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ERIN BURNETT OUTFRONT

Arizona Governor To Speak About "Religious Freedom" Bill; GOP Takes On The Rich; Spike Lee's Anti-Gentrification Rant

Aired February 26, 2014 - 19:00   ET

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


ERIN BURNETT, CNN HOST: Next, Republicans declare war on the 1 percent. One brave GOP congressman wants to close a major tax loophole and Wall Street fighting back tonight.

Plus, Spike Lee fired up, the film director unleashing a 7-minute rant about race and real estate. The man who sparked the tirade OUTFRONT tonight.

Breaking news out of Arizona, the government expected to make a major announcement this hour about the controversial bill that critics call anti-gay. Let's go OUTFRONT.

Breaking news, much anticipated announcement from the Arizona Governor's Office tonight. Governor Jan Brewer will speak in this hour about the controversial religious freedom bill as it's called that's been sitting on her if desk. Now that bill would have allowed businesses to refuse services to gays in the name of God.

Pressure has been building on Brewer for days. Miguel Marquez has been following that story for this show from Phoenix. Miguel, what's the reaction from people you're talking to tonight?

MIGUEL MARQUEZ, CNN CORRESPONDENT: The reaction is that the governor has now decided to make a statement in 45 minutes, 7:45 Eastern Time governor brewer will in her office make a statement regarding SB 1062. We have every expectation, as we have for a couple of days now, that she will veto that bill. The pressure from not only gay and lesbian rights groups here and the crowds that have gathered out here every single night have been enormous.

The business community across the board, around the country has been lobbying this governor to veto this bill. The NFL, Major League Baseball, every entity out there has been telling this governor to veto this bill. I can tell from the protesters tonight were planning a silent protest outside this capital.

Now they are planning a celebration with thank you Jan Brewer signs that they are making right now hurriedly because this veto is coming a little sooner than anyone expected.

BURNETT: All right, well, Miguel, thank you very much. There's only so long she could hold out. I know at first she said she was considering it and now we think we'll get that veto. Obviously it will be significant news later this hour. We'll be checking back in with Miguel on that as soon as the governor speaks.

Meanwhile, our other top story tonight, the GOP taking on Wall Street. Republicans, yes, you heard me, Republicans want to close one of the most crazy tax loopholes in America. It's part of a major tax code overhaul. Republican House Ways and Means Chairman Dave Camp says he is going to close a loophole that has netted the top Americans billions and billions and billions of dollars. So who has benefited.

I want to show you a few of the individuals. People like Steven Schwartzman. He's worth $7.7 billion from a company called Blackstone. Henry Kravis from an investment firm called KKR, worth $4.7 billion. And John Doerr from Kleiner Perkins worth $2.9 billion. You probably never heard of any of those three guys, but they are important.

According to the Joint Committee on Taxation, they pay many billions of dollars over the next decade if that carried interest loophole were closed. At a time when every dollar counts, you'd think there would be a celebration on Capitol Hill to close a loophole like this.

It only affect a few at the very top, but Republicans and Democrats have been really afraid of these businesses and their lobbyists. Here's John Boehner today.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Changes to --

REPRESENTATIVE JOHN BOEHNER (R), HOUSE SPEAKER: Blah, blah, blah, blah. Listen, there's a conversation that needs to be had. This is the beginning of the conversation.

(END VIDEO CLIP)

BURNETT: Blah, blah, blah. By the way, the conversation on this has been going on for many years. Speaker Boehner knows. The president, by the way, is just as guilty of caving to lobbyist pressure. He promised to close the loophole back in 2007, yes, it is 2014. The loophole allows these people to pay half the taxes they would have otherwise.

So basically they now get to pay a tax rate of 20 percent. Their regular income tax rate would tap out around 35 percent under Camp's plan. There are a lot of loopholes out there that may makes sense. But this one has a few supporters, but not many. I want to explain to you why.

When you are one of those three men, a partner in a private equity firm, you get a cut of the profits you make from investing other people's money. Usually you get 20 percent of the profits you make. So basically it works like this. If I invest money with one of them, they get to keep a cut of the profits if my investment goes up in value.

So now it was my money that was at risk so I get to pay the lower capital gains rate which is 20 percent. In this case the guys that manage my money get to take the cut of the profits and also get it taxed at 20 percent. That's pretty incredible because their cut of the profits they make on investing is a huge part of the money they earn.

Here's the bottom line. They get to pay the lower rate provided to Americans to encourage people to take except for it is not their money and it is not their risk. They get to pay 20 percent on what is the equivalent of their wages.

Last I checked everyone else's taxes are taxed at a normal income tax rate. Now you see why this is one heck of a loophole. Joining me now is Michael Farr, author of "Restoring Our American Dream, The Best Investment."

All right, Michael, I mean, first of all, can you just explain the significance of this loophole? We're talking real money, right?

MICHAEL FARR, AUTHOR, "RESTORING OUR AMERICAN DREAM": We're talking real money, Erin. We're talking about a lot of money. I mean, this would basically double the tax that venture capitalists and private equity investors have to pay every year. You've been right on this all along. It's inconsistent with current tax policy. So, yes, I mean, these guys have gotten a big break. I don't blame them.

I wish I could have figured out how to get that break. It's terrific. But now the Republicans are saying we should change that law, and look at this, we've got Republicans saying, we're going to raise taxes on the rich in this area and lower the overall rate, which makes much more economic sense.

BURNETT: All right, what I'm curious about though is why it has taken so long. The president keeps putting it in his budget but he's always willing to negotiate this out. This is a loophole. There's not very many people who benefit from it. They are incredibly wealthy. A, it would bring in a lot of money. B, it seems that they and their lobbyists are so powerful that they don't ever get it closed. I mean, how is that? Are they that powerful?

FARR: Yes. You know, money talks and certainly money talks on Wall Street, but money's rarely heard as loudly as it is in Washington. All of these folks are facing more and more expensive elections and this small cadre of very wealthy investors --

BURNETT: These guys are donors you're telling me.

FARR: Big donors. Big donors and they're paying their lobbyists a lot of money. It's a two edged sword and it has all of these guys everybody running scared.

BURNETT: So do you think it will actually happen this you heard John Boehner, blah, blah, blah. He's very familiar with this loophole. He knows this conversation has been going on for, well, years.

FARR: What I'm hearing from my friend, Greg Belliere at Potomac Research is that they're going to try, the Republicans don't want to touch much of this a minute before they have to and certainly not before the mid-term election. So I think something could happen, but I think it's going to take a while. And I think they're going to delay it. Once they can kind of get out of the political near term cross hairs then, yes, I think it has a shot at getting through.

BURNETT: Pretty incredible though. I guess the bottom line is how did they pull this racket off? I know I'm editorializing here. To be paid a low tax rate on the risk that other people are taking, that's incredible.

FARR: Well, it's incredible, it's inconsistent. It doesn't make sense. Erin, you've been right about this. You've been talking about it. You said, look, this is an inconsistency in tax policy, it's not fair. It's a loophole. I think it's really encouraging though because you have the right wing, the Republicans saying we're going to do something about it, we're going to close a tax loophole and we'll raise taxes on very rich people because we do have a significant deficit and we're printing money and it's time to act responsibly.

BURNETT: Michael Farr, we appreciate that.

Still to come, we're watching Arizona tonight where the governor is expected to make a major announcement at this hour about that religious freedom bill that we've been talking about. We'll be there live.

Plus Paula Deen with a significant new investment. An announcement to make. Is it a sign that America has forgiven her from using the "n" word?

And what prompted Spike Lee to go on this profanity ridden rant?

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Get the -- out of here. No, I can't do that. Get the -- out of here. I can't do that.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

BURNETT: The gentrification of America, you know, this has been happening for decades in major cities all across the country. Some of the ones that had the most of it, San Francisco, Boston, Atlanta, Washington, New York, but the results have been controversial and you know, it's been one of those things you say, why are you talking about that now?

Well, there is a reason we're talking about this right now because last night actor and director, Spike Lee, went off. That's a fair description. The great influx of white people. When he was asked this question by my next guest.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: You mentioned gentrification with some slightly negative connotations. I wonder if you've ever looked at it on the other side, which is if your family was still in that $40,000 home that's worth $3.5 million to $4 million.

SPIKE LEE: Let me just kill you right now.

UNIDENTIFIED MALE: OK. Go for it.

LEE: (Inaudible) article in "The New York Times" saying gentrification. I don't believe that.

(END VIDEO CLIP)

BURNETT: That was just the very beginning for Spike Lee.

(BEGIN VIDEO CLIP)

LEE: The (inaudible) Christopher Columbus syndrome. We're here -- 40 years. Now they can't do any more because the new (inaudible).

(END VIDEO CLIP)

BURNETT: So D.K. Smith is the man who ignited that firestorm. There is a lot more back and forth you're going here. He asked Spike Lee that controversial question. He's OUTFRONT tonight. Look, you asked a controversial question, but it's really interesting point. You stay in the neighborhood and other people move in, whatever their color may be, property values go up, all of a sudden your house is more value. He just goes off. Were you shocked?

D.K. SMITH, QUESTIONED SPIKE LEE OVER GENTRIFICATION: I was a little surprised by the magnitude of his going off. I figured he would not be positive about that issue.

BURNETT: All right, so obviously he wasn't personally going after you. He was being a little bit funny in I'm going to kill you now. This rant continued. Let me play a little bit more of it.

SMITH: Sure.

(BEGIN VIDEO CLIP)

LEE: I thought that the great jazz musician (inaudible) and the (inaudible) called the cops on my father. He's playing electric bass. It was acoustic. We (inaudible) in 1960 (inaudible) and now you call the cops in 2013. I'm (inaudible).

(END VIDEO CLIP)

BURNETT: That's a pretty incredible anecdote. It does speak to the racism that he's referring to. Do you agree with that point?

SMITH: Yes.

BURNETT: You were raised in the same area. You heard of Spike Lee in Brooklyn. SMITH: I agree with all of the points. I want to expand the dialogue. There is a positive side. Everything he said I'm in agreement with. I've experienced most of it. I've lived in Brooklyn, raised there longer than he is. So, I understood exactly what he was saying.

But the positive side of it, this is the first time in America that blacks have been open to that kind of wealth creation. I mean, you bought a house for $20,000, $30,000, $40,000. Now you get $3 million, $4 million, $5 million, that's a traditional route to, you know, being wealthy in America.

We have never had that opportunity. And now many thousands, tens of thousands of us in the last four years -- you have to go to 2014 before we're now able to participate in that level of wealth creation? That's a positive thing. Let's talk about that, too. Let's expand the dialogue.

BURNETT: That's a pretty incredible -- that's a pretty incredible statement.

But when you say you have experienced what he is talking about, have you experienced in your neighborhood where you grew up, and you were black, and now have you felt discrimination because white people move in and all of a sudden they look at you, like, what are you doing in this neighborhood? Are they afraid of you or...

(CROSSTALK)

SMITH: I have had the people who let their dogs pop on my sidewalk. And they're white. And when I speak to them, and they kind of look at me strange, and I'm like, are you kidding me?

BURNETT: What, like they don't think you live there?

SMITH: Like they don't think anybody lives there.

I have literally -- some of my neighbors have tracked people home and tossed the feces on their step. And when they looked outraged, it's like, hey, you left that on my sidewalk. I thought you forgot it. We have had those kind of experiences.

But let me counterbalance it. By and large, wonderful new neighbors. Very happy to have them. Great neighbors, great friends participating in the community. So it's been mostly a positive experience. But certainly we have had the negative ones from the new ones. And they come in and they start telling us what to do, as if we don't know. That's just -- but it's about education. It's about educating them.

It's not about backing off and complaining. You have to educate.

BURNETT: I mean, it's horrible to hear. It's incredible to hear. I'm glad you're sharing it, because I think a lot of people would say, well, that stuff can't happen now. It can happen now and it does happen now is what you're saying. (CROSSTALK)

SMITH: Yes, absolutely.

BURNETT: What I'm also curious about is -- let's talk about Spike Lee, just an interesting case in point. Right? The guy is one of the most successful people in the country. He's worth an incredible amount of money. He's selling a townhouse apparently, according to the papers, for $32 million.

He could move into a really bad neighborhood and bring everybody's real estate values up in one fell swoop.

SMITH: Spike is actually a causative factor.

If he moved into a swamp, the prices would go up next door immediately. And also, bad movies of his, how much does he make? A bad movie makes $40 million or $50 million. Maybe he doesn't have the full perspective of a family that has worked 30 or 40 years, paid taxes, taken care of their property, and now that $3 million, $4 million, or $5 million to them, that's a tremendous change.

He spoke about his grandmother putting him through Morehouse. Some of these families when they move south or they downsize, what do they do with the money? Now they're able to take and put their grandchildren through college or through grad school. The money doesn't evaporate and disappear. But we have never been able to do that.

BURNETT: And real estate has always been in America -- there's been bubbles and bust, but it has always been for regular Americans the only key to wealth creation. That has always been the only one.

(CROSSTALK)

SMITH: A pillar to wealth in America, and now we can participate on that level, too.

BURNETT: His issue seems to be partially though on race. Here's a script he wrote back in 1989. Let me just play that from the movie "Do the Right Thing."

(BEGIN VIDEO CLIP)

UNIDENTIFIED ACTOR: I own this brownstone.

UNIDENTIFIED ACTOR: Who told you to buy a brownstone on my block in my neighborhood on my side of the street? What you want to live in a black neighborhood for anyway? Man, mother (EXPLETIVE DELETED) gentrification.

(END VIDEO CLIP)

BURNETT: If you don't have gentrification on some level, you do end up with neighborhoods that are all one race, which I guess some people might think is a good thing. That's the implication there, but...

SMITH: Some people are more comfortable like that, but, you know, first off, it's inevitable.

It's going to happen. It's not just a black thing. I lived in Boston for 15 years in an Irish neighborhood for four years where the houses went up five and six times in value. Which of those Irish children are able to come back up and buy a home in their family neighborhood now that the values have gone up five, six, seven times in three or four years. It's not just a black thing. It's an urban thing.

It's part of a city's everyone. And what do we do, stand around and complain about it, or let's be thankful for an opportunity to participate at this level.

BURNETT: All right, well, D.K., thank you very much. Really interesting points and thoughtful.

SMITH: Thank you, Erin.

BURNETT: And, of course, want to let you know at the top of the hour, Anderson is going to talk to Spike Lee and get his comments on gentrification. This is going to be a pretty good conversation. We will have to put you two together and see that.

All right, well, still to come, Paula Deen officially launching her comeback. So, did everyone forgive and forget her use of the N- word? One small town with one big Paula Deen restaurant starting now.

Plus, new video just released of the night Justin Bieber was arrested for allegedly driving drunk. You will see the sobriety test.

And along came a spider that scared a weatherman.

(COMMERCIAL BREAK)

BURNETT: Paula Deen resurrecting her fallen empire. The celebrity chef is opening her first restaurant since admitting to using the N-word.

Paula Deen's Family Kitchen Restaurant will open this summer in Pigeon Forge, Tennessee. It's a tourist hub that's home to Dolly Parton's Dollywood theme park and other attractions.

OUTFRONT tonight is the mayor of Pigeon Forge, David Wear.

And good to see you, Mayor Wear. I appreciate your taking the time.

Paula Deen and Pigeon Forge, why?

DAVID WEAR, MAYOR OF PIGEON FORGE, TENNESSEE: Well, I think it fits.

And we're excited about what they're bringing to our town. Any time that we can add to our product mix to give something to our loyal visitors who come back here year in and year out, and also to get in front of new people, we're excited about it.

BURNETT: Now, your town is a tourist destination, as you said, 10 million tourists a year. That's a big number.

Are you worried that this restaurant could bring negative attention as well? I mean, I'm sure a lot of her fans are coming, but obviously she's now on the national stage as well for her use of the N-word.

WEAR: Right.

Well, it's a private development. And those private folks, obviously with The Island, developers of The Island, and Paula Deen's folks, they got together and decided that they, through the due diligence process, probably thought they could make a business go of it in Pigeon Forge.

So, we are excited about it. We think that she has a very strong brand and I think our visitors are going to love it.

BURNETT: How would you describe the local opinion of Paula Deen? I mean, I know you're saying, well, look, it's investors putting this money in. But do people see her as a victim, as someone who deserves a second chance? What's the perception? I mean, it's a small town here, about 6,000 people, right? What do they think?

WEAR: Well, that's a great question.

I really don't have the answer to that question. We got the press release this morning. And just following social media, a lot of folks are excited. I haven't got a lot of negative feedback personally, and don't expect it. I know that there's folks that probably have their different opinions. We're just excited about growing our tourism market.

BURNETT: And let me just be honest. We looked at the demographics of your town. It is a pretty stark divide. Only about 1 percent of Pigeon Forge is African-American. Do you think that's part of why they chose that town?

WEAR: No, I don't think so. I don't think so at all, because we host 10 million visitors every year. And those visitors are from every walk of life.

We take every make and model in Pigeon Forge. So, we don't discriminate. Our doors are open. We're a family destination, and that's what we -- that's what we're going to focus on with any development that comes in. So, our doors are wide open to whoever to build memories with their families and have a good time.

BURNETT: All right, Mayor Wear, thank you so much for taking the time.

WEAR: Thank you. BURNETT: And in addition to that new restaurant, Paula Deen also addresses the scandal in an exclusive interview in this week's issue of "People" magazine. You can get that on newsstands on Friday.

Well, still to come, Arizona Governor Jan Brewer is minutes away from making a major announcement on the controversial bill that critics call anti-gay.

Plus, Chris Christie is live right now talking on the radio about the scandal that has threatened to take down his career. He's changing his tune tonight.

And Pope Francis meets his Mini-Me.

(LAUGHTER)

(COMMERCIAL BREAK)

BURNETT: Welcome back to the second half of OUTFRONT.

More than 10 hours of Justin Bieber footage -- wow, taken shortly after his arrest in Miami has been arrested. We've viewed all 10 hours. Thank goodness I'm joking.

This clip appears to show Bieber taking a sobriety test at the police station. He seems a bit stumbly at times but it's hard to tell, if he's doing it on purpose.

Anyway, another shift shows him being frisked by a police officer. You may recall that police stopped Bieber in January for DUI and street racing. A toxicology report revealed traces of marijuana use, as well as the anti-anxiety drug Xanax.

And now to one man who thank God is more famous than Justin Bieber. Speaking of God, I'm talking about the pope. Pope Francis is so loved, the kid dressed up at him at carnival.

Anyway, this is a 19-month-old boy in St. Peter's Square today. He was in head to toe pope garb. Pope Francis lifted him up. Oh, that poor child, his whole life he'll be sad he cried at that moment.

Anyway, the boy's grandmother reportedly made the costume. His mother told "The Associated Press", quote, "It was a gesture of love toward the Holy Father".

The pope appreciated -- oh, gosh. I like the pictures.

All right. New Jersey Governor Chris Christie is answering questions speaking live on a radio program at this hour about the bridge scandal. He appeared just moments ago in a radio segment called "Ask the Governor".

(BEGIN VIDEO CLIP)

RADIO HOST: Do you believe that you have the political capital, the support of the public, the will of the people, to be able to advance a second term agenda?

GOV. CHRIS CHRISTIE (R), NEW JERSEY: Sure. I got 61 percent of the vote in November.

RADIO HOST: Well, those poll numbers have come down considerably though.

CHRISTIE: Well, but listen, Eric, the poll numbers are still better than most governors in the region and most governors across the country.

(END VIDEO CLIP)

BURNETT: Interesting comment in light of Christie's quip earlier today that pollsters are always wrong, just like weathermen, he said.

Christie also noted that nobody asked him about the scandal during a town meeting today, which is the same as his last town hall. That's true. New Jersey voters didn't ask about it.

But he did not note that both forums were held in very Christie- friendly areas of the state.

(BEGIN VIDEO CLIP)

CHRISTIE: I'm in my second term now. According to our constitution, you know, that means I can't run for governor again. I could tell you something, that's really good news for you.

It's really good news for you, and here's why -- I don't have to worry about politics anymore, everybody. This is it. I'm on the back nine and when you're on the back nine and you don't have to worry about playing another front nine, your only obligation is to tell people the truth.

(END VIDEO CLIP)

BURNETT: OUTFRONT tonight, "Newsday" columnist Ellis Henican and political analyst Steve Adubato.

Steve, what's your reaction to that? What did he mean back nine? You don't have any -- I mean, you know, you could read that a couple of ways. This guy was running for president. Is he now not running for president?

STEVE ADUBATO, POLITICAL ANALYST: I know him pretty well so I know he's not referring to the back nine of golf, but I'll say this -- the governor says he's not on the back nine or he's on the back nine, but here's the thing -- it is about politics because the governor has things that he has to do, like balance the budget. The governor needs the Democrats to control both houses of the legislature. The governor needs the popular support of the people to put pressure on Democrats to get what he has to do to get done.

The bottom line is I don't think the governor is as weakened as many people say, as Ellis is about to say. But I will say this -- politics will always be a part of your life as a politician, whether it's the first or the second term.

BURNETT: All right. What do you think -- what do you read into that, Ellis?

ELLIS HENICAN, NEWSDAY: It's not the back nine, it's a sand trap.

BURNETT: By the way, he's very savvy. He loves playing this game. He knows people are going to read into that.

HENICAN: His ball is in the water. He's neck deep in algae. The back nine, he'd be lucky to be on the back nine.

ADUBATO: Fifty percent.

HENICAN: Listen, first of all, the notion that he has to call back poll numbers from November, hello? Governor, some stuff has happened since November in the state of New Jersey. This guy, he's the walking wounded. We don't know he's dead yet, but it's a very different day.

ADUBATO: Whoa, hold on.

BURNETT: Well, there has been -- you have to admit, Ellis, absolutely no proof that he personally did anything wrong in this case. If that is true, doesn't this just roll off after a while?

HENICAN: Drip, drip, drip, drip. Maybe.

ADUBATO: Granted, the governor is in trouble.

HENICAN: Yes.

ADUBATO: He's gone from 70 percent approval to 50 percent.

HENICAN: Right, pretty much.

ADUBATO: But I will say this -- drip, drip, drip, where's the president? My point is this, you make it sound like the president should quit because his approval ratings are in the low 40s. It happens in politics.

HENICAN: Here's the problem and he sounded perfectly nice talking there. But we hear him so differently now. All the things we used to like about Chris Christie make him sound like a jerk, right? He's not strong, he's pushy. Bipartisanship seems phony. He's -- I mean, all the good things that people like have turned against him.

BURNETT: Well, the question is, is that only to people who didn't like him before?

HENICAN: No, all those middle people are dumping him.

ADUBATO: He's changing his tone because the --

HENICAN: Trouble. ADUBATO: Listen, he has a problem. The problem is there.

HENICAN: Thank you.

ADUBATO: The investigations are going on and he needs the Democrats to move forward and the Democrats are trying to kill him and I understand why.

So you're saying he has a nicer tone. He's humbler with people. How dare he do that?

What do you want him to do? Do you want him to be in people's faces?

HENICAN: No, no, I much prefer the nicer version. It seems phony. The thing that was so good about him is you believed he was real. Now nobody believes he's real.

BURNETT: But, again, my question is, is it just the people who didn't like him? This is the guy we always wanted you to see.

HENICAN: Listen, he started out with huge support, there's no denying it. He goes on, on, on, on.

ADUBATO: Listen, a lot of that was Hurricane Sandy.

BURNETT: His approval ratings are not above the president.

HENICAN: Twenty points, that's not good. This thing is going to go on for another six.

ADUBATO: Ellis, listen, it is bad. But let's be clear, 70 to 50, all right? The president is a lot lower.

And the other thing that I'm going to say this about the governor, the governor is going to be --

BURNETT: I love the game of relativity here.

HENICAN: Not as bad as this other bum, right?

ADUBATO: Listen, you called the president a bum, not me.

But here's the thing -- I'm saying the governor's biggest challenge beyond bridgegate, beyond a lot of these questions that still have to be answered, and all these people taking the Fifth overtime, on his staff, that's a problem. We agree, all right?

But here's the other thing -- the governor is it going to have to with his people get people back into their homes with Hurricane Sandy because that is the thing, more than anything else, Erin, that put him in a strong position politically. That's the thing he's got to get done.

BURNETT: All right. Let me play something else, because he did address this issue of what his staff knew. Here's the governor tonight.

(BEGIN VIDEO CLIP)

RADIO HOST: Do you think she ordered those lane closures on her own?

CHRISTIE: I have no idea, Eric. And I'm no longer going to speculate on things that I don't know about. That's why we're in the midst of an internal investigation. When we have developed all of the facts that need to be developed and have reviewed all the documents that need to be reviewed, maybe I'll have a better idea of what went on.

(END VIDEO CLIP)

HENICAN: Here's the problem with it. I mean, it's not -- it's a perfectly reasonable delay tactic, answer --

(CROSSTALK)

HENICAN: Right.

BURNETT: A completely honest answer.

HENICAN: It is, but it's exactly -- Steve, it's exactly the reason that people liked him, he knew stuff. He was tough. He was in there.

ADUBATO: Wait a minute, respectfully, the United States attorney, Paul Fishman in New Jersey is investigating this case.

HENICAN: Yes, and other people.

ADUBATO: And the state legislature run by Democrats, both houses, are disproportionately Democrats controlling the committee are investigating. So, they're going to try to get to the truth.

So, he gets asked, what do you think about Bridget Kelly, was she telling the truth? Oh, listen, forget about the investigations, I'll tell you what happened.

That's ridiculous.

HENICAN: Here's the problem he's in, right -- no matter what he does, we saw him in Washington last weekend like riding and running. He was like a member of the witness protection program instead of the Republican Governors Association.

ADUBATO: What would you have him --

(CROSSTALK)

HENICAN: I don't want him to look like an extra from "American Hustle II" and that's how he's coming off.

BURNETT: Let me give a final question to you, Steve. ADUBATO: Sure.

BURNETT: There's a report, Charlie Gasparino of Fox Business Report on this, right? You saw the report, that he's losing some big donors on Wall Street. Totally countered, by the way, the numbers we've gotten out of the Republican Governors Association, which showed he's bringing in record --

ADUBATO: Six million dollars in February.

BURNETT: All right. Who's right? That RGA number coming in or what Charlie is now reporting? Is he losing Wall Street support?

ADUBATO: Listen, I don't really know what's going on with Ken Langone and some other folks on Wall Street. But I do know that $6 million coming into the RGA in January is a big number. The bigger problem for the governor on my opinion is some of those Republicans running for governor who are hiding from him, if they don't take pictures of him overtime, that's going to be a bigger embarrassment.

BURNETT: All right. Well, we'll leave it there. Thank you for a heated conversation.

ADUBATO: Heated, really? Love that guy.

HENICAN: We're just getting started.

BURNETT: All right. And we're just minutes away from the Arizona governor. She's going to be making a statement about the controversial bill that has the entire country talking, you can see the press there waiting. We're going to bring that to you live. It's going to be a very important moment for Jan Brewer.

And the video of the day. Jeanne Moos shows us what happens when a weather man meets a spider.

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BURNETT: Breaking news: we are just moments away in what could be a decision on Arizona's Governor of Arizona, Jan Brewer. You can see that door opening and closing. She's going to be coming out in any moment coming up to the podium and addressing the media directly -- not just signing a veto but coming out and actually doing it to the cameras and speaking to the press. She has been under incredible pressure to veto the bill from even people like the NFL which said you better veto it. By the way, they're about to have a Super Bowl there. It will allow businesses to refuse services to gays based on their religious beliefs.

Earlier today, Brewer met with people from both sides of the debate, including businesses and state senators who actually at one time, the state senators at least had supported the bill. They've since though buckled to the pressure.

Miguel Marquez is OUTFRONT. Miguel, what do you expect Brewer to say as we're watching that room where she's going to come out, in a very unusual case here, not do something behind closed doors but have to address really the nation?

MIGUEL MARQUEZ, CNN CORRESPONDENT: Well, we suspected she would. We know she's unhappy about a lot of things that have been said about Arizona during the debate of this bill and during the controversy of this, and she wants to come out and say some things about what she feels is Arizona. I mean, keep in mind, this is not the first time Arizona and her governorship has been through this sort of controversy.

I can tell you that the crowd, which is busily trying to watch and listen to what's happening expects a veto. They expect it too much that -- this is kind of amazing -- they quickly produced signs saying, "Thank you, Governor Brewer". This was supposed to be a silent call tonight.

I'm actually going to take this call which I don't usually do on television but it's from our producer who's upstairs on that room, and she's holding the cell phone to the governor's podium and just in case our signal goes down, I want to be able to hear what the governor says so I'm just listening at this point.

A lot of anticipation here. This crowd grew from 20 to 30 people in the last hour half. Well, it's probably 70, to 80 people, now, perhaps 100. And they're still streaming in. This is like wild fire through Phoenix, Arizona, right now, and certainly throughout the state people are excited to hear what the governor says. They expect it as a veto. Everything that we have heard from, those who know of Governor Brewer, is that it will be a veto -- Erin.

BURNETT: Miguel, let me ask you. And I know, obviously, again, to Miguel has to listen to me and listen to his producer and listen in one ear. But, Miguel, you've been trying to find people who support this bill, people who have made the case. And, you know, we have one ready to come on the program -- but made the case that this bill does not discriminate against gays, it actually helps gays.

I never understood that argument. Has anyone made it to you in a way that you understand?

MARQUEZ: What they claim is that this would help every business, whether you're gay, straight, religious or not in order to allow them to serve who they want. The problem is, is that because in Arizona, gays are not a protected class like race or gender, that you could run into problems where gays are denied services, particularly where gay weddings are concerned.

And that is something I believe the press conference is about to start. That is one concern.

One thing we did hear from the legislators who supported this bill when it was voted on initially, is that the governor felt it was shot through the legislature here, too quickly, both the House and the Senate. She had a lot of questions about that and how that happened right now. And I'm not sure if you guys are able to see what is happening in the governor's office.

BURNETT: I'm looking at the door.

MARQUEZ: It sounds like it's getting ready to start. As of now it looks like security has come through but not the governor. She will be coming through that door and going to the podium just a few feet away addressing the media. Of course, we're going to be taking that live.

Miguel, I guess the question is -- the other question I have for you from your reporting there is, did they just think this would not get noticed? But I found it amazing this week, not just that protesters started gathering but businesses were forced to weigh in on it.

MARQUEZ: Yes, this has been a bill and a piece of legislation, one similar to it in several different states, and in almost every case, it has failed. A lot of the concern here is over what they expect is a gay marriage initiative that will be on the ballot in 2016. From what I can tell from a lot of legislators that spoke during the House and Senate discussion about this --

BURNETT: All right, Miguel. The governor is at the podium. So, Miguel and I and all of you will listen to Jan Brewer.

GOV. JAN BREWER (R), ARIZONA: I'm here to announce a decision on Senate Bill 1062.

As with every proposal that reaches my desk, I give great concern and careful evaluation and deliberate consideration and especially to Senate Bill 1062.

I call them like I see them, despite the cheers or the boos from the crowd.

I took the necessary time to make the right decision. I met or spoke with my attorneys, lawmakers and citizens supporting and opposing this legislation. As governor, I have asked questions and I have listened.

I protected religious freedoms when there is a specific and pressing concern that exists in our state. And I have a record to prove it.

My agenda is to sign into law legislation that advances Arizona. When I address the legislature earlier this year, I made my priorities for this session abundantly clear. Among them are passing a responsible budget that continues Arizona's economic comeback. From CEOs, to entrepreneurs to business surveys, Arizona ranks as one of the best states to grow or start a business. Additionally, our immediate challenge is fixing a broken child protection system. Instead, this is the first policy bill to come across my desk.

Senate Bill 1062 does not address a specific or pressing concern related to religious liberty in Arizona. I have not heard of one example in Arizona where a business owner's religious liberty has been violated. The bill is broadly worded and can result in unintended and negative consequences.

After weighing all of the arguments, I have vetoed Senate Bill 1062 moments ago.

To the supporters of this legislation, I want you to know that I understand that long held norms about marriage and family are being challenged as never before. Our society is undergoing many dramatic changes.

However, I sincerely believe that Senate Bill 1062 has the potential to create more problems than it purports to solve. I could divide Arizona in ways we could not even imagine. And no one would ever want.

Religious liberty is a core American and Arizona value. So is (INAUDIBLE) nondiscrimination. Going forward, let's turn the ugliness of the debate over Senate Bill 1062 into a renewed search for greater respect and understanding among all Arizonans and Americans.

Thank you.

UNIDENTIFIED MALE: (INAUDIBLE) this isn't about discrimination.

BURNETT: All right. You're looking obviously at the protesters who are celebrating the governor of Arizona, Jan Brewer, has vetoed the bill that would have allowed business owners to deny service to people because of their sexuality.

OUTFRONT tonight, Ted Haggard, a former evangelical leader and pastor of St. James's Church in Colorado Springs, and Peter Sprigg, senior fellow for policy studies at the Family Research Council.

All right. I'm clearly glad to have both of you with me.

Let me just start here with you, Ted.

Obviously, you're a pastor. You were obviously forced to resign as president of the National Association of Evangelicals after a scandal, which involved a male escort. You have a very unique perspective on this entire issue. So, did the governor do the right thing?

TED HAGGARD, FORMER EVANGELICAL PASTOR: I think she did. I've been married for 35 years. I have five children. I'm a conservative evangelical. I believe we need to respect one another.

And I think she did the right thing. That was a broadly worded bill that had unintended consequences in it that would have developed over the years. And I think she did the right thing so that we can continue valuing our religious liberties and our faith and our respect for one another and, in the public square, continue taking care of one another. Gail and I were speaking at a large church in Phoenix, Arizona last weekend. And we stayed in a Marriott Hotel owned by Mormons. Those are sincere Mormons. We're sincere evangelical Christians.

And it would have been hard-pressed if we would have been denied a room because they're Mormons and they're we're evangelicals. They needed to rent us the room, they did, and that's the way it should be.

BURNETT: All right. Peter, so let me get you to explain here the other side. You just heard the governor. She said, look, she couldn't -- when she looked at this bill, didn't hear one example of where someone had been discriminated against because of their religion so she didn't think the bill made sense.

But your organization released a statement today that read, quote, "This legislation would give homosexuals more protection than they had under the current law".

Given that no one could come up with example of this discrimination, how could they have more protection under a law which was essentially created to allow people who didn't want to serve gays getting married with things like photography or wedding cakes?

PETER SPRIGG, FAMILY RESEARCH COUNCIL: Well, the irony is that Arizona does not currently have sexual orientation listed as a protected category in either their employment nondiscrimination laws or their public accommodation laws.

BURNETT: That's right.

SPRIGG: So the current state of the law in Arizona is that anybody can discriminate against gays at any time for any reason or for no reason whatsoever.

This bill deals only with when a government action conflicts with a person's sincerely held religious belief. It requires the person asserting that right to be able to prove that this is motivated by the religious belief, that that belief is sincerely held, and that the government action is a substantial burden upon them. If all of those criteria are met, then the government would face a burden of demonstrating that there is a compelling government interest in coercing this individual into violating their religious conscience.

So, actually, this is much narrower than the existing state of the law.

BURNETT: Ted, what's your response to that. I mean, do you think if I go in and I give this example, right? I'm getting married to another woman and I go in and I ask for a wedding cake or a photographer, all that, and because of this bill, someone might have been allowed to say no, my religion is that I don't believe in gay marriage, so I'm not going to provide that service to you.

Is that what Christianity and what your belief in Christianity says is the right thing to do, Ted? HAGGARD: No, not at all. Jesus came to rescue all of us as sinners. And we were sinners when he rescued us. And we continue to sin to some degree until we see him face-to-face.

And so, we as Christians have given our life as a life of service. If we distort that into judging others and hurting others and denying other people fair things that we provide to others, under the banner of some religious standard, then that turns into bigotry.

And so, we as Christians are here to wash the feet of others and make life better, not to make life worse.

BURNETT: And, Peter, the country seems to be coming over to Ted's point of view -- 53 percent of people in most recent polls favor same-sex marriage. That was 32 percent back in 2003. That number has surged.

A federal judge today struck down a ban on same-sex marriage in Texas. We've seen that happened in Utah, Oklahoma, Virginia, around the country. I mean, like it or not, isn't this battle over?

SPRIGG: No. The battle isn't over. The only way that same-sex marriage is going to be legalized nationwide is if the U.S. Supreme Court imposes that, a Roe v. Wade of same-sex marriage.

And I have some hope that they will not be so foolish as to make the same mistake with marriage that they did with the issue of abortion.

HAGGARD: Erin, if I may comment on that.

BURNETT: All right. Very quickly, please?

HAGGARD: Yes. In 1993, Colorado passed an amendment to saying homosexuals could be discriminated against. The Supreme Court overthrew it. That's been legal precedent on every decision. And there will be a Supreme Court decision that will make equality the law of the land.

BURNETT: All right. Thanks very much to both of you. We appreciate it.

We'll be right back.

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BURNETT: Tomorrow OUTFRONT, how a Somali immigrant landed a role of a lifetime, became an Oscar nominee. I'll see you tomorrow night.

Anderson starts right now.