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ERIN BURNETT OUTFRONT

Romney Mum on Loophole Closures; Poll Numbers; Interview with Libertarian Presidential Nominee Gary Johnson

Aired September 10, 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 Mitt Romney says he will use loopholes to cut tax rates for everyone and still cut the deficit. We'll do the math. And tonight, teachers in the nation's third biggest school district are on strike. Do their demands add up? And were Navy SEALs on a specific drug the night they killed Osama bin Laden?

Let's go OUTFRONT.

Good evening, everyone. I'm Erin Burnett. OUTFRONT tonight is Mitt Romney raising your taxes? Well, Mitt Romney and Paul Ryan say they're going to cut individual income tax rates for everyone without increasing the deficit. So in order for that math to add up the campaign has said they will close tax loopholes. In a moment, we're going to show you just how many of those there are because it's actually mind-boggling, but there are a few problems with this logic, like which loopholes and for which taxpayers.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Give me an example of a loophole that you will close.

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: Well I can tell you that people at the high-end, high-end income taxpayers are going to have fewer deductions and exemptions.

UNIDENTIFIED MALE: Don't voters have a right to know which loopholes you're going to go after?

REP. PAUL RYAN (R-WI), VICE PRESIDENTIAL CANDIDATE: So, Mitt Romney and I based on our experience think the best say to do this is to show the framework, show the outlines of these plans and then to work with Congress to do this.

(END VIDEO CLIP)

BURNETT: All right, so their plan is to work with Congress after the election to determine which loopholes to close. Now, Chris Christie famously campaigned on that in New Jersey. I'm not telling you what I'm going to cut. Once I get in office I'll do it and he won and he actually went in and cut, but this is politically dicey for the presidential election since voters like to know if their president is planning to sock it to them on taxes. So just today a new CNN poll found that 51 percent of voters think President Obama would better handle their taxes compared to 46 percent for Governor Romney.

The Obama campaign has been out aggressively saying Mitt's plan will raise taxes on the middle class. Now, they're referring to an August study from the bipartisan Tax Policy Center which concluded that eliminating popular deductions for the wealthiest Americans won't generate enough money to make up for their 20 percent tax cut, so as a result, middle class families will get a net tax increase in order to keep revenue the same, which Mitt Romney has promised. Now the truth is though is that the math is really hard to do without knowing more of Mitt's plans because when you see these numbers that we're about to throw up you're going to say OK there has to be a way.

So here's the bottom line. In 2011, the United States of America took in about $1.1 trillion in income taxes. These are individual income taxes. OK, but look at the bottom number below it. I mean, this makes my jaws drop. Total tax breaks, credits, exclusions, exemptions, that's your mortgage interest deduction, your state and local taxes. More money than we took in. OK, whatever you think about specific deductions, this screen is everything you need to know about how our tax system is really broken, $1.3 trillion in deductions.

So ending the state and local deduction alone would be $862.2 billion, according to the CBO. The mortgage interest deduction, $214.6 billion. Now, those are exactly the deductions that Mitt Romney himself said he'd cut at a closed door fund-raiser back in April. A reporter at the event wrote quote "Mitt Romney said I'm going to probably eliminate for high income people, the second home mortgage deduction, Romney said, adding he would also eliminate deductions for state income and property taxes as well."

Note he made it clear it's for higher income people that he wants to get rid of some of these deductions. Now Mitt Romney's defenders are saying that given the fact that there are more deductions than taxes in this country they can make the math work, so can they? Well one of them is Doug Holtz-Eakin. He is the former director of the CBO, also of course was an adviser for John McCain. We're also joined by Tim Punke, Democratic strategist and John Avlon, columnist at "Newsweek" and "The Daily Beast". All right, let me start with you, Doug, and just go through the math --

UNIDENTIFIED MALE: Sure.

BURNETT: -- with you and then bring in Tim and John. So go through your math as to why you think Mitt Romney can make this work even though the Tax Policy Center and others say that he can't.

DOUG HOLTZ-EAKIN, FORMER MCCAIN ECONOMIC ADVISER: I mean the Tax Policy Center has to be wrong because we know from the Bowles-Simpson Commission, you can have a rate structure just like Governor Romney is proposing and raise revenue. And the example I give was to take the rate structure he's proposed, preserve some of the savings investment incentives and then look at the revenue losses that would prevail. That's about 145 billion for those households making more than 100,000. Then you get rid of all of their exceptions, so go to the limit and as you point out, there's an enormous amount of itemized deductions out there. You get rid of those deductions. You raise $200 billion, so already you're in the black on this. And then there's the real goal of having the economy grow better. That's the main reason to do this tax reform. My guess is that if we got the growth that this tax reform would produce, we'd get another 25 billion from high-income Americans because they'd both make more and there would be more high-income Americans. So there is no question that you can do the kind of reform that the governor is proposing without raising taxes on middle income Americans. In fact, you could give them a bigger tax cut yet.

BURNETT: All right, so a couple of things some people are going to say, critics. They're going to say all right, what kind of growth are you assuming? It's going to be something stratospheric and unreasonable. What is the growth that you're assuming?

HOLTZ-EAKIN: You're getting a bump to three percent. We just need to grow -- we're growing at 1.5 percent right now, so it doesn't take very much to grow better. And I guess the second point that's going to come up right away so we might as well talk about is you know, can this really get done and there -- I think it's important to recognize that next February, the U.S. income tax will be 100 years old and in those 100 years, we have less than one handful of genuine comprehensive reform, so as a going in proposition, tax reform is hard. It's not that Governor Romney's tax reform is hard. Tax reform is hard. And the only way to get it is to run on it and tell the voters you're going to do it.

BURNETT: All right, so when you say and this is the crucial thing when we get to which loopholes, right, when you say you're going to lose 145 billion for the tax cut and then you're just going to get rid of loopholes for the wealthiest Americans, which you've defined as over 100,000 for singles, right?

HOLTZ-EAKIN: Yes.

BURNETT: OK, so when you get that 200 billion, what are you closing? What loopholes are you eliminating for the wealthiest Americans because this is --

HOLTZ-EAKIN: Their itemized deductions from soup to nuts --

BURNETT: So everything --

HOLTZ-EAKIN: You take the itemized deductions --

BURNETT: -- the mortgage interest, state and local, health care --

HOLTZ-EAKIN: Sure, all the things you showed --

BURNETT: -- capital gains, everything.

HOLTZ-EAKIN: Yes. And so the lesson there is you don't have to eliminate them all. You can cap some. You can judiciously pick ones you want to preserve, but the whole notion of tax reform is to say boy, we have to stop micro managing people's lives (INAUDIBLE) tax code. Let's have a broad flat base that doesn't pick among different activities and then we can lower the rates. That's better economics and that's why you get better growth.

BURNETT: All right, so, Tim, let me give you a chance to respond. Now that Doug has laid out his math of why he thinks he can make this work, what do you think?

TIM PUNKE, DEMOCRATIC STRATEGIST: Well, look, a couple of things. First of all, what the Tax Policy Center said is that the math from some of these studies that I think Doug is probably referring to or talking about doesn't include all of the Romney tax cuts, so you're not necessarily including things like the estate tax, which it also benefits the wealthiest Americans. The second thing is if Doug's position is also the Romney campaign's position then he's just laid out a very clear choice because what he said is basically by getting rid of things like the mortgage interest deduction or taxes -- tax deductions for health care benefits, you are going to raise taxes on middle income earners.

BURNETT: Well he's saying he's only getting rid of them for the wealthiest Americans.

(CROSSTALK)

BURNETT: He said --

UNIDENTIFIED MALE: Correct.

BURNETT: Right.

UNIDENTIFIED MALE: Correct.

BURNETT: So no not for -- middle income Americans would still keep them --

UNIDENTIFIED MALE: Right.

(CROSSTALK)

BURNETT: -- different than what you're saying, right Tim?

(CROSSTALK)

PUNKE: What President Obama said is no tax increases for people making under $250,000 a year --

BURNETT: But how are they going to get --

PUNKE: What I think Doug is doing --

BURNETT: How are they getting a tax increase --

(CROSSTALK) BURNETT: I'm sorry --

(CROSSTALK)

UNIDENTIFIED MALE: No, that's not true.

BURNETT: I'm just -- I'm not -- if they get to keep the deduction that they have and he's giving them a 20 percent tax cut, how is that a tax increase?

PUNKE: No, but what -- I mean what he's saying is that the mortgage tax deduction and other deductions are going to go up --

UNIDENTIFIED MALE: For high --

BURNETT: No, no, for higher income Americans --

(CROSSTALK)

UNIDENTIFIED MALE: Yes.

PUNKE: -- what that means --

(CROSSTALK)

PUNKE: -- including Americans over $100,000, which what that means is the average middle class American, somebody making over $100,000 or $250,000 their taxes are going to go up. That is the math. Now, you can get rid of all those deductions if you want, but you're effectively paying for wealthy tax deductions on the backs of middle class earners. I mean that is what --

BURNETT: That's how you're defining middle class --

(CROSSTALK)

PUNKE: -- the non partisan Tax Policy Center is saying.

BURNETT: Now Doug, to Tim's point though when you're saying over 100,000, I want to make this very clear for people watching. You're not talking about families earning over 100,000. You're talking about individuals, so families earning double.

(CROSSTALK)

HOLTZ-EAKIN: Yes, I mean so I guess I'm confused by Tim's contention. I mean this is a calculation that is strictly focusing on the reported incomes and the IRS data for those over 100,000, $200,000 and as a result, doesn't say anything about eliminating those deductions for middle income Americans. This is simply addressing the assertion, which is incorrect that you cannot have a tax reform that lowers rates at the top end by 20 percent across the board and eliminates enough deductions and generates enough growth that you will lose revenue. That's just not true.

BURNETT: And John Avlon, let me bring you in here because separate from this conversation, let's just say you were going to get rid of all the loopholes for the wealthiest Americans. How is that going to politically happen? I mean maybe what the Tax Policy Center is saying well some of these is not going to be reasonable to get rid of given the political environment we're in. That's why the math doesn't work.

JOHN AVLON, CNN CONTRIBUTOR: Right and of course, that's the reality we've seen with this divide and dysfunctional Congress. We can't get anything through, let alone a comprehensive plan. Look we've seen this before. In 1986, Reagan worked with a Democratic Congress and they got a comprehensive tax reform through. And the only way you can lower rates, but you've got to close loopholes and that can actually help generate some revenue. Part of the problem here is this is a political document. Mitt Romney initially wasn't campaigning on a 20 percent tax cut.

BURNETT: Right.

AVLON: That came during the primaries. He was getting moved on by the right, so he came up with a new plan.

BURNETT: You're thinking he felt pushed to give more --

(CROSSTALK)

BURNETT: -- than it was maybe reasonable.

AVLON: Absolutely and then he's had also to be consistent with his deficit reduction numbers. He said it had to be revenue neutral, so he's in a box. Look bottom line, a serious plan requires specifics and that's why (INAUDIBLE) talking about specific loopholes is frankly necessary. You can't kick that can until after the election.

BURNETT: All right, well thanks very much to all three of you. We appreciate it. This is a conversation that is going to continue around this country for the next couple of months.

All right OUTFRONT next new presidential polls just out, plus third party candidate Gary Johnson OUTFRONT, who can he hurt more on Election Day, Barack Obama or Mitt Romney? And later, a Navy SEAL tells the story of the night his team killed Osama bin Laden, but did he reveal an unknown drug issue in the military? And should Jessie Jackson, Jr. return to Congress following his battle with bipolar depression? His close friend gives a surprising answer.

(COMMERCIAL BREAK)

BURNETT: Our second story OUTFRONT the president gets a bounce. Our brand new CNN/ORC poll shows President Obama with an edge among some key voters on several crucial issues. OUTFRONT tonight John King at the "Magic Wall". All right, there are some pretty amazing results here. He really did get a bounce, right?

JOHN KING, CNN SENIOR POLITICAL CORRESPONDENT: He sure did, Erin. Now Republicans are already howling in protest. They're questioning our numbers. They're questioning our methodology. But let's look at it because the president did get a bounce out of his convention. First let's look straight up at the horse race. Likely voters, those who can pass the screen likely to vote in November, the president now with a six-point lead, 52-46 over Governor Romney. Coming out of the Republican Convention, we had an exact tie. Going in to the Republican Convention, we had a statistical tie, so the president now ahead after several weeks of it being a dead heat and a tie.

So you ask what's driving the numbers? When you see a number like this, here's one Erin that jumps out at me. If this one sticks and I suspect the Romney campaign says there's some sugar high here, Democratic enthusiasm. This one would be stunning if it sticks, but look at this. This is among men. Democrats traditionally win among women. The president is now tied, a little bit ahead, one point ahead, but that's a tie with Governor Romney who was up a dozen points heading into the Democratic Convention among men, so watch that number when we see more polls come out.

So you mentioned issues. Issues are what drive the poll. Remember the focus at the Democratic Convention. What was it on? One of them was who's most in touch with the middle class? The president now with a 20-point lead. That is whopping, a 20-point lead when voters were asked which candidate is most in touch with the middle class, it was only a six-point edge heading into the convention. Let me zoom back down to the state of Ohio. Here's another one to look at here.

Remember during the convention, a lot of conservatives were saying the Democrats were overplaying their hand with so much talk about abortion rights, so much talk about same-sex marriage and yet, coming out of the convention, which candidate best shares your values, the president with a seven-point lead. Heading into convention season, this is just before the Republican Convention, Erin. They were tied on that. So the president wins on that one. And look at this report card. Imagine a family torn about the candidates, sitting around the kitchen table saying well who do we like on different issues. Tie on the economy. Governor Romney can't win the election if he's tied with the incumbent on the economy.

Foreign policy, Medicare, health care and taxes, all big themes at the Democratic Convention. The president has an edge. Governor Romney leading only on the deficit. And Erin, from time to time we get complaints from people saying what about the third party candidate, so for the first time, we asked likely voters what if you had a choice between four candidates, President Obama, Governor Romney, the libertarian Gary Johnson, who is the former governor of New Mexico and the Green Party candidate, Jill Stein (ph) and you see a bit of an impact here. The president comes down one point. Jill Stein (ph) gets one point. Governor Romney comes down three points. Gary Johnson, the libertarian gets three points there. I think it's fair to say, Erin, when you give them an option, some of those libertarians maybe Ron Paul supporters a bit lukewarm about Mitt Romney, they might have a second choice in Governor Johnson.

BURNETT: That's right. It certainly looks like that and thank you very much, John King. Perfect guest right now, libertarian presidential nominee Gary Johnson is going to join me. He's on the ballot right now in 43 states. Signatures are still being validated in four. But there are legal challenges taking place in three important ones, which we've highlighted in red, Michigan, Pennsylvania and Oklahoma. Now, Gary Johnson swings both ways. While Republicans fear that he could have an effect on key states like Michigan, Pennsylvania, Iowa and Ohio, some Democrats are actually worried that he could hurt President Obama in New Mexico and Colorado.

For example, in New Mexico, recent polls show the president only leading by five points and among independents in that state, Johnson gets 12 percent of the vote. Of course he is a former governor. Gary Johnson is OUTFRONT tonight. Good to see you sir, really appreciate your taking the time --

GARY JOHNSON, LIBERTARIAN PRESIDENTIAL NOMINEE: Erin, great to be on with you. Thank you.

BURNETT: All right, so, some people out there saying all right look, you can come, you can make your point, but are you going to spoil this election for one of the other? When they say that what do you say? You laugh -- you laugh --

JOHNSON: Well, yes, yes, yes, no, no, not at your face. No, the notion that a wasted vote is somehow voting for somebody that you believe in. Look, for all those people that care about the fact that we continually militarily intervene, let's stop the wars. Let's stop the growing police state in this country. Let's balance the federal budget now. Earlier -- in the earlier segment you were talking about taxes. I'm advocating throwing out the income tax, corporate tax, abolishing the IRS and replacing all of that with one federal consumption tax, the fair tax --

(CROSSTALK)

BURNETT: Sort of a VAT --

JOHNSON: Well not a VAT because a VAT ends up to be just another tax. I'm talking about one federal tax that is the fair tax. For those watching check it out, FairTax.org.

BURNETT: All right and I'm sure some people will. But let me -- Stephen Moore of "The Wall Street Journal" wrote last month, quote, "there's at least one politician at the Republican Convention this week whom the party's undoubtedly wish would stay away. That would be Gary Johnson."

JOHNSON: Well --

BURNETT: Now John King just gave the numbers. He just gave the numbers and said Jill Stein (ph) takes a point from President Obama. But you take -- Mitt Romney goes down by three. You go up by three. I mean it is Mitt Romney it appears on a national level --

JOHNSON: Well no, no, actually, put this to the question in four different states and in two states I take more votes away from Obama. Two states I take more away from Romney and then I just get back to the issues. Who's speaking on behalf of most Americans, which I would argue are fiscally responsible and socially accepting.

BURNETT: Right. I mean Colorado was another state where you really get a lot of -- a vote and that -- I mean this is pot --

JOHNSON: Yes, yes, well -- and it is on the ballot in November to regulate marijuana like alcohol. I think it actually might be the tipping point to 50 states, 50-state dominos that will fall and actually bring about rational drug policy. We'll have to wait and see on that --

BURNETT: And now, what about your view overall when you said fiscally conservative there are social liberals (ph). I'm not just talking about pot. I'm also talking about your views on same-sex marriage, you're for it --

JOHNSON: Well yes, yes --

BURNETT: You also support a woman's right to choose.

JOHNSON: Absolutely.

BURNETT: Do you think that some people that are coming to you are coming as a result of the highly publicized Republican platform, which would deny an abortion in all cases. Is that moving the needle for voters?

JOHNSON: Well I think so. Again I think the world vilifies Republicans for their social stance. I don't think the majority of Republicans fall in that category, but the majority of Republican activists certainly do. And I think that there's a turn-off there. I really do. Having run for governor of New Mexico, having served two terms as governor of New Mexico in a state that's 2-1 Democrat, I just think it speaks volumes that I got reelected in a state by being a penny pincher really. Erin, I may have vetoed more bills than the other 49 governors in the country combined and I really took some stands when it came to civil liberties.

BURNETT: All right, well thank you very much, Governor. Good to see you.

JOHNSON: Thank you very much. Great to see you.

BURNETT: We appreciate it.

JOHNSON: Thanks.

BURNETT: All right, well OUTFRONT next, how politicians are getting in the way of the 9/11 memorial at ground zero and dramatic dash-cam video just released from the scene of the deadly shooting at the Sikh temple in Wisconsin.

(COMMERCIAL BREAK)

BURNETT: Now tomorrow marks the 11th anniversary of the September 11th attacks and the day will be dedicated to the victims and our nation's emotional recovery, but today most of the headlines focused on the physical recovery of New York City, so over the past 11 years we've seen a slow but steady reconstruction of the World Trade Center that will when completed include four skyscrapers, a transportation center and at the base of the buildings, the National 9/11 Museum and Memorial. Now, the eight acre memorial part of the site opened last year on the tenth anniversary of the attacks and since then, more than four million people have visited. The museum part was set to open tomorrow, but apparently, that's not happening, which brings us to tonight's number, 2013.

According to documents filed in July by the National 9/11 Memorial and Museum Foundation, the museum will not open until quote "2013 or later". OK, that's a huge delay and it's a bad thing. Just 15 months ago, the foundation said they were well ahead of schedule to open the museum in time to commemorate the 11th anniversary, so what happened? One word. Bureaucracy. Constant bickering between the port authority of New York and New Jersey and the 9/11 Foundation has brought construction to a halt and it's all about money. The current price tag of the memorial and museum is $700 million with another 60 million needed every single year in operating costs and borrowing a last minute deal, which we're all rooting for, the sides can't agree on who's paying for it.

You've got New York. You've got New Jersey. You've got the port authority. Lots of people fighting and nobody wanting to pay. So whatever you think of the price tag, whether you think it's appropriate or absurd, we're way past the point of arguing about it. Even if there is a last second deal, if our elected officials let it get to this point on paying for the 9/11 Memorial and Museum, what chance is there they're going to be able to work together on some of the other issues facing our country, issues like teacher strikes?

Still ahead, nearly 30,000 teachers are on strike in Chicago. Tonight talks are underway right now. What demand, what specific demand is holding back a deal? And the drug at least one Navy SEAL was on the night Osama bin Laden was killed.

(COMMERCIAL BREAK)

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

Well, CNN has obtained dash cam video of the deadly shooting at the Sikh temple in Wisconsin. The camera inside Lieutenant Brian Murphy's car shows the officer exchanging gunfire with the suspect Wade Michael Page in the parking lot of the temple. We learned today the officer was shot 15 times with 12 bullets hitting him in his bulletproof vest, stopping the other three. Minutes later, another officer arrived at the temple, ands returned fire at Page, bringing him down.

(VIDEO CLIP PLAYS)

BURNETT: Moments later, the medical examiner says Page shot himself in the head after being shot by the officer. The shooting killed seven and injured four others. But Lieutenant Murphy is at home now recovering. Well, an al Qaeda-linked group in Mali is calling the killing of six Muslim preachers a declaration of war. According to a "Reuters" report, an army patrol opened fire on Muslims at a checkpoint this weekend. The government says it's investigating.

But today, we spoke with a Malian refugee named Mamaiti (ph) whom we met when we traveled to the Mali border. He told us that Islamic extremists who have taken over northern Mali has been pushing further south and raiding villages, taking food, money and supplies. Mamaiti (ph) says his family and many others in Mali are in desperate need of food.

Well, taxpayers, get ready to celebrate. You are on track to make money on AIG. The U.S. government is close to shutting its stake in bailed out insurer, AIG, and they're planning to sell another $18 billion in the insurer, which would bring American taxpayers' take to 20 percent from 53 percent.

Now, last week at the Democratic convention, I said taxpayers were in the red on AIG and G.M. but the math looks better and better because right now, if the government were to sell all of their stake, they're not selling it all, so they've got to do it before they formally make money, but right now, AIG is trading near $35 a share. As long as they sell above $28.73 a share, we all are making money.

Now, remember, U.S. taxpayers put about $182 billion into AIG at the beginning. A lot of people thought they'd never get that money back. But now, it most certainly appears that they will.

Well, it has been 403 days since the U.S. lost its top credit rating. What are we doing to get it back?

Well, today, we got some bad economic news. Consumer credit fell in July by nearly $3.3 billion. That's way off the $10 billion increase economists predicted.

Consumer credit had been a source of good news. Today's numbers are the first decrease in nearly a year. But you know what? I'm going to go ahead and give you the other side of that. When there's less credit, it means there's less borrowing. And indebted society, maybe there's a silver lining.

And now our third story OUTFRONT: We have breaking news right now on the Chicago teachers strike. Nearly 30,000 public schoolteachers have walked off the job. That meant 350,000 Chicago students were locked out of school and on the street. Now, we had planned to bring you an interview with the president of the Chicago Teachers Union Karen Lewis, but Lewis just canceled her appearance on our show, saying she's in the middle of negotiations.

Ted Rowlands is following the talks from Chicago.

And, Ted, given what Karen Lewis said, she's going to come on and she can't -- is this an indication that we're close to a deal?

TED ROWLANDS, CNN CORRESPONDENT: Well, Erin, it's a good sign because they have been at it for hours an there wasn't a huge gap leading up to today's discussions. So, the fact that they are still talking into the evening, just got off the phone with both parties and they say they are going until further notice and, quote, "nobody knows how long they're going."

So they are in a room, they are talking and they are still talking. The fact she did cancel with you just moments ago is likely a very good sign that they are productive at least and maybe coming to a solution to end this strike.

BURNETT: And so, let me ask you about something else here. I know you had a chance to speak with the mayor, Rahm Emanuel. What did he have to say? I know he has been pretty angry about this whole situation.

ROWLANDS: Well, yes, he's been the target of a lot of anger. I think that's absolutely sure -- to be sure.

The teachers are in the street. I mean, some of them have posters with Rahm Emanuel's face on him. They feel betrayed by him. He's a Democratic mayor. They feel as though that he has gone anti- union and anti-teacher's union specifically.

He on the other hand, we talked to him today, and in a press conference today, he also reiterated, he said, you know what? I don't care. If you're mad at me, you're mad at me. But this is the line I've drawn and I'm really in it for the kids. He also criticized the teachers saying this was absolutely a choice by them, a strike of choice.

There's a decent deal on the table. He urged them to keep negotiating while they ironed out these last details, and they didn't.

Take a listen to what he said earlier today.

(BEGIN VIDEO CLIP)

MAYOR RAHM EMANUEL (D), CHICAGO: This is not about me and it's not anybody else. Let's focus on what the education system is about. It's about our children -- their learning, their opportunity.

(END VIDEO CLIP)

ROWLANDS: Now, late this evening, Paul Ryan came out and said that he agrees with Rahm Emanuel on this and they're urging the president to weigh in. It will be interesting to see as the pressure mounts. Teachers also want President Obama to weigh in here.

We'll have to see which way the president goes on this. Does he go with his former chief of staff or does he come out with something else more nuanced, which will appease the teachers?

BURNETT: Let me ask you something else, Ted. When we talk about the pay here, which I know is one of the issues, although not the only one. The average salary for a public schoolteacher in Chicago, from our research $75,000. The national average, just about $52,000.

That's a pretty big gap. I mean, has the mayor made the case for having to make more tough economic choices or no?

ROWLANDS: Well, I think one thing that is for sure when you also factor in the average salary in the city of Chicago for full time work is around $35,000, there isn't a lot of empathy in terms of what the teachers are being offered -- a 16 percent raise over the next four years, on that $75,000 average salary. The top end is $89,000.

So I think the mayor does have people ear, if you will, in this area in terms of salary. People do think the teachers are paid fairly here.

What the major sticking point now is this merit pay scenario and that's what teachers say they're totally against. Even though the mayor says they had a deal in place. He claims they're now backing off of that. That's really the sticking point at this point. Not money.

BURNETT: All right. Well, thank you very much. This is going to be an interesting one. Especially given the mayor of Chicago taking a pretty hard line against the unions coming up on the election.

Well, our fourth story OUTFRONT: Ambien abuse? Former navy SEAL Matt Bissonnette is on top of the bestseller list now for his book "No Easy Day". He's one of the SEALs who that killed Osama bin Laden.

And in the book, there was this revelation. The SEALs team used Ambien to function. Bissonnette wrote and I quote him, "I popped two Ambien. My head was still cloudy from Ambien. It took me three times to get out."

In his account, Bissonnette took at least six Ambien between the time he left the United States for the raid and the return flight from Pakistan, which is less than a week later, always two at a time.

Military psychiatrist Dr. Elspeth Ritchie is OUTFRONT tonight.

And, Dr. Ritchie, I think a lot of people were surprised when they heard this. Let me just ask you this question: does this surprise you? Is this -- that the use seems to be so commonplace?

DR. ELSPETH RITCHIE, MILITARY PSYCHIATRIST: Ambien use is fairly commonplace, but in short doses in shorts periods of time. It's often used in the civilian world and the military to have people be able to sleep on the long plane rides so when they get to where they're going, they are awake and refreshed and alert.

The fact that apparently, he was still groggy after taking it, that is a surprise because he should have taken it earlier. It should have worn off and he should have been at full functioning.

BURNETT: He was saying in fact in his book, he said both he and the other SEALs were taking Ambien two at a time. You're not supposed to do that, according to the manufacturer. And he also said specifically on this case, that the day he flew to Pakistan, he tried to get through a gate and had to re-enter the code three times because he was so groggy from the Ambien.

RITCHIE: Well, Ambien is used for people to get to sleep. It wears off fairly quickly, but it will make you sleepy.

Now, I don't know about the two at a time because Ambien comes in five milligrams and 10 milligrams, so I'm not sure how much he actually took, but it does sound like he was taking it too close to the time he need to be able to function.

Now, I'll tell you, it's always a challenge and something the military wrestles with -- how to get people to sleep across these time zones or when they get to a new place and have them be awake and refreshed when they get there. It's not easy, any traveler can tell you that.

BURNETT: No, it's not, but it also raises the broader issue about prescription drug abuse among military personnel. And obviously, that's not what he was saying was happening here. But there have been some other dramatically different stories that we have heard that seem to have involved some sort of sub sans abuse.

How big of a problem is it in the military, whether we're talking about Ambien or something totally different?

RITCHIE: Well, prescription drug use is very controversial in the military. There's been a lot of discussion on whether people should be on antidepressant when they're in theater, war or not. Personally, I think it's better to have somebody treated as they should be treated, rather than say depressed and not getting treatment.

On the other hand, all of these medications have risks, they have side effects. So it's really important to very, very carefully, if you're going to use a medication in a war zone, you need to be absolutely sure that it's right one and that it doesn't have side effects that might get people into trouble.

BURNETT: All right. Well, Dr. Ritchie, thank you very much. Appreciate your time.

Well, OUTFRONT next: Congressman Jesse Jackson Jr. is back in Washington, D.C., after under going treatment for bipolar depression. We haven't seen him in months, but should he return to work on Capitol Hill? Some advice from his close friend, Patrick Kennedy, our guest.

And another political meltdown in China. This is pretty stunning for the nation and for the world's second biggest economy. The country's next leader is totally MIA.

(COMMERCIAL BREAK)

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

And we begin tonight in Vienna, where the head of the International Atomic Energy Agency says he's frustrated with the lack of progress and talks with Iran over suspected development of nuclear weapons. The agency is demanding immediate access to one of the country's military bases.

Matthew Chance is following the story from London and I asked him what inspectors actually think they might find there.

(BEGIN VIDEO CLIP)

MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: Erin, the U.N.'s nuclear chief today delivered a sharp rebuke to Iran for failing to cooperate over its controversial nuclear program. But speaking to ambassadors at the U.N.'s nuclear headquarters in Vienna, Austria, Yukiya Amano, the director general of the IAEA, called on Iran to grant U.N. inspectors immediate access to the Parchin military base near Tehran. That's the place where experiments relevant to nuclear weapons are suspected to have been carried out earlier this month.

The U.N.'s report on Iran said the country had significantly increased its capacity to refine nuclear material and was building up stockpiles of enriched uranium. Iran however insists its nuclear activities are for peaceful purposes to generate electricity for instance, despite growing international concerns -- Erin.

(END VIDEO CLIP)

BURNETT: All right. Thanks to Matthew Chance.

And now we go to Hong Kong, where protesters have won their battle against controversial Chinese education requirements that they say amount to brainwashing.

Ramy Inocencio is there and I asked him how they did it.

(BEGIN VIDEO CLIP)

RAMY INOCENCIO, CNN CORRESPONDENT: Erin, I'm standing here at Hong Kong's government headquarters where for the past 10 days, tens of thousands of protesters were assembled right here pushing back against a proposal for national education reform.

Now, critics have called it brainwashing. The reason for that is because they say that it glosses over key moments in China's history, perhaps most importantly, China's Tiananmen massacre of 1989, that's when hundreds, maybe thousands of people were killed at the hands of China's military.

Now, this controversial proposal would have seen the subject taught in all primary and secondary schools by 2015. But in a U-turn over the weekend, Hong Kong's chief executive CY Leung did a turnaround and said it would no longer be mandatory.

The protesters think that that isn't enough. Still, this is a victory for people power this weekend -- Erin.

(END VIDEO CLIP) BURNETT: Hmm, all right. Interesting development there.

Now, let's check in with Anderson Cooper with a look at what's coming up on "A.C. 360".

Hey, Anderson.

ANDERSON COOPER, CNN ANCHOR: Hey, Erin.

Yes, we're following breaking news tonight, a news that affects hundreds of 9/11 responders. They will now have health coverage for 58 types of cancer. It has taken this long for that decision to come through. Federal health officials expanded the law just today. We're going to talk to Dr. Sanjay Gupta and a former New York City firefighter Kenny Specht who tells what it means for those affected, who worked so hard to protect us all.

In politics, while the Romney campaign is stressing their focus on the economy, seems they may have launched into a kind of culture war. We're keeping them honest on that.

And what are the real issues keeping Americans up at night? We put that question directly to voters, got some surprising answers. Tonight, we'll take a look at one of the top five economic issues weighing on the mind of voters and you hear every candidate plans to fix the problem.

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

BURNETT: All right. Anderson, we'll see in just a few minutes.

And now, our fifth story OUTFRONT. Democratic Congressman Jesse Jackson Jr. is back in Washington, after several week of treatment at the Mayo Clinic for bipolar depression. And though he hadn't been seen since May, it took some time for everyone to understand what really had happened and where he was. And so far, now that he's out of the Mayo Clinic, he's not back at work. His staff said Jackson hoped to be back on Capitol Hill today, but no sign of him so far.

But Jackson's long time friend, former Congressman Patrick Kennedy visited him in treatment and he's been in constant contact with him.

I spoke to him earlier and I asked him how Jackson is doing.

(BEGIN VIDEOTAPE)

PATRICK KENNEDY, FORMER U.S. CONGRESSMAN: He is with his family and he is dealing with a very serious issue that's life threatening. He got great care at Mayo, but as anyone who's been in treatment like myself knows, the world just begins when you start treatment and you start your new life in recovery.

So I encouraged him to take it slow. Don't rush into things. Obviously, it's a transition he's in right now and that's loaded with stress and of course, stress is one of the inducers of mental illness. So he has to be careful about the environment that he's in right now.

But I know he's surrounded by friends and family and that's something that's very good for recovery.

BURNETT: Well, I can relate, we experienced depression in my family. It's hard for people the to recognize it and hard for people who aren't suffering from it to understand how severe and physically painful it can be for someone, you know, who's suffering from it. I know you have experienced this, you still fight it.

But when you were talking there, it made me realize how much you have in common, you know? I mean, your fathers are both lions. You have incredible careers yourselves, but how much have you connected with him over that? I mean, the parallels appear a little uncanny.

KENNEDY: Well, we were both elected the same year. We both sat next to one another for the 16 years I was in Congress. We know each other well. We're good friends.

And, of course, I obviously went to treatment and frankly in the same facility that he just got out of, Mayo. And so, I have been through this journey. And my role in life now is to share my experience, strength and hope with someone who's just starting their journey.

And Jesse is starting this journey. I believe he'll be successful because he's got his family as his priority. He's got his friends and most importantly he has his recovery as a top priority.

BURNETT: What about, though, his future? I mean, he's obviously slated to win easily in November. But what you're talking about is a wrong and incredibly painful process. I can only imagine what it's like what he's going through. People that have this in a somewhat severe fashion, it can take many months and it sounds it will take longer for him.

I mean, does it make sense to be running for re-election, when maybe he should be really staying home and focusing on getting better?

KENNEDY: Well, as I said, I share my experience as someone in recovery. I can tell you, Erin, I told him that my life out of Congress has been among the best time that I've ever had in my life, because I got free from the daily grind and stress of living in the public eye. I still get to pursue my calls of mental health. And Jesse said he wants to pursue that as well. Whether he's in Congress or he's out of Congress, I told him he'll still have a platform and he'll have a mantle to advocate for the issues that he cares about.

BURNETT: Congressman, one point question. And I know this is awkward to ask, but I want to ask it anyway. And that is the former fund-raiser for Congressman Jackson. In exchange for immunity, he said -- Congressman Jackson has said I directed to offer millions of dollars to then-Governor Rod Blagojevich in exchange for, basically, an offer for Barack Obama Senate seat to go to Jackson. That investigation is ongoing. It was heating up right as he sought treatment. Was that part of what brought this to a head, the stress of that?

KENNEDY: Well, as you know, Erin, these are physical illnesses but they are brought on by the environment that we live in. And certainly living in a stressful environment and of course, Jesse is in an added stressful environment because of these investigations. Clearly, he's like any other human being, under immense stress. But having a preexisting, you know, predisposed sense of being vulnerable to mental illness, that mental illness got triggered.

Right now, he's dealing with the physical illness that he's dealing with. But certainly that illness has been compounded by the stress that he's had to live under. Part of his recovery will mean trying to get away clear where he can live a less stressful life.

(END VIDEOTAPE)

BURNETT: All right. And now an OUTFRONT update on the controversial drilling for oil off the coast of Alaska. A day after Shell started to drill, the company just announced it's going to temporarily suspend operations due to ice.

Miguel Marquez, as many of you know, has been following the story for OUTFRONT. He's been out there to the Arctic and joins me live.

What is the update, Miguel?

MIGUEL MARQUEZ, CNN CORRESPONDENT: Well, the big update is that Shell, just literally 24 hours after announcing that they'd begun drilling in the Chukchi Sea, this preparatory well that they were so excited about, had to suspend drilling. They actually took the Noble Discoverer, this rig they had anchored down by several cables in the sea floor and began drilling into the mud of the sea floor so that they could prepare a blowout preventer to be placed in it. They had to stop all of that because of an ice flow.

About 32 miles by 12 miles long, it was -- the wind had changed direction there. It's begun to move toward the Noble Discoverer. They had to disconnect it from its anchors.

The spokesman for Shell says that the Noble Discoverer is absolutely fine. It's safe at the moment. Environmentalists will not be happy to hear about this. People who live up in that area will not be happy to hear about this because they see this as a sign of the weakness of Shell's plan, that you cannot be in this remote difficult environment and expect conditions to be as you might need them to be in order to conduct this sort of drilling operation.

Shell said, look, this is what we prepared for. Everything is working according to plan and at this point, there is no danger to life, limb, property, animals or anything else.

All of that said, this is preparatory drilling, and Shell at this point has to wait for the Arctic Challenger. A whole other barge, a clean-up barge to make its way from Washington to be OK'ed by the Coast Guard to make its way from Washington, all the way up into that area so they can begin real drilling below the 1,500-foot mark which they have been OK to do at this point --Erin.

BURNETT: All right. Thanks very much to Miguel.

And up next, what happens when the most populous country in the world facing a once-in-a-generation power change? All of a sudden, the guy who's going to be running China just disappears. We'll tell you.

(COMMERCIAL BREAK)

BURNETT: Well, China is just weeks away from announcing a new government. But it's another scandal that's actually captured the country's attention, because China's vice president is literally missing -- missing in action. Speculation is growing over the whereabouts of Xi Jinping.

He's not just the vice president now. He's expected to be the next president of China, second biggest economy in the world and most populous country in the world. Last week, he cancelled meetings with Secretary of State Hillary Clinton and according to "The New York Times," the prime minister of Singapore. And just today, he missed a meeting with the prime minister of Denmark.

Now, Chinese officials canceling appointments is not new, but canceling them so last minute is.

So, where is the next president of China? There's some speculation he injured himself but Gordon Chang, an expert on China, told OUTFRONT today that those rumors seem improbable. He thinks this mysterious absence is yet another sign of the instability of China.

The change over of power seeing a lot of problems. The new troubles, of course, come on the heels of the spectacular fall from grace of Bo Xilai, the communist party's rising star who lost power after his wife was detained in the murder of a British businessman. She's been convicted for that.

But the bottom line is this: if China really wants to be a superpower, it needs to end the mystery. Having the next president of your country be missing is more than strange.

Anderson Cooper starts now.