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ERIN BURNETT OUTFRONT

Deadly Explosion In Mexico City; Hagel, Senators Clash At Hearing; Barrasso: Hagel Lacks "Sound Judgment"; New Laws Could Cost Gun Makers Millions; Do Video Games Make Kids Violent?; Menendez Pays Back $58,000 For Trips

Aired January 31, 2013 - 19:00   ET

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


ERIN BURNETT, CNN ANCHOR: Up next, senators rough up Chuck Hagel during his confirmation hearing today. A senior lawmaker is OUTFRONT to explain why he is voting against Chuck Hagel.

Plus Republican Senator Chuck Grassley implies the video games, not guns, are the reasons for America's mass shootings. What role did the donations he received from the NRA play?

And another Super Bowl ad being called racist, we're going to show you the ad. It's a near and dear to our heart topic. Let's go OUTFRONT.

And we begin right now, though, with breaking news. You are looking at pictures right now of Mexico City. This is a live shot that you're watching from our affiliate, FOROtv. Right now, they're reporting that five people are dead and at least 75 at least have been injured.

There was an explosion at the offices of Mexico's state-run Pemex Oil Company. Our affiliate reports roughly 30 people are still trapped in the building. It's unclear right now what caused that explosion. We are trying to figure that out for you. We will monitor that, and as we get more information, we'll bring it to you throughout the hour.

And a good evening to all of you tonight. I'm Erin Burnett. OUTFRONT, not so friendly fire on Capitol Hill, a long day of tough questions for President Obama's defense secretary nominee, Chuck Hagel. It was his Senate confirmation hearing.

And one of the most contentious moments came when Hagel's old friend, and former colleague, Senator John McCain, asked whether the 2007 U.S. troop surge in Iraq, which you may recall, Hagel had called, in his words, the most dangerous foreign policy blunder in this country since Vietnam, he asked whether that surge had ultimately been successful.

(BEGIN VIDEO CLIP)

SENATOR JOHN MCCAIN (R), ARIZONA: The question is, were you right or wrong? That's a pretty straightforward question. I would like to answer whether you were right or wrong, and then you are free to elaborate.

CHUCK HAGEL, DEFENSE SECRETARY NOMINEE: Well, I'm not going to give you a yes or no answer on a lot of things.

MCCAIN: Let the record show that you refuse to answer that question. Now, please go ahead.

HAGEL: Well, if you would like me to explain why --

MCCAIN: No, I actually would like an answer. Yes or no.

HAGEL: Well, I'm not going to give you a yes or no.

(END VIDEO CLIP)

BURNETT: Another hot topic at the hearing today, it was a 2006 interview that Hagel gave to former Middle East peace negotiator, Erin David Miller. Now, in that interview, Hagel said this, "The Jewish lobby intimidates a lot of people up here." Now, today of that comment about the, quote/unquote "Jewish lobby," Hagel said categorically, I regret it.

(BEGIN VIDEO CLIP)

HAGEL: I've already said I regret referencing the Jewish lobby. I should have said pro-Israel lobby. I think it's the only time on the record that I've ever said that.

(END VIDEO CLIP)

BURNETT: All right, well, earlier, I spoke with one senior lawmaker who was there, who opposes Hagel's nomination. Senator John Barrasso of Wyoming, the Senate's fourth highest ranking Republican, and I asked him whether that controversy over Jewish versus Israel lobby, it's finally time to put that to rest.

(BEGIN VIDEOTAPE)

SENATOR JOHN BARRASSO (R), WYOMING: Well, I'll tell you, Erin. I think that Chuck Hagel appeared weak and wobbly today, unconvincing, and not the kind of sound judgment and strong leadership you need in a secretary of defense. I've met with him privately, as well.

The bottom line is, senators are not intimidated, as Chuck Hagel refers to, by any lobby. When the national interest of the United States is at stake, and specifically, our security, people make a vote based on the security and the best interests of the United States.

BURNETT: So, I'm trying to understand, you disagree with him saying that the Jewish lobby could influence Congress, but you don't have a problem with his explanation, that he meant, pro-Israel?

BARRASSO: No, he apologized. He apologized to others. I have a lot of trouble with his whole record, when you take a look at his record in the Senate, opposing sanctions against Iran, unilateral disarmament, in terms of nuclear weapons, the issues of Afghanistan. I think he was so wrong about the surge in Iraq. So it's so many different things that cumulatively add up. And he may give a right answer on a given day, but when you look at his history in the Senate, and his history in his career, and what he's written, I think that's what has to stand the test of time. And that's why he fails, in my opinion, to gain my vote.

BURNETT: You mentioned Iran, obviously, one of the most crucial issues. This country has a decision to make this spring or summer on what it is going to do about Iran's purported nuclear program. Hagel, of course, opposed strikes against Iran, military strikes, during the Bush administration. But today, when asked about that, he said this.

(BEGIN VIDEO CLIP)

HAGEL: The military option must remain on the table.

(END VIDEO CLIP)

BURNETT: And obviously, yesterday, in his 112-page written testimony to you folks, he said, while there is time and space for diplomacy, backed by pressure, the window is closing. That matches the president's view. Isn't that enough?

BARRASSO: Well, you have two things. One is the secretary of defense actually has to carry out what the president's mandates are. But the secretary has a responsibility to give his best judgment to the president, because the president is focused on so many different things.

And I just don't believe that Chuck Hagel is the person to give that sound judgment to the president because he continues to change positions, from week to week, day to day, and year to year.

BURNETT: Well, I'm curious, though, because this issue of military strikes, you know, it seemed that some, from the Republican side, have been critical of that. Saying, that shows you're not tough.

But Bush's defense secretary, Robert Gates, gave a speech at the beginning of this year, saying a state against the United States against Iran would, quote, "make a nuclear armed Iran inevitable." So being hesitant to nuclear strikes does not appear to be a weak point of view.

BARRASSO: The president will be the one, Erin, of course, that makes that ultimate decision. I think Chuck Hagel is not the person that should be advising him, when Chuck Hagel was one that didn't even support sanctions against Iran.

When it opened discussions with Iran, and in his book, implies that a nuclear-armed Iran would maybe actually more responsible. And I just can't see that, when you see the statements made by Ahmadinejad, at the United Nations, about Israel's mere ability to exist. BURNETT: The Senate as a whole has not rejected a cabinet nominee since 1989. It was George H.W. Bush's nomination of John Tower. It was a secretary of defense, but these were questions of personal and ethical conduct that derailed that. Before that, you had to go back to 1959 and Eisenhower to find someone else. Do you think the Senate will actually reject Hagel?

BARRASSO: I think it's too early to tell. So many senators that I talked to, Erin, said that the hearings would be consequential, and what I heard today was a senator, a former senator, who seemed uncomfortable on that side of the table, answering questions, when in the past, he was on the other side of the table, much more comfortable, when he was asking the questions.

BURNETT: And, so let me ask you this. Richard Armitage, obviously, was the deputy secretary of state in the Bush administration. And he said that, about people like you. "This is the Neocon's worst nightmare, because you've got a combat soldier, successful businessman and senator who actually think there may be other ways to resolve some questions other than force." Are you threatened by Chuck Hagel, because he actually is so successful in many areas, and could threaten Republicans?

BARRASSO: No, not at all. I just look at -- I'm one senator, I'm asked to give advice and consent. It's an obligation, as well as a responsibility, that I have. So I met with Chuck Hagel, studied his record, and in my opinion, he is not the person to be secretary of defense, and that's the way I'm going to vote.

BURNETT: That is the way you're going to vote. There's nothing that could change that at this point?

BARRASSO: I don't see it. Not after the hearings today.

BURNETT: All right, Senator Barrasso, thank you very much for taking the time. We appreciate it.

BARRASSO: Thank you.

(END VIDEOTAPE)

BURNETT: Firm and confident answers there from Senator Barrasso. John Avlon joins me now. He was there at the hearings today. John, you were in the room for four hours, and obviously, the hearings went on and on and on, setting all kinds of records. Barrasso's words were, "Hagel is weak and wobbly." Did you agree?

JOHN AVLON, CNN CONTRIBUTOR: I think the senator is pretty deep in the spin zone, there, Erin, but make no question. This was a contentious, ugly hearing. This wasn't just a typical hearing or inquiry, this was an inquisition, I mean, the sheer number of interruptions from his former colleagues.

Chuck Hagel was treated like a traitor to the conservative tribe today. And he was taken off balance, sometimes, because of it. But this was an unusually contentious, ugly hearing. And it really does belie the fact that at the end of the day, his positions that he stated are not outside of the mainstream.

He was reciting catechism on this stuff. But that's not what the senators in question wanted to hear. There were a lot of talking points, a lot of driven dump.

BURNETT: All right, I have to say that John, you know, Dana Bash was talking to some senators afterwards. One senator who was undecided told Dana, it was all the talk, all the talk. And what he was talking about was Hagel did not do well today.

A Democrat supporting Hagel shook his head to Dana in disbelief saying, Dana, are you surprised Hagel is not being more forceful. I mean, there were a lot of people who seemed to think he didn't do as good of a job as he could have done.

AVLON: He does not speak in tight sound bites and maybe his bluntness can be seen by some as a testament to his candor. But I think there was a sense of, when is he going to be crisp? When is he going to be clear? Can he be more definitive?

Why not answer yes or no? The answers I think Hagel would give some of these answers are more complex than simple yes or no. That's not emotionally satisfying, but this was a tough crowd today, no question about it.

BURNETT: All right, thanks very much to John Avlon. It's not going to be the easy, breezy confirmation that many expected.

OUTFRONT next, Republican Senator Chuck Grassley blames violent video games for the gun violence in this country. Does that add up?

Plus, Washington State tonight is looking for someone to run their pot business. Are you ready for higher office?

And Beyonce gets ready to perform at the Super Bowl. Today, she made a confession and then scores the first touchdown of the game.

(COMMERCIAL BREAK)

BURNETT: Our second story, OUTFRONT, guns and big money. A new report out today is looking at the financial toll that President Obama's proposals on gun control would have on the biggest gun makers in the United States.

Our tom foreman is OUTFRONT, looking at these numbers, and these are some pretty incredible numbers, Tom. I want to first start off with the Bushmaster, the gun used in Newtown that's gotten so much attention, made by a company called the "Freedom Group."

TOM FOREMAN, CNN CORRESPONDENT: Yes. This is hugely, hugely popular, the Bushmaster AR-15. The "Freedom Group" was put together by a private equity company, and that I have announced they're getting ready to sell this, precisely because of all the trouble over this.

Bushmaster itself was founded in 1973, annual revenue, $775 million, the impact from the proposed legislation, if they essentially lose the sale of that very popular gun out there, about $220 million. They currently employ around 3,000 people. They'd probably lose about 700 jobs -- Erin.

BURNETT: Wow, a third of their business, a huge number. All right, Mossberg & Sons, another privately owned gun manufacturer, but obviously a big gun maker. What are they making?

FOREMAN: If you're a gun owner, you know Mossberg. It's a huge, huge name out there. It looks very similar off the top and another popular weapon out here. This is Mossberg's big seller in this regard.

But look at this, Mossberg & Son's founded 1990, one of the old companies, annual revenue, $185 million, impact from the proposed legislation, $28 million. So they would go from around 500 employees, they would end up losing about 125 employees. Again, that Privco's assessment of what's happening at these companies -- Erin.

BURNETT: And now Colt, a name known to almost everyone, how significant for that, one of the biggest companies out there?

FOREMAN: Yes, this one of the very, very old classic companies. They also have guns but again, anybody would recognize as falling in the category of what we call an assault weapon. Here's what would happen with Colt.

Colt was founded in 1836, long, long time ago. Annual revenue is $122 million. This is small compared to the other two. The impact from the proposed legislation, about $60 million lost. If I they lose that business, again, from Privco's assessment, that would take them from around 120, 130 employees, they would lose about half of those -- Erin.

BURNETT: All right, thank you very much. It goes to show, there are costs to some of these decisions, especially when Tom put that in the context of what would be a lot of jobs.

And as lawmakers debate strengthening gun laws in this country, Republican Senator Chuck Grassley said something yesterday that, well, really caught our attention. And he said we're ignoring a major part of the problem, violent video games. Here he is.

(BEGIN VIDEO CLIP)

SENATOR CHUCK GRASSLEY (R), RANKING MEMBER, JUDICIARY COMMITTEE: There are too many video games that celebrate the mass killing of innocent people, games that despite attempts at industry self- regulation, find their way into the hands of children.

(END VIDEO CLIP)

BURNETT: That position mirrors the NRA's. And according to open secrets, the NRA has donated more than $28,000 to the senator since 1992. Now, we invited Senator Grassley to come OUTFRONT, but so far, he's declined. There's the saying that guns don't kill people, video games do. Senator Grassley implies they make kids more violent. Does it add up? William Pollack is a psychologist and author of "Real Boys Rescuing Our Sons From The Myths of Boyhood."

Sir, I really appreciate your taking the time. Let me ask the point-blank question. A lot of people out there, with this is accepted as a fact, that all these violent games, and by the way, they are horrifically violent, is why we are seeing this seeming explosion in mass shootings. True?

WILLIAM POLLACK, ASSISTANT CLINICAL PROFESSOR, HARVARD MEDICAL SCHOOL: No, not true. I mean, I agree with the senator, we should put some controls on those violent video games, but they don't cause the shootings, anything more than one item does.

But, when you have assault weapons and multiple magazine weapons, when someone goes in to shoot someone, they don't shoot one person. They shoot 20, 30, or 40 in a matter of seconds. And there is no need in the United States of America for someone to have recreational assault weapons.

I had the honor to be a collaborator and a principled investigator with the U.S. Secret Service on the one study of school shooters. This is targeted violence. I don't know if Adam Lanza purposefully went into the school to get someone. These are kids who went into the school because they hated school and hated people.

They were homicidal, they were suicidal. Many of them were able to get weapons from other family members, they were able to break into the locked case, and many of these weapons caused multiple damage.

Now, would I say, if we do away with those weapons, will end school shooting? No. I'd be a quack if I said that, but with the number of people killed be diminished, absolutely.

BURNETT: But it's interesting that you say that video games -- because people have talked about Adam Lanza, reportedly, a game "Aficionado." And Senator Grassley did, just in the past, literally couple of moments, sir, send in a statement.

I wanted to read you something he said. He said, this is about much more than gun violence, but then he brings up this. He says, it shouldn't be acceptable to any of us, including in Hollywood and in video games, where mass killings seem to be glorified.

The Norway mass killer wrote in his manifesto that he trained for his shooting spree that killed 77 people by playing video games. That is a pretty damning statement and that man did say that he trained on a video game.

POLLACK: I have no doubt about it. I agree with Senator Grassley. We need controls over violence in our media and in our video games, especially for younger children. But that alone isn't the answer.

BURNETT: Isn't causing the violence. POLLACK: We need those controls --

BURNETT: But what about -- let me just ask you a question about "Grand Theft Auto." There are probably some viewers out there who play this all the time. This turns, when you kill people, you win points, right?

For example, you kill a prostitute, that's a big thing, you get to win points. You know, I find that offensive and disgusting, but does that mean that those people who play that game are more likely to kill people?

POLLACK: No. It's heinous. It's more than disgusting, it's heinous, and it's possible that boys who watch that for a long period of time might stand back when fighting occurs and not protect someone or engage in domestic violence. But there's no proof they're going to go out, get a gun, and shoot someone, absolutely no proof at all.

BURNETT: Well, thank you very much. We appreciate your taking the time and, you know, giving some provocative answers there.

Still to come, new developments in the story we brought you yesterday. How Senator Bob Menendez is responding to the accusations he was with prostitutes.

Plus, another Super Bowl commercial being called racist and this one is very important to us. Why, because it involves camels.

And later, ESPN is forced to review the X-Games because of crashes like this one.

(COMMERCIAL BREAK)

BURNETT: Our third story, OUTFRONT, money, politics, and allegations of partying with prostitutes. We first brought you this story last night and now there are new twists in the accusations about Senator Robert Menendez of New Jersey.

His office says that it has reimbursed a political donor more than $58,000 for two trips to the Dominican Republic in August and September of 2010. But the reimbursement came two months after an ethics complaint was filed against him and two years after the trips actually took place.

The senator's office is calling the late imbursement a, quote/unquote, "oversight." But it's those trips to the Dominican Republic that sparked allegations Menendez was meeting up with prostitutes. For more on this developing story, here's our Susan Candiotti.

(BEGIN VIDEOTAPE)

SUSAN CANDIOTTI, CNN NATIONAL CORRESPONDENT (voice-over): Was it more than a warm Caribbean breeze that brought Senator Bob Menendez to this Dominican Republic resort? A mysterious tipster who calls himself Peter Williams claims Menendez was doing much more, partying with prostitutes.

A conservative website, "The Daily caller," published interviews in October with unidentified women who alleged they were with the senator. This week, the story added cat-and-mouse e-mails, purported to be between Williams and an FBI agent between last August and December.

The agent never appears to get a meeting with Williams. At one point, the FBI agent allegedly writes, "as far as the information you have provided, we have been able to confirm most of it." However, it's unknown what the information is.

Last April, a Washington, D.C. watchdog group was also contacted by the elusive Mr. Williams, but said it could never substantiate his claims and referred the matter to the FBI in July.

In a statement, Menendez flatly denies he's been with prostitutes in the Caribbean, and calls the accusations politically motivated. Senate Majority Leader Harry Reid strongly defended Menendez on Tuesday, and attacked the online story.

SENATOR HARRY REID (D), MAJORITY LEADER: I've told you how I feel about the source of this stuff is, really very, very typical for the source.

CANDIOTTI: But today, after Reid's aides said Menendez failed to tell Reid about those reimbursed trips to the Caribbean, Senator Reid distanced himself a bit.

REID: He's an outstanding senator. He's now the new chair of the Foreign Relations Committee. Any questions in this regard direct to him. I don't know anything about it.

CANDIOTTI: But the FBI is asking questions about the senator's wealthy friend and big campaign donor, Dr. Salomon Melgin, whose corporate jet like this one, senator used to fly to the doctor's home in the Dominican Republic. The FBI and Federal Health Care fraud investigators raided Dr. Melgin's Florida office this week and hauled away several boxes.

The FBI would only call it law enforcement activity. In an e- mailed statement, Melgin's lawyer says, "the government has not informed Dr. Melgin what concerns it may have. We are confident Dr. Melgin has acted appropriately at all times."

(END VIDEOTAPE)

CANDIOTTI: Along with the watchdog group in Washington, who said it was unable to verify his information, CNN also reached out to Peter Williams, if that's his real name. We received one reply offering more information, but we've not heard back since -- Erin.

BURNETT: Thanks very much to Susan Candiotti. Still to come, police continue to surround an underground bunker in Alabama, where a 5-year-old boy is still being held hostage. And the state of Washington is looking for someone to run its pot business. What they're doing to weed through the applicants. You can't blame us for the puns tonight.

And some people think this Coke commercial is racist -- did you just see that? Did you just see that? We're going to let you decide, later in the show.

(COMMERCIAL BREAK)

BURNETT: Welcome back to the second half of OUTFRONT.

We start with stories we care about, where we focus on reporting from the front lines.

And tonight, we go to Mexico City, where Mexico's interior minister says that 14 people have died and another 80 have been injured after an explosion at the offices of Mexico's state-run Pemex Oil Company. Those numbers, obviously, are not final. The story is still developing and authorities tell our affiliate Foro TV that at least 30 people are trapped in the building after the blast. It is unclear right now what caused the explosion, but authorities are warning that death toll could rise.

Well, the White House will not extend its job council another year. Now, two years ago, this group of business leaders would gather on occasion to give the president input on how to create jobs and strengthen the economy. The White House official says the plan was always to disband it after two-year run.

But we wanted to see, you know, did they do their job? They were supposed to create jobs, right? We checked how many times they met. According to the council's Web site, they held 18 listening in action sessions and they had four formal meetings. The most recent meeting was more than a year ago.

All right. Caleb Moore, a freestyle snowmobiler who was injured during a back flip attempt at the Winter X-Games last week, died today. It's a horrific ending to this story. He was only 25 years old. During the jump, you may remember us showing this to you, he ran into trouble landing the 450-pound snowmobile, it flipped on top of him.

In a statement, his family says Caleb will truly be missed and thanked his fans for their support.

ESPN tells us that as a result of the accident, they will review the discipline and adopt appropriate changes at future X-Games.

It has been 546 days since the United States lost its top credit rating. What are we doing to get it back? Well, today the Senate passed a debt limit extension that gives the nation the ability to borrow more money until mid-May. It goes to the president who is expected to sign it and we can go through this whole joke again in a couple months. And now, our fourth story OUTFRONT: Alabama hostage nightmare. SWAT teams and hostage negotiators continue to surround an underground bunker in Midland City tonight. As we were telling you last night when we first reported on this story, it's about 100 miles south of Montgomery. A 5-year-old boy is being held hostage there.

Now, on Tuesday, authorities say a man who neighbors have identified as 65-year-old Jimmy Lee Dykes stopped a school bus, shot the driver, killed him, and took a random kindergarten on the bunker on his property.

Now, neighbors describe the Vietnam veteran as a survivalist and a menace to the community who had a history of threatening people. Our Victor Blackwell is about a half a mile away from the bunker for us tonight.

Victor, I know this has been a very troubling and disturbing the story, because now, another 24 hours have gone by. There have been few developments in terms of whether this little boy will be freed.

What can you tell us more about this suspect?

VICTOR BLACKWELL, CNN CORRESPONDENT: Well, we've spoken with more than a few people in this community who have had run-ins with Jimmy Lee Dykes, and they -- I can tell you that he's not well thought of in this community. They tell us stories of him shouting at them, allegedly shooting at them. They say he patrolled his property between 1:00 and 3:00 a.m. with a flashlight and a shotgun, and threatened to shoot anyone or anything that came on to his property.

One woman we spoke with said she never even knew the man's name, she just spoke of him as the mean man. Well, everyone, now, knows his name. Jimmy Lee Dykes, 65 years old.

And we've done some digging into his history and we found that he has a criminal history that dates back more than 30 years across three states, starting in 1980 in Texas with a DUI. In the '90s, he was charged with improper exhibition of a weapon. That was dropped. Then in 2000, he was charged with possession of marijuana. That's a first- degree misdemeanor, served six months probation.

And then in December, charged with menacing a neighbor. Jimmy Davis Jr. says that he shot at his family after apparently he damaged the road that leads to the property line that they share.

So this is a man that, again, in this community, not well-thought of and has a history that dates back to the '80s.

BURNETT: And, Victor, what about the bus driver who Jimmy Lee Dykes shot point-blank and killed. He died trying to defend the children on that bus. What have you learned about his story?

BLACKWELL: Yes, 66 years old, named Charles Poland. His friends call him Chuck. And I had to go a few miles away to the small town of Newton, where he's lived for decades. It's a population, 1,500, and it's a community where everyone knows virtually everyone else. And I spoke a woman who has known Chuck, as she calls him, for 20 years. And I asked her if she believes her friend deserves the title of hero.

(BEGIN VIDEO CLIP)

CINDY MESSICK, SUPERVISOR, CHRISTIAN MISSION: I think it takes someone with a specialness to stand up to a man that's got a gun pointed at him and say, "No, you're not having these children." And to just go ahead and defy him and do what he did. It takes someone that is a hero.

(END VIDEO CLIP)

BLACKWELL: Chuck, as she calls him, has been married for 43 years. We've learned that his funeral will be Sunday morning in his hometown of Newton -- Erin.

BURNETT: Victor, thank you.

And now we go to Washington state, where officials are searching high and low for someone to help them grow pot. Colorado and Washington are the first states to legalize recreational marijuana use, but before they start producing and selling it in mass quantities, they say they need an expert in the proverbial field.

You've heard about pot brownies. What if you could be paid to be the pot czar?

Paul Vercammen is out front on the story.

(BEGIN VIDEOTAPE)

WHOOPI GOLDBERT, THE VIEW: State officials are looking to hire a pot consultant, to help them grow, test, and bake it into brownies. And I've got to tell you, I've put my name into the running.

(LAUGHTER)

PAUL VERCAMMEN, CNN CORRESPONDENT (voice-over): Whoopi joked on "The View," but the pot consultant job is no joke. Washington recently made marijuana legal, users kicking it off with a midnight smoke out. Now, the state's liquor control board wants to hire a consulting firm versed in reefers and regulation.

BEN CARPENTER, POT ENTHUSIAST: I kind of feel like war is over now and now they've invited us to this grand hotel to give them advice on how to grow pot.

VERCAMMEN: The search for a marijuana consultant stopped in Tacoma. A law degree is preferred. They want someone who knows how marijuana is grown, cultivated, harvested, cured, and processed. How pot should be transported, labeled, packaged and sold at a retail level, expertise on how marijuana should be destroyed in overproduced, contaminated, or recalled, and how to ensure quality and consumer safety. BRIAN SMITH, WASHINGTON STATE LIQUOR CONTROL BOARD: The board doesn't really have expertise in quality standards for certain types of marijuana.

VERCAMMEN: Washington is entering a whole new world of weed, fancy cigar-bar style marijuana stores will open in December, when commercial sales can begin. The state estimates the heavily taxed marijuana business could generate up to almost $2 billion in new tax revenue in its first five years.

Reports on what they will pay the consultant got exaggerated and passed around like a joint during the summer of love. The liquor control board told CNN the pot consulting job will pay less than $100,000 per year in a state now testing its own big bong theory.

(END VIDEOTAPE)

BURNETT: Still OUTFRONT, accusations of racism. Does Coca- Cola's new commercial go too far? Camels.

And Beyonce directly answers the lip syncing questions. Was she faking it?

(COMMERCIAL BREAK)

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

And tonight, we go to China, where the government is being accused by several newspapers of hacking into computer systems. "The Wall Street Journal" is reporting Chinese hackers infiltrated their system to monitor what they were covering.

And "The New York Times" reported Chinese hackers carried out cyber assaults over the course of the past four months. Now, that's the same time the newspaper published an investigation about the wealth of the Chinese premiere and his relatives.

And today, as CNN tried to cover news about the hacking story, the Chinese government blacked out the story. You could see that happening, right there.

Steven Jiang is in Beijing tonight, and I asked how the government there is reacting to the accusations.

(BEGIN VIDEO CLIP)

STEVEN JIANG, CNN CORRESPONDENT: Erin, the Chinese authorities have strongly denied any involvement in the cyber attacks against "The New York Times," calling the accusations baseless. And the Chinese defense ministry actually told us that the Chinese military has never supported any hacker activities.

Now, "The Times" said the Internet security experts it hired traced the origin of the latest intrusions back to China, based on the patterns and the techniques used. This wouldn't be the first time this kind of thing has happened. Google and China had a very similar row just a few years ago over exactly the same issue.

So many experts are seeing a disturbing trend emerging when it comes to cyber attacks allegedly sponsored by the Chinese authorities targeting a wider array of targets around the world -- Erin.

(END VIDEO CLIP)

BURNETT: Thanks to Steven in Beijing.

And now, let's check in with Anderson Cooper with a special "A.C. 360."

(BEGIN VIDEO CLIP)

ANDERSON COOPER, CNN ANCHOR: Tonight, a special "A.C. 360" town hall from the nation's capital, "Guns Under Fire". We want to try to cut through the talking points, the slogans, the yelling and finger pointing, and have an actual discussion that zeros in on key issues.

And the key question, how to stop the epidemic of gun violence? We're going to hear from all different sides in this debate, from people who have lost loved ones, who have used guns to save lives, survivors of mass shootings, legal experts, gun control advocates, and those who do not want more gun control.

All of that is up next, Erin.

(END VIDEO CLIP)

BURNETT: All right. I'm really looking forward to that. It's going to be a special night for Anderson.

And today, Beyonce admitted that she did have some help at the inauguration.

(BEGIN VIDEO CLIP)

BEYONCE KNOWLES, SINGER: I am a perfectionist. And one thing about me, I practice until my feet bleed and I did not have time to rehearse with the orchestra.

(END VIDEO CLIP)

BURNETT: The world-renowned pop singer said she worried about potential problems during the live inauguration broadcast, so she just sang along to a pre-recorded track.

Now, Beyonce has been silent about that performance until today in New Orleans, she is set to headline the super bowl halftime on Sunday. Now, will she sing it live or not, we shall see. But during the press conference, she proved, she is more than capable of relying on her own pipes, thank you very much.

(BEGIN VIDEO CLIP)

(BEYONCE SINGING NATIONAL ANTHEM) BEYONCE: Thank you guys so much. Any questions?

(END VIDEO CLIP)

BURNETT: That's right. Sass and style there from Beyonce. Stick it, media.

All right, that brings us to our fifth story OUTFRONT: Coca- Cola's Super Bowl ad. Is it politically correct or controversial?

OK. Here it is. Take a look.

(COCA COLA AD CLIP PLAYS)

BURNETT: All right. So as you watch this, I'll explain what it is. Basically, there's a guy on a camel, there's some cowboys, a biker gang, and showgirls. And they're all in a race. The prize, of course, is a cold bottle of Coke in the middle of what is probably the empty corridor of Saudi Arabia, I don't know.

At the end of the ad, viewers are invited to vote on who should win. The issue: when you get to Coke's Web site is that, when you go to vote, the man on the camel is excluded from the ballot. Now, I've got some thoughts on that in a movement. But some Arab-American groups have criticized the stereotypical view of the Arab. They say it's a further insult, the viewers can't even vote for him.

OUTFRONT tonight, our Roland Martin, and the author of "Islamic Pacifism," Arsalan Iftikhar.

Arsalan, let me start with you, because I know you feel this is racist. How come?

ARSALAN IFTIKHAR, AUTHOR, POLITICAL COMMENTATOR: Well, first of all, I think it's important to point out that I don't think that Coca- Cola was out to get anyone, was I think they were peddling in stereotypes.

You kept mentioning a camel -- actually, I have two words for you, a camel jockey. Go up to any Arab and call them a camel jockey and tell me they wouldn't be offended. You know, it's the moral equivalent of if coke was trying to portray Hispanics and Latinos and you had somebody wearing a huge Speedy Gonzalez sombrero, pulling on a donkey, I don't think we'd be chuckling with tongue in cheek and saying, oh, you know, those silly people at Coke.

So, I think it's important to keep in mind that 100 million people watch the Super Bowl. The most watched event here in the United States. And, you know, the marginalizing and the offending of any ethnic or minority group, you know, doesn't need to be made to make a TV commercial.

BURNETT: Roland, what's your thought?

ROLAND MARTIN, CNN CONTRIBUTOR: This is the exact same thing I talked about the other night when it came to the Volkswagen ad, that is you can got to the extreme saying something is racist.

BURNETT: Right, with the white guy using a Jamaican accent.

MARTIN: Right. You can go to the extreme and say something is racist. Now, you say it's stereotypical, but here's the deal -- I came across from this commercial as if it was sort of this movie-kind of deal, because you had -- you're in the desert, it's hot, you're thirsty. So you have the cowboys, and you have the guy with the camel, then you've got the showgirls on the bus, and you got the Mad Max sort of folks on motorcycles. That's what it sort of came across.

Now, if you're saying a guy was walking a camel down the street of Dubai, now, I can understand that. So, there was sort of I can sense they were going with this sort of movie-type theme. But to say it's racist, this is when I think you go to the extreme.

BURNETT: Yes, I mean, Arsalan, I'm wondering, obviously, you've got cowboys, you've got bikers, you've got camels, I mean, they are all the epitome of the stereotype for each of those things.

IFTIKHAR: Well, they don't they don't caricaturize an entire group or minority group. You know, you got a bunch of pretty showgirls, you know, speeding down their bus, and you have the Mad Max gang of people on their motorcycles, and who is the one guy left back? It's the Arab guy yanking on his camel and can't even get his camel to move.

BURNETT: I'm sorry, I'm finding it a little humorous here. I mean, camels are stubborn, and they don't like to run very fast. I have been to the races, so have you. They wouldn't win.

IFTIKHAR: They can actually run up to 40 miles per hour. What I'm trying to say here is that --

BURNETT: But not like a bike, you get my point, right? I mean, they are --

IFTIKHAR: But, Erin, you also have to understand that in the last 10 years here in the United States, Arab and Muslim-Americans have been marginalized in virtually every aspect of pop culture and the media.

You look at Hollywood movies, you shows like "Homeland" and "24" with Kiefer Sutherland where, you know, the perpetual bad guy are olive skinned bearded Arab Muslim males. And so, this just feed into the stereotype. And like I said, if it was a Latino wearing a Speedy Gonzales sombrero yanking on a donkey, do you think that you're on the side of the argument that you're on tonight?

BURNETT: But I don't think it's really the same. But go ahead, Roland.

MARTIN: Actually, if I see a black guy on a horse who is in the desert trying to go for a bottle of Coca-Cola, I think can probably put those things together. Look, I totally understand about images. I mean, I'm out here in L.A right now finishing my TV One show. We were talking about images and African-Americans. So, I totally get that.

But again, I think it speaks to the issue of what was the intent of the commercial, and what were you trying -- what was Coca-Cola trying to show? I think it goes to the extreme when somebody says it's racist. Now, if you say it's a question of stereotypes, and what is insensitive, that's a whole different conversation.

BURNETT: Right.

MARTIN: This is, again, where I think with this type of commercials. So, again, what is the happy medium? So, would have been somebody who is Muslim wearing a suit walking across the desert with a brief case? I mean, I'm just asking from that vantage point, what would you have liked to have seen versus that?

IFTIKHAR: Listen, you could have kids playing soccer in the desert. You could have a billionaire baller driving a black Range Rover through the sand. But, again, the stereotype of a camel jockey, you know, to call an Arab or a Muslim, a camel jockey, the only --

BURNETT: But it wasn't really a camel jockey. I mean, you know, the Bedouins do ride camels. It's not the same as being a camel jockey.

But, look, Ars, let me just say this -- you get on Emirates Airlines, right, one of the biggest carriers in the world. On your TV screen, they talk about camels. You're in the Dubai airport, they have camels. I mean, camels are a symbol. I mean, there's nothing derogatory about saying camel.

IFTIKHAR: Erin, do you think the vast majority of the 100 million people who are going to watch the Super Bowl have flown first class on Emirates Airlines? No, they're going to get --

BURNETT: By the way, those TV screens are all the way through the entire plane, and coach also, as I'm sure you're well aware.

IFTIKHAR: Even so. All I'm saying the vast majority of people in America, you know, get a lot of their, you know, preconceived notions about religious and ethnic minority groups through television and through pop culture. And like I said, if it was a Latino guy wearing a sombrero, pulling a donkey, I'd have the same outrage that I have tonight.

BURNETT: All right. Well, interesting point and fair and said in such a nuance way. Thanks to both.

And let us know what you think of Coke's ad. Go to CNN.com/OUTFRONT and vote in our poll.

(MUSIC)

BURNETT: It is strange for us to focus on the commercials instead of the game until you realize the game isn't about football anymore. It's about selling stuff. In 2010, "The Wall Street Journal" analyzed the NFL games and found that when you ignore the parts when the players are milling around on the field or the coaches are chatting on the sidelines or the cheerleaders are dancing, this is actually incredible. You only get 11 minutes of real football action during an NFL game, that's not a lot.

Which brings us to tonight's number, 47. There will be 47 minutes of commercials during Sunday's game. That's a new record. And that's three minutes more than last year. Hmm.

All right. A car company has figured out a way to fuel your car, and I mean, I'm talking a big car with a lot of horsepower, with pond scum.

(COMMERCIAL BREAK)

BURNETT: Pond scum, it's the next big thing, apparently, at least for Audi, which is trying to turn a rather nasty and smelly substance into fuel.

(BEGIN VIDEOTAPE)

BURNETT (voice-over): Audi, it's a brand that's more like on Facebook with Justin Bieber or Lady Gaga. And now, the company is a rock star in its own right when it comes to cracking one very important code.

BRIAN RANPP, HEAD OF GOV'T RELATIONS, AUDI AG: At the end of the day, we can produce electricity with our project. We can produce hydrogen. We can produce natural gas in the form of methane, which has been, again, it's free. We can produce ethanol or diesel.

BURNETT: They call it e-gas, and according to Brian Ranpp, the scientist with Audi, it's the fuel of the future. The company has figured out a way to make its own brand of natural gas without drilling.

Kind of a miracle, right? They're making fuel from pond scum.

RANPP: Giving the challenges ahead of us with global warming, this is a solution.

BURNETT: Which is why pond scum is so perfect. It's low cost, renewable, and it's a raw material that can be converted into biofuels that can then be used in diesel engines.

Reiner Mangold, one of the masterminds behind Audi's big idea says that his goal is to produce e-gas at the same cost as oil.

REINER MANGOLD, HEAD OF MOBILITY, AUDI AG: The reason is to bring it to the same level as oil. We think about $100 a barrel of processed fuel.

BURENTT: And this isn't a pipe dream for 2020 or some far out year. The ACTNG is rolling out in Germany in May. It can use diesel and e-gas with a 13.2 gallon tank that can go as far as 775 miles.

RANPP: This car underlines Audi's belief that gas, natural gas, has a future.

BURNETT: Audi says e-gas will be available to everyone for the exact same price as diesel here in the United States by 2016.

RANPP: What makes it a rock star? Engineering. It's the truth in engineering, it's yes.

UNIDENTIFIED MALE: Innovation?

RANPP: Yes, product innovation.

(END VIDEOTAPE)

BURNETT: That's pretty incredible that it could be running on pond scum so quickly.

Thanks, as always, for watching. A special "A.C. 360" "Guns Under Fire" special town hall starts right now.