents in both the terms of the religious liberty and parental responsibility to deal with their children and seek help for their children when it's appropriate.

(CROSSTALK)

GRANDERSON: -- against their mental health.

What about gay people being thrown in jail? What about gay people being thrown in jail, where is that biblical, where is that loving? Where is that love thy neighbor, gay people being thrown in jail and you're funding an organization that wants to say that? Not just one, but two.

MOHLER: Well, I say you say you. I'll simply tell you that an organization with which I am affiliated has never called for incarcerating homosexuals because of their homosexuality.

GRANDERSON: Well, I'm telling you right now, there are two organizations have been funded by Chick-fil-A, by your good friend, that have said exactly that on the record.

MOHLER: I have to look at the comments and context. I will simply tell you that I'm absolutely confident that Christians --

GRANDERSON: What context is it OK to simply thrown in jail for being gay? Why is that OK to say?

MOHLER: I don't think there is an appropriate context. But I do believe that Christians have the right to speak of Christian convictions and I have the right to do so in a way that quite frankly is part of a responsible public conversation.

BURNETT: All right. Thanks to both of you. We appreciate it.

Ands next, a big, big moment for space.

(COMMERCIAL BREAK)

BURNETT: Last year, it looked like NASA was getting out of the space exploration game, but now NASA is giving money for space to private companies. There's a deal now where three companies are going to get a total of $1 billion for new spaceships. Boeing, SpaceX and Sierra Nevada, which has a winged dream chaser. It's pretty cool. It might sound like a lot of money, but NASA wasn't getting the job done cost effectively on its own. Think of this, it spent $63 million a seat to the Russians to ferry astronauts to the space station.

Now, the space station may have outlived a lot of its usefulness and NASA has a new frontier for itself, that's Mars. In November, NASA launched Curiosity, which a probe going to the Red Planet. It's a one-ton robot. Its mission is to find evidence of life. With a $2.5 billion price tag, it is the most ambitious, complicated and expensive mission ever to other planet.

NASA, which is called a descent of the seven minutes of terror, it's what it's calling the descent, is going to use a sky crane to gently land the largest rover ever. Curiosity is basically the size of a Mini-Cooper. It's got a laser and a plutonium power source.

Space fans say it's a must-see event, that's why NASA is going to stream it on their Web site, or if you're in New York, it will be on the JumboTron in Times Square, a number of viewing parties around the country and it will actually touch down on Monday at 1:31 a.m.

"A.C. 360" starts now.