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ERIN BURNETT OUTFRONT

Redistribution in Politics; Steering Clear of Mitt Romney's Comments; Hopes Failing; Super PAC Economy

Aired September 19, 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 "R" word, that's what President Obama is accused of doing, but wouldn't Mitt Romney do it too? Plus, Republicans think they can gain control of the Senate, does it add up? And she called 911 screaming for help, but two days later, her family found her dead. Now, they're suing for justice and they are OUTFRONT tonight. Let's go.

Good evening, everyone. I'm Erin Burnett. OUTFRONT tonight, the "R" word. It's become sort of a four-letter word for some, but for others something wonderful. You've heard it all day -- redistribution.

(BEGIN VIDEO CLIP)

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: He favors redistribution.

REP. PAUL RYAN (R-WI), VICE PRESIDENTIAL CANDIDATE: He believes in redistribution.

ROMNEY: It's known as redistribution.

(END VIDEO CLIP)

BURNETT: OK, the "R" word though takes on different meaning for different people. Here is Mitt Romney's definition.

(BEGIN VIDEO CLIP)

ROMNEY: I know that there are some people who believe that if you simply take from some and give to others that we'll all be better off. It's known as redistribution. It's never been a characteristic of America.

(END VIDEO CLIP)

BURNETT: OK. This word though didn't come out of nowhere, of course, because Mitt Romney was taking a jab at President Obama. A 1998 audio clip of then State Senator Barack Obama has surfaced on "The Drudge Report". He spoke at a Loyola University Conference and made this pitch for more effective government.

(BEGIN VIDEO CLIP)

BARACK OBAMA, ILLINOIS STATE SENATOR, OCTOBER 1998: I think the trick is figuring out how do we structure government systems that pull resources and hence facilitate some redistribution because I actually believe in redistribution, at least at a certain level to make sure that everybody's got a shot.

(END VIDEO CLIP)

BURNETT: OK. What is redistribution exactly? Well, in times like this when a word becomes political dynamite, it's time to go to the dictionary. We went to Webster's and here's what we found. Redistribution: The theory, policy or practice of lessening or reducing inequalities in income through such measures as progressive income taxation and anti poverty programs.

OK. Granted, redistribution can happen in a lot of ways -- Medicare, Social Security, food programs, the list goes on. Some of those anti-poverty programs, but we want to focus on the other part of it -- progressive income taxation. Voters care a lot about their taxes, so here are the facts. Here are our current tax rates. We've got six brackets. You know which one you're in no doubt -- 10 percent, 15, 25, 28, 33 and 35.

Now, the president's proposed plan would keep those four rates the same and raise the last two. So, if you're in the last two, you're at 33, you're going to go to 36 and if you're at 35, you would end up in the 39.6 percent bracket, so the rich would be paying more through progressive income taxation. Makes sense, right? That's what you know the president has said he wants. Some of that money paid by the wealthy subsidizes things for the less fortunate -- in other words, redistribution.

Now, it is very important to note when we did this analysis that if the president keeps a lot of basic loopholes for the wealthy, simple things like mortgages deduction, state and local income taxes, things that by all accounts he's going to keep, their marginal rates would actually be much lower than the 39.6 percent statutory rate. But for simplicity sake, the spread between the top tax rate and the bottom tax rate under President Obama would be about 30 percentage points.

OK. Now, let's take Mitt Romney. He said something rather shall we say pro redistribution recently. He says he would eliminate tax breaks for the rich.

(BEGIN VIDEO CLIP)

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

(END VIDEO CLIP)

BURNETT: Fewer deductions and exemptions for people at the high end. All right, we do not know exactly which deductions are going to go away under a Mitt Romney presidency, but since we're trying to compare Romney to Obama on the basic difference between the top and bottom rates, we did this. We asked the Tax Policy Center, which did the most frequently cited critical report on the Romney tax plan, what would happen if all loopholes went away for people making over $1 million a year.

The verdict from the Tax Policy Center, people making over $1 million a year now paying a tax rate of 35 percent would pay a rate of 44.5 percent. Now of course they would get the tax cut of 20 percent, which Romney has promised everyone, which would bring the rate to about 35.6 percent if you took the 20 percent off that total. The bottom line under Mitt Romney the spread between the bottom tax rate and the top tax rate would be 27.6 percentage points.

Let's hold this up on the screen because again, the spread between the bottom rate and the top rate under President Obama is 29.6 percentage points. Yes, we are getting progressive income taxation, remember, our dictionary definition of redistribution, from both candidates. It's a matter of small degree.

OUTFRONT tonight is John McCormack of the conservative "Weekly Standard" and Stephen Moore of "The Wall Street Journal" Editorial Board. All right, thanks very much to both of you for taking the time and obviously, you know you can run these numbers in a lot of ways. We don't have exact information, for example, from Mitt Romney on what loopholes he would close, so it's an inexact science, but it is safe to say that the conclusion would be both of these people are for redistribution and progressive taxation in some way, right, John?

JOHN MCCORMACK, THE WEEKLY STANDARD: Well I'd actually disagree. The Tax Policy Center is definitely one study, but there's another conducted by an economist at Princeton University named Harvey Rosen (ph) and he has concluded that under plausible growth assumptions that you wouldn't have a net tax burden decrease for the rich and you wouldn't have a tax burden increase for the middle class or the lower class, so this all depends on whether you assume --

BURNETT: OK, but that also assumes --

MCCORMACK: (INAUDIBLE) growth.

BURNETT: Right --

MCCORMACK: And the Tax Policy Center --

BURNETT: I don't want to get into an exact analysis of tax policy versus Rosen (ph), again, what Rosen (ph) assumes is closing every single loophole, which we all know is something that Romney has said he doesn't want to do.

MCCORMACK: No, that's not what he assumes.

BURNETT: He does. He assumes you're getting rid of capital gains.

MCCORMACK: Not every loophole though. He assumes that we -- by getting rid of loopholes for the -- primarily for the wealthy -- I mean again, this is a problem where Romney hasn't been entirely specific --

BURNETT: OK. But hold on -- hold on to my point because we're trying make a point -- we can get into a debate on this, but I don't want to lose sight of what we're trying to talk about, which is you're saying he's getting loopholes -- rid of loopholes for the wealthy, not for others. That's progressive.

MCCORMACK: Well, it, we -- again, we don't have the exact idea here, but that's the whole idea. I think the debate right now is whether we want to distribute the economic pie more equitably, which is the president's plan or Romney's plan is saying let's grow the economic pie. Let's lower the rates for everyone and close some loopholes and they haven't specified those loopholes because there are very powerful special interest groups that will respond very fiercely and bring everything to bear you know to stop that from getting into place. So they're going to wait until after the election and go into Congress, I think that it would be helpful to be more specific, but credit to Romney, he's been a lot more specific on his spending plans, his Medicare reform than President Obama has.

BURNETT: All right, but I want to stick specifically with this point because I mean reading between the lines, it is clear, Stephen Moore, and I think it's very clear that Mitt Romney, whatever words he wants to use to define it or what America he says he wants to believe in, believes in a progressive taxation system. That is clear.

STEPHEN MOORE, WALL STREET JOURNAL: Right, we have a progressive tax system. He wants to make it a little less progressive. I mean, Erin, I'm a radical on this. I think -- I'm with a lot of Americans. I think we should have a flat rate income tax system like Steve Forbes talked about. Let's just have one tax rate. You know you talked about lowering the tax rate somehow is going to benefit only the rich people and that this is some kind of radical idea to close the loopholes and cut the rates. I mean my goodness, Erin, we did this in 1986.

We didn't cut the tax rate to 35 percent. We got the top tax rate all the way down to 28 percent and by the way, after that happened, the share of taxes paid by the rich increased just as they did after '81, after -- in fact after George Bush's tax cuts, the share of taxes paid by the rich increased. We have a highly progressive tax system, Erin.

BURNETT: Yes.

MOORE: Right now the top 20 percent pay over 90 percent of the income tax, so this is a tax system that depends a whole lot on six- figure taxpayers and millionaires and billionaires. We just need more of them if we're going to balance this budget.

BURNETT: All right, but what about this issue when Mitt Romney said -- in the sound bite that we had of him at the top when he said redistribution has never been a characteristic of America.

MOORE: Well that's right. I mean look --

BURNETT: What do you mean, that's right?

MOORE: The Constitution guarantees life, liberty and the pursuit of happiness. It doesn't guarantee happiness. Look, the purpose of the United States federal government is not to redistribute income. We've gotten since the great society started in the mid 1960's we had been doing that --

BURNETT: OK, but tax policy has, right? I mean it's Republicans who put forward the child tax credit. It was George W. Bush who put forward one of the biggest entitlements in American history --

MOORE: Well that's true --

(CROSSTALK)

BURNETT: All of that is redistribution. You may not like it, but it's part of our system.

MOORE: You're right, Erin. You're right. We have a highly redistributed system and this is a big problem with America. I think that's what Mitt Romney should really make as a theme of his presidency, that we now redistribute about a trillion dollars every year, about one-seventh of our economy to people who are not working right now through welfare programs, through food stamps, through unemployment, insurance programs, disability, housing aid. That's a big problem for America. It sounds a lot like what's happened in Europe and look at the problem they're in.

BURNETT: All right, well thank you very much to both of you. I appreciate it. It's a very interesting conversation and one that no doubt is full of frustrations for both sides the left and the right.

Well ahead, Republicans have thought for months they could get back control of the Senate, but have recent gaffes by Mitt Romney shattered those dreams? We have the numbers. And Super PACs are spending so much to get your vote, you've heard about it again and again, but do the agencies charged with overseeing them do their job?

(COMMERCIAL BREAK)

BURNETT: Our second story OUTFRONT, the Romney trickle down effect on the battle for Senate control. So just a few months ago, Republicans were very optimistic that they were going to get the majority, get the Senate. They only had to get four seats, flip them and (INAUDIBLE). That's what they thought. But, if you take a look at this map, these are eight states Republicans were optimistic that they could keep or carry. So here they are. Take a minute. You can look at them.

You see Virginia on there, OK, Connecticut. But now a number of those states are toss-ups with Democrats actually leading in several crucial ones including Virginia, Missouri and also Massachusetts. So, how much of this has to do with Mitt Romney? OUTFRONT tonight senior congressional reporter Dana Bash and Dana, when the races are this tight, I mean it seems like everything must have an effect, whether it be Romney's recent 47 percent remarks on people paying taxes or anything else, right?

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: That's certainly the fear among Republicans who are running in a lot of these races and that is why with regard to this last controversy over Mitt Romney's 47 percent mark, the people who really could have potentially been hurt the most moved very, very fast to distance themselves from Mitt Romney. Just take a look at what I'm talking about. I'm talking about the Senator, Republican senator from Massachusetts, Scott Brown, who you mentioned is already behind even before this.

Linda McMahon (ph), the candidate from Connecticut and Dean Heller (ph), the Republican senator from Nevada. I actually spoke with him for a fairly long time in the hall of the Senate today and he was talking about why he totally disagrees with Mitt Romney and he put it in very interesting terms. I want to put up part of his quote. He said "I don't write any -- I don't write off anybody" and he went on to say "I have five brothers and sisters. My father was an auto mechanic; my mother was a school cook. I have a very different view of the world", meaning a different view of the world than Romney, who suggested of course that 47 percent of Americans are already Obama voters and are you know, on the government dime.

He said to me that he believes that the government has a responsibility to have a safety net for people. And that is something that he said in a very calculated way, wanted to make sure that got out there. Because Nevada is a neck-and-neck state and it is a state that he says he believes his fortunes are really tied to Mitt Romney.

BURNETT: All right, Dana, thank you very much. Showing that this could be a very different world than some people think in a couple of months time. Also OUTFRONT Patrick Millsaps, former chief of staff for Newt Gingrich's presidential campaign and Jonathan Prince (ph), a former senior official for President Obama. All right, Patrick, how much is Mitt Romney hurting these Senate races?

PATRICK MILLSAPS, FORMER CHIEF OF STAFF FOR Gingrich PRES. CAMPAIGN: I don't think we can tell that yet. I think that some of these Senate races you're still seeing what I'm calling the Clinton bump from the convention. I also think that you're seeing an electorate that's finally getting engaged. I mean we've got to remember that "Honey Boo Boo" beat both conventions in terms of ratings on TV. It's not -- it wasn't --

BURNETT: That's just a terribly depressing thing for everybody --

MILLSAPS: It really is --

BURNETT: The left and the right can unite on that one.

MILLSAPS: I lost brain cells saying the words, "Honey Boo Boo". So but I think that you're seeing new polls out that says the people -- the voters that are the most likely or the most interested it's still a very tight race and I think you're going to see that trickle down to these states. You know the state polling is slower than the national polling I think and again, a lot of it depends on specific issues that are happening in states that I don't think the national polling is very effective in determining. BURNETT: All right, so let me ask you, Jonathan, about what's going on in Massachusetts. I mean this is a race everybody watching knows about Scott Brown and Elizabeth Warren. So now Elizabeth Warren really has opened up a lead, 48 percent to 44. Seems like it's probably right outside the margin of error, right exactly at it. But it has been sort of trending in this direction. Still, Scott Brown is a very popular person in Massachusetts, 60 percent popularity. So could the Democrats just get too confident here all of a sudden?

JONATHAN PRINCE, DEMOCRATIC STRATEGIST: Well look there's also a risk in any election of a campaign getting too confident. And it's funny, as you point out, Scott Brown is reasonably popular. It's one of the only elections in the country where both candidates are actually reasonably popular. But if there's any place in the country where the Senate candidate has got serious head wind against them because of the presidential race, Massachusetts, and it's funny because of course it's the state where Mitt Romney was governor.

BURNETT: Right.

PRINCE: Massachusetts is the state where President Obama is probably going to win by 30 points. I just don't see a lot of people are going to be out there voting for Barack Obama and Scott Brown.

BURNETT: So, Patrick, let me ask you about Virginia because we were talking about how the presidential poll, according to "The Washington Post" had now opened up I believe eight or nine percent in favor of Barack Obama. When you look now at the Senate race there, George Allen had been in the lead. Now he's trailing Tim Kaine and this is a pretty wide spread here, 51 percent in favor of the Democrat Tim Kaine to 43 percent for George Allen. Do you think that these sorts of margins are makeupable (ph) at this point?

MILLSAPS: Yes, I think they are. I mean you look at this race in particular; I mean you know when we worked -- when I worked for Newt I mean we went up and down first, last. I mean Donald Trump was the front-runner at one point and these races turn on a dime. I mean if you remember -- to use the Newt analogy again -- when we went to South Carolina, we were kind of hemorrhaging and then Newt had very -- two very good debate performances and we ended up taking the state. So I think that this race beyond anything we've ever seen before, because of Twitter, because of -- I mean 24 hour news cycle, this is however many minutes in a day, I mean that's how quickly news travels. And I think that what this week has down and last week, I think we're finally going to get into some real issues like redistribution versus a conservative grow the economy, what role do public unions play and then foreign policy. I think now that the electorate is going to be engaged -- seems to be engaged I think these are as you said very makeupable (ph).

BURNETT: That was a made up word, makeupable (ph).

MILLSAPS: Well you've coined it.

BURNETT: Thanks to both of you. Appreciate your taking the time. And ahead, despite a woman's pleas to 911 for help, she was found dead and found dead two days later. Her family now holding the police accountable. Plus an OUTFRONT investigation into massive Super PAC spending, are the agencies watching over them failing?

(COMMERCIAL BREAK)

BURNETT: And now our third story OUTFRONT, is the Super PAC economy running amuck? Two major government agencies, the Federal Elections Commission and the IRS are tasked with overseeing outside spending, which as of today totals $360 million so far this election and that's just what's been reported. If you've been watching John Avlon's investigative series all week, you'll know that what's reported isn't always the truth. There is always a dark money that's hiding in the corners. But tonight, you're talking about the watchdog agencies that are supposed to oversee these Super PACs and all their affiliates and they're sitting there toothless.

JOHN AVLON, CNN CONTRIBUTOR: That's right Erin. Look I mean there's this gold rush going on in the Super PAC economy. But it really is like the Wild West. People are pushing boundaries, getting away with anything they can get away with because the laws are unclear and the regulators who are supposed to be laying down the letter of the law, they are toothless watchdogs. They are not doing their jobs and it's adding to the chaos of the Super PAC economy right now. So let's start with the first (INAUDIBLE) group. Federal Election Commission, they're the group that really should be overseeing Super PACs.

BURNETT: Right.

AVLON: Keeping an eye on when there's collusion or coordination between campaigns in the Super PACs. Here's the problem. It's actually (INAUDIBLE) problem in the country. The Federal Election Commission is divided into three Republicans and three Democrats. In the past, they really have to figure out a big issue to be able to work together.

BURNETT: Oh.

AVLON: But you know where this is going.

BURNETT: Yes I have a terrible feeling that I know.

AVLON: They are just reflexively deadlocked 3-3 on almost every issue. And I spoke to Larry Noble (ph), the former general counsel of the FDC, and here's what he told us. "Over the past 10 years or so, he said, you've had a great increase in the 3-3 splits on the commission due to the fact that they won't compromise. And so you have a less aggressive commission." Where have we heard that before? Division leading to dysfunction, that's the story of the FEC these days.

BURNETT: And that's what I like to call the three Cs, you got to compromise. OK.

AVLON: That's right.

BURNETT: So, what are the solutions to this problem?

AVLON: Well first let's talk about the IRS, because that's the other commission. Because of the right role of 501(c)(4)s the dark money organizations we talked about last night (INAUDIBLE) the use and abuse of these tax exempt non profit entities (ph), the IRS should be playing a role, now they don't want to get involved in politics but they've clearly got a problem. In fact here's one measure of the problem. They're only three IRS civil servants in an office in Dallas overseeing the entire review process for politically involved 501(c)(4)s. Three people.

BURNETT: Three people to oversee --

AVLON: Three people overseeing the entire universe of politically involved 501(c)(4)s. That is a fundamental problem and the IRS is actually --

BURNETT: So this is a case where the government may need to get bigger to do its job.

AVLON: (INAUDIBLE) maybe just adopt itself because the rules in place haven't been adopted since 1959. A bunch of organizations wrote letters to the IRS saying you got to get on this. They responded -- to their credit they responded and they said they're aware of the current interest in the issue and they said we will consider proposed changes in the area. But that's not going to happen until after the election. That's part of the problem with the (INAUDIBLE) switch here.

BURNETT: All right, well John Avlon, thanks, and of course then there's always another election and we know what that means. Maybe things will change. Let's pray.

Ahead, a brand new poll just in from a battleground state. Will the lead hold through Election Day and who is in the lead and is President Obama sending mixed messages overseas? And it's the dance craze sweeping the world but be warned this can get you fired.

(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.

And first, the Justice Department's inspector general has released a report on the botched Fast and Furious operation. It found that 14 employees at the DOJ and Bureau of Alcohol, Firearms and Explosive responsible for the failures that led to 2,000 missing guns. Now, they were referred for possible disciplinary action, but not for criminal sanctions.

And this is the thing that's going to get everybody going. The report also found that Eric Holder did not, not, not learn about the operation until early 2011 when Congress began pressing him for information. Soon after the report was released, the DOJ announced the departures of two employees who were found to be at fault. And an actress who starred in the anti-Islam film that led to violent protests in the Middle East is suing the film's producer. Now, this suit was filed by Cindy Lee Garcia. It alleges fraud, invasion of privacy, and misappropriation of Garcia's likeness. Garcia is also suing YouTube and its current company, Google, for refusing to remove the content from the Web site causing what she allegations is irreparable harm.

In an interview with our own Miguel Marquez, Garcia said she didn't know the producer was making an anti-Islam film and thought she was making an adventure movie. Garcia says she has received death threats over the film.

Penn State president Rodney Erickson says the university plans to settle with Jerry Sandusky's victims in the near future. Erickson told "Bloomberg News" the university is working with lawyers on a process to settle ideally all the civil cases brought against the university. Michael McCann of Vermont Law Schools says an indicator for how much each victim might receive is to look at the Catholic Church, which has on average paid $268,000 for every sex abuse claim, or each one. He suspects the university will pay a premium on this case, though, to reach a settlement to try to basically avoid going to trial.

American Airlines in the meantime has canceled about 300 flights since Sunday in part because pilots are calling in sick. Now, this is according to a spokesman for the airlines. The pilots are unhappy with their current labor contract, which includes more flying hours and lets American outsources flights to more partner airlines. Pilots union had new rules imposed on it by a bankruptcy court because they failed to reach a deal with management and the airline this week began sending notices to 11,000 unionized ground workers warning their jobs are at risk.

American says about 4,400 are expected at the end to be cut.

It has been 412 days since this country lost its top credit rating. What are we doing to get it back?

Well, unemployment continues to be a problem. The Congressional Budget Office now estimates that under the president's health care law, 6 million people will pay a penalty in 2016, because they're uninsured. The previous estimate was 4 million, but the CBO had to revise that number sharply higher due to a higher estimate for the unemployment rate.

Well, our fourth story OUTFRONT: the president taking a big lead in the swing state of Michigan. In a new CNN/ORC poll, Obama is ahead of Romney by eight percentage points among likely voters there.

OUTFRONT tonight, John King in Sterling Heights.

All right. So, John King, what is the take away from this poll?

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: The biggest takeaway, Erin, has to be what you call a missed opportunity for the Republican nominee, Mitt Romney. You know, Nevada right now has the unwelcome distinction of being the state with the highest unemployment rate. But before Nevada, Michigan for month and months and months and I could keep going, Michigan had that distinction for so long. Plus, Mitt Romney was born here. He's dad was governor.

If there was one blue state in America that had just the recipe and the right bio mix for Mitt Romney to turn red or to at least turn it to a competitive battleground, you would think his birth state of Michigan would be it. But, Erin, when you look at those numbers, you have to think at least for now, local Republicans haven't given up hope. But this one looks like it's slipping.

BURNETT: And is there something to watch here on the gender divide in the case of Michigan?

KING: Well, that's one of the fascinating things when you look deep into our polls. You mentioned the eight-point lead among likely voter statewide. The president, as he is in many states, is up well and double digits among women, but the president's actually running ahead among men here, 51 percent for President, 46 percent for Mitt Romney.

Now, Mitt Romney leads among white men, which is something you'll find across the country. But this is one of those bigger, diverse states and a state where the president has a huge support, huge edge among African-Americans, Latinos and other minorities help him. If the president's leading in a state among men, guess what? If that's the case on Election Day, he's going to win it.

BURNETT: That obviously is -- it's got to be a very frightening statistic for the Romney campaign.

Another thing, though, John, I just have to wonder. You're in Michigan. You're in the heart of auto land. How much of this spread we're seeing is due to the auto bailout that you've been able to ascertain?

KING: A good amount. There's no question about it. You're seeing this. I heard you talk about this in recent days. It's not huge optimism, but there's beginning to be a bit more optimism among voters across the country, about the future of the economy.

They might not feel great today, but they look a year ahead, down the road, and they're starting to feel a little bit better. Well, this is one of the places where you find that.

I'm just a few miles from G.M. plants, from Chrysler plants, that were shutdown, that were on the brink of total collapse just a few years ago. We stopped by a UAW hall today and I asked one of the workers point blank, do you owe your job to the president? He said yes.

Look at these numbers, in Oakland and Macomb Counties, suburbs statewide, Obama and Romney are running even. But Oakland and Macomb Counties, the home of the auto industry, 56 percent for the president, 43 percent for Governor, 13-point edge in the blue collar Detroit suburbs that are critical to wining any election here.

This is the birthplace, they used to call Macomb County, the birthplace of so-called Reagan Democrats. Union households, the president's up 13 points, Erin. That tells you, the people who used to be Reagan Democrats might break from their party. They vote for, say, Ronald Reagan. At the moment, they're not breaking to vote for Mitt Romney.

BURNETT: All right. Thank you very much to John King.

Well, the United States and China appear to be on a collision course. China has promised to investigate today after protesters swarmed U.S. Ambassador Gary Locke's car in Beijing. He got stuck in a demonstration which was technically taking place over Japan's control over a small group of disputed islands in the South China Sea.

Obviously, though, it was an image which got a lot of people's attention and caused anxiety given actions we've seen in the Middle East against U.S. envoys and ambassadors. The move in China, though, comes as Defense Secretary Leon Panetta wrapped up a very important visit, a crucial visit. He met with the future Chinese president Xi Jinping. And on the agenda, the American military build up in Asia, which China sees as a very direct threat.

There's a very delicate relationship between the United States and China. And in fact, the relationship between the U.S. and all of its allies has become one of the biggest campaign issues of 2012, amid signs that the president could be losing ground when it comes to foreign policy.

We wanted to talk about this poll and stood out to me. Take a look at this NBC/"Wall Street Journal" poll. It shows the president's approval rating on the issue of foreign policy has fallen 12 points among independents.

OUTFRONT tonight, Obama's deputy campaign manager, Stephanie Cutter.

Always good to see you, Stephanie, and appreciate you taking the time.

Does that number in the poll worry you when you look at independents and their approval of the president's foreign policy position?

STEPHANIE CUTTER, OBAMA DEPUTY CAMPAIGN MANAGER: No, I think that poll is actually an outlier. And if you look inside those numbers and the question about who would be better at handling foreign policy and who would you trust to make the best decisions on foreign policy, there's been no change. The results are the president being plus six over Mitt Romney in terms of who would make the better foreign policy decisions.

So, this -- we're not worried about this. I think the American people see the president having a steady hand and a strong vision on foreign policy. We've got a strong record. Whether it's killing Osama bin Laden, ending the war in Iraq, holding, you know, China accountable on trade, to ensure that we're protecting American workers. We've got a very strong record.

BURNETT: So, let's talk about this, though. I'm curious specifically when it comes to the Middle East, because -- you know, as you and I know, Stephanie, there's been a lot of coverage on Romney's response to attacks on the embassy in Cairo. A lot of criticism from the left and the right to Mitt Romney for that -- and that's been a big part of the conversation.

But yet, there's a report today that the United States was warned of an attack on the Egyptian embassy, that it was imminent, two days before it happened. Our Arwa Damon on the ground in Libya has said repeatedly for the past four days that the U.S. was warned three days before the Libyan consulate attack that there would be an attack. If that's true, didn't the administration drop the ball?

CUTTER: Well, Erin, I can't talk about intelligence reports. I'm not in the White House. I'm out here on the campaign. I'll leave that to my colleagues in the White House.

But I do know they said there was no information provided on that in advance of the attack, but they are conducting an investigation to get to the bottom of why those attacks occurred and what they could done to better protect the ambassador and security. So, I'll leave that there.

But in terms of how the president and Mitt Romney handled the crisis, I think the American people have drawn a conclusion that the president handled it like a commander-in-chief, like a leader. And Mitt Romney, you know, shot from the hip. As the president said, shot and aimed later.

By two-to-one I think in a recent Pew poll, Americans believe that the president handled that crisis better than Mitt Romney. So, I think that, you know, that the conversation is going to continue. You know, Mitt Romney in the now famous leaked videotape from the high-end fund-raiser claimed that he would take advantage of a foreign policy crisis. Just like the Iran hostage crisis. You know, I wonder whether or not the Libya statement was an attempt to do that.

BURNETT: And one thing I'm wondering, I understand your point, you're not the intelligence spokesperson so you can't say what they knew or whether there was a failure there. But what about the images? You have to see this, Stephanie, that the protests against America in the Middle East are happening and they're continuing. We're having these attacks, green-on-blue in Afghanistan where Americans are being killed by the Afghans they're supposed to be training. There was an attack in Afghanistan yesterday about this film, supposedly a retaliation for it, that killed 12 people.

As these images keep coming in, and they keep coming in and they keep coming in and are not stopping -- aren't you worried as an operative that people might say, hey, why aren't they stopping? What's my boss doing about it? CUTTER: Well, I think they do see their boss doing something about it. I think we just walked through the results in recent polling, that they do see the president having a steady hand on foreign policy, being strong on foreign policy, protecting America's interest. Obviously, those aren't pictures that we want to see on the evening news, but what's more important is what you're doing about it.

And I think that the American people approved of how the president has handled himself.

BURNETT: And I want to talk about China briefly. So many things foreign policy-wise, I'd love to spend all day. But time is limited. So, let's talk about China.

CUTTER: Yes, I know.

BURNETT: I'm sure you are acutely aware of that and don't get any sleep.

But the Obama administration filed a new enforcement claim against the WTO about China, also rolled out a new television ad saying, look, we're tough on China. Here it is.

(BEGIN VIDEO CLIP, OBAMA CAMPAIGN AD)

AD NARRATOR: Tough on China? Not Mitt Romney. When a flood of Chinese tires threatened a thousand American jobs, it was President Obama who stood up to China and protected American workers. Mitt Romney attacked Obama's decision, said standing up to China was bad for the nation and our workers.

How can Mitt Romney take on the cheaters when he's taking their side?

(END VIDEO CLIP)

BURNETT: All right. So, called China the cheaters at the same time, Leon Panetta had the first ever high level Defense Department visit over there. I mean, isn't that at the least, a mixed message? At the most, hypocritical?

CUTTER: No, I don't think so. I think Secretary Panetta said himself, that it's an important but complicated relationship. And it is. You know, we do have a relationship with China. It's a fairly good one. But that doesn't mean we're not going to stand up for the worker and --

BURNETT: You call him a cheater?

CUTTER: -- and ensure a level playing field.

Well, you know, we wouldn't be taking these trade cases if that wasn't the case. You know, whether it's the tire industry, the automobile industry, auto suppliers, steel.

You know, the president's going to continue standing up to ensure our companies, industries and workers are on a level playing field and that nobody is trying to manipulate the market against them. That's why we have our trade enforcement offices. That's why the president's strengthened our ability to enforce trade laws. And he's not going to stop doing it.

You know, we filed twice the number of enforcement actions against China over the last four years than Bush did in eight years. And that's because the president made it a priority of ensuring that, you know, manufacturing jobs would be created here. That our manufacturing companies could compete globally and our American workers were protected.

BURNETT: I would love to get into it with you and have fun debating that, whether trade with China and being tough on them helps or hurts American jobs -- topic for another day. Hope to have you back. Thanks, Stephanie.

Ahead, her screams went unanswered after a botched 911 call. But now, the family is trying to hold the city and its police department accountable. The victim's sister is OUTFRONT next.

(COMMERCIAL BREAK)

BURNETT: Some good housing news today. Housing starts are up.

According to the Commerce Department, construction of homes and apartments was up about 2.3 percent. You've got to seasonally adjust to get the real number, and that comes out to about 750,000.

Well, single family housing starts alone were up 5.5 percent to annual rate of about 535,000. And you're like, OK, what does all this mean? Well, here's what it means -- it's the best pace since April of 2010, which is why the National Association of Homebuilders reported that builder confidence is really good. Actually, the best since 2006 -- which brings me to tonight's number: 71 percent.

Despite that seemingly good news, we are still 71 percent below the housing start high, which was in January 2006. And despite the single family increase, multifamily start, that's apartment buildings, were down and building permits, which are a very good sign of future construction, were also down. Also, many of the would-be buyers reported difficulty qualifying for the loans and down payments banks require.

The bottom line: the Fed can keep interest rates really, really low. But low rates seem to not be the major part of the problem.

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

ANDERSON COOPER, CNN ANCHOR: Yes. Hey, Erin, we have breaking news tonight. New information tonight about the murder of the U.S. ambassador to Libya, Christopher Stevens, and three others. In a "360" exclusive, y going to hear what he was telling people about the threats against him in the weeks leading up to his death, concerns he had about security there. We'll also speak with Senator John McCain, who's been skeptical about the administration's account of what happened in Benghazi.

Also keeping them honest tonight, debunking the debunk claim. Mitt Romney's campaign today fired back on the leaked secret leaked video saying it had been debunked by "Politico". The only problem, "Politico" says they made no such claim. You're going to hear from Dylan Byers, the "Politico" reporter sources. He'll be on the program.

Those stories and my conversation with Raffaele Sollecito, Amanda Knox's ex-boyfriend and codefendant in her murder trial. He gives a behind the scenes account of what really went on in that four-year-old ordeal.

All that and tonight's "Ridiculist" at the top of the hour, Erin.

BURNETT: All right, Anderson. Really looking forward to that.

Our fifth story OUTFRON: A cry for help ends tragically in murder. Thirty-two-year-old Deanna Cook called Dallas 911 on August 17th. She was begging for help as her ex-husband allegedly attacked her in her home. According to a lawsuit filed by Cook's family today, it took nearly 10 minutes to dispatch police and 50 minutes for officers to arrive on the scene.

Police say they checked the outside of the house, that they spoke to neighbors, and didn't find signs of foul play and then left. But two days later, Deanna Cook was found dead in her bathtub by her sister. Her ex-husband is charged with her murder.

OUTFRONT tonight, Karletha Cook-Gundy, Deanna's sister, and her family attorney, Aubrey "Nick" Pittman.

Good to see both of you.

And, Karletha, I know this has been a difficult month than you probably could have ever imaged. I want to ask you about this lawsuit because I know that police have acknowledged that the 911 call was handled improperly. It wasn't prioritized appropriately, that it never should have happened the way it happened.

What are you hoping to get out of the lawsuit?

KARLETHA COOK-GUNDY, MURDER VICTIM'S SISTER: I think we are hoping to shine a light on the Dallas Police Department. We do understand that they changed some policies, but we would like a culture change as well, the way certain locations are handled or certain people are handled, and we would like for this to never happen to anyone else again.

BURNETT: When you say certain locations or certain people, I want to ask -- I want to ask the question. Do you think your sister was treated differently because she was black?

COOK-GUNDY: I'm not sure, if it was because she was black. I do think it was -- it had something to do with location and, maybe race. But, I just think that there need to be a culture change in the Dallas Police Department on how they handle certain situations and certain people.

BURNETT: So, Nick, is this something where it is gross perhaps bad training or negligence? Or -- I understand there's 75 dispatchers in 1.9 million calls in 2011 in Dallas. Is that just a dramatically underfunded and understaffed 911? Or this something more sinister, where there's discrimination against people who live in certain neighborhoods who -- certain socioeconomic income levels or people with certain races?

AUBREY "NICK" PITTMAN, ATTORNEY FOR DEANNA COOK'S FAMILY: Yes, we believe that there is -- there is a combination of things. There is the understaffing or the 911 call center. There's bad training by the Dallas Police Department in terms of how to handle the 911 calls, how to prioritize them, as well as how to conduct the investigation. We also believe that there are issues with how the Dallas Police Department looks at domestic violence victims.

We know that Ms. Cook had called in before, so police were aware that she was a domestic violence victim. So, there are different ways that they handle domestic violence calls. There are different ways they handle certain neighborhoods. High-crime rate neighborhoods tend to get less assistance or prolonged assistance from the Dallas Police Department and we are unaware of any situation and a more affluent neighborhood where police would take 50 minutes to arrive at the scene.

We were able to find information where police actually stopped at a convenience store prior to the time they arrive at the Ms. Cook's residence, we don't think that would have happened.

BURNETT: A 7-Eleven, right?

PITTMAN: Correct.

COOK-GUNDY: Yes.

PITTMAN: And we don't think that would have happened in another neighborhood.

BURNETT: And, Karletha, what made you decide to go ahead with this lawsuit? I know it's a lot of time, you're obviously going to take criticism from some. What made you decide to be that person?

COOK-GUNDY: We just think that the Dallas Police Department does not take domestic violence situations serious enough. I think that is what we are trying to gain from this lawsuit. We're trying to make it put it out there that it is serious and it needs to be handled differently.

BURNETT: Nick, what changes do you think you can make happen on the domestic violence front? Because it does seem, regardless of race, that many do not complain at all and when they do, they end up going back into the relationships they are in and these awful and tragic endings happen much more often than they should.

PITTMAN: We think that hopefully with this lawsuit, that the Dallas Police Department will start paying more attention to the training that they give their officers, so their officers will know that domestic violence is a serious situation. Over a third of the women who were killed in Texas over the last few years were victims for domestic violence and we think that the police should take it a lot more seriously that they have been doing so far.

BURNETT: All right . Well, thank you both very much. We appreciate you taking the time, Karletha and Nick.

PITTMAN: Thank you.

COOK-GUNDY: Thank you.

BURNETT: Well, the Dallas Police Department told us, they could not comment on a lawsuit today.

Well, next, how the number one song around the world got 14 Americans fired.

(COMMERCIAL BREAK)

BURNETT: Right now, the biggest pop music star in the world seems to unquestionably be the South Korean rap sensation Psy. His song "Gangnam Style" is currently number one on iTunes in 18 different countries. Maybe it's that move.

Yes, that's one of the many exciting moves in this dance. He has made appearances and danced on the MTV Awards, TMZ and the "Today" show, "Ellen" and "SNL". And just today, the YouTube video of his song passed 220 million views.

So, the success of the song has lead to hundreds of parodies, including this one by a group of lifeguards in El Monte, California, that has been viewed more than 1 million times. So, it looks like a bunch of coworkers having a really good time. It's actually really well done video. Unfortunately, their employer, the city of El Monte, doesn't see it that way.

The 13 lifeguards that participated and the poll manager have been fired. In a statement, the El Monte Parks and Recreation Department said the lifeguards made an unauthorized video that used city resources without permission, specifically distinctive red lifeguards swimwear and the poll. But the El Monte 14, as they're being called, aren't going quietly. More than 15,000 people from around the world have liked their Facebook page and hundreds of people turned out at a city council meeting in their support.

After the three-hour meeting, the mayor said, "I'm going to launch an independent investigation."

Or take is -- hey, go ahead and wear the city-issued swimsuit and use the pool, as long as you didn't do it on the company dime and, you know, get paid, hey, let them dance, right? How does it go?

(MUSIC)

BURNETT: Oh, No, I'm not doing that move. I draw the line.

Anderson starts now.