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PIERS MORGAN TONIGHT

Mitt Romney's 47 Percent; Battleground America

Aired September 20, 2012 - 21:00   ET

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


PIERS MORGAN, HOST: Tonight, Mitt Romney's moment of crisis. Is he turning it around?

(BEGIN VIDEO CLIP)

MITT ROMNEY (R), PRESIDENTIAL NOMINEE: Now when it comes to the economy, the president has already thrown in the white flag of surrender.

(END VIDEO CLIP)

MORGAN: If anybody knows presidential politics and a good battle, and how to overcome difficulties like this, it's George Stephanopoulos. Tonight I'll ask the "GMA" anchor and Clinton White House inside how Romney could rise above the fray.

And Robin Roberts, George's sidekick, beginning the battle of her life. How's she doing? We'll find out.

(BEGIN VIDEO CLIP)

ROBIN ROBERTS, CO-ANCHOR, ABC'S "GOOD MORNING AMERICA": I feel the love and I thank you for it.

(END VIDEO CLIP)

MORGAN: Plus, battleground America. Two surprising takes on the 47 percent and what it means. In one corner, anti-tax warrior Grover Norquist and in the other corner, top Democrat Robert Reich.

Plus who is behind the terror attack that killed Ambassador Chris Stevens? Does the trail lead to al Qaeda? I'll ask a man who's put some of the most notorious terrorist in jail. Former Attorney General Michael Mukasey.

This is PIERS MORGAN TONIGHT.

Good evening. Our big story tonight, Mitt Romney giving 100 percent now to move beyond his gaffe about the 47 percent. Listen to the candidate today in Sarasota, Florida.

(BEGIN VIDEO CLIP)

ROMNEY: This is a campaign about all of America, about the poor, we want to bring in the middle class. About the middle class who we want to give a break to. They're -- they're really struggling in the middle class with those higher costs and lower take-home pay. I want to help all Americans and my five points will do it.

(END VIDEO CLIP)

MORGAN: Meanwhile, President Obama facing tough questions in a forum by the Spanish language Univision Network.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: You can't change Washington from the inside. You can only change it from the outside. I'd really like to concentrate on in my second term is being in a much more constant conversation with the American people, so that they can put pressure on Congress to help move some of these issues forward.

(END VIDEO CLIP)

MORGAN: Joining me now with more on our big story, George Stephanopoulos, he's a co-anchor of ABC's "Good Morning America" and host of "This Week with George Stephanopoulos."

George, welcome.

GEORGE STEPHANOPOULOS, CO-ANCHOR, ABC'S "GOOD MORNING AMERICA": Hey, Piers.

MORGAN: Good to see you.

STEPHANOPOULOS: Good to be back.

MORGAN: You're the perfect guy to ask. Because when you were with Bill Clinton you went through great highs and the occasional massive low. Mitt Romney has clearly hit a bit of a buffer moment here. Could be a game-changing moment. Could be an election ending moment in terms of --

STEPHANOPOULOS: Wow. That's going a little far actually.

MORGAN: Is it going too far?

STEPHANOPOULOS: I think it is. I mean --

MORGAN: People are calling it like that.

STEPHANOPOULOS: No, and you don't want you're low to hit in the September before the election, Bill Clinton's lows were more during the primary season, January, February. He was on an ascent going into the fall.

But look, even after all of the hullabaloo over the 47 percent this week, Gallup Poll comes out today, Mitt Romney is picking up a point. It's dead even race. Now the polls are all over the map right now and Mitt Romney is running out of both time and space, but you can't say game ender yet. MORGAN: So all these gaffes -- supposed gaffes, I mean, do you see them as gaffes with your old White House hat on? How significant are these alleged gaffes be?

STEPHANOPOULOS: I think there have been more unforced errors than you would expect from a presidential campaign in the final months. I mean, if you go back to the trip to Europe and the Olympic gaffes, the convention, there were some significant mistakes at the convention, setting aside Clint Eastwood and the empty chair. There didn't seem to be a coordinated message coming out of the convention in support of Mitt Romney and his agenda, going forward. And of course, you know, this tape coming out.

Now you can say, is it a gaffe or is it what Mitt Romney really believes. Whatever it was, they didn't want it out this week in this way at this time.

MORGAN: Let's hear a bit of that tape again. It's becoming notorious. But let's play it to remind viewers who may not have heard it.

(BEGIN VIDEO CLIP)

ROMNEY: There are 47 percent of the people who will vote for the president no matter what. All right, there are 47 percent who are with him, who are dependent upon government, who believe that they are victims, who believe the government has the responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it. That that's -- that's an entitlement and the government should give it to them, and they will vote for this president no matter what.

(END VIDEO CLIP)

MORGAN: See, here's the difficult question for you. When Bill Clinton was fundraising, for example, would he often go harder on the rhetoric, thinking he was in a secure room with people that he could trust, or is this Mitt Romney's big fatal flaw, that he's been caught talking in a different way?

STEPHANOPOULOS: You have just got to assume, when you're in a presidential race, that every single moment is on the record. There is no such thing as off-the-record in a presidential race. Now Bill Clinton -- listen, every candidate makes mistakes. In fact, one time when he was president, President Clinton went before a fundraiser I think it was in Houston and he told the crowd, this was after he'd passed the tax increase, which ended up working, that he thought he had raised their taxes too much, and that was a three or four-day a story that we had to deal with. So it does happen.

I think the problem here is that actually I think you actually left out the most damaging line in that soliloquy. And that was where he said, my job is not to worry about them.

MORGAN: Yes.

STEPHANOPOULOS: That's just like writing off --

MORGAN: I thought that, and also he called them victims.

STEPHANOPOULOS: Well, and --

MORGAN: The moment you start calling half the country victims --

STEPHANOPOULOS: And then when you add to that --

MORGAN: It's a real patronizing pat-on-the-head kind of thing.

STEPHANOPOULOS: But that 47 percent is actually striking right at the heart of many Romney voters, especially the elderly who receive significant amounts of government assistance, Social Security and Medicare. That's why it caused so much trouble for him.

MORGAN: The advantage he has is we're living in a Twitter/Facebook kind of age.

STEPHANOPOULOS: Everything cycles through so fast.

MORGAN: I mean, you must be even in the time that you've been out of the White House stunned by the speed now of the news cycle.

STEPHANOPOULOS: It's completely different. I got to tell you, I wouldn't know how to run a campaign in this environment. Now the good -- the bad news is that anything can hit you at any time. The good news is that it does cycle through the whole news cycle, the whole political cycle, much more quickly.

And you have to say, you look at this race and even as we talk about these unforced errors from Romney the last several weeks, not much moves the needle in this race. That said, even though the national polls, some of them are tied, here's Mitt Romney's real problem. Right now, if you look state by state at the battleground states and you look at a number of polls showing Barack Obama has a fairly solid lead in Virginia, fairly solid lead in Ohio.

He wins one of those states, he's got a very clear path to 270. He wins two, it's almost impossible to see how Mitt Romney can get the 270 electoral votes he needs.

MORGAN: Did the Republicans choose the right candidate? The reason I ask is that, if you look at all the weapons to attack Barack Obama with, there are lots of them. You know, 8.2 percent unemployment, $16 trillion debt, gas prices doubled in his tenure and so on. There are lots of ways you can really go for this president, but he doesn't seem to be doing that successfully.

Would a more charismatic nominee, a Clinton-esque character, one who could make a speech like your man did at the Democratic convention? If they had somebody like that, would they be doing better in the polls?

STEPHANOPOULOS: Well -- if you look back at that primary field that we were dealing with a year ago, watching in debates a year ago, there's no question with the exception perhaps of Rick Perry, who ended up imploding for other reasons, I don't think there was anybody else on that stage who could have gotten the nomination and been competitive in a presidential race.

Now you can look at a lot of Republicans didn't run and wonder what might have been. Mitch Daniels, Chris Christie, some others. But of those on the stage, Mitt Romney had the experience. He had the background as running before. He had the money. He was really -- and this is what got him through the primaries, the candidate who Republicans believed had the best chance of beating Barack Obama in a general election.

MORGAN: So I want to put you in a difficult position, make you a Republican spin doctor for a moment. You're the guy who's been charged now with trying to resuscitate the Romney campaign. You've got him in a room, it's you and him, mano-to-mano. What do you say to him?

STEPHANOPOULOS: You got nothing left to lose. You've got to go out there in the next six and a half, seven weeks, and show people a few things. One, show them your heart, show them your passion. Number two, you got to do a little more and show them your agenda for what you're going to do as president, more specifics. It may be uncomfortable but you've got to give people something to hold on to.

And number three, and this is going to be huge, October 3rd, you can't blow it. October 3rd. You've got to go up on that stage, not make a single error because that will be the story, and you've really got to put the pressure on Barack Obama and try to force that error so, you know, this is -- this is crunch time.

MORGAN: Let's turn to your colleague, Robin Roberts, because it's the day that she had the bone marrow transplant today. How is she doing, do you know?

STEPHANOPOULOS: You know, the transplant went as well, it's transfusion, really, went as well as can be expected. It was about 90 minutes. Robin was there surrounded by friends and family. It was a very kind of calm, smooth procedure. It's really just like a transfusion. Now comes the part where everybody watches and waits and sees how it's going to go. Does it take, does she stay free of infection.

Everything has gone as well as it can have gone so far. We had her doctor on this morning, we'll have her doctor on again tomorrow morning on "Good Morning America" to talk about this, but we're just all having our fingers crossed, sending our prayers to her that these -- that these bone marrow cells take to her body and do the job they're supposed to do.

MORGAN: There's a very moving video that you played this morning which I want to play a bit of here.

(BEGIN VIDEO CLIP)

ROBERTS: This journey is as much about the mind as it is the body. Your thoughts, your thoughts are so powerful. You got to change the way you think in order to change the way you feel. You have to change the way you think in order to change the way you feel. And let me just say this lastly. I feel the love and I thank you for it. Thank you.

(END VIDEO CLIP)

MORGAN: I watched it this morning, it was very, very moving. Incredibly inspiring. She's such a tough lady. But I'll be honest with you, I was shocked by how she looked, how she sounded. She's clearly been through an awful lot with this treatment.

(CROSSTALK)

STEPHANOPOULOS: What she's been through, you have to understand, she's been going through chemotherapy all summer long but the last week has been especially intense. Several days of several hours a day of chemotherapy capped off on Tuesday, 18 hours of chemo to completely wipe out --

MORGAN: Wow.

STEPHANOPOULOS: -- your system so when you see her talking there, you know, she's talking to all of us and is so grateful to everyone, as she said, for their prayers and their love but also talking to herself. You know, this is -- this is very difficult physically to go through right now. Now, you know, what a lot of people who get bone marrow transplants call this day, the day of the transfusion, they call it their new birthday because it's like she's starting all over again with brand new blood, brand new bone marrow cells, and she's going to have to just go one step at a time and build up her immune system, build up that strength again and believe her when she says that everything that everything that everyone is doing for her out in the world makes a big difference.

She draws strength from that and we know that's going to help bring her back.

MORGAN: She's a remarkable lady. Do send her our very best.

STEPHANOPOULOS: Absolutely.

MORGAN: And to all her family and friends and colleagues. It must be strange without her.

STEPHANOPOULOS: It is. It is. We miss her every day but we keep her on our wrists and in our hearts.

MORGAN: That's good to hear. George, good to see you. Thank you very much.

STEPHANOPOULOS: Thank you. Take care.

MORGAN: Coming up, battleground America. Tax warrior Grover Norquist plus this Robert Reich on Mitt Romney's 47 percent.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

ROMNEY: This is a campaign about the 100 percent. So my campaign is about the 100 percent of America. I know that I'm not going to get 100 percent of the vote. I've demonstrated my capacity to help the 100 percent. Because I care about the 100 percent, people in America are going to have a better future if they elect me the next president.

(END VIDEO CLIP)

MORGAN: I think I got the hang of it. The new math from Mitt Romney moving on from the 47 percent to the 100 percent. But does it all add up? That's a question in tonight's battleground America.

And joining me now, Grover Norquist, president of Americans for Tax Reform. Along with Clinton labor secretary and author of "Beyond Outrage," Robert Reich.

Welcome to you both.

GROVER NORQUIST, PRESIDENT, AMERICAN FOR TAX REFORM: Good to be with you.

ROBERT REICH, FORMER LABOR SECRETARY: Thank you, Piers.

MORGAN: So, Grover, I'm struggling here with Mitt Romney's math, because from the tape that we've been watching the last two days, he'd written off 47 percent of the American public. We now seem to have bounced back to 100 percent. So has he decided to completely change plans? I mean what's going on here?

NORQUIST: No, I think what he was earlier saying is that the president was polling at 47 percent, still is. It's going to be a close election. But obviously, pro-growth policies that take us away from the high levels of employment and the $5 trillion of debt that Obama saddled the country with, moving away from those failures are good for everybody in the country. Hundred is quite correct, 100 percent of Americans will be better off if we moved away from the debt and taxes and spending that has made the country in a worse position than it was when Obama took office.

MORGAN: Right. But you're a man who's implacably opposed to any tax increase and yet there was Mitt Romney, you know, your guy, running for president, going public, saying that he thinks 47 percent of the American people aren't paying enough tax effectively. You must have been incandescent, were you?

NORQUIST: Two things. That's not what he said. What he pointed out is look, about half of the country doesn't pay personal income taxes, roughly. However, they pay taxes on Social Security, they pay property taxes, they pay state taxes. If the Democrats think that promising to only tax a few people will make the American people go oh, then they won't tax me, they miss a couple of things. One, 16 days into his presidency, Obama broke that pledge and raised taxes on millions of people. There are eight taxes on the middle class in Obamacare and of course one thing that has been very interesting is the president's changed his promise. Four years ago, wasn't going to raise any taxes on anyone who earned less than $250,000.

September -- August 8th, and since then, new promise. I won't raise your income taxes for the next year. Two changes. Everything other than income tax like a VAT is fair game, and the president's only promising not to raise your taxes for 12 months.

MORGAN: OK. Let me bring in --

NORQUIST: Big deal.

MORGAN: Let me bring in Robert Reich here. What is the reality? Is there any way -- I mean, just treat me like an idiot which shouldn't be too difficult.

Is there any way America can dig itself -- stop nodding, Grover. Is there any way you can dig America out of a $16 trillion debt with all the economic pressures that are going on at the moment, with 8.2 percent of the population unemployed, et cetera, et cetera? Can you do it without increasing any taxation, because from where I sit, I just don't see that is a feasible position?

REICH: Well, I think you're going to have to increase taxes, Piers, on people who are very fortunate in this society, who are very wealthy. That's what the president has said. We're going to also have to cut some spending. Spending that is unnecessary, corporate welfare, some military spending. We do a lot of spending that doesn't actually help average working Americans or the middle class or people aspiring to be the middle class, and that's going to be hopefully the topic of conversation and action by Democrats and Republicans.

We don't know when, however. I mean one of the problems right now as we face this thing called a fiscal cliff where taxes are going to be increasing and also at the same time, very major spending cuts January. Well, you don't want to do that. You don't want to get deficit reduction under way too fast because there's not enough energy in the economy, not enough private spending by companies and also by individuals to keep us going.

MORGAN: Grover Norquist, I listen to George Stephanopoulos earlier, quite interesting. I mean he was actually not saying this has been a terrible time for Mitt Romney. He thinks the race is pretty wide open, the polls are still very close, and anything could happen. What does Mitt Romney need to do, though? From your point of view, you're a very influential figure in the party.

What has he got to do to refocus, to re-galvanize and to try and get the right message over now to win this election?

NORQUIST: Well, he needs to keep saying what he has been saying and force the press to focus on that. For heaven's sakes, in the last couple of weeks, we've seen the entire bump that Obama got disappear and the Gallup Poll has them neck and neck and the establishment press is having a conversation about whether Romney is in trouble. It's Obama's numbers that have been collapsing over the last two weeks. Romney is doing just fine.

He needs to talk about the unemployment which is very problematic, $5 trillion in debt, more money for Solyndra and bailouts. I mean the wasted money, all of that stuff, and focus -- because Chicago gave us this opportunity -- on the president's position towards the education of small children.

First thing that this president did when he came to Washington, D.C. was kill the opportunity for Washington, D.C., young kids, to have scholarships to go to private schools. He killed a program for 1600 people and that is exactly the wrong thing to do. We should be giving those kids an opportunity, took a Republican Congress to make him put it back into place. What Chicago tells us, what the failures of the teachers union tell us is that when Obama chose between young poor kids in Washington, D.C. and the teachers union, it didn't take him 20 seconds to side with the teachers union bosses.

This is not a guy interested in helping giving people a hand-up. He's beholden to the unions and to the union leadership and we're seeing that in Chicago, where 40 percent of the kids don't graduate and that -- we're having a debate whether the Democrats are going to give a 20 or a 30 percent pay increase to the unions that don't even send their own kids to the public school.

MORGAN: Robert Reich, is there merit to what Grover Norquist is saying there?

REICH: I don't think there's very much merit, if any merit at all, Piers. Now look, unions represent in the private sector fewer than 7 percent of American workers. We need more unions. Average working people need more bargaining leverage because even though corporate profits have been going up, wages have been going down. The median wage has dropped for, well, now 10 years.

The typical American -- working American today, if you adjust for inflation is earning less today than he was earning 30 years ago, and if it's a she, only a little bit more. So that's the big problem. That's the big story. I mean Wall Street and corporate America have been doing extremely well on the backs of average people.

I don't -- you know, Grover may want to have a different story here but that's the -- that's the story most people understand. If they haven't lost their jobs, they're still in potential danger of losing their jobs. The president has tried everything. He has a jobs bill in, Republicans will not even touch it. They've said no to absolutely everything.

Well, if you can't just say no, you can't have a -- basically a platform as the Republicans do, as Mitt Romney does, that's full of holes that just says OK, we're not going to -- we're going to cut the taxes of millionaires and we're not going to tell you how we're ever going to close any loopholes for the millionaires. MORGAN: OK --

REICH: The public wants very detailed answers.

MORGAN: We have to take a short break. I can see Grover simmering like a volcano there. So it's a good time to take a break. So --

(CROSSTALK)

MORGAN: Keep him simmering on the bolt until we come back. When we come back, I want to talk about jobs, taxation a bit more and the R word, redistribution.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OBAMA: The most important lesson I've learned is that you can't change Washington from the inside. You can only change it from the outside. That's how I got elected, and that's how the big accomplishments like health care got done, was because we mobilized the American people to speak out. That's how we were able to cut taxes for middle class families.

(END VIDEO CLIP)

MORGAN: President Obama taking his turn in the hot seat in Univision's Meet the Candidates Forum today.

We're back now with battleground American. Tonight with Grover Norquist and Robert Reich.

Grover, I sort of figured yesterday that leapt out at me from the newspaper pages. Home sales jumping to the highest level in more than two years in August, up 7.8 percent, coming at the time the stock market is being roaring up as well, and a small but perhaps significant drop in the unemployment benefits as well, by 3,000. All these are fairly encouraging indicators, albeit in an overall rather depressed economic situation. But the momentum appears to be behind Barack Obama at the moment. You must be worried, aren't you?

NORQUIST: No. If we looked at last -- this month's unemployment numbers, 300,000, 400,000 people left the workforce. Unemployment fell not because the number of people getting jobs, but because the number of people who quit looking.

If Barack Obama's economy had recovered as strongly as Reagan's did from the bottom of the recession, we would have 10 million more Americans at work. Reagan took a different approach, spend less, not more, lower taxes, less regulation. Obama did the opposite. He put 10 million more Americans to work. There are 10 million Americans today, your friends, neighbors and mine, who are out of work that would have worked if Obama had a recovery that looked like Reagan's.

(CROSSTALK) MORGAN: Yes, but how --

REICH: Interesting take on the record.

MORGAN: How would Reagan have got on if he inherited the financial hospital pass George Bush slithered towards Barack Obama?

NORQUIST: Twenty -- 20 percent -- 20 percent interest rates, double-digit inflation, a Soviet Union? I mean, Reagan's position was better than Obama's. I mean for heaven's sakes that the growth that Reagan --

(CROSSTALK)

MORGAN: You're saying the Soviet Union --

REICH: Wait a minute. Wait a minute. Grover, Grover --

MORGAN: Wait a minute. Grover. Grover.

REICH: Can I just -- can I just intervene here?

MORGAN: The Soviet Union was no more of a financial burden on America than Afghanistan and Iraq had been. These are fatuous arguments.

NORQUIST: First of all, they brought out at the same time that Reagan was managing -- ending Carter's inflation policy and 20 percent interest rates and the increase in the cost of energy, turned all that around. He also created jobs at the same time. Ten million more during the same 36 months than Obama has. That's one of the reasons people look at this and the high unemployment rate --

(CROSSTALK)

MORGAN: OK. Robert Reich has raised his hand very politely.

NORQUIST: Sure.

MORGAN: And I think he's entitled to --

REICH: I'm very -- I'm very polite.

MORGAN: To jump in.

REICH: We need more -- Piers, we need more civil discourse on television.

(CROSSTALK)

MORGAN: I totally agree. I love the race fan.

REICH: When Grover Norquist -- when Grover Norquist talks about stuff that he obviously has not idea what he's talking about I've got to hype up. I mean Grover Norquist --

NORQUIST: That's civil?

REICH: The fact of the matter is the Reagan recession was very deep, but it is nothing compared to what Barack Obama inherited from George W. Bush. I mean, the economy fell off a complete cliff. We have not had an economic calamity corresponding to this since the Great Depression.

And it's really amazing that we are doing as well as we are doing given how far and how fast the economy fell in 2008. And it fell on George W. Bush's watch. And it fell because George W. Bush was not watching. His regulators were not watching Wall Street. George W. Bush himself was not watching his budget.

You know, the Federal Reserve Board was not doing its job. I mean, you had an administration in George W. Bush that -- talk about letting the economy go into free-fall. That administration did it. And Barack Obama I think has done a very credible job, in difficult circumstances, getting the economy back on track.

It's still not there, but it is moving in the right direction.

MORGAN: Grover, let me ask you a question. Has any president in the history of the United States ever handed a bigger financial crisis over to the guy that followed him than George Bush did?

NORQUIST: Well, if you look at --

MORGAN: Yes or no.

NORQUIST: Yeah, sure.

MORGAN: Who?

REICH: Herbert Hoover. Herbert Hoover.

NORQUIST: Well, Herbert Hoover took all the same policies -- I mean, FDR didn't do anything that Herbert Hoover didn't do: higher taxes, more spending, more regulations. And it didn't work for Hoover --

REICH: Are you saying that FDR was the same as Herbert Hoover?

NORQUIST: Well, he did -- Hoover took tax rates up to 75 percent from 25. FDR took them up towards 90. He did massive spending. He did all that regulation of the farm industry, nothing particularly new, just a little bit more. And of course, it didn't work --

MORGAN: But Grover -- Grover, an interesting parallel. An interesting parallel.

REICH: That's remarkable.

MORGAN: Wait, wait, wait. Unless my memory's wrong, FDR was the only other president in certainly modern history who ever got re- elected with unemployment over eight percent, because the people believed that he had the right vision going forward to turn things around. Isn't that a very similar position to what we're now seeing?

NORQUIST: It's not, because the president just gave a speech about how the American people demanded Obamacare. As he knows perfectly well, on the day that Obamacare passed, the vast majority of the American people didn't want it. They still want it repealed. People didn't ask for five trillion dollars in additional debt. They didn't ask for the long term unemployment to double.

They don't want the oil prices to double. None of these things are supposed to happen in a declining economy. Oil prices should fall with an economy as weak as Obama has given us.

To hear Robert Reich say that the president's doing fine tells you that the president intends to change nothing, which means nothing's going to get any better --

REICH: Hopefully, the president gets a Congress.

MORGAN: Final word to Robert Reich.

REICH: Well, Grover Norquist, I hope the president gets a Congress that is a little bit more cooperative. It's not that he has done everything he could do or should do. He tried to do a lot, and the Republicans completely said no.

The parallel with Franklin D. Roosevelt and what he inherited from Herbert Hoover is very important to understand. Herbert Hoover said we want smaller government, we want basically a laissez-faire government. Government has no place. FDR actually did stuff. He had not as much -- certainly Barack Obama did not do as much as Franklin D. Roosevelt. But Franklin D. Roosevelt, Social Security, all of the unemployment insurance, all of the basics that we now take for granted, a 40-hour work week, with time and a half for overtime, stuff that you probably don't want and don't think is necessary, but it's the bedrock of the middle class, the lower middle class and the working class in this country, and people aspiring to be in that class.

Franklin D. Roosevelt's tradition is critically important here.

MORGAN: Gentlemen, I'm glad we managed to swathe our way through almost 100 years of American history here. I would love to continue this with you two, but I can't tonight. Maybe come back and we'll do it again very soon. It's been a lively debate and it has been a civilized debate. Certainly after last night when my main guest, Kelsey Grammar, didn't even make it to the studio, I would like to thank you both for turning up at all. So thank you both very much.

REICH: Thank you, Piers.

NORQUIST: Thank you. Good to be with you.

MORGAN: This political note, on Tuesday next week, I will sit down with President Clinton and ask him about the state of the economy, the state of the world. I will even ask him some of your questions. When we come back, new questions about who was behind the deadly attack on the U.S. embassy in Libya. I will talk to the man who jailed the notorious terrorist, the Blind Sheikh.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

HILLARY CLINTON, SECRETARY OF STATE: We have condemned in the strongest possible terms the violence that has erupted from these protests. And as I have said, the video that sparked these protests is disgusting and reprehensible. And the United States government of course had absolutely nothing to do with it.

(END VIDEO CLIP)

MORGAN: Secretary of State Hillary Clinton today. She briefed Congress behind closed doors on the terror attacks in Libya that killed Ambassador Chris Stevens and three other Americans. And she said she will launch an accountability review board to be chaired by former Ambassador Thomas Pickering.

Joining me is Michael Mukasey. He was attorney general under President George W. Bush, also the man who put the notorious Blind Sheikh behind bars. Welcome to you, sir.

MICHAEL MUKASEY, FORMER ATTORNEY GENERAL: Good to be here.

MORGAN: A lot going on, which comes under the raiment that you used to be in charge of. What do you make of it?

MUKASEY: Not much of it good.

MORGAN: Right. Exactly. What do you make of all this talk that al Qaeda may have planned this attack, that we may have had a former Guantanamo Bay releasee maybe masterminding it, all the stuff that's coming out. How much credence should we be giving it, do you think?

MUKASEY: As to that part of it, plenty. The fact is that Eastern Libya is a hotbed of these kinds of folks. And when you combine that with the fact that this took place on 9/11, that these folks came with RPGs -- they weren't there to demonstrate about some obscure film. The fact that the ambassador was not in Tripoli -- he was in Benghazi. That visit was supposed to be confidential.

They knew where the safe house was. Put all of those things together and the notion that this was somehow due to some film is ridiculous. Of course it was a terrorist attack.

MORGAN: The name that's been floating around of this supposed ring leader, the guy who is supposed to have been released from Guantanamo Bay in 2007, that would have been on your watch. Are you familiar with him? Do you remember him? Would you have been aware of --

MUKASEY: No. Also, the Justice Department had zero to do with Guantanamo. And I don't know whether it was now today or not.

MORGAN: I wouldn't even have been aware of him being released?

MUKASEY: No, he was in custody of the Defense Department. But the fact is that the alumni of Guantanamo have resurfaced, whether it was during the Bush administration or the current administration, at an alarming rate. The recidivism rate is upwards of 20 percent. And that's the people we know about, because they have either been killed or captured again.

God knows how many of them are out there fighting that we don't know about.

MORGAN: When we saw the -- after the death of Osama bin Laden people talking of the end of al Qaeda, did you ever think that was likely to be the case? Or do you believe that really al Qaeda isn't so much a centralized organization and probably never has been? It is just a collection of terrorist cells around the world?

MUKASEY: Well, it's essentially a franchise. And the notion of the end of al Qaeda is kind of ridiculous. It makes it sound like a motorcycle gang with a bunch of guys wearing al Qaeda on the back. And as soon as you kill them all, you're done with it. That's not the point. This is motivated by an ideology. It's an Islamist ideology. And Osama bin Laden obviously was the principal purveyor of this, but there are others -- many, many others.

And to say that because he was taken out or because some subset of his henchmen were taken out, that that's the end of the phenomenon of violent Islamism I think is a big mistake. Al Qaeda is part of it, but by no means the only part of it.

MORGAN: You were, of course, the man who put the blind sheikh, Omar Abdel-Rahman behind bars. There were reports that the recent uprising was spawned by calls for his release. Do you think that is plausible?

MUKASEY: Sure, it's plausible. He is regarded as a totemic, as a heroic figure by many people in that part of the world, people who mean us ill. And there have been repeated demonstrations for his release. In fact, 9/11 -- Osama bin Laden's list of grievances included prominently the fact that he was in custody.

He was the inspiration behind the assassination of Anwar Sadat. He was the inspiration behind the 1993 Trade Center bombing and a planned campaign of bombings beyond that. His followers killed more than 60 tourists in Luxor and cut some of them up horribly and put little messages in their bodies demanding his release. And then of course was 9/11.

MORGAN: The new Egyptian president, Mohammad Morsi, has vowed to pressure the U.S. to release this man. The Justice Department has said today the assertion that the Blind Sheikh may be transferred to Egypt is utter garbage. Do you think there's any danger that he will be released at any stage, in any capacity? MUKASEY: I don't take a denial from the Justice Department as dispositive. The Justice Department is not likely to be rung in on this if there have been any conversations. I would look rather at what the spokesperson for the State Department says.

Now maybe she was just having a bad day, but she said that we have not had any contact with anybody in senior -- in the Egyptian administration recently about this. And we have no plan. Now, that is a statement that, forgive me, is eight and a half months pregnant. What do you mean, not recently, what do you mean not senior, and what do you mean, you have no plan?

Have there been discussions? Morsi obviously went out -- went pretty far out on a limb and this didn't start with that speech. It started well before that.

MORGAN: Final point I would make, do you believe from what we have seen in the last week, then, that America is once again under attack from al Qaeda?

MUKASEY: America has always been under attack from al Qaeda. I think America has gone limp in that part of the world and has sent a message to that part of the world that we're no longer in the game. And when you do that, you get what we see on television.

MORGAN: Michael Mukasey, thank you very much.

MUKASEY: Thank you for having me.

MORGAN: Coming up, the checks are in the mail, 2.5 billion dollars worth for Bernie Madoff's victims. Where has the rest gone? My exclusive with the men who are hunting it all down.

(COMMERCIAL BREAK)

MORGAN: Good news today for some victims of Bernie Madoff. They're getting their money back. Another 2.5 billion dollars has been recovered. Where's the rest of the money? Charged with getting that money back is Madoff trustee Irving Picard. He joins us now for his first exclusive interview in three years, along with his chief counsel, David Sheehan of BakerHostetler, and Stephen Harbeck, whose is the president and CEO of the Securities Investment Corporation.

That was a mouthful, wasn't it? The bottom line is you three are basically tracking down the Madoff dough and handing it back to those that lost it. Am I right?

IRVING PICARD, MADOFF TRUSTEE: That's correct.

MORGAN: Let me start with you, Irving, if I may. The figures here are extraordinary. You sent out checks worth 2.4 billion today. But you've recovered 9.1 billion dollars, representing 52 percent of the approximate 17.5 billion that were lost in the Ponzi scheme.

I suppose the obvious question is how much can we expect to recover in the end? PICARD: Well, we'd like to think that we can recover all the 17.5 billion dollars.

MORGAN: Is that likely?

PICARD: It depends on litigation.

MORGAN: Are you pleasantly encouraged by how far you've come so far?

PICARD: Oh, absolutely, because we started at zero. When we came in, the page was blank and it was through the hard work of forensic accountants, my counsel, and a lot of people who have worked very hard over the last almost four years that we've been able to recover what we have so far. And we believe that there's a lot more that we can do.

MORGAN: David, the average check is approximately two million dollars. The smallest check is for 1.784 thousand dollars. The largest check, which was to a fund, 526,865,675.11. These are big numbers, big figures going back to people. They must be thrilled, I guess, that they are getting anything back.

DAVID SHEEHAN, COUNSEL, BAKERHOSTETLER: Well, I think they are. What we're finding is with all of the people that did receive the money to date, they are reaching out to us and letting us know that they're finally, after all these years, receiving a significant distribution. The one check, as you point out, over 500 million dollars is going to a fund. And the people behind that fund, all the investors in the fund, will obviously be the beneficiaries of that. It isn't one single investor who got that check.

But we're very happy with the fact that we have reached out to so many people. Over 50 percent of the people who have claims are fully satisfied now and have, in fact, gotten all of their money back that they put in. It's pretty amazing.

MORGAN: Stephen, has Bernie Madoff been helpful at all in this process?

STEPHEN HARBECK, PRESIDENT/CEO, SIPC: I would say no. These gentlemen have interviewed him. He lives in his own fantasy world. I think the impetus for the recovery has been the great forensic work that has been done, starting from the blank slate that Irving mentioned.

MORGAN: And the way it's working, as I understand it, you're not paying anybody for the presumed profits they may have made. What you are doing is trying to repay the original investments, less what they took out. Is that right?

PICARD: That's correct.

MORGAN: What do you think of Bernie Madoff? From all you have now gathered about him, was he an evil man or was he just a chancer? How would you categorize him? PICARD: I really haven't thought about characterizing him at this point, because our efforts and our focus has been to go out and recover what we can, as much as we can, as quickly as we can, for the people for whom we are trying to get the best recoveries and best distribution.

MORGAN: This was the biggest Ponzi scheme in American history, right?

PICARD: Yes.

MORGAN: If you were to succeed in recovering the money, it would be the biggest recovery of its type that we would have ever seen?

PICARD: Yes, of course. It already is.

SHEEHAN: I think a way to look at Mr. Madoff is to look at who he victimized. That will give you insight. AS to whether he's evil or not, that is obviously everybody's own opinion. But what he did is he went after people who were his friends, his relatives, his known acquaintances, et cetera, and got them. He had people, like Mr. Levy, when he died, turned over his entire estate, and he stole all of that.

What you had was a man who was -- whether he's evil, a sociopath, however you characterize him, is someone who he had no qualms whatsoever about stealing other people's money for his own purposes.

MORGAN: He's pretty despicable human being, wasn't he?

SHEEHAN: I don't know that I would go that far, because, you know --

MORGAN: I could go that far.

HARBECK: I think that works for me. Despicable works for me.

MORGAN: Indiscriminately preying on anyone and everyone.

SHEEHAN: No, I think that's fair. That is true.

MORGAN: You are doing a great job, gentlemen. I wanted to get you in here to say thank you on behalf of the American public for a great public service. Continue what you are doing. I hope everybody gets everything back.

What is the final lesson, would you say? to stop this happening again, what is the key thing? If you're an investor, is it the old, if it seems too good to be true, it is too good to be true. Is that the maxim?

PICARD: Well, that is true. But the other thing that people should take a look at when they are investing is don't put all of your eggs in one basket. I think that's one of the big things that happened here, is everybody thought they were going to make so much money that they gave him all the money. And unfortunately it didn't turn out that away. MORGAN: Wise words. Gentlemen, thank you all very much.

(CROSS TALK)

MORGAN: We'll be right back.

(COMMERCIAL BREAK)

MORGAN: CNN Heroes receives thousands of nominations from our global audience every year. We've introduced you to one of these extraordinary people each week. And now we can reveal this year's top ten CNN heroes. Each of them will receive 50,000 dollars, and a shot at the top honor, CNN Hero of the Year. The first choice is yours.

But first, here is Anderson Cooper with the top ten CNN Heroes of 2012.

(BEGIN VIDEO CLIP)

ANDERSON COOPER, CNN ANCHOR: I'm Anderson Cooper. All year, we have been introducing you to every day people who are changing the world. We call them CNN Heroes.

Well now, we announce the top ten CNN Heroes for 2012. The honorees are, in random order -- Connie Siskowski is helping children who are caring for ill or aging loved ones to stay in school and hold onto their childhood.

Pushop Pabasnet saves innocent children from growing up behind bars with their incarcerated parents.

Tulani Madondo organizes his town community to educate hundreds of their next generation.

Mary Cortani enlists man's best friend to get fellow veterans a way to move beyond PTSD and into life again.

Malya Villard-Appolon has turned personal trauma into a fight for justice for thousands of rape survivors in Haiti.

After using sports to fight his own addiction, Scott Strode now helps former addicts to stay fit and sober.

Wanda Butts brings water safety and swimming lessons to those most vulnerable, black and Latino children.

Catalina Escobar ensures healthy deliveries and solid futures for Colombian teens already facing motherhood.

Leo McCarthy's tragic loss of his daughter sparked his mission to end the culture of underage drinking.

And where terrorists stop at nothing to keep girls from being educated, Razia Jan fearlessly opens her school each and every day.

Congratulations to the top ten CNN Heroes of 2012. Tell us who inspires you the most. Go to CNNHeroes.com online or on your mobile device to vote for the CNN Hero of the Year.

(END VIDEO CLIP)

MORGAN: CNN hero of the year will be awarded an additional 250,000 dollars. You can decide who it will be. Just go to CNNHeroes.com online and on your mobile device. You can vote up to 10 times a day for the most inspirational hero. All 10 will be honored live at CNN Heroes, an All-Star Tribute, hosted by Anderson Cooper, on Sunday, December 2nd. Only one will be named CNN Hero of the year.

That's all for us tonight. "AC 360" starts now.