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THE SITUATION ROOM

Interview with White House Press Secretary Jay Carney; Rick Perry Unveils New Flat Tax Plan; Rick Perry Questioned about his stance on Birtherism; Louisiana Republican Governor Bobby Jindal Wins Reelection; Some Question Libya's New Sharia-Based Constitution; Interview With Governor Bobby Jindal; Vatican Urges New World Economic Order

Aired October 25, 2011 - 17:00   ET

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


WOLF BLITZER, HOST: Our heart goes out to those people, Arwa. Thanks very much for that report.

And you're in THE SITUATION ROOM.

Happening now, the president of the United States says the economy is so bad he has to start taking drastic action and bypass Congress. The White House press secretary Jay Carney is standing by to talk with us this hour.

Also, Rick Perry deals with a new distraction while unveiling his flat tax plan. Will his performance boost his very struggling presidential bid, or will it drag it down more?

And the Vatican is warning about the moral consequences of a broken global economy. Critics fear though that the Catholic Church's new fix it plan potentially could make matters worse.

We want to welcome our viewers in the United States and around the world. Breaking news, political headlines and Jeanne Moos all straight ahead. I'm Wolf Blitzer. You're in THE SITUATION ROOM.

President Obama is increasingly bypassing Congress, or at least trying to, taking unilateral action aimed at boosting the U.S. economy. Right now the president is in San Francisco for a campaign event. It's all part of the three-day western swing promoting mortgage refinancing, student loans, and jobs for American veterans.

Joining us now to talk about the president's plans and more, the White House press secretary, Jay Carney.

Jay, thanks very much for coming in.

Unemployment, obviously, issue number one for so many millions of Americans right now. The president making a major push to bypass Congress saying we can't wait, those are his words. But you've waited until now. Why?

JAY CARNEY, WHITE HOUSE PRESS SECRETARY: Well, Wolf, the fact is the president, as you know, put forward a comprehensive bill, the American Jobs Act, that is filled deliberately with provisions that have traditionally been supported by Republicans as well as Democrats. The kinds of things that Republicans in the past have voted for and helped make law.

That was the idea so that Congress would pass it. Things like putting teachers back to work, putting construction workers back on the job, rebuilding our bridges, highways and airports and schools. Giving tax cuts to middle class Americans, 160 million Americans who get a check. Giving tax incentives to businesses to hire veterans. Those kinds of things the president hopes Republicans will support as well as Democrats.

But while he is urging Congress to do that, he is also doing everything he can as president through executive action to focus on the number one priority that the American people have, which is the economy and jobs.

So that's what we're announcing this week, a series of measures. We'll continue to do it whether it's helping students to manage their student loans or helping underwater homeowners to refinance their homes.

Whatever he can do as president, he will do. You can be sure of that.

BLITZER: He said the other night -- and I'll read to you, I'll put it up on the screen -- at a Monday night fundraiser. He said, he said, "A lot of the things that we promised we'd do, we've done. And I carry around a little checklist, and I think we've gotten about 60 percent of it done so far."

What hasn't he gotten done so far?

CARNEY: Well, for one thing, the number one priority of getting our economy back to where it needs to be and on a stronger foundation is still a commitment that he is focused on and needs to get done. We have, the president has, saved this economy from falling into the second great depression. It's stabilized, but as you know, Wolf, and report on every day, 9.1 percent unemployment is not OK. It's not good enough and he is working every day to make sure we can do things to bring it down.

Economic growth is taking place. We're not shrinking the way the economy was in free fall when he took office. It's growing, but not fast enough. We need to work on that.

But other issues like immigration reform. Comprehensive immigration reform is obviously something that remains undone and he is very committed to doing.

So there are a series of things that he obviously wants to focus on in the coming 13 months and beyond, but he's also pointing out, as he did last night, while whether it's ending "Don't Ask, Don't Tell," as he promised, or passing health care reform after 100 years of trying or ending the war in Iraq, as he promised he would do. These are significant accomplishments.

BLITZER: He said back in 2009 -- and this week he's reiterating his commitment to help all those millions Americans who are losing money in their homes, their homes are being foreclosed or their homes are underwater, as they say, the houses are worth less than the mortgages they have. This is what he said around February 18th, 2009. I'll play it for you because I want to move the story for ward.

Listen to this.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Through this plan, we will help between 7 million and 9 million families restructure or refinance their mortgages so they can afford -- avoid foreclosure.

(END VIDEO CLIP)

BLITZER: All right, that's what he promised, and he issued a wide sweeping plan back in 2009 shortly after he took office. But now, it seems only about 1 million families were helped in that initial plan, not 7 million to 9 million.

What happened?

CARNEY: Well, this is an incredibly difficult problem, as you know. It's one of the main drags on our economy, and that's why this president has continued to take measures to address it.

For example, a few months ago, he initiated an action that will give loan forbearance to people who are paying their bills, trying to maintain their mortgage payments but are unemployed, give them up to 12 months of forbearance.

And then yesterday, as you mentioned, he announced a program to change the rules that allow Americans who have underwater mortgages to refinance their loans at a much cheaper rate, saving them hundreds, thousands of dollars even per year. And that money, of course, will likely go back into the economy and help it grow.

So, yes, the problem is big, it requires a number of actions, and he is continuing to fight for the middle class of this country desperate for the help.

BLITZER: And I want to switch gears for a second, cause you know the president taped an interview with Jay Leno of "The Tonight Show" that will air later tonight, but some of it has been released. And this one jumped out at me, Jay, and I want you to explain if you can, what he's referring to.

He's al Awlaki, the American-born cleric who was killed by a drone strike, a Predator drone strike in Yemen a few weeks ago. Even though he's a U.S. citizen born in new Mexico, the president telling Jay Leno, this is a guy who was actively planning a whole range of operations here in the homeland and was focused on the homeland.

That sort of jumped out at me. What -- what do we know about what he was trying to do in terms of terrorist operations allegedly here in the United States?

CARNEY: Well, Wolf, we know absolutely that he was operationally involved as part of al Qaeda in the Arabian Peninsula, one of its leaders, which was the most dangerous factions of al Qaeda, and he was focused on terrorist acts against Americans inside the United States of America. We know that from his active involvement in the Christmas Day bomb plot, from his active involvement in the failed plot to target U.S. cargo planes flying to the United States. This was a principle objective of his, and it's absolutely a good thing that he's been remove from the battlefield. He was a major threat.

BLITZER: Cause the president goes on to say this was probably the most important al Qaeda threat that was out there after bin Laden was taken out, and it was important that working with the enemies we were able to remove him from the field.

I wonder if --

(CROSSTALK)

CARNEY: I think --

BLITZER: Working with friends, I'm sure he meant to say.

CARNEY: He meant Yemenis, Yemenis. The Yemeni government.

BLITZER: Oh, with the Yemenis. With Yemenis, enemies.

CARNEY: Correct.

BLITZER: Yemenis.

But here's the question -- here's the question: Was there an ongoing Anwar al Awlaki terrorist threat that was about to happen in the United States? An operations threat, if you will.

CARNEY: Well, AQAP was and continues to be a threat. I don't have any details to give you about intelligence that may be out there. I'm not aware of any active or imminent threat involving Anwar al Awlaki, but he was, because of his activity, his operational role, a persistent threat to the United States because his objective was to kill Americans and to harm the United States.

BLITZER: Jay Carney, the White House press secretary, joining us from San Francisco.

We'll see you back in Washington, Jay. Safe travels.

CARNEY: Thanks, Wolf. Thanks for having me.

BLITZER: Moving on to Libya right now, Moammar Gadhafi was buried in a secret location along with painful memories of his 42-year rule. Five days after Gadhafi was killed, there are growing concerns, at least among some, that Libyans could face a new era of strict Islamic rule. Brian Todd is taking a closer look into this part of the story. What are you seeing here, Brian? BRIAN TODD, CNN CORRESPONDENT: Wolf, Libya's new leaders have declared that their new constitution is going to be based on Sharia law. In some countries that has meant legal punishments that harkens back to the Middle Ages. In others there's a less strict interpretation and the laws are fairly moderate. Right now many are watching closely which way Libya will go.

(BEGIN VIDEOTAPE)

TODD: It took eight months of slug it out warfare and bloodshed to end four decades of Moammar Gadhafi's rule, a huge investment of NATO firepower and western resources. In the first major signal of what direction the post-Gadhafi government may take, Transitional leader Mustafa Abdul Jalil laid down what would be the basis of Libya's new constitution.

MUSTAFA ABDUL JALIL, LIBYAN NATIONAL TRANSITIONAL COUNCIL (via translator): As a Muslim country, we have adopted the Islamic Sharia as the main source of law.

TODD: A few Muslim states like Iran and Saudi Arabia interpret Sharia law to include punishments such as cutting off the hands of thieves, beheading convicted murderers and rapists, stoning to death adulterers.

It doesn't look like Libya's heading down that path. Mustafa Abdul Jalil later tried to reassure the international community that Libyan's are moderate Muslims. But there's one component of Sharia law he seems to be embracing that does draw concern. During Gadhafi's rule polygamy, a man having multiple wives was not banned outright, but was restricted. Jalil has suggested that restrictions on polygamy be loosened because Sharia permits it.

ROBIN WRIGHT, U.S. INSTITUTE OF PEACE: Libyan women are very concerned because the idea of allowing polygamy again or allowing the husband to marry again without asking permission of the first wife is going to really resonate throughout Libya.

TODD: I pressed Libya's ambassador to the U.S.

(on camera) Some are concerned that the new laws might make it easier for men to engage in polygamy and therefore women may not have the rights that maybe they should have.

ALI SULEIMAN AUJALI, LIBYAN AMBASSADOR TO THE U.S.: Look, polygamy is always that, but the practice of polygamy is not as it used to be hundreds of years ago. And the women's association is also very strong now. There is no restriction against Libyans women to do anything now in Libya.

TODD (voice-over): But with Islamic principles and parties playing a new, stronger role in Libya, in Tunisia's elections this week, and in Egypt's upcoming elections, there are new questions being raised about the revolutions in the Middle East.

(on camera) Does this mean the Arab spring is blowing up in the faces of people in the west and those who invested in it?

WRIGHT: Islam is clearly going to place a much stronger role across the region, whether it's in Tunisia, Libya, Egypt, and beyond. But that doesn't necessarily mean they're going to be rigid Islamic regimes.

(END VIDEOTAPE)

TODD: Experts point out most Muslim countries make Sharia law the basis for their constitutions, but that's to ensure that no law goes against the principles of Islam. Many countries, like Egypt, Iraq, Jordan, don't practice the strictest parts of that law, Wolf.

BLITZER: Mustafa Abdul Jalil also suggesting that Islamic law may now govern financing, interest rates, another sensitive issue.

TODD: That's right. He has indicated that Islamic banks are going to be established in the new Libya, and that could mean that banks may be banned from charging interest for loaning money. That's going to raise all sorts of questions about whether investment will come to Libya, whether it's going to make it tougher for banks to lend money. So those are things that may be worked out in the future. It's going to be very interesting to see how that plays out in the financial system.

BLITZER: Yes, and Libya, Tunisia, Egypt, we're going to watch all of this very, very closely. Lots at stake in North Africa right now. Brian, thanks very much.

Republican Rick Perry held a news conference a little while ago. CNN's Jim Acosta asked a question that made him gristle.

(BEGIN VIDEO CLIP)

RICK PERRY, (R) PRESIDENTIAL CANDIDATE: That is one of the biggest distractions there is going.

(END VIDEO CLIP)

BLITZER: Stand by for more on Rick Perry's big distraction. Also, his new flat tax plan and why his presidential campaign could use a boost now more than ever.

Plus, is President Obama willing to joke about his poll numbers? The comedian Jay Leno tried to get him there.

(COMMERCIAL BREAK)

BLITZER: Jack Cafferty is here with "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN CONTRIBUTOR: Wolf, President Obama may in fact face an uphill battle for reelection, but one area where he can boast is his success in foreign policy. And that's something new for Democrats. Ever since the Vietnam War, Democratic candidates for president have often been labeled as soft and inexperienced when it comes to military and foreign policy issues. Think John Kerry getting swift-boated, Jimmy Carter and the Iran hostage crisis, or Michael Dukakis riding around in that tank.

But not President Obama. He's presided over the killings of Osama bin Laden and American born Anwar al-Awlaki, although it's worth pointing out not everybody thinks assassinating a U.S. citizen without due process was either legal or a good idea. U.S. support in Libya also led to the toppling of Moammar Gadhafi. As for the two ongoing wars, Mr. Obama is drawing down troops in Afghanistan following an earlier surge there, and he's now taking credit for ending the war in Iraq, which is a big reach. George Bush ended the war in Iraq in 2008, and we are now being kicked out of the country by the Iraqi government. But, hey, it's politics.

Nevertheless, despite these successes overseas, it isn't clear if foreign policy victories will help this president win a second term. If unemployment stays above nine percent it may very well be all about the economy, stupid, as James Carville told Bill Clinton.

A recent CNN-ORC poll shows foreign policy's not a top issue on American minds these days. Just 23 percent of those polled say that foreign policy is extremely important to their vote for president. Compare that to 54 percent who say the economy and most other issues rank higher than foreign policy, including unemployment, the deficit, health care, Social Security, Medicare, terrorism, taxes, and the size of government, just about everything.

So here's the question. Will president Obama's foreign policy successes help him in 2012? Go to CNN.com/Caffertyfile and post a comment there or go to our post on THE SITUATION ROOM Facebook page. Interesting how he's taking credit suddenly for winning the war in Iraq and getting us out of there. That's not exactly how the history books will record what happened in that country.

BLITZER: But it's a good question you've got there, Jack. I'm anxious to hear what our viewers think. Thank you, appreciate it.

An Israeli-American law student held in Egypt since June may soon be released. He's accused of spying on behalf of Israel. Now there are reports he'll be freed as a part of a prisoner swap. CNN's Mary Snow is following the story for us. Mary, tell us what you're learning.

MARY SNOW, CNN CORRESPONDENT: Wolf, the stage is now set for that prisoner exchange between Israel and Egypt. Israel's security cabinet approved it earlier today. It calls for Egypt to release Ilan Grapel and Israel to release 25 Egyptian prisoners. The move is welcome news to Grapel's family here in New York.

(BEGIN VIDEOTAPE)

SNOW: Twenty-eight-year-old Emory law school student Ilan Grapel is one step closer to being freed from Egypt now that Israel has agreed to a prisoner swap and will close a harrowing chapter for his mother Irene, a musician for the New York Philharmonic, waiting anxiously in New York.

IRENE GRAPEL, MOTHER OF DETAINED STUDENT: It's been hell. It's really been -- I wouldn't wish it on my worst enemy. I've been heartbroken for four and a half months.

SNOW: Egyptian officials arrested Grapel in June, accusing him of spying for Israel. Grapel holds dual U.S.-Israeli citizenship and served as an Israeli paratrooper in Lebanon in 2006. His mother says the reason he went to Cairo this summer was to volunteer for a nongovernmental organization helping refugees. And she says there's no chance he was a spy.

(On camera): Why do you think Ilan was targeted?

GRAPEL: I think that one theory which I tend to agree with is that the generals needed a diversion from their own problems and Ilan was a perfect sitting duck.

SNOW (voice-over): A sitting duck, she says, because he's an Israeli and because he put photos of himself in his Israeli army uniform on his Facebook page.

Egyptian officials allege Grapel was sent to Egypt after the January revolution to provide Israel with military and political information. But his mother says he was studying law in January at Emory in Atlanta, and last week Secretary of State Hillary Clinton said the U.S. was hopeful he would be released.

HILLARY CLINTON, U.S. SECRETARY OF STATE: We see no basis for any legal action against him.

SNOW: New York Congressman Gary Ackerman has been working to free Grapel and is now in Israel. And as Irene Grapel waits for her son, her enthusiasm for Egypt's revolution is cast in a new light.

GRAPEL: I was thrilled to see these young people and I really felt for them finally gaining their own voice. And when this happened with Ilan, I had a lot of regrets about those feelings because it sounded like it was a regression, not a forward movement.

(END VIDEOTAPE)

SNOW: And Wolf, the Israeli government now expects Ilan Grapel to be back in Israel on Thursday. From there he is expected to return to the U.S. and eventually resume his final year of law school.

BLITZER: All right, Mary, you'll stay on top of this and let us know the outcomes. Thanks very much.

Republican presidential contender, Rick Perry, he unveils his major flat tax proposal today. Does it make filing your taxes more complicated though? Stand by.

(COMMERCIAL BREAK)

BLITZER: Rick Perry's telling voters his new proposal for a 20 percent flat tax would "set our people free." That's a direct quote. But the Texas governor may not be feeling that free himself as new poll numbers and an old controversy weigh on his presidential campaign. CNN's Jim Acosta has been covering Governor Perry's big rollout today in South Carolina. Perry has a lot riding on this tax plan, Jim, as he's trying to rebound.

JIM ACOSTA, CNN POLITICAL CORRESPONDENT: That's right. The voters here in South Carolina, Wolf, got a sneak preview of Rick Perry part two today. And while some of his supporters are hoping the squeal is better than the original, parts of the governor's message may sound like a rerun to some Republicans.

(BEGIN VIDEOTAPE)

ACOSTA: This was supposed to be the day for the new and improved Rick Perry. The Texas governor was armed with a radical new economy plan that he says would balance the budget by 2020, radically change entitlement programs, and give Americans the option of a 20 percent flat tax on their income or stick with what they already pay.

GOV. RICK PERRY (R-TX), PRESIDENTIAL CANDIDATE: This is a change election and I offer a plan that changes the way that Washington does business.

ACOSTA: It was also a changed Perry. Borrowing a page from the Herman Cain marketing playbook, the Texas governor used props to illustrate the simple choice he's offering voters -- keep the reams of paper representing the current tax code --

PERRY: The best representation in my plan is this postcard.

ACOSTA: Or switch to a tax form that fits on a postcard.

PERRY: Taxpayers will be able to fill this out and file their taxes on that.

ACOSTA: But there is another longer form document on Perry's mind these days. At a press conference, Perry was asked about an interview he gave to "Parade" magazine in which he raised doubts about the president's birth certificate.

(on camera): You raised the issue of the president's birth certificate over the weekend. And just curious, what will it take to convince you the president was born in this country? And do you have plans to release your birth certificate?

PERRY: I'll cut you off right there. That is one of biggest distractions there is going. We need to be talking about jobs.

ACOSTA (voice-over): Perry says he discussed the issue with Donald Trump, who seized the mantle of birther in chief earlier this year when he finally forced President Obama to put his birth certificate on display in the White House.

DONALD TRUMP, CHAIRMAN, THE TRUMP ORGANIZATION: Today I'm very proud of myself because I've accomplished something that nobody else has been able to accomplish.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Hello, everybody.

ACOSTA: At the time, the president brushed off birtherism as a distraction.

OBAMA: We're not going to be able to solve our problems if we get distracted by sideshows and carnival barkers.

PERRY: God bless you, and thank you all for coming out and being with us today.

ACOSTA: But Texans know Perry's bite is worse than his bark. He sharpened his attacks on Mitt Romney, calling him a fat cat who refuses to release his tax records. He's also beefed up his staff, hiring George W. Bush campaign veteran Joe Alball. With a new poll showing Perry a distant fifth, the lone star governor clearly doesn't want to be a shooting star that once burned bright but is fading to black.

PERRY: I've always said that polls are going to go up and down. The fact is this long time of this campaign's over with and we're going to being about things like this. We got in this race late.

(END VIDEOTAPE)

ACOSTA: And while the governor did promise to release that birth certificate, his campaign has not said exactly when that will happen. As for the Obama reelection campaign, Wolf, they're not touching the issue.

BLITZER: Jim Acosta on the scene for us, as usual, thanks very much.

Let's dig a little deeper right now with a high profile supporter of Governor Rick Perry's presidential campaign, the Republican governor of Louisiana, Bobby Jindal. Governor, first of all, congratulations on your reelection to a second term as the governor of Louisiana. I suppose you're very happy about that.

GOV. BOBBY JINDAL (R), LOUISIANA: Thank you, Wolf.

We had a great election night on Saturday. We set a record, getting 66 percent of the vote, the highest percentage a candidate has received since we've adopted the open primary system here in Louisiana. The people of Louisiana have given me four more years.

And we've outperformed the national and southern economies by cutting spending, by cutting taxes. Our top priority in the second terms is to continue to improve our public schools, continue to improve education right here in Louisiana.

BLITZER: All right, let's get this out of the way. You're a major supporter of Governor Perry. Do you believe the president of the United States was born in Hawaii?

JINDAL: Oh, absolutely. Wolf, I've said for the last many years, I've always believed he was born here. I have no questions about where he's from. I've got more questions about where he's going, where he's trying to take our country. And look, I think all that is a distraction.

The reality is the president was born here. He is the president of the United States. The real debate about whether he deserves a second term is his handling of the economy.

The reality is, the only way we're going to grow the economy is to cut government spending, to shrink government spending. We've had three years we've tried the opposite. The results have been a disaster.

You've got a debt that's up to $15 trillion. You've got unemployment over 9 percent. Government spending has increased, and yet private sector jobs have not recovered. The real debate is about where he's trying to take us, not where he's from.

BLITZER: So why does your candidate, Governor Perry, refuse to say what you just said, and instead, he told this to CNBC? It aired this morning on this whole birther issue. Listen to this.

(BEGIN VIDEO CLIP)

GOV. RICK PERRY (R-TX), PRESIDENTIAL CANDIDATE: It's a good issue to keep alive. I'm really not worried about the president's birth certificate. It's fun to poke at him a little bit and say, hey, let's see your grades and your birth certificate.

(END VIDEO CLIP)

BLITZER: Why does he do that? Why doesn't he just say what you said, Governor?

JINDAL: Wolf, you'll have to ask him. The bottom line though is this election is about a difference in two approaches.

President Obama has increased the size and cost and role of government, including with Obamacare. Under Perry, he has cut taxes 65 times in Texas, $14 billion. They've added a million jobs in Texas. Under President Obama, we've lost two million jobs. And under Governor Perry, they've actually reformed their torte laws.

He understands -- Governor Perry understands we need to shrink the size of government. He unveiled a very aggressive plan today.

You know, for too many years, our tax code in America has punished, not rewarded success. You compare us to other OECD countries, and when you look at combined federal/state tax burdens, second highest corporate tax burden. By 2015, the cost of tax compliance will cost over $480 billion.

You think about that money that's being taken out of our economy. Instead of the American taxpayers wasting all those hours, collecting all those receipts, wasting all that money on tax preparers and accountants, why not have a simpler, fairer tax system where everybody pays?

BLITZER: It's not as simple as Steve Forbes proposed it back in 1996, when he was running for the Republican presidential nomination. He said across the board, a flat tax, 17 percent. Now Governor Perry says 20 percent, but he also goes one step further, as you know, and he says, you know what? If you like the current system, you can keep that, you don't have to go to the flat tax, you can do exactly what you're doing right now, which means for a lot of people out there, Governor, you, me, others, you know what we're going to have to do? We're going to have to have our accountant see what we would have to pay the federal government under the current system, then we would see what we'd have to pay the federal government under the flat tax system.

So there's a lot of work that has to be done, maybe double the work, in order to determine what's best for you or me.

JINDAL: Well, I think over time, I think the vast majority of people will move over to the flat tax system. I think Rick's simply trying to say if people make long-term investment or spending decisions based on promises made to them, you shouldn't change the rules on them overnight. But simply and fundamentally, you look at the overall plan, not only is it a flat tax that preserves the deductions for charitable giving and mortgage and standard deductions for those making $500,000 or less, he's also proposed a moratorium, a timeout, if you will, on regulations.

The SBA estimates the cost of federal regulations as a trillion dollars, $10,000 for every manufacturing job. He also proposed specific reforms for Medicare and Social Security.

For almost three years now, the president keeps saying he knows we've got to reform our entitlement programs to save them, but he hasn't presented a specific proposal. Governor Perry is showing he understands we have got to shrink government.

And Wolf, in this country, we've got to stop punishing success. If you want less of something in this country, tax it.

For too many years, we've taxed success. And as a result, we've got fewer jobs, we've got less success. Governor Perry understands that. Let's get government out of the way.

So, today's proposal, not just a flat tax, also specifics on a moratorium on regulations, a timeout to study their true costs and benefits, as well as specific ideas on Social Security and Medicare. I think when people look at the details, they'll be very impressed.

He's showing, just as he's done in Texas, he understands we need to cut government, shrink the size of government to grow the private sector economy, and the voters will get to decide. Wolf, for three years, we've grown government spending, 18 to 24 percent of GDP, $15 trillion debt. This is a clear contrast.

President Obama stands for more spending, more taxes, more borrowing. Governor Perry understands with a flat tax, with a balanced budget amendment, he understands it's about balancing the federal deficit, balancing the budget, and it's about cutting government spending.

BLITZER: Maybe you can explain this part of the proposal, his flat tax proposal to me. He says 20 percent, federal income tax, no matter what your income is, but he also says you can keep your deductions for charitable contributions, for your mortgage payments, state and local taxes, unless you make more than $500,000 a year.

Now, Republicans always say when President Obama and the Democrats make those kinds of statements about millionaires and billionaires, that's class warfare. Is Governor Perry engaging in class warfare by saying if you make more than $500,000 a year, you don't get those deductions?

JINDAL: Absolutely not. Look, he is cutting people's tax rates. Certainly, I think people that are successful in this country would be very pleased with a 20 percent tax rate. And if they have to give up their deductions in favor of a lower marginal tax rate, right now we actually punish success. The more successful you are, the higher your marginal rates are.

By doing this -- what he's doing is two things. One, he is saying yes, you're going to pay your fair share, but he is also getting rid of all those loopholes.

Look, the president himself has talked about the fact that he thinks it's wrong that Warren Buffett pays a lower rate than the people working for him. I don't think the president said this, but many people have said it's wrong that successful companies like GE aren't paying taxes.

What Governor Perry is saying is, let's get rid of all the special treatment, the loopholes, the tax code expenditures. Let's get rid of all of those hidden loopholes and those costs. And let's stop the wealthy from hiring these accountants and other tax preparers to help them avoid paying taxes. Make everybody pay a fair, flat share, and that way you know everybody is paying their fair amount.

BLITZER: Governor, we're almost out of time. So, if you're making $499,000 a year, you can have all those deductions, but if you're making $501,000 a year, you don't get those deductions. Is that fair?

JINDAL: Well, look, compared to the current tax code system, absolutely. Instead of paying what you've got do now and wasting all that money on accountants -- the only people that should be against this plan, by the way, are the people making a fortune helping people avoiding pay their taxes. They're the only people that should be against this.

Look, anybody making that kind of money in America shouldn't be complaining. They'll do better under this tax code system, and hopefully they'll be able to use those savings to create more jobs for other Americans.

BLITZER: In this new poll, this CBS/"New York Times" poll, back in mid-September, he was leading the pack with 23 percent among Republican primary voters. He's now down to six percent. He's fifth. Herman Cain went from five percent to 25 percent.

What happened? How come he's collapsed like that? JINDAL: Look, polls will go up and down, and I know the pundits will analyze those, but what I think is important, he's offered a specific, credible plan today. President Obama's been there for nearly three years. We've yet to hear his plan.

We keep hearing -- during the budget negotiations over the summer we kept hearing he had a plan to save Social Security, he was going to present a plan on the entitlements. We never saw that plan.

Today, Governor Perry is saying here's my plan with premium support to help Medicare, with personal accounts to help save Social Security, with granting the states more flexibility to generate savings in Medicaid. There is no specific, alternative, credible plan.

I think what Governor Perry is showing is that he is willing to offer a different vision for America that involves more robust private sector economic growth, that doesn't involve us sending more and more of our tax dollars to Washington, D.C., doesn't involve our federal government borrowing over a trillion dollars from the Chinese to sustain a level of spending we have not had historically and that our children and grandchildren cannot afford to sustain. Right now, if we do nothing, the Social Security trust fund will be gone by the time I'm ready to retire, Wolf. And last year, for the first time, Social Security, in a long time, since the early '80s, paid out more than it was going to take in, and the reality is that situation is not going to change in the foreseeable future.

We need a candidate, we need a president who's willing to tell us specifically the hard truth it's going to take to grow our economy again. Governor Perry is doing that.

BLITZER: He's lucky that he has you as a supporter, Governor Jindal.

Thanks very much for coming in.

JINDAL: Well, thank you, Wolf. And you've got an open invitation. Come back to Louisiana.

BLITZER: I'll come down to Baton Rouge and visit you. Congratulations on your second term, landslide reelection. Appreciate it very much.

JINDAL: Thank you.

BLITZER: Stand by for some remarkable images as rescuers comb through the earthquake rubble in Turkey and find survivors, including a baby.

And police track a sexual assault suspect who allegedly was targeting a very specific group of women. We have details. It sounds like it could be a made-for-TV movie.

(COMMERCIAL BREAK)

BLITZER: Hurricane Rina is now threatening a major resort.

Lisa Sylvester is monitoring that and some of the other top stories in THE SITUATION ROOM right now.

What's the latest?

SYLVESTER: Well, Wolf, Hurricane Rina is headed for Cancun, Mexico, and forecasters warn it could strike as a major hurricane.

The storm's winds are 110 miles an hour. It's just shy of making a Category 3 hurricane.

Florida residents, beware, because the forecast track has it approaching the Keys after striking Mexico.

And dramatic images from Turkey, where two days after that devastating earthquake, rescuers carried a baby from the rubble. A short time later, the 2-week-old girl's mother and grandmother also were pulled out alive.

The death toll is at least 459 people.

And police in Plano, Texas, say this video -- take a look here -- it shows the man they believe broke into the homes of four former members of the same sorority and sexually assaulted them. The women are all in their mid 50s to mid 60s and were members of Delta Sigma Theta. A police spokesman is urging anyone who recognizes the suspect to call, saying, "We know someone knows him."

And President Obama is returning to late-night TV. The president taped an interview with "Tonight Show" host Jay Leno today in Los Angeles, and Leno asked him about the field of possible Republican opponents.

(BEGIN VIDEO CLIP)

JAY LENO, HOST, "THE TONIGHT SHOW WITH JAY LENO": Have you been watching the GOP debates?

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I am going to wait until everybody's voted off the island.

(LAUGHTER)

OBAMA: Once they narrow it down to one or two, I'll start paying attention.

(END VIDEO CLIP)

SYLVESTER: He's got those one-line zingers there, wait until they're voted off the island.

BLITZER: He's got good writers to help him with those adlibbed lines. Very good lines.

Thanks very much.

The Vatican is calling for a new global economic order. Will international leaders take it seriously? (COMMERCIAL BREAK)

BLITZER: Some are calling them radical ideas by the Catholic Church to fix the global economic crisis.

Our own Lisa Sylvester reports.

(BEGIN VIDEOTAPE)

SYLVESTER (voice-over): Occupy Wall Street protesters carried a golden calf named greed to make their point, the growing gap between the rich and the poor.

UNIDENTIFIED MALE: My biggest beef is the growing economic disparity. I have a problem that I feel we have a capitalist system that is based around hoarding wealth, instead of disbursing it to grow capital and help the free market grow.

SYLVESTER: The division between the haves and the have-nots is a message long central to the Catholic Church. Now the Vatican is picking up on the momentum and speaking out against what it calls the idolatry of the market.

For the first time, the Vatican has outlined what it sees as a moral fix for the problem of poverty, a proposal to create a new financial authority including a global central bank and a new tax on global financial transactions.

REV. THOMAS REESE, WOODSTOCK THEOLOGICAL CENTER: Globalization has made us all in the same boat, and we're going to either sink together or we're going to prosper together. But we're only going to do that if we work together as a world community to deal with these issues.

SYLVESTER: The Vatican says the International Monetary Fund has lost the ability to stabilize the world financial system and points to the current debt crisis in Europe and the lingering effects of a global recession. But added regulation and centralizing global authority, Marc Calabria with the Cato Institute counters, will exacerbate the problems and put more powers in the hands of a wealthy few.

MARK CALABRIA, CATO INST.: The attitude that you are sort of insulating this further from public accountability in the individual countries actually increases the leverage that the largest financial institutions have in this game because they will be the ones at the table.

SYLVESTER: Father Thomas Reese says this is meant to be a moral blueprint, a first draft to be tweaked by economists and politicians.

Like the Occupy Wall Street protesters, the Vatican hopes to draw attention to the issue of poverty and offer a vision where principles trump profits.

(END VIDEOTAPE)

SYLVESTER: Now, Father Reese of Georgetown's Woodstock Theological Center acknowledges these proposals are to the very far left. In fact, the pope advocates redistribution of wealth. And that's all going to be a really tough sell, but the Vatican believes that it's still important to have a conversation about what it calls a crisis in morality -- Wolf.

BLITZER: Father Reese is with the Georgetown University.

OK. Thanks very much for that, Lisa.

So, will President Obama's foreign policy successes help him in 2012? That's Jack Cafferty's question. It's coming up.

(COMMERCIAL BREAK)

BLITZER: Time now to check back with Jack for "The Cafferty File" -- Jack.

CAFFERTY: Pardon me. The question this hour -- I just drank some water -- pardon me. It went down the wrong way.

The question is: Will President Obama's foreign policy successes help him in 2012?

I apologize.

David in Virginia writes, "I doubt it. He let the war in Iraq end according to the Bush agreement, but couldn't negotiate an agreement that would protect our games there. Egypt is in some murky state of anarchy, Libya lost 30,000 --

BLITZER: Jack -- hold on for a second, Jack. I want you get your thoughts for a second, drink a little water, and then we're going to fix this, because I want to make sure we do it right, Jack. Let me know when you're ready and we'll make this happen.

Jack Cafferty has got some great responses from our viewers out there, and I want our viewers to hear it, but only when Jack is ready.

Are you ready, Jack?

CAFFERTY: I think I'm ready. I apologize. It happens sometimes. I grabbed a drink of water and it went down the wrong pipe. But we'll give this another shot.

David was saying, "Egypt is in a murky state of anarchy. Libya lost 30,000 people due to a prolonged insurgency, and could wind up hosting the largest advanced weapons free market in the world. Pakistan is on the verge of telling us to take a hike, and Afghanistan has said that in a pinch, they would side with Pakistan against us."

"Not exactly Nobel Peace Prize material. Eh?"

Russ in Pennsylvania, "This seems to be one of the key problems in America these days: assassinating an American citizen in Yemen without due process is seen as a good thing by both parties, or that attacking Libya without congressional approval, also seen as a success. What about the real rule of law? Shouldn't we be asking that our leaders be held accountable for these acts, or does American exceptionalism now mean that our leaders and our country are above such values? Ron Paul is the only correct answer next year."

Harold, on Facebook, "They are worthy accomplishments to everyone but those on the right. Will they make the difference in the election? I doubt it. The economy will determine the election's outcome."

Scott writes, "How is continuing Bush's foreign policy a success? I voted for Obama in 2008, but it's precisely because of his foreign policy (Bush-lite), that I won't vote for him again next year. The idea that Obama's making good on a campaign promise by bringing the troops home from Iraq three years after being in office is a joke."

"Bush set the end of this year date in the security of forces agreement that he signed in 2008. The truth is that if the Iraqis would ask us publicly to stay, the troops wouldn't be coming home at all."

And Noel writes, "It can't hurt, but it isn't enough to trump the economy. The best thing going for Obama politically is the lunatic behavior of the Republicans in Congress and the Republican candidates. The debates are the best reality show on television."

If you want to read more on this, go to my blog, CNN.com/caffertyfile, or through our post on THE SITUATION ROOM'S Facebook page.

And thank you once again, Mr. Blitzer, for the life preserver. I feel much better now. I apologize.

BLITZER: Good. Good work, Jack. Thanks very much.

Jeanne Moos, coming up next.

(COMMERCIAL BREAK)

BLITZER: One singing Halloween house is now a nightmare.

Here's CNN's Jeanne Moos.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT (voice-over): That's no motion- detecting, anti-burglary device. This is a talking house, practically a dancing house.

(MUSIC)

MOOS: The Web site Gawker christened it "The Awesome Halloween Light Show You're Glad Isn't on Your Block."

UNIDENTIFIED MALE: In a place that perhaps you've seen in your dreams --

MOOS: Or in your nightmares. The house plays one number taken from the Tim Burton film "The Nightmare Before Christmas." UNIDENTIFIED GROUP (singing): This is Halloween -- Halloween, Halloween, Halloween, Halloween.

MOOS: Here's the house version --

UNIDENTIFIED GROUP (singing): This is Halloween -- Halloween, Halloween, Halloween, Halloween.

MOOS: This is the family that lives in the Halloween house in Riverside, California.

(on camera): Kevin -- he prefers we not use his last name -- isn't doing any TV interviews at the moment, but we did have a nice, long phone conversation with him.

(voice-over): At his day job, he installs fiber-optics for Verizon, but he takes a week off to put up the 5,000 or so LED lights on his own house

(MUSIC)

MOOS: And he uses his spare time over a period of months to program them. He started the tradition back in 2008 with "Thriller."

(MUSIC)

MOOS: He does something different every year.

(MUSIC)

MOOS: And this year's graveyard smash is "Party Rock Anthem" from LMFAO.

(MUSIC)

MOOS: Cars cruise by. Kevin's house attracts a crowds of 300 or so people standing around watching the nightly shows.

(on camera): One night, a teenage girl showed up on his doorstep around midnight and asked if this was the house with all the lights and could he please turn them on? Kevin declined.

(voice-over): To us, it may be funny. Are the neighbors amused? One we talked to said folks seemed to like it, though she was a bit worried it would get too popular.

Online, it's a smash -- "Epic!" "Incredible!" "Awesome!"

That's Kevin's daughter departing the singing house mid-performance.

(on camera): Kevin says he doesn't do Christmas because he's too tired from Halloween.

(voice-over): Take your pick. Is it an eyesore or an eyegasm?

(MUSIC) MOOS: Jeanne Moos, CNN, New York.

(END VIDEOTAPE)

BLITZER: I'm Wolf Blitzer in THE SITUATION ROOM.

The news continues next on CNN.