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ANDERSON COOPER 360 DEGREES

Government Shutdown Looming?; Dow Plunges

Aired September 22, 2011 - 22:00   ET

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


ANDERSON COOPER, CNN ANCHOR: It is 10:00 p.m. here on the East Coast. Good evening, everyone.

We begin with breaking news, a brutal day on Wall Street. Your 401(k) and stock portfolio likely took a beating today, the Dow closing down nearly 400 points after plunging more than 500 points earlier in the day, while the S&P and Nasdaq each posted double-digit losses.

Fears of another global recession fueling the sell-off, some key international markets opening right now, all eyes on them as everyone is wondering if this bad day turns into an all-out international downward spiral.

Investors spooked by the messages from the Federal Reserve on Wednesday warning of -- quote -- "significant downside risk to the economic outlook," including strains in the global financial markets.

Joining us for more insight is Erin Burnett, host of the upcoming CNN program "OUTFRONT," plus Stephen Moore, senior economy writer at "The Wall Street Journal," and senior political analyst David Gergen.

So, what is behind the sell-off, Erin?

ERIN BURNETT, HOST, "ERIN BURNETT OUTFRONT": It's pretty amazing. I was talking to a few investors today.

And what Ben Bernanke said yesterday, Anderson, was exactly what the market expected him to same. We know things are weak and we know Europe is a very severe issue. But him saying it, even though they knew he was going to say it, just makes people even more worried. People are kind of looking for nothing hold on to, maybe for a little bit of hope, so that's why you see this.

But most people are saying this is a rather dramatic sell-off and you might see a little bit of stabilization. That isn't the same thing though as saying we aren't in a real economic problem. We know that we are.

COOPER: And, Stephen, it seems like the markets were also underwhelmed by the Fed's latest moves to try to kick-start the economy. Is there anything at this point that policy-makers can do to raise expectations?

STEPHEN MOORE, SENIOR ECONOMIC WRITER, "THE WALL STREET JOURNAL": Certainly not the fed. The fed has been deluging the economy with money for the last three years. And the idea of more purchases of government bonds by the Fed, which is what Ben Bernanke announced yesterday, I'm not sure they had a very calming effect. I think Erin is right.

I also think the president's message this week wasn't very helpful. As you know, Anderson, on Monday, the president announced there would be this $1.5 trillion tax increase starting in 2013. That's only 14, 15 months away. And I think that was just a very bearish, dreary message in an economy that's already hobbled.

COOPER: David, do all roads, even this one, lead back to the president?

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: No, not all roads. There is a great fear in the markets right now about what is going on in Europe and the Eurozone with the European banks.

There's also some fear now that the U.S. banks are getting a little shaky. Three of them had their credit downgraded in the last 48 hours. There's concern about China and manufacturing. You know, the Chinese stock market is down 20 percent year-to-date. So there are other concerns.

But part of this we had been the number one economy, we had been the driving force. We were supposed to be the locomotive to help other nations get out of this and we are exactly the opposite, we are the caboose in many ways. And, yes, it does involve politics. Typically, it is economics that change our political scene. In this case, it is the deterioration of our politics that's dampening the economy.

And I do think to follow up on Steve's point there is a growing sense and in the industrial community and financial community, I have been talking to both here in the last few days, that both the jobs bill and the deficit bill, prospects for doing anything seem to be slipping.

COOPER: So, Erin, do you agree with that, that political gridlock is playing a role in this?

BURNETT: I think it is a huge role, Anderson, because the Fed, Fed Chief Ben Bernanke, he is a patriotic man, he is a respected man. Whether you think he has been doing the right thing or not, he has been doing everything he can.

The Fed is doing everything. The problem is that Washington and Capitol Hill are not doing anything. So, yes, gridlock is a big issue, and when you look at the root of the whole problem and what really could fix all of this -- and I know this is a little bit of oversimplification, but I think it's a fair point to make -- it's U.S. housing prices still off 30 percent from the highs and they're still dropping, we found out yesterday.

As long as that is the case, our economy won't get better, the world economy won't get better, and the Fed can't fix that. They have rates so low, right, mortgages can't go lower. People can't buy homes. That's something only Congress can do something about right now and it looks like there's nothing that they are going to do.

(CROSSTALK)

MOORE: I agree with what Erin just said, Anderson.

But, Erin, I don't think the problem is gridlock right now. I think the problem is at the top. I mean, I think there is a leadership problem, when you have got this kind of schizophrenic message from the president. Remember about 10, 12 days ago, the president said we will do this big tax cut to help businesses grow.

I think there were some good ideas in that plan. Then a week later, he says, oh, by the way, we will have a $1.5 trillion tax increase on top of that. Right now the parties are so polarized, the president has not really put anything on the table that Republicans in Congress are going to buy into.

And I think that's big problem, because this economy does need a stimulus but it needs the right kind of stimulus, not another $800 billion spending program.

COOPER: David, Stephen is clearly putting the blame on the president. Are the Republicans to blame at all for this, too?

GERGEN: Oh, sure they bear some of the responsibility. Everybody's fingerprints are all over this. We wouldn't have had the kind of debt fight that we did had Republicans not pushed that right to the limit. And we had the biggest drop in consumer confidence as a result of the debt fight that we have had in years, so, yes, the Republicans bear some responsibility.

But I think what -- the sense, Anderson, that one finds out in the job creation community is that we are looking for something that will help us get out of this. And what we see in Washington is we don't see any help coming. Indeed, what it looks like is that everybody has gotten into campaign mode, they're all thinking about 2012.

I do think that the president's plans, Stephen just attacked them, I think for good reason in one sense, in that they were political documents, not governing documents. And there's a real sense in the country, can't you guys spend three to six months helping to fix the economy in serious ways, like tax reform and get off the trail for a while?

COOPER: Erin, do you think we are already in a recession or heading back that way?

BURNETT: It is interesting. I think most people would say yes, right? The experience that people, the 25 million unemployed Americans, and more underemployed, would be that a lot of people would say it is shocking we are a couple years out of a recession and they would disagree with that. Technically speaking, a lot of the data that we have had recently have not shown that we are falling into another recession, but I will say there are some very influential people...

COOPER: Right. George Soros yesterday said he thought we were already back in one.

BURNETT: That's right. George Soros said. And you had Mohamed El-Erian, who is one of the most influential bond managers in the country, so they own a lot of U.S. debt, out at PIMCO. He also thinks that we could have another financial crisis. So I think the jury's out on that.

But one thing that really could turn the tide outside the U.S. and all these gridlock issues we are talking about really would be resolution of the European problem. If you had real resolution there, I think that would be significant. That would turn around people's sentiment and sentiment really and trust and confidence is what this is all about. So that really could prevent a recession.

(CROSSTALK)

COOPER: Australian markets are down.

(CROSSTALK)

COOPER: Stephen, go ahead.

MOORE: Yes. I was just going to say, problem, Erin, if we do hit a double-dip recession, I pray that that doesn't happen because American finances are just kind of clawing out of the last financial meltdown that we had with the housing crisis.

You know, if we had a double-dip recession right, we could see this budget deficit go from $1.3, $1.4 to $1.8, $2 trillion, and put us in an even bigger home. And the problem is we have borrowed so much money in the last three years, we are kind of not in any position right now to deal with a double dip. So it is a very scary situation, especially after those census numbers came out last week that showed declining family income, rising poverty levels and of course, 9 percent unemployment.

(CROSSTALK)

GERGEN: Anderson?

COOPER: Yes.

GERGEN: I just want to make -- there is a parallel between Europe and the United States and in both we're suffering from weak political leadership.

COOPER: Yes.

MOORE: Right. I agree.

COOPER: Depressing note to end it on, but we got to end it there.

David Gergen, Stephen Moore, Erin Burnett, appreciate it. Thank you.

We got something at the end of the program to make you smile and laugh, so stick around for that. It's not all depressing tonight.

A reminder. Erin's new show here at CNN, "ERIN BURNETT OUTFRONT," debuts Monday, October 3, at 7:00 p.m. Very excited for that.

Erin, thanks for being with us.

BURNETT: That's right. Please watch so we can give you a good lead-in. That's what we are here to try to do.

(LAUGHTER)

COOPER: Let us know what you think. We're on Facebook. Follow me on Twitter @AndersonCooper. I will be tweeting tonight as well.

Up next, breaking news on a shutdown showdown on Capitol Hill. That's right. . We are back here again. Talking about a shutdown. We're waiting for a new vote in the House to keep the government running after September 30. The measure failed yesterday when Republican lawmakers wanted more spending cuts to pay for disaster relief aid. What's going on? We are "Keeping Them Honest."

Also tonight, we continue our special series "Ungodly Discipline." New allegations of child abuse at a fundamentalist school in Virginia. Some former students are saying they were hit and humiliated by staff members, to the point that some students considered suicide.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: We constantly lived in fear of looking the wrong way, doing the wrong thing.

UNIDENTIFIED MALE: We were brainwashed, our parents were brainwashed, and you followed what Roger Voegtlin said.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

COOPER: More breaking news tonight, and "Keeping Them Honest."

Here we go again on the brink of a possible government shutdown. All that talk of compromise. Well, maybe just that. Talk. The do- nothing Congress could be living up to the nickname tonight once again.

We're waiting for a crucial vote in the House on a bill to fund the government beyond September 30, and even if it passes, it would only fund the government for seven more weeks. And that's a big if. The vote on the GOP measure failed in the House last night, 230 to 195, 48 Republicans defected, voted against their party's own measure, and only six Democrats sided with Republicans. Now the failed vote, some say, has proved to why Congress has just 12 percent approval rating in the latest poll conducted by CBS and the "New York Times."

Conservative Republicans voted against the C.R., Continuing Resolution, because they said there weren't enough spending cuts to offset the $3. 6 billion in disaster relief money. Now you can decide for yourself if you think funds for disaster relief for agencies like FEMA should only be available if they're offset by spending cuts elsewhere.

This country is in some pretty tough strait for sure, but this is the first time ever, ever, that funding for people affected by things like tornadoes, floods, hurricanes, fires, you name it, have been used as a political edge.

And right now, that aid is in limbo until this bill gets passed.

"Keeping Them Honest," just last week, House Majority Leader Eric Cantor said he wouldn't hold up disaster relief. We found this on ThinkProgress.org.

(BEGIN VIDEO CLIP)

(CROSSTALK)

REP. ERIC CANTOR (R-VA), HOUSE MAJORITY LEADER: No one is holding any money hostage. I also think we can do so responsibly.

(END OF VIDEO CLIP)

COOPER: He says no one is holding any money hostage. But they are tonight, even though Cantor pointed out his district needs the aid. His district in Virginia was hit by Hurricane Irene and an earthquake last month.

House Speaker Boehner seemed caught off guard by last night's vote. He desperately tried to get his party on board and failed but today at a news conference he dismissed there was any chaos in the ranks and insisted they're going to reach a deal.

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: The founders gave us a committee which is now 535 individuals. And trying to get 535 people to come to agreement on anything around here is difficult.

But that's -- we've known that going in. We'll work our way through this. I have always been confident that we'll be able to come to an agreement and we will.

(END OF VIDEO CLIP) COOPER: That's Speaker Boehner earlier today. At this hour, again, we're waiting for a new vote on the measure. It's expected any moment. We'll see if Republicans did in fact reach an agreement as Mr. Boehner said they would.

Republican sources tell us that House GOP leaders have in fact unveiled a new proposal to offset the cash wanted for disaster relief by cutting roughly $100 million from a government loan program that granted a $535 million loan guarantee to the now bankrupt and highly controversial Solyndra solar company.

The question tonight, will this get the bill pass and avoid a government shutdown. Let's talk about it with CNN political analysts David Gergen and Gloria Borger.

David, what do you make of this? When you hear Congressman Cantor and other Republicans say that they're not playing politics with disaster relief funding, especially as the possibility of a government shutdown looms, do you buy that?

GERGEN: Anderson, I think both sides are going to try to make points. Democrats are going to try to do that over in the Senate, Gloria has been reporting on some of that, to the make points off the FEMA thing.

But I have to tell you. I do think they're going to get something passed. I don't think there's going to be a government shutdown. The amount of money at issue here is actually modest.

But what this has done, it was one of the things, it was a backdrop to the markets going down so much today. The investors looking, and saying, my god, those people in Washington, they haven't made peace, they can't even agree on this little tiny -- little bit of business.

And it is -- it is fueling the sense that they're not going to be able to get a real bargain on -- big bargain on the deficits.

GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: Right.

GERGEN: They may not be able to live up to the agreement they cut on the debt ceiling back in August.

BORGER: Well, you know, Anderson, that's the whole problem. When they cut this deal on the debt ceiling, they said, when we pass a bill to keep the government running, known as a Continuing Resolution, it's going to be clean. Then you had these disasters, as you pointed out, and the Republicans in the House say we need to pay for those disasters.

And I just got off the phone with the Senate Democratic leadership aide who said to me that if the House bill passes tonight, with more offsets, spending cuts for disaster relief, the Senate will reject it. That Senate Democrats will reject it.

And what they eventually will do is pass a clean Continuing Resolution to fund the government with FEMA funding separately and deal with that -- don't forget the FEMA money for these -- for disaster relief expires early next week. So we will move from one crisis to another crisis.

COOPER: Is this the way business is just going to be done now, David? I mean especially between now and the election? Can anything major get done between now and this presidential election?

GERGEN: Anderson, one held out hope for that, I think, a few months ago, that they could actually make some real progress, get some more breakthroughs before the election. I think that hope has diminished sharply in the last few weeks.

Everybody here has now gotten into campaign mode. And by the way, this is something President Obama foresaw some months ago. He -- this is the very reason he wanted to get a bigger deal in August because he thought, as we got closer in, it was going to be hard.

But now the White House has gotten into politics, too. I mean everybody is playing the game. And I think that there's a growing feeling that big breakthroughs are going to have to wait the next administration, the next president, this president, whoever it is.

BORGER: And here's --

GERGEN: And the next Congress. BORGER: And here's what complicates all of this. What really complicates it, you have a Republican primary going on. Don't forget, those Republican presidential candidates were all out there, most of them, saying, you cannot even pass an extension of the debt ceiling.

You have congressional leaders who may -- Republicans -- who may feel they want to get something done as I think John Boehner felt early on in this process. But they have to try and be on the same page with their presidential candidates.

The presidential candidates are appealing to a Republican primary electorate, which is very, very conservative. And so I think gridlock is in the offing because Republicans' hands are tied by this primary.

COOPER: But even -- I mean what's so frustrating about that is that -- I mean we're seeing today the markets reacting in part to this gridlock.

BORGER: Of course.

COOPER: I mean this is costing people -- this is costing people their 401(k)s, this is costing people money.

GERGEN: Exactly.

BORGER: And it could cost people their disaster relief, by the way, Anderson.

COOPER: Right.

BORGER: If that doesn't go through.

GERGEN: That's exactly right, Anderson. A lot of people's 401(k)s are -- you can measure that through the S&P 500. That's where a lot of the mutual funds are, for example. S&P 500 is down 7 percent over the last two days. And you know so people are losing, not only their housing value but their -- now their 401(k) again taking hits.

And that's what's so frustrating about this. But I have to say, it's not just that the Republican candidates are tying their people up and asking for loyalty. Look at Norm Dicks, a Democrat, who was going to vote for this Continuing Resolution. He said he publicly was going to vote for it.

Very independent, fine congressman, he came under pressure from his caucus on the Democratic side to vote against this Continuing Resolution, to stop things, because, you know, they're playing their political game, too.

BORGER: Absolutely. I mean they're playing it on both sides.

GERGEN: Right.

BORGER: Why do you think the Democrats want to separate out the money for FEMA?

GERGEN: Right.

BORGER: Because then they can say that the Republicans don't want to fund disaster relief.

COOPER: Right. It's just games, I mean, back and forth.

BORGER: Terrible.

GERGEN: Just games.

BORGER: Yes.

COOPER: Yes. David Gergen and Gloria Borger, appreciate it. Thank you.

Just ahead tonight, a busy day in the lead up to the trial of the Dr. Conrad Murray who's charged in the death of Michael Jackson. And the battle is on to choose a jury. Will they get the job done by tomorrow? We'll look at that tonight.

Also, had a new and disturbing report on our "Ungodly Discipline" series. Some pretty stunning allegations of child abuse in a fundamentalist Baptist school in Indiana. We're going to hear from former students and the pastor who runs the school, ahead.

(COMMERCIAL BREAK)

COOPER: "Up Close" tonight, dramatic testimony in a federal hearing looking into whether SeaWorld Orlando should be charged in the death of an employee, one of its animal trainers. Her name was Dawn Brancheau. She was drowned by a 12,000 pound killer whale name Tilikum last year. You may remember it wasn't the first time that Tilikum had showed signs of aggression.

David Kirby has been in the courtroom for the hearing. He's the author of "Death at SeaWorld." David Kirby joins us now live from Orlando.

So, David, during today's hearing, Dawn Brancheau's spotter testified about the way he remembered seeing this whale, Tilikum, pulled Dawn into the water before ultimately killing her. What did he say?

DAVID KIRBY, AUTHOR, "DEATH AT SEAWORLD": His story was a little bit different today than what he told the Orange County Sheriff's Office and of course this story keeps evolving over time.

Initially she fell in and drowned, then we are told that she was pulled in by her ponytail. Today, his story changed a little bit. He said that Dawn was lying on her back in the water doing what's called a lay-out with Tilikum where Tilikum also gets on his back, and they were laying on their back together, then he said Dawn got up on her knees and then he said the next thing he saw was Dawn pulling at her ponytail.

While under cross-examination from John Black, the OSHA attorney, Jan admitted that Dawn was lying in the opposite direction so he couldn't actually see her hair. He just assumed that it went into Tilikum's mouth. And of course his testimony completely contradicts what other people have said including a sworn witness earlier this week, a former NYPD officer, who said that Dawn was pulled in by her arm. He said it looked like she was giving a left-hand turn signal as she went in.

Now Jan works for the FBI so he's a credible witness as well.

COOPER: So what's the significance of all of this? I mean why do the details matter so much?

KIRBY: Well, the initial belief was that SeaWorld is going to try to blame this on Dawn and say that she never should have been in that position and never should have let her ponytail flow into Tilikum's mouth. We have now had four witnesses, SeaWorld employees, testify that Dawn did nothing wrong, that where she was and what she was doing was completely approved by SeaWorld.

If SeaWorld wants to still stick with what's called the ponytail defense, OSHA has now countered that, too, because there was another event where a woman was pulled in by her clothing, and it was decided that they needed to desensitize the whales to not just clothing but also hair and other objects.

So even if it was a ponytail, SeaWorld never desensitized Tilikum to hair, so I don't think SeaWorld gets off the hook.

COOPER: There was also emotional testimony today from the trainer who tried to rescue Dawn from the attack. She spoke of another incident back in 2006 where a killer whale showed aggressive behavior. What did she say happen?

KIRBY: She was at the slide-out area when this young whale named Ike, that's his nickname, grabbed her leg and I believe, you know, wounded her. She gave Ike a signal to open his mouth and fortunately he did. She got out of the pool. A medic was called. She was treated on site. I think the injuries were fairly minor.

She sat down with her supervisor and they listed the incident on the incident report. And today in court, it was presented that that incident report never made it into the incident log.

COOPER: Wow, that's interesting.

KIRBY: So when SeaWorld says they have only had 99 incidents, we've now heard of maybe five, six, seven, 10 more incidents that happened but never got put into the log.

COOPER: And I guess the bottom -- the question underlying all of this is should these whales even be in captivity like this and is there something about being in these small pens -- because in the wild they go for miles in straight lines -- and are just swimming round and round for their entire lives stuck in these pens, does that make them more aggressive?

And I guess that's the underlying question here.

KIRBY: I have spoken to scientists who have told me they do believe it does. That there are signs these animals are stressed out. Today, the governor -- the government's witness, Dr. David Duffus from British Columbia, he had a slightly different take. It was very interesting.

He said, first of all, aggression is part of being a predator. And these are top predators. They evolve successfully because they are aggressive and he also said it wasn't necessarily the stress of captivity. It was the sheer proximity to these whales that was so unpredictable.

COOPER: Right.

KIRBY: In the wild we don't get up close with killer whales, it only happens at SeaWorld.

COOPER: David Kirby, good to talk to you again tonight. Thank you very much.

Coming up...

KIRBY: Thank you, Anderson.

COOPER: ... in the program tonight, "Ungodly Discipline," beating kids in the name of god to practice. We started looking more than a month ago at a boarding school. In one case it resulted in a tragic death of a 7-year-old girl, not at the boarding school but in a family. Now Gary Tuchman has uncovered allegations of abuse at a another school, a religious school, in Indiana. First, though, Isha Sesay joins us with the other stories in the "360 Bulletin" -- Isha.

ISHA SESAY, CNN INTERNATIONAL CORRESPONDENT: Anderson, a disturbing discovery in southern Libya. Anti-Gadhafi forces took a CNN crew to warehouses containing barrels and bags of yellow powder marked "radioactive." It's not confirmed that the material is in fact radioactive, but international authorities do say Libya under Moammar Gadhafi was stockpiling yellow cake, a form of uranium that can be used for nuclear purposes.

In a speech at the United Nations, Iran's president who has denied his country is developing nuclear weapons blamed the United States for many of the world's problems. Mahmoud Ahmadinejad also made disparaging remarks about the holocaust. Delegates from France, Germany, the UK and the U.S. all walked out.

One of the lawyers representing Dr. Conrad Murray who's charged in the death of Michael Jackson says he thinks a jury for the trial will be seated by tomorrow afternoon. Opening statements are set for next Tuesday.

And that satellite expected to fall to earth tomorrow afternoon, well, the Federal Aviation Administration today issued warning for pilots calling it a potential hazard. NASA has said it poses minimal risks though they also said, Anderson, they're not quite sure where the pieces will land. Those that do re-enter. Yes.

COOPER: All right. I will be looking up.

Isha, time now for "The Shot." We found this on YouTube under Jedi cats. Why we were looking under Jedi cats, I'm not sure. That was enough to make us look.

Yes, OK, it's kind of hokey, maybe even a little nerdy, but also hard to resist. Also some pretty impressive editing. May the force be with you. Little Jedi kitties. Watch. I like that.

SESAY: That's pretty cool. I have to say.

COOPER: Yes. Jedi Kitten. There you go.

SESAY: Yes. I get it. That's a little much.

COOPER: That's right.

SESAY: Or, as you know, Trekkies would say at that point in time, they would go -- it goes on, they go, live long and prosper.

COOPER: You're a Trekkie, aren't you?

SESAY: I -- I'm picking up an attitude or a tone.

COOPER: No. No. I say that with nothing but admiration and respect. Curiosity. SESAY: From the guy who kept a snake as a kid.

COOPER: Yes. By the way, that was "Star Wars," not "Star Trek."

SESAY: I know that was "Star Wars." I'm just saying, while we're getting all nerdy, you said...

(CROSSTALK)

COOPER: Do you even know what "Star Wars" and "Star Trek" are? Did they have that in wherever it is you group in Britain?

(LAUGHTER)

SESAY: Yes, where I grew up.

COOPER: Yes?

SESAY: Yes.

COOPER: Did they dub it?

SESAY: So that they said...

COOPER: To the king's English?

SESAY: .. oh, Darth Vader. Oh, Lord Vader, you are scary.

COOPER: Like...

(CROSSTALK)

COOPER: ... Darth Vader.

(LAUGHTER)

COOPER: All right. Isha, much more serious stuff ahead.

We've been telling you about the 14-year-old boy who killed himself on Sunday. His family says he was bullied to death. Tonight, an update. Reports that a criminal investigation has been opened to see whether the kids who bullied him may be charged with harassment or hate crimes. The latest on that.

Also ahead, our continuing series, "Ungodly Discipline." There are allegations of child abuse at a fundamentalist Baptist school in Indiana. Some former students are saying they were hit and humiliated by staff members.

(BEGIN VIDEO CLIP)

SAMUEL BAIN, FORMER STUDENT, FAIRHAVEN BAPTIST ACADEMY: He basically told me to bend over and said, "Pull down your pants." I looked, I kind of hesitated, because to me it doesn't sound right, even to a kid.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

COOPER: Tonight, a new part in our continuing series, "Ungodly Discipline." Religion is sometimes used as an excuse to mistreat kids. We started looking into this disturbing phenomenon more than a month ago.

Gary Tuchman spoke Michael and Debi Pearl, the authors of a controversial book called, "To Train Up a Child," a manual that says God wants parents to spank kids with belts, switches, even wooden spoons and that, for it to be effective, the spanking must cause pain. Michael Pearl gave Gary a demonstration of this kind of punishment, which he says is guided by teachings in the Bible. Take a look.

(BEGIN VIDEOTAPE)

MICHAEL PEARL, CO-AUTHOR, "TO TRAIN UP A CHILD": Rubbing the spaghetti all over your head, you shouldn't have done that at 7 years of age.

GARY TUCHMAN, CNN CORRESPONDENT: OK.

That hurts, and I'm 50. I mean, I...

PEARL: OK. But are there any marks on you?

TUCHMAN: No, but you would hit a -- you would hit a 5-year-old like that?

PEARL: Yes. Sure.

(END VIDEO CLIP)

COOPER: The Pearls' book was found in a fundamental home in California where authorities say a couple, in the name of God, beat their kids regularly and so brutally that they beat their 7-year-old adopted daughter to death. They're both serving prison sentences.

What we found looking into cases like these is that child abuse in the name of religion is not isolated and happens not only in private homes but sometimes in schools, as well.

Gary Tuchman reports tonight on a school in Indiana that's facing accusations that are hard to comprehend.

(BEGIN VIDEOTAPE)

TUCHMAN (voice-over): Roger Voegtlin is a powerful man, extremely influential in fundamentalist Baptist circles.

ROGER VOEGTLIN, PASTOR, FAIRHAVEN BAPTIST: I believe the Bible is the world of God.

TUCHMAN: His Indiana church is called Fairhaven Baptist, and on the well-manicured grounds, there is also the Fairhaven Baptist Academy for children and Fairhaven College. Pastor Voegtlin has led thousands of children and their families for four decades.

(on camera) You've said children are born depraved. They're born liars. They have to be trained to be good. Do you still believe that?

R. VOEGTLIN: Yes. The Bible says all have sinned and come short of the glory of God.

TUCHMAN (voice-over): The Bible also says he who spareth the rod hated his son.

R. VOEGTLIN: My philosophy is three swats. It should sting but not hurt.

TUCHMAN: It's not considered an unusual philosophy among some in the fundamentalist Baptist community. Corporal punishment does remain legal in many of the nation's schools.

But these former students are now speaking out, saying what they endured was beyond, way beyond, anything taught in the Bible.

(on camera) How many of you have had suicidal thoughts? That's every one of you.

ALISON LAVERY, FORMER STUDENT, FAIRHAVEN BAPTIST ACADEMY: We constantly lived in fear of looking the wrong way, doing the wrong thing.

DAVID GONZALEZ, FORMER STUDENT, FAIRHAVEN BAPTIST ACADEMY: We were brainwashed; our parents were brainwashed. And you followed what Roger Voegtlin said.

TUCHMAN (voice-over): These former students say Pastor Voegtlin did some of the hitting, but most of it was done by his staff.

Alison Lavery was in grade school when she says the principal came into her class to paddle her.

LAVERY: He would call you to the front. They'd have pulled a chair out. And bend over, grab the chair. He tells you, "Look at that lunch pail." And he would pull the paddle up. And he was so tall it practically touched the ceiling. And he would swing it really hard and hard enough for you to move forward. He'd move the whole chair forward.

TUCHMAN (on camera): This is in front of the whole class?

LAVERY: Yes.

TUCHMAN (voice-over): Jeremiah Souza was in seventh grade when he encountered a school administrator.

JEREMIAH SOUZA, FORMER STUDENT, FAIRHAVEN BAPTIST ACADEMY: He spanked me, and the paddle split down the middle. So he started back over, holding the paddle together. So whenever he would hit me, it would pinch the skin on my bottom and bruised and bleeding. TUCHMAN: Samuel Bain also was in grade school when he says he got it from a church maintenance man.

BAIN: He basically told me to bend over, and he said, "Pull down your pants." I looked -- I kind of hesitated, because to me, it doesn't sound right, even to a kid. You know, we were taught not to question people.

TUCHMAN (on camera): Then he did what?

BAIN: He laid into me.

TUCHMAN: They say that not only were they hit when they were here, but it was done with great effort to humiliate them in front of whole class, belt them over a chair. Is that still done today, and do you think that's humiliation?

R. VOEGTLIN: Yes. It is still done today. And I suppose it is humiliation, but again, humiliation is not the big thing.

TUCHMAN: But what I'm saying to you is God doesn't say anything about humiliation in the Bible.

R. VOEGTLIN: No.

TUCHMAN: He does talk about sparing the rod.

R. VOEGTLIN: Yes.

TUCHMAN: That is mentioned in the Bible.

R. VOEGTLIN: Yes.

TUCHMAN: So why the humiliation? Why is that necessary?

R. VOEGTLIN: Habit.

DARCEL MCCOY, FORMER STUDENT, FAIRHAVEN BAPTIST ACADEMY: I'm a minister. I'm a preacher. I speak to youth. I speak to teenagers.

TUCHMAN (voice-over): Darcel McCoy (ph) is a proud Baptist who now lives in Alabama. He says during a student mission trip to Mexico 15 years ago, he was forced by a Fairhaven administrator to keep drinking liquids after he urinated in a shower.

MCCOY: My stomach is literally out to about here, and I'm puking over and over, puking. And one of the -- one of the men come up to me: "Don't you puke again. You better not puke." And I'm just puking everywhere, all over my clothes, all over people's stuff.

They put -- they put one of the older kids, one of the senior boys, they put his stuff at my feet. And said if you puke again this boy's going to beat the snot out of you. And so I'm trying hard not to puke. They made me do that until I peed on myself.

R. VOEGTLIN: I have never heard that story. Darcel was a lot of trouble when he was in school, but I'm not saying that he's totally lying about it. Because I don't know. I wasn't there.

TUCHMAN (on camera): This was something you'll investigate?

R. VOEGTLIN: Yes, I will.

TUCHMAN: It was a long time ago, but probably worth investigating?

R. VOEGTLIN: Yes. Yes, I will.

TUCHMAN (voice-over): Jeremiah Souza says he was tormented by faculty members.

SOUZA: I was secretly taking piano lessons, and they found out and pulled me in front of the youth group, called me a fag. Queer.

TUCHMAN: And it got much worse. Souza says he was repeatedly raped by a fellow student. He told no one at the church until many years later.

SOUZA: I was raped for three years straight there. And I was told it was my fault. I went and told the pastor. He asked me if I was tithing and giving money to the church at that time. He said it was because I wasn't giving money that I was violated.

R. VOEGTLIN: Plain lying. That did not happen. If it happened, I'd be the first one to drag the person to the police station.

TUCHMAN: And then there's Lois Crosby. She started Fairhaven more than three decades ago. She says the brutality was too much for her.

LOIS CROSBY, FORMER STUDENT, FAIRHAVEN BAPTIST ACADEMY: I've actually overdosed twice. The second time I overdosed, even the doctors don't know how I'm alive.

TUCHMAN (on camera): All seven of your former students said they've either thought or tried to commit suicide. A, do you think they're lying to me? And B, how does that make you feel?

R. VOEGTLIN: It makes me feel bad, but I really don't believe it has anything to do with us.

TUCHMAN (voice-over): But there are also these two former students.

(on camera) Tell me your name.

FRANK VOEGTLIN, ROGER'S ADOPTED SON: Frank Voegtlin.

CATHERINE VOEGTLIN-SELTER, ROGER'S ADOPTED DAUGHTER: Catherine Voegtlin-Selter.

TUCHMAN (voice-over): Catherine and Frank Voegtlin, two of Pastor Voegtlin's children, whom he and his wife adopted when they were young. F. VOEGTLIN: I haven't spoken to him in 25 years. He won't speak to me.

TUCHMAN: Frank says his father once got mad when he didn't finish a ten-mile run.

F. VOEGTLIN: He stripped me down. He got his belt to out, and he spanked me until he couldn't move his arm any more. And I was black and blue from my lower back to the bottom of my legs.

As a punishment, I had to wear a dress in day camp for the entire day to show everybody what a sissy I was.

TUCHMAN (on camera): You ran cross country. You came in second place in the race, and he said what?

VOEGTLIN-SELTER: He told me that I was never, ever to lose a race. Ever. And took me downstairs, lifted my skirt up and beat me with a belt.

R. VOEGTLIN: We are did nothing but to try and help Frank and his sister. We hadn't planned to adopt anybody.

TUCHMAN: But you did, and I'm wondering is that true what they're saying about you?

R. VOEGTLIN: No, no. We spanked -- we spanked Frank, but as far as you said, sending him to school in a dress? No.

TUCHMAN (voice-over): Pastor Voegtlin feels his children and these former Fairhaven children are malcontents who are embellishing. He says almost all Fairhaven students are happy. But these former students say Pastor Voegtlin leads a church that has ruined many lives.

GONZALEZ: I don't know what love is. I don't know how to love somebody.

TUCHMAN (on camera): Before we left, people who work at the church gave us a souvenir, a souvenir they say they're proud to hand out to all visitors. It's one of the paddles these use to strike the children. It comes complete with words from the Bible. It says "Fairhaven Paddle." And then this book verse from the book of Proverbs: "He that loveth his son chasteneth him betimes."

Do you ever have any doubt in your mind that you're not faithfully and accurately following the spirit of God's word in the Bible?

R. VOEGTLIN: No.

(END VIDEOTAPE)

COOPER: Gary Tuchman joins us.

Now, Gary, it's really fascinating to hear both the pastor's perspective and how -- I mean, polar opposite of these kids and his own kids, the two kids who he had adopted. Are authorities investigating any of these allegations?

TUCHMAN: Under state law, Anderson, Indiana is not allowed to oversee religious schools. It's very hard to have any kind of investigations of religious schools. So we don't know if there's any investigation, don't think there is.

We can tell you in the 1970s, the pastor and the headmaster at the school were both arrested. They both went to court. The headmaster was charged with aggravated assault and battery of a child. The -- Pastor Voegtlin was charged with conspiracy. The conspiracy charge against the pastor was dropped. The jury found the headmaster not guilty of aggravated assault.

But the jurors later said when they were interviewed they had would have found him guilty of a lesser charge of child abuse.

Nevertheless, the church considered that a victory.

COOPER: The pastor says that almost all the students are happy. Do -- do we know? Is there any truth to that?

TUCHMAN: Well, there are certainly a lot of happy students. We can't characterize the percentage. There's also a lot of loyal students and ex-students. We've been the targets of a targeted e-mail campaign not to run this story.

But we can tell you, he inferred to us these ten people are the only unhappy ones. We know of scores of people we've gotten in touch with who are very unhappy, who were terrorized at school. We didn't have time to put most of them on TV. Other ones are afraid to talk on television. But I can tell you, Anderson, if we included every story from every former student we talked with, it would take the entire night on CNN to tell all those stories.

COOPER: And it's fascinating he hasn't talked to the two kids who he had adopted.

TUCHMAN: That's a horrifying story for everybody, to be honest with you. I mean, by all means, we think you love those children, the children loved him, but they haven't talked in a quarter century.

COOPER: Gary Tuchman, fascinating report. Appreciate it.

An update now on a different kind of child abuse: teenage bullying. It's a story we've been following all week. Fourteen-year- old Jamey Rodemeyer, Buffalo, New York, took his own life Sunday after online bullying and slurs against his sexuality, his parents say.

Now, ABC News has learned that police have opened a criminal investigation into Jamey's suicide to see if three students in particular should be charged with cyber harassment or hate crimes. New York state does have an anti-bullying law that took effect last year. We'll continue to follow this issue here on 360. We've recently teamed up with the Cartoon Network and Facebook to get at this from all angles. There's no an app on Facebook where you can pledge to do everything you can to help stop bullying. Go to Facebook.com/StopBullyingSpeakUp.

And join us for a special series of reports we're doing, "Bullying: It Stops Here." That's starting October 9 right here on CNN.

Up next, Jaycee Dugard held captive for 18 years, robbed of her childhood. She is now filing a lawsuit against the U.S. government. I'll have details ahead.

(COMMERCIAL BREAK)

SESAY: More from Anderson in a moment. First, a "360 News & Business Bulletin."

In Somalia tonight, there's word of a potentially devastating health crisis linked to the famine. There are surging cases of cholera and diarrhea. In Mogadishu in one hospital alone, more than 6,000 cases have been reported since January. Children face the greatest risk.

A lawsuit seeking an undisclosed amount blasts the federal government for failing to monitor convicted sex offender Phillip Garrido. The suit was filed by Jaycee Dugard, who was 11 years old when she was kidnapped by Garrido and his wife and held captive for 18 years in a hidden backyard compound. Garrido was on parole at the time.

And a bright spot on the job horizon. Toys "R" Us says it will add more than 40,000 workers nationwide for the upcoming holiday shopping season. Hiring for a range of retail positions has already begun.

Those are the headlines. Now back to Anderson.

COOPER: Tonight in "The Connection," blind drivers. I bet that's something you never expected to see on the road, but a Virginia Tech researcher has designed a high-tech car that he hopes will make that possible one day. Here's Tom Foreman.

(BEGIN VIDEOTAPE)

TOM FOREMAN, CNN CORRESPONDENT: OK. Let's go for a drive. Here we go.

(voice-over) On the campus of Virginia Tech...

(on camera) I will tell you, this is a very disconcerting experience.

(voice-over) ... in a parking lot near the stadium...

DR. DENNIS HUNG, VIRGINIA TECH: You're driving like a pro FOREMAN (on camera): I don't think like a pro.

(voice-over) You're watching a minor miracle. That's me driving. Yes, I am blindfolded and no, my passenger, Dr. Dennis Hung, is not worried, because he and his students built this car to prove a point.

(on camera) You don't have any doubt in the world that blind people can drive?

HUNG: I believe so.

FOREMAN (voice-over): Back up. What was that?

(on camera) Blind people can drive?

HUNG: I believe so.

FOREMAN (voice-over): The connection that led to this conviction came when Dr. Hung's acclaimed robotics lab here hooked one with the National Federation for the Blind. At first, he assumed what the federation wanted was a robot-driven car, but they said, no, a blind driver had to be in control.

HUNG: Obviously, the driver cannot see. It's he car needs to see for the driver. So for that, we use the laser range finders.

FOREMAN: So his team installed laser range finders, cameras, GPS, a massive computer in the back of an SUV.

UNIDENTIFIED MALE: Ready?

FOREMAN: And as they began testing for everything from speed control to crash avoidance, he listened and listened to what the test drivers told him.

HUNG: I think one of the biggest secrets for our success was that we worked with the blind.

FOREMAN: The result? A car that electronically watches the road and feeds the driver a stream of information through a simple pair of buzzing gloves and a pad on the seat.

(on camera) So, all of these signals are actually coming from the car itself?

HUNG: Yes. The vibrations in your knuckle tells you how to steer the vehicle. And the vibration that you feel from the seat and the patterns tell you the speed of the vehicle that you're operating.

FOREMAN: Testing is kept to about 25 miles an hour in controlled environments for now, but Hung believes in just 15 years, with many refinements, one of these vehicles could truly be ready for the open road...

HUNG: I'm so happy. FOREMAN: ... taking blind drivers to a place where limitations end and limitless begins.

Tom Foreman, CNN, Blacksburg, Virginia.

(END VIDEOTAPE)

COOPER: Coming up, R.E.M. has broken up, and some of us are really broken up about it. "The RidicuList" is next.

(COMMERCIAL BREAK)

COOPER: Time now for the "RidicuList." And tonight it is with heavy hearts that we have to add one of the greatest bands of all times, because after 31 years and 15 albums, R.E.M. has broken up.

Bob Seger and the Silver Bullet Band, you know, still touring. I'm just saying.

So I wanted to spare you the "It's the end of the world as we know it" reference, but for legions of fans, it actually kind of feels that way. It's certainly the end of an era.

R.E.M. posted a message on their Web site yesterday. Yes, it has taken us a day to process this. We were in denial all day yesterday. The message says that, as lifelong friends and co-conspirators, they've decided to end the band. Quote, "We walk away with a great sense of gratitude, of finality and of astonishment at all we have accomplished. To anyone who's ever felt touched by our music, our deepest thanks for listening."

Just like that, with sincerity, humility and appreciation, R.E.M. basically dumped us to on a Post-it note.

I've got to say, R.E.M., this kind of seems like it came out of nowhere. Speaking for the fans, couldn't you have given us a chance to maybe change your mind?

(BEGIN VIDEO CLIP)

(MUSIC)

(END VIDEO CLIP)

COOPER: Radio Free Europe, 1983.

Bassist Mike Mills writes on the Web site that there hasn't been any falling out among the band members. The time just feels right to say good-bye. So basically, it's the "it's not you, it's me" speech.

Look, I get it.

(BEGIN VIDEO CLIP)

(MUSIC)

(END VIDEO CLIP)

COOPER: "Most Beautiful" from "Up," 1998.

Guitarist Peter Buck writes that it's been an unbelievable gift being a part of fans' lives, and he'll be seeing us again. OK. So they still want to be friends with us. Look, that's great. We can work this out. We can all go to counseling or something maybe.

(BEGIN VIDEO CLIP)

(MUSIC)

(END VIDEO CLIP)

COOPER: "Orange Crush," "R.E.M. Live," 2005.

Frontman Michael Stipe writes that a wise man once said, the skill in attending a party is knowing when it's time to leave. Which yes, I suppose it's their prerogative after giving us such great music for more than three decades. But no farewell tour? Not even one last show?

Maybe we can just call them a whole bunch of times late at night, leave a whole bunch of tearful, pleading, increasingly desperate- sounding messages on their answering machine. Maybe they'll come back. I think that's probably the best way to handle this.

(BEGIN VIDEO CLIP)

(MUSIC)

(END VIDEO CLIP)

COOPER: "Night Swimming," "Automatic for the People," 1992.

We're only allowed to play a little of each song. Believe me, if we could have done it, this whole "RidicuList" would have been me just sitting here while R.E.M. songs played with the sound of certain 360 staff members, who shall go unnamed, weeping in the background.

R.E.M. started out in Athens, Georgia, back in 1980, before the YouTube, before the iTunes, before the Autotune. They earned their fans the old-fashioned way: making great music, constantly writing and honing their sound, getting in a van and hitting the road. Some credit the band with creating college rock, creating alternative music. But to the fans, R.E.M. has been nothing short of a soundtrack to life, starting their formative years and continuing all the way to middle age. Thankfully, that soundtrack leaves us with a whole pile of songs to help us get through this.

Thanks for the awesome breakup mix tape, R.E.M. Thanks for everything, actually. Let us know when there's a reunion tour. There will be a reunion tour, right?

OK, that's it for 360. Thanks for watching. "JOHN KING USA" starts now. I'll see you tomorrow.