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CNN NEWSROOM

North Korean Saber-Rattling; Mickelson Tax Remarks; Interview with House Majority Leader Cantor; Nude Photos Posted without Consent

Aired January 24, 2013 - 15:30   ET

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


DON LEMON, ANCHOR, "CNN NEWSROOM": North Korea vowing to launch more long-range rockets and conduct more nuclear testing, designed to target what it called its "sworn enemy," the United States.

This announcement on state TV. "Settling accounts with the U.S. needs to be done with force and not with words as it, the U.S., regards jungle law as a rule of its survival."

The latest threat seen as retaliation for the new U.S.-led sanctions condemning North Korea's rocket launch back in December.

At the time, North Korea swore it was part of the peaceful space program, but now this. Quote, "The long-range rockets that we will fire and the high-level nuclear test we will carry out are targeted at the United States."

If that wasn't clear enough, South Korea is saying the threats are real. Listen.

(BEGIN VIDEO CLIP)

COLONEL WEE YONG-SUB, PUBLIC RELATIONS OFFICER, SOUTH KOREAN DEFENSE MINISTRY: We consider that North Korea is ready to conduct a nuclear test at any time if its leadership decides to go ahead.

Regarding this, we're closely monitoring the North's nuclear test preparations and its military movement based on our firm and combined defense position.

(END VIDEO CLIP)

LEMON: ABC News global affairs anchor Christiane Amanpour is here with us.

Christiane, you've been on this story for years. You visited a nuclear facility in 2008, saw them blowing up a cooling tower.

So, how much of a direct threat are these nukes to U.S. soil?

CHRISTIANE AMANPOUR, ABC NEWS GLOBAL AFFAIRS ANCHOR: Well, Don, they're just not right now. All the analysts say that, yes, this rhetoric is incredibly belligerent and, yes, the North Koreans it was targeted.

But, clearly, the rhetoric was targeted at the United States and, as you say, it came in direct response for the latest set of U.S. resolutions and U.N. sanctions over the last North Korean rocket launch.

So, what this is, is yet another potential nuclear test which is not good news. The United States does not want that. It's already seen two nuclear devices being tested, 2006 and 2009.

But you talk to all the experts inside government and outside government, North Korea doesn't have the long-range missile capability to reach the United States and it does not have the ability to put a nuclear warhead onto a missile. Right now it doesn't have it.

So, it's much more of an ongoing threat, something that has to be dealt with and definitely a rhetorical threat.

LEMON: OK, that out of the way, Christiane, North Korea feels betrayed by China because it sided with the U.S.-led sanctions.

How does our relationship with China play into all of this? I mean, China is the only major diplomatic ally in the region.

AMANPOUR: Well, it is incredibly important, of course, because the United States says that its needs to be in these negotiations not bilaterally with North Korea, but with China and Japan and the other countries which are involved.

But, as you correctly point out, China is the one that is considered to have the most leverage with North Korea because it shares a border, because it gives a lot of aid, because there's a lot of engagement, because the leadership of both countries meet on a fairly regular basis.

But, also, China does not want to see these provocative nuclear tests by North Korea, so, yes, China gets angry when there are these nuclear tests and nuclear devices tested in contravention to all the international laws.

LEMON: Christiane Amanpour, thanks so much.

AMANPOUR: Thank you.

LEMON: You can file this story under a train wreck waiting to happen. One of the world's wealthiest athletes is, in the case of golfer -- in this case, the reliability -- reliably, I should say, controversial Phil Mickelson decided to open up to reporters about the taxes he pays on his $40-plus million annual income.

And, at one point, he seemed to suggest that his growing tax burden has made him consider quitting golf.

Here's the quote, the "money quote," as it were, about the money. "There are going to be some drastic changes for me because I happen to be in that zone that has been targeted federally and by the state and, you know, it doesn't work for me right now."

So, not working for Phil. This golf thing and the taxes that go along with that $48 million income.

That was Sunday. Well, here, yesterday, a change of tune for Phil Mickelson. Listen.

(BEGIN VIDEO CLIP)

PHIL MICKELSON, PROFESSIONAL GOLFER: Well, I've made some dumb, dumb mistakes and, obviously, talking about this stuff was one of them.

My apology is for talking about it publicly because I shouldn't take advantage of the forum that I have as a professional golfer to try to ignite change.

I think that it was insensitive to talk about publicly to those people who are not able to find a job, that are struggling paycheck to paycheck. I think that was insensitive to discuss this.

(END VIDEO CLIP)

LEMON: All right, well, let's discuss it now more with Rick Newman. He is the chief business correspondent for "U.S. News & World Report."

Rick, you've got a lot of folks going and some are saying what a whiner, what a complainer about this tax problem, but other people are saying, dude, why apologize? You're getting hammered.

Are the wealthy making changes as Mickelson seemed to suggest here?

RICK NEWMAN, "U.S. NEWS & WORLD REPORT": Yeah, he's getting no sympathy for the taxes he pays on something like $50 million of income and I'm not going to defend him on that.

But I think he highlighted something that is a real problem, Don, which is, it's not just rich people who are kind of getting nickeled and dimed at the federal level, the state level and the local level. A lot of middle class people are feeling the same sort of pinch.

They might be earning $50,000 rather than $50 million, but we know that everybody just about who gets a paycheck got a little bit of a federal tax hike this year when that payroll tax cut expired.

One thing we don't think about a lot is local property taxes have gone up for a lot of people just because cities and states are running out of money and sales taxes and, in some states, income taxes have gone up by a lot, too.

There's no good set of data that puts this all together, so we kind of don't think about it this way, but a lot of ordinary, middle-class people, believe it or not, are suffering from the same thing Phil Mickelson is explaining about.

LEMON: Well, he says that between Prop 30 and the new federal taxes on the wealthy, here's what he says. He says his tax rate has climbed to 63 percent.

But some are suggesting that he could use a new accountant because, if you break it all down as we do here, it's probably in the range of 52 percent and that's before you even factor in itemized write-offs.

So, Rick, maybe not as bad for the wealthy as Mickelson first suggested.

NEWMAN: Yeah, he's definitely not paying 63 percent, but that might be his starting tax rate. With all kinds of various deductions, charitable giveaways and things like that, most accountants will tell you it's down to 50 percent.

LEMON: That's still a lot of money, though.

NEWMAN: It's still a lot of money, but he's in about the worst place he can be for paying taxes, honestly, Don, which is to be in California right now.

LEMON: Move to Florida.

NEWMAN: It's a high-tax state.

That's right, like Tiger Woods just did. And that's another interesting situation we've got these days which is a growing disparity between some states that have been raising taxes and other states, like Texas and Florida, that are basically saying, look, we have no income taxes. We raise revenue in other ways.

But there's this kind of arbitrage people are now starting to play between states with high taxes and states with low taxes. A lot of people are leaving California and it's also businesses are leaving, too, especially medium-sized businesses that employ a fair number of people that are going to places like Utah and Idaho.

And this is not necessarily a great thing that we've got, companies moving all around. We've got people considering moving around. What we really need is for people to be thinking about the best ways to be productive wherever they happen to be, not to kind of figure out where they can go to skirt the laws.

LEMON: Yeah, Rick Newman, thank you.

NEWMAN: Sure thing.

LEMON: All right, coming up, the growing problem of revenge porn. Say you're in a relationship that ends badly and your ex-has access to some intimate photos of you. Those picture may end up online posted on revenge porn websites. That story is next.

(COMMERCIAL BREAK)

LEMON: Ali Velshi is at the World Economic Forum in Davos, Switzerland. That's where the global leaders in business and government gatherer once a year to talk big ideas.

And that's where Ali sat down with House Republican Majority Leader Eric Cantor to discuss Washington's next big political battle and that's budget.

(BEGIN VIDEOTAPE)

ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: When you look at the options out there, President Obama's budget proposal and Paul Ryan's offer, they both don't do what guys like you say need to be done, balancing the budget, for a long time.

So, now, you guys have a proposal or you're coming with a proposal that says you'll balance the budget in 10 years.

I asked Paul Ryan this. I can't get an answer. How? What gets cut? Because it's going to hurt.

REPRESENTATIVE ERIC CANTOR (R), VIRGINIA: Well, I mean, there are new baselines now in the budget.

I mean, obviously, we just -- as we know, some of the difficulty and the differences in Washington were centered around the method of accounting, whether it's static or whether it's dynamic.

Because it's static, when you raise taxes, that $650 billion of additional taxes that went in because of the cliff deal, that adjusts the baseline. That is going to make the numbers look somewhat differently, right?

And we'll have to make some choices. There's no question about it. But we have committed to putting a budget out there that will actually bring it to balance within 10 years.

VELSHI: The fact is nobody seems to want to own up to a budget that will hurt. There's no solution that is not going to hurt.

CANTOR: Well, the Ryan budget, I mean, the last one, didn't balance in almost 30 years.

VELSHI: Correct.

CANTOR: But the way that we were trying to move is say, look, like in most in the private sector, we want to transition from a defined benefit scenario to a defined contribution scenario.

But you need to affect some real reforms in healthcare delivery and compensation and payment if you're going have that happen.

We cannot get agreement from the White House or the Democrats in Congress to join us in the effort.

VELSHI: So, whether it's spending cuts or whether it's taxes, ultimately, you started by saying it's about growth. We all agree.

In fact, here at the World Economic Forum, everybody in the world agrees it's about growth. And you can achieve that a few ways. Some say spending cuts. Others say increased employment.

But, ultimately, what's the thing that you can do to really move the ball forward and create growth?

CANTOR: What I think that the election said more than anything else is the people of our country want to see a government that works.

VELSHI: Yes.

CANTOR: And we ...

VELSHI: Regardless of whether that's about taxes or cuts.

CANTOR: And we've got to and I hope the administration and Barack Obama, the president, will come and join us and say, look, it's time for us to set differences aside and do what any couple does, any group of people do, which is say, look, you're not going to agree 100 percent on everything. And you're not going to agree 100 percent on anything.

So, find where we agree.

VELSHI: But when they did on that on January 1st of this year, you voted against it. We found middle ground between Democrats and Republicans ...

CANTOR: There was no middle ground. There was no middle ground because where were the cuts? Here's what we did ...

VELSHI: There was middle ground on the fact that you guys had asked for no tax increases then you put a threshold of a million dollars. Then we got that ...

CANTOR: We had always said -- according to the Boehner rule, we had always said, if we're going to raise revenues through borrowing, through taxing, is we've got to do something about the problem.

You can't keep digging the hole deeper and keep asking people to pay more taxes.

VELSHI: But you did vote against a consensus agreement?

CANTOR: No, there really wasn't. There really wasn't. This was a last minute jam of a deal that I think we could have done a lot better for the American people.

VELSHI: Are we going to have a last minute jam of a deal on sequestration, on the debt ceiling now which is going to happen in May, on a continuing resolution, on a budget?

CANTOR: I hope that we can work things out and come to an agreement that you're going to have to do something about the problem. It is about spending. We've got to get control of the spending.

VELSHI: But you understand you're never going to get Democrats to really agree to that? So, you're going to have to find another way around coming to that solution.

If we get stuck on ...

CANTOR: If we don't get control of the spending, then you're going to end up like Europe. VELSHI: Then don't we go back to Bowles-Simpson then? The idea that nobody likes it, but this could solve the problem.

CANTOR: Bowles-Simpson didn't solve the spending problem.

Back to that, the main driver of the spending problem are the health care entitlements. Bowles-Simpson left that out.

VELSHI: So, can you lead and say let's do a Bowles-Simpson and add ...

CANTOR: Absolutely. We're working with the Fix the Debt Coalition and others to say, yes, let's come together, both sides of the aisle.

We've got proponents on our side. We're looking for those on the other side who say, fine, let's do something.

VELSHI: But you're prepared to go in with documents rather than saying, the president won't do this and the Democrats won't do this and Harry Reid won't do this.

You're prepared to go in and say, this is what it looks like. Let's talk.

CANTOR: I think we have done that since Barack Obama was elected with the stimulus plan.

VELSHI: I think some may disagree, but starting with ...

CANTOR: We've got papers.

VELSHI: You'll go in and say, let's negotiate on our suggestion and let's come to the table. Here's the room.

CANTOR: We consistently have done that and, unfortunately, it's not been properly or accurately portrayed because it is about sitting down together ...

VELSHI: Right.

CANTOR: ... and figuring out how we fix the problems for the people who put us there.

VELSHI: It's going to be accurately portrayed now because it's coming out of your mouth. Thanks for being with us.

CANTOR: Thanks.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

LEMON: All right, pay attention, everyone.

Six percent of Americans over 18 admit to sending nude pictures of themselves to someone else. That is according to a Pew Research Center study and, now, today, a case that will make you think twice before sending such photos.

Sixteen women say they may be victims of "revenge porn." That's when a bitter ex- of yours sends a nude photo of you to a porn site.

Now, these women have now filed a civil lawsuit against a site in Texas state court, alleging their photos were posted illegally.

Drew Findling is "On the Case" for us right now. So, Drew, legal experts say cases like this are on the rise. How does the law protect people online? Can they be protected.

DREW FINDLING, CRIMINAL DEFENSE ATTORNEY: Well, I think the first thing about is the importance of thinking twice before you're going to send these pictures even with a boyfriend or girlfriend.

And, now what happened is these companies have become a conduit. Essentially, what they're saying to the public is, hey, your girlfriend broke up with you? You've got a nude picture? Send it to us and we'll put it online and you can really get back at her.

But what these lawyers are saying, too, is, hey, our clients haven't agreed for their pictures to go public. We're suing you.

And, Don, what's most important, the lawyers are now saying, we're suing you and, anybody that clicks on that site, we're going to sue you, also.

LEMON: You're talking about hosts like GoDaddy. The lawsuit also names GoDaddy, the host of that porn site. So, what does it mean for the host site?

It's almost like child porn, right? If you even click on it you without even knowing it, still you can be named in a suit, right?

FINDLING: That's exactly right. Yeah, Don, that's exactly right.

What we're seeing throughout the country is people are not only being criminally prosecuted for going to child pornography, but lawyers are suing them for looking at these children's pictures and, what these lawsuits are doing, they're going after the consumers, as well.

They're saying, hey, the way to put these companies -- I mean, GoDaddy is going to go on no matter what. If they can advertise in the Super Bowl, they'll be fine.

But they're saying, we're going to go after the wallets of the people that click on these sites that want to see the pictures of these jilted girlfriends.

LEMON: Wow. And, so, do you think that will work?

FINDLING: I think it will be enough to make some of these companies think twice before going into this business and make people think twice before clicking on these pictures.

LEMON: Yeah, but think twice before you send a picture, but also, if you're going to send a picture out of your ex-, you should think twice, to, because you could possibly be prosecuted, as well.

FINDLING: Exactly.

LEMON: OK. All right, let's move on now because this next case is an Atlanta man. He's suing the state of Georgia because they won't let him put the word "gay" on his license plate.

He says he applied for the following plates, but was rejected -- "GAYGUY" and "GAYPWR." He says his constitutional rights have been violated and, while religious speech like "JESUS4U" was approved and -- check this out -- he said this is an inconsistency. Plates like "HATERS" were approved, but "HATERS1" denied.

Is Georgia violating this man's constitutional rights?

FINDLING: I think they're arbitrary and this is clearly a violation. And I think this is what you're going to see, Don. You're going to see an about-face.

Sam Olens, the attorney general of Georgia, has a sophisticated office with some very bright constitutional experts. Georgia has been railing for two decades because we are the state of Bowers V. Hardwick that made it illegal to have consenting sodomy amongst a gay couple.

And, even though that was at first affirmed by the Supreme Court, it later got reversed and we have been railing in the state of Georgia ever since then.

This attorney general's office is not going to endure the embarrassment of that one. You will see Sam Olens office quickly do an about-face. I promise that.

LEMON: Oh, so you think it'll -- all right. It'll be over.

Thank you, Drew Findling.

FINDLING: Absolutely.

LEMON: Interesting stuff. Interesting stuff. Think twice about those pictures.

FINDLING: Absolutely.

LEMON: All right, we'll be right back.

(COMMERCIAL BREAK)

LEMON: You can bet people who own stock in Apple will be glad to see the closing bell ring on Wall Street in just a few minutes. It has been an exceptionally bruising day for what had been a financial juggernaut.

Alison Kosik at the New York Stock Exchange, Alison, what in the world is going on at the end of this trading day?

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: What happened? Well, Apple, first of all, didn't sell as many iPhones as Wall Street wanted done.

People wound up also buying lower priced products instead of the higher priced ones. They bought the iPhone 4S instead of the iPhone 5, for instance, so that hurt Apple's bottom line.

But, still, look, Apple recorded record profits and sold 48 million iPhones in the most quarter.

But competition is really a big factor now that's shaking things up. You know, there are quality alternatives out there. The tablet and the smartphone arena is getting pretty crowded at this point.

So, at this point, Apple is feeling the heat as we watch the stock drop like a rock right now, down 12.5 -- almost 12.5 percent at $450.

Now, that $450 stock price, I don't think is anything to sneeze at at this point, Don.

LEMON: No, it's not, but Steve Jobs didn't really -- he welcomed competition because he believed that Apple products were the best.

And, so, I think are concerned about Apple innovation. Steve Jobs, no longer with us. Tim Cook is now the CEO, so what does it say about Tim Cook, if anything?

KOSIK: Well, for one thing, yeah, he's getting the blame. Tim Cook, the blame is right on his shoulders because he's the CEO. Look how the stock was doing.

The stock was trading around $375 a share when Cook took over. The price almost doubled in the first year that he was in charge and then the price peaked in September when the iPhone 5 came out.

But the thing is, since then, the shares have been tumbling and there are two schools of thought on this. You know, Wall Street and some analysts say, you know what? We don't have the confidence in Tim Cook that he can deliver the next hippest, sexiest, blockbuster device.

But then there are the shareholders and one analyst I talked to said, you know, the shareholders, they don't necessarily want him to leave.

This is an incredibly healthy company. It's got $137 billion tucked away in cash. Now, if you see more quarters, you know, one after another after another like the one it just had, things might change.

But, at this point, I don't think you're going to see Tim Cook go anywhere, Don.

LEMON: All right, thanks, Alison.

We'll be right back.

(COMMERCIAL BREAK)

LEMON: That will do it for me. I'm Don Lemon. Thanks for watching.

"The Situation Room" with Mr. Wolf Blitzer begins right now.

WOLF BLITZER, ANCHOR, "THE SITUATION ROOM": Don, thanks very much.