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White House Makes Fiscal Cliff Offer; Interview With Minnesota Congressman Keith Ellison; Violence in Syria

Aired November 29, 2012 - 22:00   ET


WOLF BLITZER, CNN ANCHOR: It's 10:00 p.m. here on the East Coast.

We begin with breaking news. For the first time, we're getting a look at what the White House is offering to stop the fiscal cliff stalemate. Drastic mandatory tax hikes and spending cuts will kick in with the new year unless the White House and Republicans can reach a deal.

For weeks, GOP lawmakers have said, we're just waiting for the White House to give details, specifics, some numbers. Well, tonight, that's happened. The White House is calling their bluff, and they have laid out how they want to cut the debt.

Jessica Yellin is over at the White House for us tonight with new developments.

Jessica, what are the specifics of this offer tonight?


Well, according to senior officials on both sides of the aisle, the president is asking for $1.6 trillion in new taxes. That includes raising taxes for families who make $250,000 or more. You will recognize that as a pledge from his campaign.

And it also includes limiting deductions and loopholes as well as other changes to capital gains and dividends taxes. Well, that is the headline for Republicans, Wolf, who say it is far more money in tax rates than they ever expected to hear from the White House in any offer.

Moving on to some other aspects of the proposal, Secretary Geithner on Capitol Hill also outlined in this plan an intention to extend unemployment insurance, $50 billion in stimulus for next year, and creating some kind of permanent mechanism to extend the debt limit so we don't repeat a crisis like last summer.

Now, what would they get in return? What would the White House give? The proposal is they would offer $400 billion in Medicare and other entitlement savings, but exactly what those would be are to be determined in negotiations next year. Republicans, Wolf, they are saying this is overreach, too much. They are rejecting it. The White House says, hey, we will compromise. Come back to us with an offer -- Wolf. BLITZER: Jessica, as you say, the Republicans are already rejecting this outright, so was the administration surprised, shall we say, by that rejection?

YELLIN: Well, their public response, yes, is surprise and they're accusing the Republicans of avoiding a deal to protect the wealthy, but the truth is, this is a negotiating dance. The bottom line is they have been going back and forth for a few weeks and Democrats say they asked the GOP to be specific about what revenue number they would be OK with.

Democrats say, well, the Republicans weren't forthcoming so Democrats said if you're not going to show yours, we will show you ours first. We will make an offer and we will come in high, and now the Republicans aren't happy with it, but some Republicans in fact are telling me that conversations have moved backwards in the last 24 hours. This offer has made things worse.

But Democrats and the White House feel this is what they need to do to lay down a marker and start moving forward, Wolf.

BLITZER: Jessica, thank you.

Reaction was swift after today's meetings on Capitol Hill. Neither side seems ready to give up on the game of finger-pointing.


REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: No substantive progress has been made in the talks between the White House and the House over the last two weeks. I got to tell you, I'm disappointed in where we are. I'm disappointed in what's happened over the last couple of weeks. But going over the fiscal cliff is serious business, and I'm here seriously trying to resolve it, and I would hope the White House would get serious as well.

SEN. HARRY REID (D-NV), MAJORITY LEADER: I don't understand his brain, so you should ask him. It's been weeks, at least two weeks, since we met at the White House and we're still waiting for a serious offer from the Republicans.


BLITZER: Let's bring in Minnesota Congressman Keith Ellison. He was just reelected as co-chair of the Congressional Progressive Caucus.

There are reports out there right now that a deal may be taking shape that involves $400 billion, maybe even more, in what they call entitlement cuts over 10 years, mostly from Medicare. The Progressive Caucus, you're the chairman. You have drawn a line in the sand saying it simply won't support entitlement cuts. Here's the question. How far would you go to oppose this?

REP. KEITH ELLISON (D), MINNESOTA: Well, you know, I got to know exactly what the composition of this deal is. I really have only heard the reports you just repeated, so it's difficult to know exactly what they're talking about.

I mean, really, so we're making -- you're calling on me to make a decision with very limited information, but I can tell you this. We're not going to stand back and let seniors, people with disabilities, most low-income vulnerable people in this country, bear the brunt of this fiscal entanglement.

What we have here is a number of tax provisions expiring and we have a sequester. That is what is right in front of us. The fact that we are going to address programs that will ultimately reduce the benefits to people who really need them is disturbing to me.

I am concerned, but I want to be fair to the people proposing this deal and take a strong look at it before I really start planning on how to oppose it.

BLITZER: Would you be willing, Congressman, to allow the country to go over the fiscal cliff? Would you vote against the president's plan if he were to come up with a compromise along these lines?

ELLISON: Well, let me tell you this. You know, it's not really a cliff. It is a deadline. We want to meet the deadline. We need to negotiate in good faith to make sure that we make the deadline, but one thing I will not do, I will not sacrifice the interests of seniors and low-income, poor Americans with disabilities just to come up with some deal.

I mean, it needs to be a good deal. It needs to be a fair deal. Let me tell you, going over the deadline is bad. Here's what's worse, having low-income people, poor people with disabilities in the street without enough to eat, with no adequate health care, you know, struggling to get by even worse than they are now.

So that's -- this is a choice. The question is not is it good or is it bad. It's, is it bad compared to what? It's worse -- this alternative going past the deadline is worse than -- may be worse than what will happen to Americans with disabilities and our older Americans if I don't stand firm and fight for them at this time.

BLITZER: We know where the liberals don't want the cuts to come from, Congressman. What is the alternative here? What cuts would you make to get a deal with the Republicans? I know the caucus has suggested some specific defense-related cuts, but there are not enough to get to the magic number, are they?

ELLISON: Well, the magic number is also a myth. What are we actually aiming for? What we need is a sustainable ratio between our nation's GDP and its deficit. That's what we need.

To try to slam the brakes right now and get to balance tomorrow is not desirable. Economists will come on your show and tell you that that would not be good for the economy. So I think we're dealing with a degree of artificiality right there.

BLITZER: Congressman Keith Ellison, thanks for joining us.

ELLISON: Any time. Thank you.

BLITZER: For more on this, let's bring in our CNN political contributor and Republican strategist Mary Matalin, and Cornell Belcher, Democratic strategist and pollster with the Obama 2012 campaign.

Mary, what do you make of the details of this opening bid from the White House? Republicans have already dismissed it but does it give us any clues at all about what an eventual deal might look like?

MARY MATALIN, CNN POLITICAL CONTRIBUTOR: It's reported that Mitch McConnell, the Senate minority leader, burst out laughing when he heard it. It's not even worthy of a laugh.

It's really Sands. It's pathetic. We went from a reasonable theoretical $3 in cuts for $1 in revenue, which was basically the Simpson-Bowles, and now we are at $4 of real and immediate tax increases, plus new spending for, in the future, unspecified, uncertain cuts to we don't know what. How could anyone take that seriously?

I don't even -- I thought we were doing a Kabuki dance. This is not a Kabuki dance. I don't even know what this is. It's worse than laughable. It's embarrassing. This president won this election, he's supposed to be leading, and he's doing anything but. It's really sad, Wolf. It's really sad.

BLITZER: Let me bring Cornell into this conversation.

Cornell, Republicans are saying that the savings the president is proposing here would be entirely wiped out by his extension of some expensive policies, emergency unemployment benefits, for example, payroll tax holiday that's now set to expire at the end of the year. Are these savings just a bluff from the president, as Republicans are suggesting?

CORNELL BELCHER, FORMER OBAMA CAMPAIGN POLLSTER: Look, this makes me scratch my head too.

I'm like Senate Majority Leader Reid on this. This is sort of boggling, sort of mind-boggling. I know Republicans and their pollsters have had a hard time sort of capturing the real American electorate here, but poll after poll, CNN's own poll had 67 percent of Americans sort of wanting these tax cuts, sort of balanced with tax rates to go up on wealthy people.

Exit polling, 67 percent of Americans say they want the tax rate to go up on higher-income Americans. They want a fair and balanced sort of way out of this process. So it boggles my mind politically. Who are Republicans fighting for? Why are Republicans fighting so hard to sort of protect just the wealthy interests, when the overwhelming majority of Americans say we want the wealthy to pay their fair share? From a political standpoint, it makes no sense. They have no constituency here.

MATALIN: I don't know, Wolf and Cornell, whom I adore, what is fair share.

The top 20 percent, whose real income dropped during the Obama recovery seven times more than the bottom 80 percent, cover 60 and carry 68 percent of the tax burden. What is fair, 100 percent? If you took -- if Republicans agreed today with President Obama's suggestion to do this, raise the money on the rich, the job creators, I call them job creators and growth creators, you call them the evil rich or whatever, we would be -- save enough money or raise enough revenues to run the government for eight-and-a-half days.

That doesn't make any sense. Plus, the president is announcing that he doesn't even want to put it towards deficit spending. He wants to do new spending, new stimulus, new infrastructure, new education. There's not one word of entitlement reform, Social Security reform, Medicare reform, the structural debt.

Let me tell you what the leverage is, Cornell. You want to know what the heart of the electorate is? It's the Senate Democrats who were elected in the last midterms and the Senate Democrats that were elected this time on a debt reform, spending reform, entitlement reform. Those are your Senate Democrats who couldn't even pass something that was half as bad as this. You're not going to -- this is worse than laughable. It's despicable.

BELCHER: A couple of things. One, Mary, I love you in red.

Two is that, look, what's wrong with us going back to quite frankly the rate under Bill Clinton? You remember the Clinton years? The largest economic expansion in our history, sort of everyone's boat rising, everyone paying their fair share, deficit reduction, the middle class growing?

The problem with what Republicans want to do right now, Wolf, is they want to lock in this tax rate, that you have to sort of address the tax rate. We cannot have a tax rate locked in where they starve the government so that the middle class has to sort of pay more of the share for the burden of government, and you know what, we end up cutting away those programs, those things that help grow opportunity for the middle class.

The number one problem with our country right now is sort of the shrinking and burden on the middle class. If we want to sort of expand the middle class and grow the middle class, the last thing we can do is sort of put more of that burden on them as opposed to asking the wealthy people to pay fair share, like what they paid in the Clinton administration.


BLITZER: Mary, hold on a second. Hold on.

You are saying the president has not offered any specifics. He is offering some specific cuts in entitlement spending, Medicare spending, saving about $400 billion. The Republicans have their own ideas. Why not let the Republicans come out with their priorities, tell us what their ideas are, then you can get this process moving? MATALIN: The Republicans have been very clear. Let me say again what the president is proposing, four times as many tax increases, plus new spending for unspecified, in the future, Medicare cuts.

We don't want to cut Medicare. We want to reform Medicare. If we want to go back to the tax rates of the Clinton era, Mr. Polka Dot Tie, which I love you in, why don't we go back to the Clinton era spending?

President Clinton really did cut spending and he really did work with the Republicans to balance the budget. I haven't heard one thing out of any Democrat, let alone the president, the newly elected president of all the people, talking about any real and immediate spending cuts, let alone entitlement reform. It's absurd. It defies Erskine Bowles. It defies Rivlin-Domenici. It defies every single bipartisan commission to do entitlement and debt structuring reform for the last two decades.

BLITZER: All right, we got to leave it.

Cornell, very quickly, give us a final thought.

BELCHER: My final thought is the president has already put the -- has already signed into law $1.1 trillion in spending cuts. He's already come to the side of the Republicans. The Republicans have to come into this and put something on the table.

BLITZER: Cornell Belcher, Mary Matalin, guys, thanks very much.

And let us know what you think. You can follow us on Twitter at @AC360.

Meanwhile, new signs tonight in Syria that recent gains scored by rebels may be triggering a brutal response from Assad's forces, meantime, word that the United States is now weighing new strategies for getting involved in the conflict. A lot of late-breaking developments to cover. We will get a report from CNN's Arwa Damon. She's one of the few reporters inside Syria right now.


BLITZER: In Syria, there's a sense of growing urgency and anxiety. We will get to why in a moment.

First, I would like to show you some images that are quite frankly very disturbing and, we want to warn you, extremely graphic. But above all, they are a reminder of why we care so much about this story, why we have been devoting so much time to covering it. We think it's important for the rest of the world to see what's happening to the Syrian people.

According to the opposition, a government airstrike hit a residential area in south-central Aleppo today, killing at least 20 people and wounding dozens more. We have blurred the most graphic details in the video, which appears to have been shot moments after the strike. You can see how thick the dust is in the air as men rush to the scene. Like other videos posted from Syria, CNN can't verify this one's authenticity. One of the first victims the men find is a child, a young boy who appears to be seriously wounded.

But he's alive and talking and he is asking for help. Many children were buried in the rubble. In this next clip, you can see just how powerful the strike was. These were homes. Families lived here. We don't know what happened to that little boy. Rebel forces fought back at Aleppo today and this video purportedly shows the Free Syrian Army setting off a bomb.

All of this comes a day after rebels claimed to have shot down three regime aircraft in Aleppo. Today, nearly all Internet access in Syria was shut down, according to an outside monitoring group. It's unclear who was behind the outage, but for many it raises the question, is Bashar al-Assad's government planning to escalate its response?

In Damascus, the capital, and Assad's seat of power, there were intense clashes between rebels and Syria's military. The airport was shut down.

Earlier, I spoke to Arwa Damon, who is one of the only Western journalists inside Syria.


BLITZER: Arwa, we're hearing Syrian rebels shelled an airport near Aleppo today. What can you tell us about that?

ARWA DAMON, CNN INTERNATIONAL CORRESPONDENT: Well, what we are able to gather is that there were clashes along that main vital road leading from the capital to the Damascus International Airport. There were various reports that the airport had been shut down, that some airlines were canceling their flights.

The Syrian government put out a statement saying that terrorists, as they have long been calling the opposition, attacked a number of vehicles along that route, but that it is now secure. This is, however, an indication of, Wolf, just how much territory the rebels have been able to gain.

BLITZER: It seems, Arwa, correct me if I'm wrong, the Internet service for the entire country of Syria has been shut down and cell phone service also down where you are? We are speaking by satellite. Is the Assad regime responsible for this? What's going on?

DAMON: Well, the opposition members that we're with are saying the government is the entity that shut down the Internet, even though we have not seen anything as widespread in the past as this blackout we're hearing about right now. They say the government does this to prevent activists from communicating to one another, from getting information out, from uploading their videos, but also to prevent the rebel fighting units from communicating to one another as well. I can tell you that where I am right now in northern Syria, there is no power, no cell phone service, and even the land lines are not functioning at this point. And, of course, it makes it incredibly difficult, not just when it comes to communications, but also the lack of power. It is winter, it is freezing cold right now, and most people are unable to heat their homes.

BLITZER: There are also reports as you know that Assad's forces have been fiercely shelling Aleppo. What can you tell us about that?

DAMON: Well, we were driving past outskirts of Aleppo and we did hear the sounds of explosions in the distance. We were hearing various reports of aircraft being overhead targeting not only Aleppo, but also one of the areas outside of it that is a major vital transit point for rebel fighting forces heading to the front lines in Aleppo.

What we have been seeing throughout the province is that the Free Syrian Army most certainly has made significant gains when it comes to territory. Parts of this province that you cannot even imagine driving through two months ago are now firmly in the control of the opposition. Civilians are even feeling confident enough to return to their homes. We even saw schoolchildren carrying their books, people, only a small amount of them, of course, picking olives in the grove. It is right now the time to be harvesting that.

So most certainly the opposition is making these vast gains, but again, the Syrian government does have the upper hand because of the vast amount of artillery it has at its disposal and of course because it still does have the power of the skies, the various fighter jets and the helicopters that it does continue to employ.

BLITZER: One last question. Arwa, do you feel safe?

DAMON: Where we are right now, yes. Driving through much of Aleppo province, we most certainly did. And that is, again, an indicator of just how far this rebel fighting force has been able to come, especially when one considers the fact that there has been no significant international support for them, whether financial support or military support for them whatsoever, but they have been able to gain significant areas under their control to such a degree that, yes, one can travel with them feeling fairly at ease.

BLITZER: Arwa Damon, be careful over there. We will stay in close touch. Thank you.


BLITZER: There is also word tonight that the U.S. government is actively considering bolder interventions in Syria, including directly arming some of the opposition forces.

A short time ago, I talked about that with CNN contributor the former CIA officer Bob Baer and CNN national security contributor Fran Townsend.

(BEGIN VIDEOTAPE) BLITZER: Fran, the U.S. ambassador to Syria, Robert Ford, has confirmed that the Obama administration is considering deeper intervention to help the rebels in Syria, something that to date it's been loathe to do. No decision has been made, at least not yet, we're told. What do you make of this? It would certainly be a dramatic policy shift.

FRANCES TOWNSEND, CNN NATIONAL SECURITY CONTRIBUTOR: It would, Wolf, but in some ways, it's too late.

It's awfully -- there are real consequences to the fact that we have waited and acted through allies. This has been a real crisis along the Turkish border. We have worked with our Arab allies in Saudi Arabia and Qatar, but in the meantime, the vacuum that's been created while the Assad regime annihilates its own people, and the bloodshed that's taken place, has created this vacuum, the lack of Western action, not just U.S., but also its allies, and allowed people like al Qaeda to get in there and extremists and insert themselves.

It's become a much more dangerous situation. We have seen the developments today with the taking down of the Internet, for example, and you really do have to worry about why the Assad regime is doing that now, just as the rebels have shown real military capability against Syrian air assets. So the situation is becoming increasingly dangerous, especially for Syrian civilians.

BLITZER: Bob, you say you think the administration's hand has really been forced here. What do you mean by that?

BOB BAER, CNN CONTRIBUTOR: Well, Wolf, I think -- I totally agree with Fran. We're a little bit late on this, but Syria is spinning out of control. Anybody who knows Syria could have seen this a year ago. There's no organized opposition, there's no easy way to transfer power.

The Alawites, the minority that rules the country, have been forced into the corner. Right now, they're holding on to Damascus, parts of Aleppo. In the meantime, countries like Qatar and Saudi Arabia are sending weapons to everybody. There's no accounting for them. There is surface-to-air weapons, these missiles going in there as well.

We have seen them being used the last couple days. Now that six bases have fallen, I think we will see some sort of very, very unpleasant end to this conflict, which in the coming months will spread in various parts of the Middle East from Lebanon to Iraq to Jordan and even Turkey.

BLITZER: That's a pretty gloomy assessment.

Fran, there are reports the U.S. is doing this with an eye toward gaining or shall we say regaining some credibility with the opposition forces. You say that's just not going to happen. Why?

TOWNSEND: Well, look, they have been fighting on their own and they have been asking for these weapons. They have been asking for more support from the U.S. and the administration, and they haven't gotten it.

They have seen civilians killed in massive numbers while the West stood by. Yes, we had a presidential election. Yes, we, the United States, and Western powers have been distracted both by political events and the economy. But in the meantime, the Syrians say our people are being murdered. And so it's a long road back for us in terms of credibility with the opposition forces.

Can we mitigate sort of the harm we have done by lack of action and attention? Yes, we can. Look, I'm not arguing. We ought to be taking additional action. We ought to deepen our ties to the opposition. But we shouldn't underestimate just sort of the hole we're in with the opposition and because of our lack of earlier action.

BLITZER: Bob, one option that appears to be on the table is inserting CIA officers or officers from other allied intelligence services into Syria directly to assist the rebels. As a former intelligence officer yourself, you say this is a smart move. Why is that?

BAER: It's smart because if you're just dealing with these people in places like Turkey or Europe or wherever they're meeting them now, you're not getting to the right people. You need to get to the fighters. You need to figure out who they are.

You need to support the ones that are moderate, that are not connected with al Qaeda. There are large parts of Syria which are not under government control which can be protected. There's aid organizations working there with no problems at all. I think we should be there. This country, Wolf, is key to the Middle East. If it collapses into chaos, worst-case scenario, we truly are in trouble.

And I think we need to know how bad it is right now. And we have to put people on the ground in touch with the Syrian opposition to determine what's going on.

BLITZER: All right. Fran Townsend, thank you. Bob Baer, thanks to you as well.

BAER: Thank you.


BLITZER: A diplomatic defeat for the United States and Israel, as Palestinians celebrate a vote at the United Nations. We will have a live report from Ramallah. That is straight ahead on 360.


BLITZER: President Obama and Mitt Romney face-to-face for the first time since the election. And we're going to tell you how it went and what the former political rivals discussed. That's ahead on 360.

(COMMERCIAL BREAK) BLITZER: A small but symbolic victory for Palestinians today. The United Nations Assembly voted overwhelmingly to grant Palestinians what's called nonmember observer state status, a stinging defeat for the United States and Israel, which voted against the resolution.

The secretary of state, Hillary Clinton, condemned the decision as, quote, "counterproductive" to peace efforts. The U.S. ambassador to the U.N., Susan Rice, warned that little will change in the Palestinian territories after this vote.

Palestinians in Gaza and the West Bank flooded into the streets late into the night. They are shooting fireworks, waving flags, honking car horns in celebration.

Let's go live to CNN's Fred Pleitgen. He's in Ramallah with the latest.

Fred, a very big day for the Palestinians. What are you seeing now?


Well, the celebrations certainly have quieted down somewhat, but it was really just in the past ten minutes that they did quiet down. Before that, what happened was that these massive celebrations that you saw here on Arafat Square with people not only shooting fireworks, but also actually AK-47s and pistols into the air, then sort of went into the side streets here, where people drove around in their cars, were honking horns and, certainly, were very happy with the way that that vote in the United Nations General Assembly went.

To them, they say they believe it's actually very significant to the Palestinians. They say that they believe it could be a first step to full statehood down the line.

A lot of people here obviously not very happy with the American position on all this. The Palestinian leadership just yesterday saying they believe that America is on the wrong side of history in all of this.

But certainly, tonight after that vote came in just massive celebrations here on the ground in Ramallah, and certainly, people were celebrating up until a few minutes ago. And right now it's -- it's 3:30 here so it is quite late, but it really was a celebration that went on for a very long time, Wolf.

BLITZER: Yes, 3:30 a.m. The vote, the ramifications of the vote might be more symbolic than substantive.

Here's the question. Why do Palestinians there feel it is, in fact, so historically significant?

PLEITGEN: Well, it's that one word that you were just talking about, the -- the nonmember observer state. And "state" is really the operative word. A lot of Palestinians telling us that for the first time they feel as though they are no longer a people without a land, but they have a clearly defined land that's recognized by a body of the United Nations.

Now, of course, as the state, the definition of that is of course East Jerusalem, West Bank and Gaza, so therefore, for the first time, they are saying that they have this clearly defined.

And of course, there are also some real -- real ramifications of all this. Potentially, the Palestinians could in the future try and take Israel to the International Criminal Court for perceived war crimes in past military operations or future military operations also.

So there are some real ramifications, but you're absolutely right. In the end, of course, with the situation on the ground, very little is going to change in the short term. It's not like checkpoints are going to disappear. It's not like the economic situation here is going to get any better any time soon. So real change, it's not very much, but certainly symbolically, it is a lot, and there are some real ramifications.

BLITZER: Yes, there certainly are. They were until now a nonmember observer entity, and now that's been changed to a nonmember observer state. So that word "state" obviously very important for the Palestinians and their supporters, and this resolution was overwhelmingly passed by U.N. General Assembly.

Fred, thanks very much.

There's certainly a lot more we're following tonight. Isha is joining us with the AC 360 bulletin -- Isha.

ISHA SESAY, HLN ANCHOR: Wolf, searching for clues. The FBI has launched an international campaign calling for anyone with information about the deadly attack on the U.S. consulate in Benghazi, Libya, to step forward. Law enforcement officials are using the Internet and social networking Web sites to solicit any information. Four Americans were killed in the assault on September 11, including ambassador Christopher Stevens.

Only four weeks ago, President Obama and Mitt Romney were locked in a fierce battle for the White House. Today, the two men discussed the future over a bowl of turkey chili. Romney lunched at the White House with the president in a closed-door meeting.

And CNN has a new president. Jeff Zucker was officially named head of CNN Worldwide today. Zucker once headed NBC's "Today Show" and is credited with establishing that powerhouse brand.

In 2000, Zucker was named president of NBC Entertainment. He then rose through the ranks, becoming president of the network's entertainment, news and cable group. And in 2005, CEO of the NBC Universal television group. We are thrilled to have him here -- Wolf.

BLITZER: We will welcome him warmly once he starts.

SESAY: Yes, we will.

BLITZER: He is supposed to start at the end of January. Looking forward to that.

Isha, thank you.

Up next, a new twist in the investigation into self-proclaimed polygamist prophet, Warren Jeffs. Officials are taking steps to seize the ranch where they say Jeffs committed his crimes against children. Gary Tuchman has a rare look inside the secretive compound. That's ahead.


BLITZER: A homeless man comes face-to-face with a New York City police officer. A photograph of their exchange goes viral instantly. We're going to find out what this officer did that captured the hearts of so many people. That's ahead on 360.


BLITZER: In "Crime & Punishment" tonight, the state of Texas is now taking the first steps to seize the ranch used by a polygamist haven by followers of the sect leader Warren Jeffs.

Prosecutors say the Fundamentalist Church of Latter Day Saints used the Yearning for Zion ranch to sexually abuse children. Warren Jeffs is now in prison. He's serving a life sentence for sexually assaulting two underaged brides.

In 2008, police removed hundreds of children from the ranch after child protection officials found what they described as a pervasive pattern of abuse, including the forced marriage of young girls with older men. The Texas supreme court did not find enough evidence the kids were in danger and ordered them returned.

Gary Tuchman visited the ranch a short time later and filed this story.


GARY TUCHMAN, CNN CORRESPONDENT (voice-over): This is the ranch where 462 children were taken away by authorities in 2008. The allegations: that they were abused, neglected and in imminent risk of harm. But most of them came back in a matter of months, to the Texas ranch owned by the fundamentalist group that broke away from the Mormon Church, FLDS.

(on camera) Did you miss it?




TUCHMAN: Did you understand what happened when they came here and they raided the ranch?




TUCHMAN: Did you understand it?




TUCHMAN: What did they tell you the reason was, your parents?


TUCHMAN: Who told you -- who told you you were bad?


TUCHMAN (voice-over): CPS or Child Protective Services found foster homes for all the children, and as you might imagine, denies ever saying that to them.

But a Texas appellate court and the Texas supreme court ruled the state had no right to take these children, despite the FLDS' history of polygamy and underaged marriage.

So except for one 14-year-old girl who was allegedly married to the jailed leader of the church, Warren Jeffs, they were reunited with their families.

(on camera) There's a famous painting called "American Gothic." You know what work?


TUCHMAN: That's what you look like right now with the pitchfork.

UNIDENTIFIED FEMALE: Well, actually, it needs to be like this.

TUCHMAN: Gloria is part of a polygamist household. She has nine of her own children. Like all the FLDS members on this ranch, she is observant, praying at the gigantic white temple the members constructed themselves.


TUCHMAN: The day we were there, ten FLDS members went before a judge in Texas to answer to sexual abuse and bigamy charges. A week earlier, Winston Blackmore was arrested in Canada on charges of plural marriage.

All these men say they were charged because of their religious beliefs. Another leader in the church said many members of this large polygamist group in North America are frightened there could be more raids.

(on camera) So you think this is a conspiracy against your religion? Do you think this is taking away your freedom of religion?


TUCHMAN (voice-over): Willie Jessop, who has since left the FLDS and now speaks out against Warren Jeffs, said computers and photo albums were taken as evidence from every family here.

The FLDS members who live on this ranch produce their own food and say their alfalfa, potato and sugar cane crops failed when people were forced out during the raid. But they're back at work now, adults and children picking carrots here.

(on camera) Are you mad that they took you from this ranch?



UNIDENTIFIED FEMALE: Because you don't like to lose the spirit of God.

TUCHMAN: So do you think you still -- you think you still have the spirit of God?


TUCHMAN: What did your mom and dad tell you was the reason they took you off the ranch?

UNIDENTIFIED FEMALE: Because they think we were abused.

TUCHMAN: And what do you have to say about that?

UNIDENTIFIED FEMALE: That's just a bunch of malarkey.

TUCHMAN (voice-over): Some of the children looked scared as we drove around the 1,500-acre ranch. We were told they thought we were police. Most of the time, it looks like nothing dramatic ever happened here.

(on camera) But what did you learn from it?

UNIDENTIFIED FEMALE: To love each other more.

TUCHMAN: Gary Tuchman, CNN, El Dorado, Texas.


BLITZER: "Digging Deeper," let's bring in KDPK investigative reporter Michael Watkiss, who's done some remarkable reporting on the FLDS.

Michael, a big move by the state of Texas to try to seize the property. Are people even still living in that compound?

MICHAEL WATKISS, INVESTIGATIVE REPORTER, KDPK: Well, my sources are telling me that there's clearly not as many people as of the time just prior to that raid when we had large families, women and children and lots of guys working down there, because that has been a work in progress since Warren Jeffs and his followers went down there in 2003. Basically, fleeing from pressure that they were getting in Utah and Arizona.

And the bottom line, this is just a Texas-sized eviction notice put on the gates of that ranch yesterday, courtesy of the attorney general and Texas Rangers, who basically alleged from the get-go that Warren Jeffs and his followers went to Texas with the intent to commit crimes.

In a 91-page document filed yesterday, they're using, you know, prosecutor terms that they use for the mafia: "organized crime," "criminal enterprise." These are the kind of things that they allege Warren Jeffs and his followers went there to do. And then in the document, they outline -- outline the specific crimes that they allege have occurred during the intervening eight and nine years, including child rape, money laundering.

Some of these charges already proven in a court of law with Mr. Jeffs' conviction. Ten men convicted of child rape. It's definitely a big deal, and the state of Texas basically is saying they don't want them there anymore.

BLITZER: Knowing what you know about them, Michael, do you think the FLDS is going to try to fight to keep the property?

WATKISS: Well, Warren Jeffs has lots of lawyers. Warren Jeffs has basically been a full employment act for a whole slew of lawyers all over the country. And as long as his followers continue to send him money and bankroll these efforts, they'll fight that for sure.

But I've been told that even some of the auxiliary businesses around the compound in Texas, that were FLDS owned and started after they moved down there, they appear to be shuttering up.

So I think the message is pretty loud and clear and has been received by the FLDS community that Texas was a bad move for them. Disastrous for Warren Jeffs.

Are they all going to come back to Utah? I mean, those of us who have been following these issues along the Utah/Arizona border for many years believe that the crimes that they identified, those Texas Rangers identified down in Texas, have basically been going on here in this region for decades.

BLITZER: Hundreds of people used to live in that compound. Michael, where did they go?

WATKISS: Well, good question, Wolf. There are -- when Mr. Jeffs started to feel pressure in the early 2000s from Utah and Arizona, he sent people out and built compounds all over. They referred to that Texas one as R-17, Refuge 17. So he sent a lot of people out. They bought in South Dakota, in Colorado. They already have people in Idaho. There's lots of places they could go.

But clearly, the big concentration, Colorado City and Hillville, Utah, right on the Utah/Arizona border, many of them will come back here. And there's already great tensions, because the federal government has come in and suing both of those municipalities that are run by the FLDS, basically saying that they're corrupt.

So the tensions, the dynamics, lots of moving parts to this story suddenly.

BLITZER: Michael Watkiss, thanks for joining us. We appreciate it.

WATKISS: Thanks.

BLITZER: And coming up, a simple act of kindness by one of New York's finest. The story behind the picture that has everyone talking.


SESAY: I'm Isha Sesay with a "360 Bulletin."

Late word tonight from "The New York Times" that a lawsuit brought against Dominique Strauss-Kahn by a hotel housekeeper will not go to trial. The paper says the former head of the International Monetary Fund and the housekeeper have reached a settlement agreement. Nafissatou Diallo accused Strauss-Kahn of sexually assaulting her last year in his hotel suite. They're scheduled to appear in court next week.

Strauss-Kahn, who was once a leading candidate for the French presidency, resigned his IMF post in disgrace after he was indicted on charges including attempted rape. The case fell apart weeks later.

Families left homeless by Superstorm Sandy may soon need to face the possibility of living on boats. FEMA says it is researching the idea of quickly creating low-cost housing on the water. Officials say the vessels would ideally sleep two to six adults.

A new study released today finds the ice sheet covering most of Greenland and Antarctica is melting fast and causing the oceans to rise. The findings are the result of 20 years of data. Researchers say since 1992, the oceans rose 11 millimeters.

And a New York City police officer's act of kindness is now a global sensation. A tourist visiting from Arizona took this photo of the policeman buying shoes for a homeless man and putting them on his feet. She posted it on Facebook, and it is now being shared, liked and commented on by hundreds of thousands of people -- Wolf.

BLITZER: Very inspirational. A wonderful act of kindness. Wonderful any time, especially this time of the year. Isha, thank you very much. We're just three days away from Sunday night's live broadcast of "CNN Heroes." An all-star tribute, our annual salute to the top ten Heroes of the Year. This special recognition helps honorees do even more to help others.

Chef Bruno Serrato, one of last year's top ten heroes, is a perfect example. He's grown from feeding hungry kids living in motels to helping them and their families move into their own homes. Take a look.


BRUNO SERRATO, CHEF: Who likes the pasta?

ANDERSON COOPER, CNN ANCHOR (voice-over): Every night, Chef Bruno Serrato serves free meals to 300 motel kids in Anaheim, California. It's work that he was honored for last year as a top ten CNN Hero.

SERRATO: It was the most amazing moment in my life. After the CNN show, lots of people call me: "What can we do for you?"

COOPER: But it was Bruno who wanted to do more to help families living in area motels.

SERRATO: When I sent the kids back to their motel, I always had a very sad moment because I know where they go back.

UNIDENTIFIED FEMALE: You guys can all share your markers. Sit right here and color.

COOPER: It's a hard life to escape. Ask the Gutierrez family, who lived in a motel with their five children for more than a year.

UNIDENTIFIED FEMALE: There is our living room/bedrooms. We sleep right here. And then the rest of them sleep on this bed.

He got laid off. I started working just a month ago. It's really hard for us to save up to get into an actual home.

SERRATO: I came over, said let's pay the first and last month.

COOPER: By providing rent and a deposit, Bruno now helps families leave the motel life behind for good. Working with a local nonprofit, 22 families have now gotten a fresh start in a home of their own.

SERRATO: What do you think?


UNIDENTIFIED FEMALE: The kids just went around, explored, found their rooms.

SERRATO: This is yours?


SERRATO: My heart is really full of joy. We're putting back people to their own home.

COOPER: Bruno hopes to move 70 more families by the end of next year. A "CNN Hero" with a new recipe for helping others.



BLITZER: Tune in this Sunday night, 9 p.m. Eastern for "CNN Heroes," an all-star tribute hosted by Anderson Cooper, live from the legendary Shrine Auditorium in Los Angeles. It's an evening that's sure to inspire. You won't want to miss it.

We'll be right back.


BLITZER: That does it for this edition of 360. Thanks for watching. "ERIN BURNETT OUTFRONT" starts right now.