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Joe Paterno to Step Down; Markets Plummet; Interview With Florida Congressman Cliff Stearns

Aired November 9, 2011 - 18:00   ET


JOHN KING, CNN ANCHOR: Good evening, everyone.

We begin tonight with worldwide economic jitters that are stoking fears of a new global recession. Europe's widening debt crisis is the biggest source of the worries, and your bottom line most likely took another hit today. The Dow Jones industrials average plummeted almost 390 points. That's more than 3 percent of the market's value. The Standard & Poor's index down even more, nearly 4 percent.

Alison Kosik live in New York tonight with the latest.

Alison, what's driving this?

ALISON KOSIK, CNN CORRESPONDENT: John, we definitely saw the sell-off pick up steam here on Wall Street after a report came out showing that a Eurozone official said they have no plans to give Italy a financial rescue package, financial assistance may just not be in the cards for Italy.

Because the thinking is that Italy could be too big to bail out. The fact is it's solvent but it is drowning in $2.5 trillion in debt. Its economy is more than twice as big as Greece, Portugal and Ireland when you put them altogether. A bailout clearly would cost much more than it did for Greece. The fear that Italy could default is really playing out obviously in the equity market, in stocks but also in Italy's bond markets.

The yield on a 10-year note spiked more than 7 percent. The fact is no one wants to touch Italy's debt because it's a big question whether Italy can even pay its bills -- John.

KING: Alison, for someone watching here in the States you have this global domino effect going on. What will it take to stop the freefall?

KOSIK: The fear factor, that uncertainty that you see in the markets that needs to go away. The fear factor meaning governments need to be put into place in Italy and Greece. Quick reforms like austerity measures, those need to be put into place, because what the markets really want to see is more stability happening right now in Europe before things can calm down, because the fact is the big worry is if Europe can't get its act together it could go into another recession, if it's not already there now, and the U.S. could follow -- John. KING: Alison Kosik live on Wall Street tonight. Tough times there. Alison, thank you so much.

And as Alison noted, there is no end to this uncertainty and volatility in sight. The surging bond rates in Italy raising the prospect the Eurozone's third largest economy might also need a bailout and there are serious questions about whether the European Union and the International Monetary Fund have the resources to pull that off.

Speaking in China, which is dealing with economic troubles of its own, The IMF chief, Christine Lagarde, listen here, anything but optimistic.


CHRISTINE LAGARDE, MANAGING DIRECTOR, INTERNATIONAL MONETARY FUND: I say it again, we believe that the world economy has entered a dangerous and uncertain phase.


KING: Turning now to another major developing story tonight, already today Penn State University announced its legendary college football coach Joe Paterno is stepping down. His conduct now in question as a child sex abuse scandal rocks the program and the campus.

And there's word tonight the university president, Graham Spanier, is on the verge of losing his job. Paterno said in a statement today he wants to retire and plans to retire at the end of the season. There are some on campus however who are pushing for an immediate resignation.

One of Paterno's longtime assistants, Jerry Sandusky, is charged with abusing eight young boys over a 15-year period. Two top university officials already are charged with lying to authorities and failing to report what they knew about those abuses.

Paterno insists he did nothing wrong but conceded in his statement today that in hindsight he wishes now he did more. Paterno also said: "I am absolutely devastated by the developments in this case. I grieve for the children and their families, and I pray for their comfort and relief"

Reporter Sara Ganim of "The Patriot-News" of Harrisburg, it's been breaking a lot of news on this story, she joins us now from State College.

Sara, the question tonight is, will the president of the university survive an emergency meeting tonight? What do we know?

SARA GANIM, "THE PATRIOT-NEWS": Well, we know that they are meeting at 7:30. We have been hearing all day they have been meeting in private together. There have been rumors circulating and news reports circulating that today is his last day as president. However, as far at "The Patriot-News" is concerned, we haven't confirmed that. We're told it's still up in the air. This meeting is happening tonight.

As you know, during the day most of the news and the action was surrounding Joe Paterno. Almost all the media here in town was at Joe's house watching him come and go from his house and family trickle in, and he did issue a statement early in the morning that said he plans to resign at the end of the season. However, that's not definite.

The board of trustees could make a decision for him, and basically cut his career short, if that's what they choose to do.

KING: And what's the sense of that? There are obviously some pressures that say if you are going to have a break, have it immediately. The university needs to start today if not tomorrow to rebuild and he has to go. He's obviously though an icon. Will he get the respect, I guess is the right word for it, to be allowed to finish or are the political pressures too big?

GANIM: You know, it's very split. There are a lot of students on campus that are showing very vocal support for Joe Paterno. They were at his house last night. There were some people protesting downtown and at Old Main, which is where the president's office is, and then at the stadium last night.

But there's also a pretty vocal group on the other side of the issue. The other side, they believe that he should go and he should go now.

KING: Sara, you have, in the course of your reporting, in the middle of these big developments had a chance to talk to some of the families of the victims. Tell us what they tell you.

GANIM: Well, you know, I talked to them yesterday, and they really feel betrayed by Penn State. They feel like something could have been done earlier this decade that could have stopped the abuse before it got this far.

I also have talked to one of the sisters of the victims who is a Penn State student, and she says that she doesn't feel that Joe Paterno should go out like this. She actually supports him, but feels that some of her fellow students are making too much light of this situation, that they're making jokes about it in class and they're making her very uncomfortable. So we will have that full report tomorrow, but, you know, it's a very trying time for them because you can imagine, they're victims.

Some of them have been dealing with this for several years, and now this circus and this chaos that is surrounding this case is almost too much for them to handle. Some of them are really on the brink.

KING: Sara Ganim, fabulous reporting. We appreciate your sharing some of it with us on CNN tonight. We will stay in touch as this story progresses.

As Sara noted, many on campus are sad to see Paterno go and are angry at word he was pressured to step aside. Here's the coach last night speaking to student rallying in support of him.


JOE PATERNO, PENN STATE HEAD FOOTBALL COACH: Remember, we're always going to be Penn State, regardless of what happens to certain people. We're Penn State. I'm proud of you, folks. I'm proud of you. I have always been proud of you.


KING: Among the Paterno supporters on campus is John Tecce, who is an athletic department intern, John Tecce with us from the campus tonight.

John, he's a legendary coach, he's an iconic figure on campus. When you hear, A., he's being pressured to go and some say don't even let him finish the season, he should go immediately to begin to get this cloud away from the program, what do you say?

JOHN TECCE, PENN STATE STUDENT: It's a tough situation, I think, for everybody involved. It's really -- I mean, Joe Paterno and Penn State, he is Penn State, and in Pennsylvania, too. He's one of the most powerful people in the state, and with so much uncertainty surrounding the situation, it's really difficult to form an informed opinion. You know, I know on campus I have heard every different type of opinion, as Sara alluded to. It's just tough to kind of figure out where you stand on it.

KING: You say it's tough to figure out because he's such an iconic figure, but when you mention his power on campus and his power in the state is it then logical to say that he is the name, and the face and the responsible figure for this program, so if maybe he didn't know anything, maybe he should have?

TECCE: I mean, I think Joe Paterno has built Penn State football to what it is today, but by the same token we don't know what he knew and didn't know. That could come out in the next couple of days, couple weeks. We don't really know right now, but it's just a sad time for Penn State right now with just the ways things are unfolding.

As a student here, as a senior here, Saturday is my senior day, my last football game as a student in Beaver Stadium. To have this kind of hanging over the week is difficult, but at the same time I think we will be there Saturday displaying what Penn State is about and Joe Paterno has built here.

KING: Help me understand. You're an intern in the athletic department. Help me understand the culture. Is there a culture in the program that what happens in the program stays in the program, that it's a family, and if somebody has maybe gone a bit wayward, it is dealt with internally? Is that the culture?

TECCE: I can't really speak to that. I'm not really in touch with much of the football aspect of the program.

My responsibility with football is really just with Paterno, though, which is outside of Gate A where students camp out every week preceding a Penn State football game to get the best seats. I oversee that along with the other officers. And we manage that. So I can't really speak to the internal workings of the football program.

Success with honor is the mantra that is brought for by Penn State athletics. And that's kind of how they treat most situations. But, yes, I can't really speak to what goes on internally, honestly.

KING: Let me ask you, as a student on the campus, you mentioned you're going to your senior day. Your legendary football coach has been forced to step aside. One of his top deputies is involved in a child sex abuse scandal and most likely is headed off to prison. The president is under pressure to resign tonight.

It has to be a pretty trying time on campus and does it make you question at all sort of the strength of your community there?

TECCE: Absolutely not.

I think obviously it's been a trying time, but, you know, I mean, the cliche is tough times don't last, tough people do. I think what we have seen on campus this week has really been an outburst of Penn State pride and Penn State passion to say, OK, the actions of a few will definitely not define the many. Penn State is so much larger than even a figure like Joe Paterno or like Graham Spanier.

It's so much larger than any of that with the tens of thousands of students involved in the university now, the hundreds of thousands of alumni around the world. I really think that Saturday, you know, the eyes of the world are going to be upon us with, how's Penn State going to react to this? And I think what we have seen this week is really an outpouring of support for these players and this football team, these guys that I see walking through the hub and these guys that I sit near in class, who have nothing to do with this, really.

I think you're going to see an outpouring of support for them and I think that's what's really important with how the fan and student reaction is going to be this week, the rest of the week and the game Saturday.

KING: John Tecce, appreciate your help tonight understanding the mood on campus. Thanks so much.

Still to come here, some Latino activists who supported President Obama in 2008 are increasingly angry at the president and at one of their old friends who works as a top Obama deputy.

Plus, new e-mails in the investigation of that green energy company Solyndra whose bankruptcy left you on the hook for a half billion dollars, do they show political connections influenced White House decisions? That's next.

(COMMERCIAL BREAK) KING: The major development tonight on the investigation of a green company whose bankruptcy left taxpayers on the hook for more than $500 million.

House Republicans say new e-mails obtained in their investigation of the Solyndra loan show that a big Obama fund-raiser with a big state in Solyndra lobbied the White House for help. The request from fund-raiser George Kaiser came after the loan was issued. Kaiser and his associate was trying to get the government to buy some of the company's solar panels.

To committee Republicans it is proof that political influence played a role in how Solyndra was treated, but committee Democrats are furious tonight. They say the Republicans selectively cherry-picked a few e-mails, but are holding dozens more that show no wrongdoing or influence-peddling of this took place.

Here's a sample of the newly released e-mails. In one e-mail exchange, Kaiser associates Ken Levit and Steve Mitchell discuss a meeting with Vice President Joe Biden's office.

Levit: "They about had an orgasm in Biden's office when we mentioned Solyndra."

Mitchell: "That's awesome! Get us a DOE" -- that's Department of Energy" -- loan."

In a later e-mail from Kaiser to a colleague, he discusses what appears to be a meeting at the White House -- quote -- "A couple of weeks ago when Ken and I were visiting with a group of administration folk, White House, not DOE, and Solyndra came up, every one of them responded, suggesting it was one of their prime poster children."

Florida Congressman Cliff Stearns is the Republican chairman of the Oversight and Investigations Subcommittee. He's been with us before and he joins us now by telephone.

Mr. Chairman, you think there's some kind of a smoking gun here. If so, what is it?

REP. CLIFF STEARNS (R), FLORIDA: Well, I don't know if it's a smoking gun. But, John, what you mentioned in those e-mails go back to February, 2010, which is obviously a year-and-a-half ago that these people were talking to the White House.

We have e-mails clearly showing that both Argonaut, the hedge fund which tried to help Solyndra, as well as George Kaiser's foundation, his people were talking to the White House, and we also have indication that Mr. Kaiser was talking to the White House.

So all we're saying to the White House is, there's enough smoke here that we would like to see the rest of the e-mails about the top advisers in there, including Valerie Jarrett, Ron Klain, Rahm Emanuel, Larry Summers, Carol Browner.

(CROSSTALK) KING: Forgive me for interrupting, sir, but that is covered in the subpoena you issued to the White House. And they are fighting you over that.

I want to make clear to our viewers these are 2010 documents. The loan was approved before that. These are after the loan. You still don't have any, sir in your possession that you can say here's a document that proves despite the warning signs, despite the objections of some in the administration to this loan, somebody overruled it because of pure politics? You can't prove that, can you?

STEARNS: Well, no, and I think we're just trying to get the documents, not necessarily to prove that, but to try and, shall we say, understand all the people in the White House, what was their influence?

Did they influence this because of political reasons like you talked about, or was it that they were so hell-bent in propping a poster child of Solyndra being the first loan guarantee, that they just forgot about all reason here, particularly in light of Department of Energy issuing red flags?

But I think the bottom line is we're just asking through the subpoena, which is the same type of subpoena that has been issued by John Dingell when he was chairman of the same Oversight Committee that I am today, as well as Mr. Waxman. It's the same thing we issued to the Department of Energy. It's the same language.

So all we're saying to the White House, look, there's enough e- mails out there to know that there were some conversations with top advisers in the vice president's office as well as the president. Just turn them over to us and let's look at them.

KING: Chairman Cliff Stearns, appreciate your time tonight. We will keep in touch as this one unfolds.

Carol Leonnig of "The Washington Post" has been following this story closely and she is with us.

The chairman makes the point he's trying to see is there any political influence, and he suggests these e-mails prove -- as you know, you have been reporting this all day, this is a 10-page letter from the Democrats on the committee and they say what the chairman's doing is playing politics, because they're releasing selectively a few e-mails and they quote in this document here, you know, dozens more, which they say prove just the contrary, that these guys were aware of the politics and were very sensitive to it.

Do these new e-mails from the Republicans tell us anything new?

CAROL LEONNIG, "THE WASHINGTON POST": The new e-mails from the House probe don't prove that there was political influence in the loan, as you pointed out.

What they give us is a glimpse into just how close this bundler was and his operation with the White House and also with the Department of Energy. Remember, there are two stages. The loan is given in 2009, but the company is financially suffering for a long time. And they need DOE's help. They apparently were setting up a meeting with the White House to try to figure out some sort of contracting to sell the panels.

And it's clear that while George Kaiser, the bundler for Obama, is not directly involved in lobbying the White House about the loan, he's advising his key people about how to lobby the White House on some specific things.


KING: Forgive me. The chairman's point is if you have this in 2010, we want to see all the documents going back to see if there were some conversations similar to this before the loan was approved, when we all know people in the Office of Management and Budget were saying this isn't ready for prime-time. Let's not do this right now. And somebody decided, no, let's do it.

Is that -- based on your reporting, is that a fair question?

LEONNIG: I think it's a pretty fair question now that you see that Kaiser's operation and his folks appeared to have a lot of contact with the White House and a lot of close discussions we weren't aware of previously.

However, I'm glad you pointed out the Democrats' report and their release of e-mails, because it has plenty of material in which Kaiser personally -- George Kaiser of Argonaut personally says, I don't want to make a personal appeal to the White House, and, in effect, sits with the president at a fund-raising dinner and says he never brings it up.

KING: You read some of those e-mails and here's one of them here, George Kaiser sending an e-mail to one of his associates: "I question the assumption that White House the path to pursue. Both of your issues are with the Department of Energy. I doubt whether Rouse/Browner" -- that's Pete Rouse and Carol Browner at the White House -- "would intervene. And if they did I'm concerned the DOE/Chu, Secretary Chu, would resent the intervention."

That goes on and on. But he's clearly saying do this at the Department of Energy.

I guess my point in closing is this. You have these newly aggressive oversight hearings. Amen for that. Whether it's Democrats or Republicans in the White House, Democrats or Republicans in Congress, oversight is the job of Congress. Bit when you have the Republicans release this and then the Democrats release this saying foul, what is the hope for the taxpayer who might be on the hook out there for more than $500 million that at the end of this they will trust they had a fair and comprehensive and objective investigation?

LEONNIG: Both sides have a lot of room to grow in terms of being forthright and just sticking with the central question. Was our money wasted? And I would agree with the chairman on one point, which is it appears pretty obvious from what we reviewed that DOE was -- the Department of Energy -- was pretty supportive of this company in a way that they hadn't been with others, and it's perhaps because it was their first baby.

KING: Well, Carol Leonnig, is it their first baby or is their influence at play? We will figure this one out. And thanks for your help sorting it out.

LEONNIG: Thank you, John.

KING: And that was quite diplomatic, that they have room to grow. I that's a nice way -- that's the nicest thing that has been said about Congress in a long time. Carol, thanks for coming in.

Still ahead here, about last night. What do the 2011 elections tell us about the higher stakes in 2012?

And next, a Latino turncoat in the Obama White House? Some angry one-time Obama supporters say yes and a warning their votes are in play next year because of mounting personal and policy differences.


KING: Here's tonight's number, and it's important politically, 396,906. That's the number of deportations, illegal immigrants thrown out of the country by the Obama administration. That's a record and it has some people mad.

Let's take a look at just how this breaks down -- 55 percent of them are criminal offenders. About 20 percent repeat immigration violators. These are removals done right at the border, immigration fugitives here, other removable aliens, or illegal immigrants, some people don't like that term.

How does this play out over time? One of the reasons this is playing on our politics now is that people are mad, some people are mad it's the Democratic Obama administration doing this. Look, in 2008, that's President Bush. Look at the last three years, and each year the deportations going up under the Obama administration.

That record number of deportations one of several flash points now between the White House and the Latino community, and in recent days, it has become both highly charged and highly personal. A growing number of Latino organizations and activists are turning on a one-time friend in the White House, the director of intergovernmental affairs, Cecilia Munoz, calling her a turncoat and a traitor.


CECILIA MUNOZ, WHITE HOUSE INTERGOVERNMENTAL AFFAIRS DIRECTOR: As long as Congress gives us the money to deport 400,000 people a year, that's what the administration's going to do.

(END VIDEO CLIP) KING: That's Cecilia Munoz there.

How is this feud impacting the White House ties to Latinos and how will the tensions translate at the ballot box in 2012?

Mario Solis-Marich is host of "Colorado's Progressive Talk." He's also a Democratic consultant. You have seen him here before. Maria Cardona, CNN a contributor and a Democratic strategist.

Mario, you called for Cecilia Munoz to apologize and to resign. I thought she was a friend of yours.

MARIO SOLIS-MARICH, PROGRESSIVE BLOGGER: I also by the way just -- I also asked the president to apologize as well in the very same piece as the piece I wrote in August.

I have a lot of respect for the previous accomplishments of Cecilia Munoz. I have a lot of respect for her as an individual. But I just find that in this particular role at this particular time she's being ineffective. There is no way that the Obama administration, that that tight little circle of Obama, Plouffe and Axelrod could know of the distress in our community and not be acting on it.

KING: But you say she's being ineffective. She knows of distress and complaints in your communities, because you and others have complained to her. Do you think she's ineffective? Do you think that she's being muzzled or do you think that she agrees with them?

SOLID-MARICH: Well, at this point, it's very hard to tell.

But one thing we know, one thing that this entire issue has clarified is that at this point today there is no way that the president cannot understand that there's a high level of anger and dissatisfaction at this abhorrent policy that he continues to promote.

KING: Does the president understand, Maria, that there's this high level of anxiety and frustration?

MARIA CARDONA, CNN CONTRIBUTOR: Absolutely. He understands that 150 percent. And so does Cecilia.

KING: But he doesn't think his policy is wrong?

CARDONA: Well, no. I think what is going on is he's as frustrated as we in the Latino community. And he has said this time and again.

He has even gone before Latino groups to say thank you for holding my feet to the fire. I need your help in this, because you know what? The fact of the matter is, is that this administration has done a lot in terms the power that they have in the executive office to change the immigration system.

Very recently they announced a new policy on prosecutorial discretion which focuses the discretion that they have on criminal undocumented workers. The way that you have shown this, and now the majority of folks who are being removed are criminals. That's the way you have to go. More needs to be done, and the passion in our community needs to be focused on the Republicans, which need to step up to the plate.

KING: Will the passion be focused on the Republicans, Mario, or will some Latinos even look for a Republican alternative or stay home?


SOLID-MARICH: We have spent a lot of time focusing on Republicans, and that you know has brought us very little.

The president has broad discretionary power in this particular program, in the so-called Secure Communities program. He has a lot that he could still do. He said, hold my feet to the fire. That's what we're doing.

Now, lately he hasn't been saying, "Hold my feet to the fire. He's been saying, "Back off," quite frankly, but we will continue to hold his feet to the fire, because there's much more that he can do.

Even the people that are currently defending Cecilia Munoz publicly acknowledge that the president's position right now as a policy is an absolute disaster. They wrote an open letter highlighting how dissatisfied they are with the president's current policies.

KING: Well, we know Latino voters could be the key constituency. The -- I was going to say "a," but they could be the key constituency. If you look at Colorado, Nevada, Florida. If you look even at Virginia and North Carolina, a small population but a growing population can make a huge difference. Mario, will there be a price? Is that already locked in? Will there be a price next year? Some either vote for the Republicans out of protest, even if they don't like what they see, or stay home.

SOLIS-MARICH: I think that what we're seeing right now, based on the polls is a lot of members of the community are much less enthusiastic about this particular president and about re-election. He has a lot of work to do in the community.

You cannot spin your way out of destroying families, separating bread winners, creating orphan children. It's very difficult to spin out of that.

The president needs to correct his policy. He had a beer summit with a -- with a police officer accused of racial profiling. He's invited his Republican enemies over for cocktails and football games. He needs to have a beer summit with the DREAM Act students. He needs to sit down finally with these students, and they need to hash out what he can do for them.

CARDONA: And you know what? The president was the first one to call Republican senators, last December, when we on the verge of passing the dream at and they were not able to have that support. So, again, this president knows that the community is frustrated and that more needs to be done. He's the first one to say that. But in all fairness, it is not fair to put this either at Cecilia's feet or at the president's feet when we could have half of the Republican senators who supported comprehensive immigration reform just a few short years ago step up to the plate, we could get this done tomorrow.

Latinos understand this...


CARDONA: ... and in the latest poll that came out, they support this president 2-1 over any of the Republican candidates running right now.

SOLIS-MARICH: You know, it's only in Washington, D.C., John, where your approval rating could go from 72 percent amongst Latinos down to 64, and it's considered a good sign.

I mean, clearly, Barack Obama needs to move himself out of the beltway, come into the barrios, sit down with the DREAM Act students, have a beer-and-soda summit with the DREAM Act students, and find out what more he can do for them.

CARDONA: And he will be doing it.

SOLIS-MARICH: The power of the executive pen is very, very important. He's yet to meet with DREAM Act students. And I think that - that this would be a good time for him to do that.

KING: I clearly see the tension in the community. We'll keep an eye on the president.

Mario, thanks for coming in. Maria, as well.

SOLIS-MARICH: Thank you, John.

KING: Appreciate it. Keep your eyes open. Appreciate your being here.

And still to come, is President Obama the Grinch who taxed Christmas? Tonight's "Truth" traces the Christmas tree tax.

And next, after all that's happened since 9/11, surprising numbers about how many people still head to the airport with -- get this -- guns in their carry-on bags.


KING: Welcome back. Here's the latest news you need to know right now.

Three people died and dozens are missing in Turkey tonight, a magnitude 5.7 earthquake collapsed a number of buildings in the same area where a stronger quake a couple of weeks ago killed about 600 people. Today's first-ever test of the country's emergency alert system uncovered plenty of problems, including reports of TV and radio stations that didn't run this afternoon's test at all. FEMA says they'll work on it.

And the nation's airport screeners tells Congress a surprising number of people still try to carry guns onto airlines. Listen to what happened in just the last week.


JOHN PISTOLE, TSA ADMINISTRATOR: We prevented over 30 more guns from being carried into the cabin of an airplane, including nine just yesterday.


KING: General Motors today posted better-than-expected earnings and are now on the way to finishing the year ahead of Toyota as the world's biggest carmaker.

And at tonight's presidential debate in Michigan, conservatives continue attacking the credibility of the women who've come forward to accuse Herman Cain of sexual harassment and unwanted sexual advances. Now some of the women are talking about teaming up.

Here's CNN's Brian Todd.

Brian, let's start with questions being raised about the backgrounds and the records of some of these accusers.

BRIAN TODD, CNN CORRESPONDENT: John, that's right. Questions about their backgrounds, leading to more questions about are they credible in this case? We'll talk about the one accuser who came out yesterday, Karen Kraushaar.

This is not the only complaint that she has filed inside a workplace. She told CNN that while she worked for the INS, the old Immigration and Naturalization Service -- this was after she worked at the National Restaurant Association, told CNN that she filed an internal complaint there because she was not allowed to telecommute while she was recovering from a car accident. She had found out that somebody else was being allowed to telecommute. She didn't think that was fair, so she filed a complaint about that. Her attorney says, look, that has no bearing on her complaints against Herman Cain.

The other accuser, Sharon Bialek. The Cain campaign suggesting she has credibility products because she was involved in several lawsuits in years past: a lot of financial problems, including bankruptcy.

She told CNN, "Yes, I've had bankruptcy. It was after my mother died. I was helping my father pay some medical bills. I had a custody battle."

But still, John, questions being raised. Now Herman Cain has high-powered attorney Lynne Wood on his side, so you can bet more questions will also be raised about these accusers.

KING: And Brian, is there any developments, any progress on this talk that three or four of these accusers might get together and have a joint press conference?

TODD: Well, yes. Kraushaar's attorney, Joel Bennett, has told us that Kraushaar and the other woman, Sharon Bialek had agreed to hold a joint news conference. They're trying to contact two other accusers. The names of those accusers are not public. They're trying to contact them to hold a news conference. They've not been able to reach them yet.

Not quite clear right now whether they will go ahead with just the two women who we know about holding a news conference. They may do that. They're going to wait and see. We may know something in the next 24 hours or so about that.

KING: Brian Todd, appreciate the latest reporting on that. Brian, thanks so much.

This just in to CNN. The United States Department of Education announcing a short time ago tonight they plan to investigate Penn State's handling of sexual misconduct allegations. Again, the U.S. Department of Investigate -- Education will launch an investigation into whether Penn State failed to comply with the Cleary Act in regard to allegations of sex offenses on campus by a former school official.

Former Penn State defensive coach Jerry Sandusky has been charged with sexually abusing several boys over several years, including incidents on campus. State and federal law requires -- requires those crimes, if witnesses see them, to be reported.

Now that election results from across the country are in, Democrats are finding plenty to cheer about. We'll look at what changed last night next.


KING: You could argue that election day 2011 was a day for the Democrats. At the very least vote, voters across the country seemed to be putting limits on the Republicans' agenda. Consider this: in Ohio they overturned a new law passed by Republicans that limited collective bargaining rights for public workers.

Mississippi voters rejected an anti-abortion initiative that defined life as beginning at the moment of conception, even fertilization.

Out west, the state senator who wrote Arizona's controversial immigration law lost a recall election.

To discuss what, if anything, all of what happened last night could mean in 2012, we're joined by CNN contributor Erick Erickson. He's editor in chief of the conservative blog Republican consultant Alex Castellanos is with us, also Democratic strategist Paul Begala. I want to start in Ohio. The union initiative received the most attention. Governor Kasich, Republican, passed through the legislature legislation that rolled back collective bargaining rights. Then they had a recall effort on the ballot. That recall effort passed, meaning the unions win. Governor Kasich says the people have spoken.


GOV. JOHN KASICH (R), OHIO: It's clear that the people have spoken. And you know, my view is when people speak in a campaign like this, in a referendum, you have to listen when you're a public servant.


KING: He has to listen, because it wasn't a close call. Sixty- one percent against on that referendum. You show the results up there, repealing what's called SB-5. Thirty-nine percent favor, 61 percent against. So that one goes down.

Yet as the Democrats all do hand stands, and it is proof the unions could organize; it is proof the unions could overturn this. At the same time the people of Ohio are essentially asked to vote their opinion on the Obama health-care plan. Do you want to protect their individual freedom?

And look at this one. Proposed constitutional amendment to preserve the freedom of Ohioans to choose their health care. Sixty- six percent favor, 34 percent against.

So the Democrats win on union rights. They lose on health care. What does it tell you about Ohio 2012?

PAUL BEGALA, DEMOCRATIC STRATEGIST: A clean sweep against Mitt Romney. Because what they voted on was not Obama health care, just the individual mandate. That was symbolic, I'm told, not binding. But still, the individual mandate is the heart of Romneycare, which is how it got into Obamacare. So Mitt loses across the field there.

I don't think it hurts the president at all. I think it shows he can win Ohio, and I think he will win Ohio. It's a great win for the unions, by the way. America doesn't want to bash unions; certainly the people of Ohio.

KING: And does it -- does it tell the Republicans, if nothing else, that, look, labor lost the big elections in 2010. Wisconsin governor, Ohio governor, Pennsylvania governor. Does it at least tell Republicans these guys are trying to regroup and looks like they might be able to do it?

ALEX CASTELLANOS, REPUBLICAN STRATEGIST: When they're able to spend three-one over the Republican, yes, they can be very effective.

But look, Republicans shouldn't try to cover up the sun with one hand here. They lost. When you lose you better learn something. And one of the things I think Republicans could learn is that, when you lose control of the agenda and you let an election become about, hey, we're going to take away your firefighters and your -- and your cops, that's an election you're not going to win.

But if you can keep an election on economics and on big government, on Obamacare, it was a referendum against Obamacare, not Mitt Romney. I don't think he was on the ballot.

KING: Erick, what did you learn last night?

ERICK ERICKSON, REDSTATE.COM: Yes. Well, you know, I learned across the nation even down into Mississippi where for a while there was a nail-biter of an election, although it panned out well for the Republicans, that the GOP ground game seemed to really be off across the nation, from Virginia all the way over to Arizona. There didn't seem to be a good GOP effort. I'm not really sure what happened there.

In Ohio, as well, it seems like Republicans got really confident. They did well in the recalls in Wisconsin. They were able to keep the Senate in Wisconsin. And they kind of fell back and said, "Well, Ohio's going to go that way, too." Well, it didn't.

KING: Senator Russell Pearce in Arizona got national attention when he passed SB-1070, the Arizona immigration law, a lot of it still tied up in the courts. There was a recall election against him. Listen here. He lost. Here's what he had to say about it.


JERRY LEWIS (R), SENATOR ELECT, ARIZONA: Our opponent was the most powerful politician in Arizona and one who had deep pocketed and powerful interests from outside our district backing him as well as the entire muscle of the state Republican Party, the party to which I also belong.


KING: That is Jerry Lewis, the moderate Republican won the race. This is Russell Pearce in defeat.


SEN. RUSSELL PEARCE (R), ARIZONA: If being recalled is the price for keeping one's promises, then so be it. I've always kept my promises.


KING: Erick, do we learn anything about the strength of the immigration debate? Was this just about Russell Pearce? Was this a tug-of-war in the Arizona Republican Party? What did we learn here?

ERICKSON: Yes. I do think that this had a lot to do with Pearce himself. I mean, the law is still there, and it was one individual recalled. He didn't run a very good effort against the recall. I don't know that he took it very seriously after what happened in Wisconsin.

It's very interesting to see the Republicans this year. They saw what happened in Wisconsin and decided, ah, it didn't work out bad there. So we can rest on our laurels in all these other states. And they got swept away because they got too comfortable.

KING: I can't figure Arizona out in the sense that, if John McCain weren't the nominee last time, the Democrats would have tried for it. Demographics are changing just like Nevada, in the region out there.

You would think, after this immigration law passes, governor gets reelected, the Obama campaign would say, nah. But if you look at graphics, why not?

CASTELLANOS: The difference -- there wasn't much difference between those two candidates on the issue of immigration. The big difference was in tone.

And Pearce did have personal issues scandal, money, all those kinds of things. A big lesson from last night for Republicans is union states, Republicans didn't do well last night. Non-union states, Virginia, North Carolina, those kind of states going into 2012, looks like Republicans are going to have a better hand to play. And I think that's the lesson for both sides.

BEGALA: I think if you look at the Republican agenda, voters don't want it. They don't want to restrict voting rights. Republicans lost in Maine trying to restrict voting rights.

They don't want to restrict women's access to contraception. In Mississippi -- they lost in Mississippi, not exactly a left-wing state.

They don't want to bash unions as they tried to in Ohio. They don't want to bash immigrants as they tried to in Arizona. If you look across the country in every region, the Republicans lost on their agenda and on their ideas.

KING: This is an anchor's prerogative. This is A rhetorical question as we go to break. I think one of the things we may have learned, and we learned it in 2010, reaction to 2008. We may have learned it a little bit last night, is that the winners always seem to overreach. Whether they're Democrats or Republicans, they tend to overreach just a bit.

We're going to take a quick break, though don't forget, coming up at the top of the hour, "ERIN BURNETT OUTFRONT," she's going to take a very close look at a very rough day in the markets.

And up next for us, the "Truth" about what you might call the Obama administration's gift for conservatives under the Christmas tree.

(COMMERCIAL BREAK) KING: To the conservatives, manna from heaven and just in time for the holidays. A Christmas tree tax imposed by the Obama administration. Right? Just doesn't get any better than that. Obama the Grinch, the president who taxes Christmas, heading into his re- election year, no less, at a time millions of Americans can't find work, let alone afford a pricey Christmas tree.

So in a snap, the Internet version of a wildfire. A banner headline on "The Drudge Report." FOX News tweet is a play on a holiday favorite. I can't sing, but you get it. "Oh Christmas tree, Oh Christmas tree, how much can O tax thee?" Got to admit, that's catchy.

And the conservative gateway pundit recycles Drudge and has a personal note. "Barack Obama hates Christians."

How about that for Christmas season creativity? Use a new tax on a Christmas tree to stir up all the crazy birther "Obama is a Muslim" conspiracy garbage. Bad form anyway. Un-Christian, you might say. And all the more so because of tonight's "Truth."

It's all a bogus attack. The money raised from that new tax, 15 cents per tree sold, will be used for advertisements and other ways to promote the real deal, real trees over fake trees.

The "Truth" is, though, this tax was not hatched by the Obama administration. It came as a request of the tree growers, the National Christmas Tree Association -- yes, there is such a thing -- the National Christmas Tree Association, which is looking for ways to fight market decline.

Those looking for ways to attack President Obama, well, in this case barking up the wrong tree. The conversations about this tax actually started back in the Bush administration.

But the critics won't back down, and they won't see that they're barking up the wrong tree because their attacks worked, at least for now. Tonight, the White House says because of this big dust up that the Christmas tree tax is on hold.

Let's get back to our CNN contributors, Erick Erickson, editor of; Alex Castellanos, Republican strategist; Democratic strategist Paul Begala with us.

My question on these always, Erick, to you first, is, you know, there are plenty of things. If you're a conservative and you want to make the case against President Obama, there's no shortage of things you can run on. Why do you need to do this?

ERICKSON: You know, because it connects to people. We're coming into the Christmas season.

KING: But it's not true.

ERICKSON: A tax on Christmas trees. The Obama administration should -- it was true that you just said they were going to impose it, now they're not. Look, the National Tree Association can't tax anyone. The government has to do it. And they were going to. They should have seen this one coming from a mile away.

KING: You're right, they should -- you're right, they should have seen it coming. But the shrimp association, the cotton growers.

CASTELLANOS: So what. The consumer didn't. The consumer didn't ask to get taxed but an industry collaborated with the government to screw the poor American consumer which you're right they do on all kinds of things.

KING: And under all kinds of administrations.

CASTELLANOS: This is the axis of evil when big industries like the big powerful Christmas tree lobby collaborates with big government.

ERICKSON: This is the one area of the Occupy movement and the Tea Party crowd agree on.

BEGALA: Nobody should use anything like this to pursue this myth, which is offensive to me as a Christian that somehow there's a war against Christmas or against Christians in our country. This country has been a wonderful haven for my co-religionists in the Christian faith. And nobody should say otherwise.

CASTELLANOS: Sorry, Paul, you're not allowed to say Christmas, you have to say the holidays.

BEGALA: I can, and I do, because this is a myth. This is a myth. See.

KING: There you go. I'm going to move on to something. I'm going to move onto something. I'll just leave it at that. And I won't try to characterize it.

Mr. Erickson writes a very provocative piece on, essentially saying if the Republicans nominate their current frontrunner, that guy named Mitt Romney, that conservatism is all but dead.

This is what Erick writes: "Mitt Romney is the Silly Putty of politicians. Press him -- press on him real hard and he'll take on whatever image you press into him until the next group starts pressing. Voters may not like Barack Obama, but by the time Obama is done with Romney, they will not trust Mitt Romney. And voters would rather the guy they don't like than the guy they don't trust."

Erick goes on to write this: "Conservatism itself will not really die. But it might as well be dead, as even conservatives in the heartland of the country stop taking Washington conservatives seriously. The party that could lead a conservative, populist campaign against Wall Street and Barack Obama will instead nominate a guy more at home on Wall Street than Main Street."

Erick, I'm not the sharpest tool in the shed, but I'm getting the impression you don't like Mitt Romney.

ERICKSON: You know, I don't have a problem with Mitt Romney himself. I think he's a horrible candidate. I mean, this -- we are nominating our Michael Dukakis.

ABC News asked him to respond to me, and he basically makes the Dukakis argument from '88, that it's competence over ideology. You know, you've got to beat something with something. You can't beat something with nothing. And I think Mitt Romney's career makes pretty sure he is a nothing able to be filled with whatever you want him to be filled with at the particular time.

BEGALA: This is a populist moment in American politics and Mitt Romney is an elitist. He's a Wall Street alumnus. He's Millionaire Mitt. He made hundreds of millions of dollars from laying people off. Well, that's fine. He can make that case. But I can't wait to see him as the Republican nominee.

KING: So you think Erick's right?

BEGALA: Yes. This is a populist atmosphere. This guy is a lay- off artist.

KING: You worked for Romney last time around. You're not this time around.

CASTELLANOS: No, I'm not this time around. But I think if Mitt Romney is the nominee, thank God he'll run against a populist Harvard professor who has...

BEGALA: He's a Harvard student.

CASTELLANOS: ... who has populated his administration with people from Wall Street. Look, Mitt Romney I know, and we've had our disagreements.

KING: Conservatism might as well be dead if the Republicans nominate Mitt?

ERICKSON: This is Harriet Meiers all over.

CASTELLANOS: I know Mitt Romney.


CASTELLANOS: ... issues. But he does have a core. The man believes in family and his faith, and he lives both of those things. And those are the things where conservative principles come from. So there's a...

BEGALA: He made his money from laying people off. May not have laid you off. He laid off hundreds of people. Or thousands, thousands.

(CROSSTALK) KING: I'm going to call a timeout. Maybe we'll continue it after. We've got to go. But there's a woman waiting to have her program start. "ERIN BURNETT OUTFRONT" ready to take it away right now.