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Obama Picks Homeland Security Chief; The Growing Appeal of Private Drones; 12 Years a Slave Early Oscar Favorite

Aired October 18, 2013 - 16:00   ET


JAKE TAPPER, CNN ANCHOR: After the few weeks we have had, I'm going to try my hardest to avoid saying the word shutdown today, starting now.

I'm Jake Tapper. This is THE LEAD.

The money lead. Now that we're done flirting with potential default for a few months, the markets finishing this note -- finishing this week on a high note, but the real story on the street is what you will find if you Google "Google" today.

The buried lead. Drones, they are not just for killing targets thousands of miles away anymore. Forget the Benz and the Rolex. Private drones are the new status symbol. And I will take one for a test flight.

And the pop culture lead. It's an unflinching look at the horrors in America's past. The reviews are stellar across the board for "12 Years a Slave," but will audiences find it too hard to watch?

Good afternoon, everyone. Welcome to THE LEAD. I'm Jake Tapper.

We will begin with a new lead today, the money lead. The closing bell just moments ago on Wall Street. Considering the few weeks leading up to now and the threat to our economy that Congress just barely avoided by raising the debt ceiling, I think I speak for many of us when we say we needed this.

The Dow Jones finishing the day more than 20 points up, which may not be huge, but it is way above where we thought it might be and way above where it was hovering the middle of the week. The S&P 500 is the real story here, surging into record territory for a second day. But you hear that slapping noise out there? That's the sound of palms hitting foreheads all across the country, from those who saw the $85 public offering price for Google back in 2004 and said to themselves, ah, it's just a fad.

Today, Google's stock price reached the $1,000 mark for the very first time. We will talk all about that success story in just a moment.


TAPPER: Many of us don't leave the house without checking it. Many of us wouldn't get where we're going without it. As we mentioned, Google had a day to remember on Wall Street, with shares hitting the $1,000 mark for the first time ever.

And I want to bring in Rocco Pendola, a columnist for The Street.

Rocco, good to see you.

Google demolished expectations with its earning report. How did they do this?

ROCCO PENDOLA, THESTREET.COM: Jake, first I want you to repeat after me. You don't have to worry about a shutdown at Google.

TAPPER: You really you don't have to worry about a shutdown at Google. OK.

PENDOLA: There you go. Fantastic. So, you said shutdown within the first five minutes of the show.

TAPPER: Oh, you...

PENDOLA: Yes, they blew it away.

You didn't get that, Jake. Come on.

TAPPER: No, I didn't realize. I violated my oath.

PENDOLA: You are so enamored with the $1,000 stock price like everybody else is.

They're on fire. And the reason why is because they're focused. They're more focused than Yahoo!, who does search, they're more focused than Microsoft, who does search with Bing, and they're more focused than even Apple, one of the greatest companies in the world that doesn't even do search.

This focus means we make our money on advertising. That's all we care about. There is potential to make money in so many other areas and their other revenue is growing. It's almost 5 percent of the pie, which is a few percent higher than it was a couple of years ago, but they're laser focused on advertising dollars.

They have all these Android devices out there. They have Chromebooks that suckers like Hewlett-Packard are making and that are selling for $300. All they want people to do is use them, use the Google ecosystem and click on ads. And they make tons of money, billions of dollars every quarter doing that. It's just -- it's remarkable what they have been able to put together. They have seen the future like nobody else.

TAPPER: But, Rocco, it's not just ads, right, and their search? They have content. They have YouTube. And Yahoo! doesn't have anything like that.

PENDOLA: Exactly. That's the problem. Yahoo! has lots of traffic. They always have. They have some really great properties, but I don't think Yahoo! is the go-to place. A few weeks ago, Springsteen was playing in Rio, and I wanted to see what the set list was. So, I went to the Springsteen fan site. And I was like, oh, wait, the time change, change, Brazil and L.A., I can actually -- the show hasn't happened yet. There was a link and where does it go? To YouTube. This Rock in Rio festival in Brazil, they were live-streaming the concert on YouTube.

I watched it for two-and-a-half-hours, great quality. I actually used Chromecast, a little thing Google put out, so it's on my television set. And I'm watching this thing for two-and-a-half-hours. Today, I went to Google to find something, I ended up on YouTube. I watched one video. They hooked me. I watched about three more.

So, yes, they have fantastic content across all their platforms. YouTube probably has the most potential right now, and they're just skimming those advertising dollars. That's the thing, skimming that advertising money. They will worry about other revenue slowly but surely. There's no stopping where they can go.

TAPPER: And, lastly, Rocco, let's say I don't own Google stock and I don't think I do. Should I buy some? Or do you think buying it at $1,000 a share is a fool's errand?

PENDOLA: A lot of people say $1,000 a share, that's too expensive, and you really have to consider things like the stock price compared to revenue, compared to profits.

You look at Netflix at $330, Pandora at $25, two stocks that have done really well this year. They are actually really expensive stocks. Google's a pretty good value. That said, you want to be careful chasing something because you missed it, you missed it at $85, you missed it at $100, you missed it at $200, $300, $400, $500, $600, $700. It's always a fool's game to try to chase those stocks.

It depends on your personal situation. Want to make it a small part of your portfolio, fine, probably not a bad idea even at these levels, but to say my strategy is going to be to catch Google going from $1,000 to $2,000, it's really risky for most people, particularly if you have retirements, college funds, first homes, those kind of things that your money depends on.

TAPPER: Rocco Pendola,, thanks again, my friend.

PENDOLA: All right, Jake. Thanks.

TAPPER: To our national lead now. If it were not for the last 16 days of let's call it unpleasantness in Washington, D.C., the big political story of the month would probably be the stumbling debut of the Obamacare Web sites, which allows consumers to, from the comfort of their couches, long for the joy of a trip to the DMV.

We have reported extensively on the problems people have had signing up through the health care exchange Web sites that launched October 1. CNN reported first earlier this week that there are problems on the back end too. Insurers are having difficulties. They are getting bad data from the government on who would buy the plans insurance companies are supposed to offer.

And now "The Wall Street Journal" has more details about that. We are talking about duplicate enrollments, wrong information, blank data fields and concerns over whether the people signing up are actually eligible. Some insurers have now hired temps to call these new customers and clear up the mistakes.

The administration will not release enrollment numbers for the Affordable Care Act until November at the earliest. CNN has been surveying 14 of the 36 states taking part in the program, along with Washington, D.C. Based on that, our most recent estimate for the number of people who have signed up is at least 242,000.

Coming up next on THE LEAD: He was just nominated for the top security job in Washington, D.C. but is Jeh Johnson the right man to lead what one senator calls the most mismanaged department in the federal government?

Plus, he's the mastermind behind the Everything Store, so what does Amazon's CEO Jeff Bezos have planned next? Our money lead is ahead.


TAPPER: Welcome back to THE LEAD.

In other national news, when you hear the term homeland security, what comes to mind? The Secret Service, the government spying on your e- mail? Agents busting illegal immigrants or failing to do so?

The Department of Homeland Security is a sprawling agency encompassing everything from Border Patrol to domestic threats from al Qaeda, cyber-security and transportation security to disaster assistance. It's been three months since Janet Napolitano announced she was resigning from Obama's Cabinet as head of the DHS. She left office early last month, so who is taking her place?

Well, President Obama announced just about two hours ago that Jeh Johnson, former head counsel for the Pentagon, will be taking over, if he's confirmed.

Here to give us some insight on this nomination and what we can expect and what he can expect, Julie Myers Wood, former assistant homeland security secretary during the Bush administration, and Spencer Ackerman, the national security editor at "The Guardian."

Julie, we were talking about this during the break. You were a special assistant to President Bush helping to come up with the short list of nominees after the Bernie Kerik discussion exploded. Michael Chertoff ultimately got it. He did not have a tremendous amount of management experience, even though he had been at the Criminal Division at the Justice Department.

Why was he the right man for the job? And compare him to Jeh Johnson.

JULIE MYERS WOOD, FORMER ASSISTANT SECRETARY OF HOMELAND SECURITY FOR U.S. IMMIGRATION AND CUSTOMS ENFORCEMENT: Sure. And I think there are a lot of similarities between Secretary Chertoff and Jeh Johnson. Chertoff was the right man for the job because he's incredibly smart. And DHS has a lot of very difficult issues, a lot of first impression issues, and he could look at those and decide them very quickly.

TAPPER: So, it's a lot -- you really need to be able to make snap judgments?

WOOD: Well, to make judgments quickly. You can't mull over things for years.

DHS is not the kind of agency where you can do that. Chertoff also had successfully navigated the interagency community, something that Jeh Johnson has done at the Department of Defense. They were both former prosecutors from the Southern District of New York. And so I think, ultimately, President Bush thought that background would give Secretary Chertoff a real leg up and help him bring together this agency.

And I think he did so.

TAPPER: Spencer, we have had two governors serve in that role, Tom Ridge of Pennsylvania, Napolitano of Arizona. Is it important to have a big -- experience with a big sprawling bureaucracy, because that's what this job is?

SPENCER ACKERMAN, "THE GUARDIAN": It has to be important. This is one of the most unwieldy agencies in the federal government. It faces a lot, right now, existential questions about should it even persist in the form that we know it as.

It's very easy to come into DHS and know a whole lot about one thing that it does, cyber-security, aviation security, immigration. It's very rare -- and, in fact, we haven't really had it yet -- for a DHS secretary to know everything or at least most things about everything DHS does.

TAPPER: And tell us what you think about Jeh Johnson. You think he could be effective in that?

ACKERMAN: Fascinating choice.

Johnson has a very rounded background inside a lot of the very important national security law issues that he faced at the Pentagon. For someone to run an agency like this, even with the management questions, he knows a lot, as we were just discussing, about the interagency process. That's going to be really important.

And this will be a test of how perhaps a different background for an agency whose existence is very much in play might turn out to be an agent of change.

TAPPER: What do you think?

WOOD: Absolutely. I think his background at DOD and his experience, frankly, dealing with cybersecurity issues is going to be absolutely critical. DHDS and DOD are in a lot of disagreements over how cybersecurity, one of the biggest threats to our national security, should be handled. He's been right in the middle of that. I think he could be very effective in helping kind of bridge the gap. The other thing that I think -- when you look at his speeches, he's a very thoughtful guy, and he's good at looking at emerging issues. And you've got to have that for a DHS leader.

And so, I think he could be a good choice, particularly with the appointment of DHS Dep Sec Ale Mayorkas. You really need somebody with this immigration background, and I hope they confirm him quickly. I think together they could be a good team.

ACKERMAN: This is one of the more fascinating things about the Johnson appointment from a counterterrorism perspective. Johnson is one of the leftward pulls, you might say, of the administration's internal dialogue about what to do about the war on terrorism and gave this fascinating speech late last year before he left the Pentagon about envisioning a time and a circumstance where there is no longer a perpetual global war against al Qaeda and that's not really something the government's been very prepared to talk about or even envision. What does victory actually look like?

And Johnson took a public position on that, saying it's really almost for internal consumption as well as public consumption. It's OK to envision a time in which the U.S. moves beyond this and does so successfully. The fascinating thing, you don't really get the sense that DHS is going to be the player influencing that conversation internally.

WOODS: Well, with him in place, DHS could be. I think if he's the secretary, and he has a voice, he could be the player.

TAPPER: But isn't that something that the Bush administration officials especially might be not excited to hear about, somebody talking about the end of the war on al Qaeda, given that there still is this existential threat from al Qaeda and affiliated groups like al Shabaab?

WOODS: Well, I think certainly, you know, Jeh Johnson might give a different speech today than he did a few months ago. I think the recent events have shown that we're not yet to an end game, but you have to think about what's the end game, are we moving there? And I think having a secretary that has a big voice in this discussion is important.

The one management challenge I will say, I do think he faces a lot of management challenges, is how do you manage empty chairs? And DHS has so many vacancies. And so, in order for him to be effective as the secretary, you've got to fill in those senior level positions. Otherwise, Obama is not going to be able to move his agenda forward.

TAPPER: Final thought?

ACKERMAN: Julie made a really great point about cybersecurity. This is going to be increasingly important to what DHS becomes as right now counterterrorism is to what it is. Cybersecurity faces a lot of questions about who does what, who protects the civilian internet, who protects data security on a business infrastructure and particularly the military facing a lot of questions about whether it should do more in that space as opposed to simply protecting military networks and conducting outward threats against foreign adversaries, particularly when most cybersecurity threats are about data exfiltration.

It's going to be really fascinating to see how a former Pentagon official at senior levels is able to negotiate this with the Pentagon.

TAPPER: Fascinating stuff. Spencer, Julie, thanks so much for coming in. We appreciate it.

Coming up on THE LEAD: feeding your brain. A new study looks at the power of sleep in fighting off diseases like Alzheimer's and dementia. We'll explain in our buried lead.

And next --


TAPPER: The future of drone technology is here. We're using one for this very shot. Coming up next on THE LEAD.



TAPPER: Welcome back to THE LEAD. I'm Jake Tapper.

Now, it's time for the buried lead. That's what we call stories we think are flying under the radar.

And speaking of flying, drones is a loaded word. One that's getting and been getting politicians riled up for years now.



SEN. JOHN MCCAIN (R), ARIZONA: Drop a drone hellfire missile.



TAPPER: But there is more to drones than the unmanned military aircraft used to strike foreign targets. Smaller drones can do everything from crop scouting to food delivery, and their sudden mass appeal is raising new concerns about how to control and legislate powerful technology in the hands of private citizens.


TAPPER (voice-over): Welcome to your future. By 2015, these small privately owned drones equipped with cameras and advanced technology could be changing the way we live for good and possibly for ill.

Each month at this rural airport near Washington, D.C., Tim Reuter organizes just one of several nationwide groups of hobbyists and hopeful entrepreneurs dedicated to expanding drone use.

TIMOTHY REUTER, PRESIDENT/FOUNDER, DC AREA DRONE USER GROUP: We really believe the sky is the limit with this technology, and we want to incentivize people to start thinking about how can you apply this to real world problems.

TAPPER: Unmanned camera toting drones can go where many aircraft and helicopters cannot. More safely and more cheaply. For example, a drone costing a few hundred dollars can be used to monitor wildlife reserves and assess damage from natural disasters. You can even use them to deliver wedding rings if you're so inclined.

What you cannot do yet is commercialize them, making it hard for private citizens to get licenses.

REUTER: As soon as you start charging money, you need to get a license from the FAA.

So, right now, America is sitting on its hands while around the world, people are starting small companies that are eventually going to grow into big companies that we're all going to have to compete against.

TAPPER: I figured if the future of innovation looks like this, I ought to learn to control it.

(on camera): Whoa! Sorry.

(voice-over): After a few practice rounds, Tim lets me go bigger.

(on camera): You took the training wheels off.

REUTER: I did.


REUTER: So, little more aggressive. Up, up, up, up. Up, up, up, up.


REUTER: Looks like it's in fine shape.

TAPPER (voice-over): It suddenly becomes clear just why this growing technology has its legal limits.

(on camera): Is this thing filming me?

REUTER: Oh, yes, it is. Yes. It's been filming the whole time.

TAPPER: This club in Maryland of up to 600 active drone users are excited about this new world of drone use, but there are some Americans who are not so enthusiastic.

SEN. DIANNE FEINSTEIN (D), CALIFORNIA: How do you monitor their use?

SEN. PATRICK LEAHY (D), VERMONT: We have to carefully consider the impact on the privacy rights of Americans.

TAPPER (voice-over): To address some of these justifiable concerns, the Federal Aviation Administration is working under pressure from Congress to prepare for potential risks. Its assignment to commercialize and regulate the use of drones. Its deadline is September 30th, 2015.

(on camera): This is happening, no matter what.

REUTER: Right.

TAPPER: Whether the FAA wants to acknowledge it, whether law enforcement wants to acknowledge it, they are being developed and they're being advanced all over the world. So this isn't a question of when, it's a question of how are we going to deal with it as a society.

REUTER: Right. And part of the challenge is that the FAA doesn't really have the enforcement capacity to deal with it.

TAPPER (voice-over): Not every community, after all, welcomes drones.

JENNIFER LYNCH, ATTORNEY, ELECTRONIC FRONTIER FOUNDATION: What's to prevent all of these commercial operators from sharing the vast treasure trove of data that they collect with the government?

TAPPER: Jennifer Lynch is an attorney for the Electronic Frontier Foundation, a nonprofit privacy rights group that sued the FAA last year, demanding to know who had applied for drone licenses.

LYNCH: I think that drones also present new issues and those include the fact that drones can fly at various altitudes that make them impossible to see. They are able to gather much more information on us than has been possible before.

TAPPER: There are also clear safety concerns. This drone capturing images of a bull race in Virginia this summer suddenly fell from the sky, injuring at least four spectators. One month later, Texas became the first state to pass legislation punishing improper drone use. The state now implements fines of up to $500 for the crime.

(on camera): Surely you can understand why there are people who see this and think holy cow.

REUTER: Yes, there are real issues here but, you know, whenever you empower people --


REUTER: -- there's always going to be a challenge associated with it.

TAPPER (voice-over): So, as the FAA works to overcome the obstacles, Americans like these will be anxiously awaiting the opportunity to take off.


TAPPER: One final point: given that the term drones can have a negative connotation in many minds associated with killing and surveillance, I asked Tim why not change the name. He said, quote, "To be honest, we're trading a little bit on the mystique of the military. If we had called ourselves the remote control club of Washington, D.C., you would not be here talking to me," end quote.

In 2012, neuroscientists reported on something they called the glymphatic system that clears out toxins that could be responsible for brain diseases such as Alzheimer's. Now we're learning one way to clean out those waste products could be as simple as getting more shut-eye. According to researchers from the University of Rochester Medical Center, sleep clicks the system on to a super-clean type level, clearing out the cobwebs from your brain, removing products linked to dementia such as the toxic protein amyloid beta. They based their research on test done with mice and found that the brain does a better job of detoxing itself when asleep than it does awake. They hope to use the research to come up with new ways to treat and prevent certain types of brain diseases.

It was a surreal moment Wednesday night when stenographer Dianne Reidy had her outburst on the House floor. She rushed the dais and starting shouting when the members were voting to reopen the government and avoid bumping up against the debt ceiling. No one knew why this, in the words of her husband, sweet level-headed woman was suddenly scolding Congress, screaming that a house divided will not stand. But now, Reidy is saying God made her do it.

In a statement to FOX News, she said, "For the past two and a half weeks, the Holy Spirit has been waking me up in the middle of the night and preparing me through my reluctance and doubt to deliver a message in the House chamber and that is what I did last night,." unquote. Though she obviously broke the rules of decorum, Reidy was doing what so many Americans wanted this week, giving Congress an earful, making sure they heard her.