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Anderson Cooper 360 Degrees

Stem Cell Ban Lifted; President Obama & America's Health Care; Oprah's Warning to Rihanna; Mexico's Drug War Escalates

Aired March 09, 2009 - 23:00   ET


ANDERSON COOPER, CNN ANCHOR: Tonight, changing course, changing lives: President Obama today reversing eight years of Bush administration rules on scientific research and lifting the ban on the use of embryonic stem cells.

Tonight, we'll tell you what it means for millions of people with Parkinson's, diabetes and spinal cord injuries.

Also tonight, the war next door: Mexico's drug war spilling over into the U.S., tonight my journey with "60 Minutes" to the front lines. President Obama just got a high-level military briefing on what it means for us. We'll brief you tonight.

And Oprah Winfrey's warning to superstar Rihanna about staying with boyfriend and alleged assailant on Chris Brown. Is one incident a sign or more violence, even deadly violence to come?

A lot to talk about in the hour ahead.

We begin though, with science, politics and faith. And a major reversal of policy on a lightning rod issue.

President Obama's decision to end the ban on federal funding of embryonic stem cell research is being both applauded and condemned tonight. Here's what Mr. Obama said earlier today.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: But after much discussion, debate and reflection, the proper course has become clear. The majority of Americans from across the political spectrum and from all backgrounds and beliefs have come to a consensus that we should pursue this research.

That the potential it offers is great and with proper guidelines and strict oversight, the perils can be avoided.


COOPER: The executive order the president signed today swept away the Bush administration rules that have divided the nation. Ed Henry tonight has the "Raw Politics."


ED HENRY, CNN SENIOR WHITE HOUSE CORRESPONDENT: The President's 17th Executive Order wiped out eight years of Bush policy, limiting the types of embryonic stem cell research that could be funded by the government.

OBAMA: Scientists believe these tiny cells may have the potential to help us understand and possibly cure some of our most devastating diseases and conditions, to regenerate a severed spinal cord and lift someone from a wheelchair, to spur insulin production and spare a child from a lifetime of needles. To treat Parkinson's, cancer, heart disease and others that affect millions of Americans and the people who love them.

HENRY: The gains may still be years away. But now scientists can study hundreds of untapped stem cell lines already in existence beyond the 21 lines the former President opened in 2001 which critics say tied America's hands.

ARTHUR CAPLAN, MEDICAL ETHICIST, UNIVERSITY OF PA.: Other countries are absolutely pushing as fast as they can in embryonic stem cell research to get ahead of us -- China, India, Britain, Sweden, Israel, even Iran.

So those countries are hoping that they can come up with some cures before we get there, patent them, sell them back to us.

HENRY: The monumental nature of the move was reflected in the reaction from many conservatives. Outraged the cells come from embryos that end up being destroyed.

REP. CHRIS SMITH (R), NEW JERSEY: Human embryo destroying stem cell research is not only unethical, unworkable and unreliable. It is now demonstrably unnecessary. Assertions that leftover embryos are better off dead so that their stem cells can be derived, is dehumanizing and cheapens human life.

HENRY: But other Republicans, like Nancy Reagan, praised Mr. Obama's decision, saying, "We owe it to ourselves and to our children to do everything in our power to find cures for these diseases -- and soon. As I've said before, time is short and life is precious."

The president said he understands how divisive the issue is but believes the government has been forcing a false choice between sound science and moral values.

OBAMA: As a person of faith, I believe we are called to care for each other and work to ease human suffering. I believe we have been given the capacity and will to pursue this research and the humanity and conscience to do so responsibly.

HENRY: But Mr. Obama is punting for now on whether federal funds, can be used to experiment on embryos themselves; an issue that will be hotly debated on Capitol Hill in the months ahead.


COOPER: Ed, overturning the ban was an Obama campaign promise. Is he trying to send a message here? HENRY: He is, beyond just the stem cell policy. During the campaign he also charged that the Bush administration was putting ideology over science, government science, not just on stem cells but also issues like global warming.

So he is trying to send a signal here to government scientists that, look, this administration will back you up no matter what the facts say, Anderson.

COOPER: All right. Ed Henry at the White House, Ed, thanks. We're going to talk with our own Dr. Sanjay Gupta later tonight.

For President Obama it was stem cells today, education reform on tap for tomorrow. The President calls it keeping campaign promises while others say he should focus on just one thing, the economy.

Today, billionaire Warren Buffett said the economy has fallen off a cliff. He called on the president to step up his game and sharpen his focus.


WARREN BUFFETT, BILLIONAIRE INVESTOR: What is required is a commander-in-chief that is looked at as being the commander-in-chief in a time of war. The only authoritative voice in the United States who says this is what we're going to do, this is what we're not going to do and very specifically, is the president of the United States.


COOPER: Warren Buffett is calling what we're facing an economic Pearl Harbor.

Republican Senator Richard Shelby in the meantime, calling for cutting our losses when it comes to basket case banks; he says let them fail. Listen.


SEN. RICHARD SHELBY (R), ALABAMA: Some of these banks should be closed. Will they cost money to close? Will they send shock waves through the system? Absolutely. But if you keep subsidizing banks, when do you stop?

Close them down. Get them out of business. If they're dead, they ought to be buried. We buried the small banks. We've got to bury some big ones and send a strong message to the market.


COOPER: And sent a pretty strong message himself.

Our question tonight, is your money, is it being wasted that Senator Shelby believes? Are banks lending yet?

Ali Velshi here, to follow the money, with a fact check on banks and the economy.

So Ali, the Americans are worried they can't get loans. Where do things actually stand? I've heard conflicting reports. Are banks actually lending?

ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: Yes, there are conflicting reports. In fact, that's part of the issue. One of the things is that there is money flowing better than it was back in September and October, the height of the credit crisis.

But it's not necessarily flowing to personal loans. So the people who think they're not getting it are right. A lot of personal loans, a lot of mortgages, auto loans and small business loans are not getting done. And that's part of the problem right now.

So banks are lending. But loans are harder to come by. And in some cases, you need a higher credit score and the rates are higher, Anderson. So if you're getting conflicting reports, that's because there is conflicting information about whether or not lending has started again.

COOPER: OK, now, taxpayers, we were the ones footing who were putting the bill to help these financial systems. Are Americans getting a return on that or is that money gone? I mean, have they lost their money?

VELSHI: Well, this money was structured. And this is what we call TARP; it's the bailout that was passed in October. $700 billion -- it's hard to keep track of all the money that's going on.

The issue was that taxpayers do get a return for this money. The money that's loaned to banks basically gets an eight or nine percent interest rate. The issue, of course, is that you may not have chosen to give them your money, so your money has some risk exposed to it.

But, in fact, if those banks are able to repay, the return is probably better than anything you can get out there at eight or nine percent. The issue is, are the banks going to be able to repay your money. Your money's at risk, but you are earning something on it, Anderson.

COOPER: So far we've put -- the government has put $11 trillion in the financial system, spent billions in buying stakes in big banks like Citigroup. I think they own now...


COOPER: ... 36 percent in Citigroup's stock. Are the banks really being nationalized? I mean, is that effective nationalization?

VELSHI: Well, it depends how you define nationalization. If the government controls a bank then they are nationalized. The issue is that sometimes we associate nationalization with what may have happened in Cuba or in Venezuela where the government seizes what was otherwise private property and makes it the property of the government. There is no seizure going on. Everything that's being done including the 36 percent ownership in Citigroup is done with -- at the behest of the bank. So if the U.S. taxpayer ends up owning more than 50 percent of a given bank -- and that is certainly a possibly with a bank like Citigroup -- I suppose you could call that nationalization.

We just have to understand, this is not the government as a matter of policy seizing a private enterprise and taking ownership of it so that they can control what happens. This is a matter of the government being the only body with enough money at their disposal to be able to finance a bank right now, Anderson.

COOPER: All right, Ali, thanks very much. Ali Velshi.

Give us your take on the economy. How the government is doing. Let us know. Join the live chat happening now at And check out Erica Hill's live webcast during the breaks tonight.

Up next, our panel weighs in on whether the president is trying to do too much and a new development concerning his Attorney General. You remember he called America a nation of cowards when it comes to race. We'll talk about that. President Obama has weighed in.

Also, fixing health care -- exclusive insights from Dr. Sanjay Gupta on what he learned inside the White House and what President Obama's priorities really are.

And the latest on the charges against Chris Brown in the alleged beating of Rihanna, including Oprah's warning to Rihanna about future, and possibly even deadly, violence. Is there cause for concerns?

And Mexico's drug war: now the violence is coming here. President Obama was briefed this weekend. Tonight, my "60 Minutes" report. I'll take you to the front lines of the war next door.


COOPER: President Obama has got a lot on his plate both by circumstance and choice. Stem cells, health care, stimulus, two budgets, this year and next, and banks and more, smaller issues, of course, the kind that can damage a presidency little by little.

Remember this? Take a look.


ERIC HOLDER, U.S. ATTORNEY GENERAL: Though this nation has proudly thought of itself as an ethnic melting pot, in things racial we have always been and we, I believe, continue to be in too many ways essentially a nation of cowards.


COOPER: That's Attorney General Eric Holder last month. Over the weekend President Obama said he misunderstood -- or he understood, I should say, what Mr. Holder was trying to say. But he himself would have said it differently.

Joining me now: senior political analysts David Gergen and Gloria Borger; also, Ryan Mack of Optimum Capital Management.

David, you worked in the White House. Any time the president has to publicly rebuke or walk back comments made by someone else in his administration, that's not a good thing. Is this a big deal or is it just a small matter?

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: It's pretty small, Anderson. Presidents sometimes use humor to rebuke their aides. I remember when President Reagan had an Interior Secretary that did something dumb about the Beach Boys on the mall, performing on the mall.

He called him in that Monday and gave him a plaster of Paris foot with a big hole shot in the middle of the foot.

COOPER: I remember that.

GERGEN: And asked him to go back out on the front lawn of the White House and show it to the press.

So I think Barack Obama is always using these occasions as he's done with his Vice President more than once to try to bring his people into line.

He uses his tongue a little bit to sort of corral them and make sure they're a little more careful with what they say.

COOPER: Gloria, on stem cell, this clearly was a campaign promise Barack Obama had made. Did it surprise you that he even tried to move so quickly to do it?

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: No. Actually, he could have done it at any time by Executive Order. And it was very clear to me that from talking to folks in the administration that he decided he wanted to move on other things first. Such as the economy, talk about Guantanamo, et cetera.

But what he did on stem cell today is no surprise. It's something that he had been talking about throughout the entire campaign. So people really expected it to happen.

COOPER: But, David Gergen, he did sort of leave it up to Congress to kind of wrestle with the more difficult matters on stem cell?

GERGEN: Well, I think he said a few weeks ago that he did want to hear from the voice of Congress on the stem cell issue. And I think this was -- you know, to some people you would say he was ducking, but I think he was right to leave it there.

I think what's so stunning to me, Anderson, is how much he has done so quickly. Tomorrow is going to mark the 50th day of his presidency or halfway to the fabled 100-day mark. And if you look at it, he's done an extraordinary amount both in changing domestic policy directions and in foreign policy. Whether it's all going to work or not remains to be seen.

BORGER: Some people would say too much.

COOPER: Yes, Ryan, let's talk about the economy. Is President Obama going to need to ask Congress, do you think, for a second stimulus package? The amount of money that's been thrown out already is remarkable.

Do you think he's going to have to ask for more?

RYAN MACK, PRES. OPTIMUM CAPITAL MANAGEMENT: Well, definitely and we have to be a little bit patient on that to see exactly what happens after this first stimulus package. We've been a little bit too quick to judgment. As David Gergen said, tomorrow is the 50th day. And this has been one of the most highly scrutinized presidencies.

And not really giving a chance, you know, individuals trying to place a lot of this blame on this economy when a lot of these things essentially he inherited.

So I think it's a little bit too premature to go towards the second stimulus package as of yet.

COOPER: David, what do you think? Do you think he's just going to ultimately ask for more?

GERGEN: I think the Senate stimulus is on its way and it's going to be here sooner than we think. Anderson, there was a very important set of stories in this morning's papers in "Financial Times" and the "Wall Street Journal" --

COOPER: Did you call it the son of stimulus?



GERGEN: I believe the son of stimulus is going to be on our doorstep soon.

We learned this morning that the administration, when the president goes to London for a very important set of economic summit meetings with so-called G-20 nations, the big, advanced nations in early April, he's going to push for a global stimulus to fight off global recession. Because as Warren Buffett said today, the economy has been falling off a cliff.

In doing that, Anderson, I don't see how he can ask others to do more without doing more back here in the United States. I think -- I just don't see how he can be persuasive. So my bet is we're going to see a second stimulus much sooner than we thought.

COOPER: It's going to be tough, though, Gloria, to go to Congress and ask for that money?

BORGER: Absolutely tough. I mean, he's already starting to have problems on his budget. You saw the problems that he had on the first stimulus package. And then, of course, Anderson, there's this question about what to do with the banks.

I mean, the folks I talked to in the administration don't want to go back to Congress for more money to bail out the banks, which is something, in fact, they may end up having to do.

At a certain point, he's going to -- he's going to meet a lot of resistance, even from Democrats in his own party. Because it's easy to politically oppose giving money to the banks, very easy.

COOPER: It's interesting, though, Ryan, we heard from a lot of Republicans this weekend saying essentially, look, you've got to let some of these banks fail.

MACK: Well, I actually like the idea of a bad bank idea. I don't know why that was actually pulled off the table. I think that when you're looking at investing in some of these banks' bad assets, which TARP was originally design for, you have the liquid assets which are easily valued. You have the illiquid assets in which we might be able to do some reverse auctions or some model based techniques. But then you have some assets that are not necessarily easily valued, that are sparsely owned and heterogeneous and very obscure.

At the end of the day, if we can do what Barclays did to Lehman Brothers and buy them for 10 to 20 cents on the dollar and let the banks bear the loss, I think the bad banks idea should be brought back on the table again.

COOPER: So David, we won't know until April, though, whether or not that is going to be back on the table?

MACK: Well, definitely, I mean...

GERGEN: I -- go ahead.

MACK: Well, definitely, this is something I think as we continue to go through the process and get more outline, and this is one thing that the administration really does have to do a little bit more clear in terms of which direction they're trying to go in solving this...

COOPER: Right. But David, it's not until, like, late April that we may hear from Geithner. Right, David Gergen?

GERGEN: You know, Anderson, I don't think they've got that long. They've got these stress tests going on. I think things are going to unfold here pretty quickly.

I think we're going to know in the next two weeks, for example, whether General Motors is going to go into bankruptcy, whether this administration is going to take them there.

And the signals coming out from inside the administration, at least to me, have been conflicting. I've had people tell me two different things. I think they've got to decide that pretty fast.


GERGEN: They've got to decide what they're going to do in London. And they've got to have to decide -- I think this bank issue just simply cannot wait.

BORGER: Right. I think, Anderson, Anderson, they have to connect the dots a little better with the American people. It's very unpopular to bail out the bad banks who have made bad decisions. President Obama said that in his joint address to Congress.

But the case they have to make is that we have to bail out these banks because if we don't, we're going to bury ourselves.

COOPER: Yes, OK. I've got to leave it there.

Gloria, good to have you on, Ryan Mack as well and David Gergen, as always. Thanks.

We're talking about a massive chunk of the economy next. And not to mention a vital part of your personal economy -- health care. Dr. Sanjay Gupta is here taking off a week of reporting on President Obama's prescription for making health care affordable and making sure all Americans are covered. We'll talk about that ahead.

And we'll take you to a state also where 98 percent of the people have coverage, it's affordable and both political parties helped make it happen. Did you know where that is? Find out in a moment.

Plus, see why the daughter of John McCain is calling out conservative Ann Coulter and why Democrats could not be happier about that.

And Rihanna, she is back together with Chris Brown. See why Oprah Winfrey thinks that could be a deadly choice when "360" continues.


COOPER: All this week we're going to be focusing on President Obama's prescription for health care reform. Mr. Obama has vowed to fix a system that's often described as in crisis; many before have tried, however, and failed.

Here's what he said last week at a White House Summit.


OBAMA: Health care reform is no longer just a moral imperative, it's a fiscal imperative. If we want to create jobs and rebuild our economy and get our federal budget under control, then we have to address the crushing cost of health care this year in this administration.

(END VIDEO CLIP) COOPER: The president says we need to rein in costs, improve quality and find a way to take care of the millions of Americans without health insurance. So how will he do all of that?

Well, over the next five nights, Dr. Sanjay Gupta is going to "Dig Deeper" on that. Sanjay joins us now.

Sanjay, you met with President Obama after the election to talk about your potential nomination to be Surgeon General.

What did he tell you about his health care plans, about his priorities?

DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: Yes, you're right. I met with him in Chicago right after he was elected to talk about the Surgeon General job. You know, I was honored. It was a flattering meeting, no question. As you know, Anderson, I decided not to pursue this position. It's worth pointing out a couple of things.

First of all, the Surgeon General job is an apolitical job. And my reasons for not pursuing it had nothing to do with the president's policies. They were strictly personal decisions. It's also safe to say that really since that meeting I've been thinking about really hardly anything else but health care policy.

And one of the terms that comes up over and over again is universal health care. You just played a clip where he talks about this. People think you have to go to France, you have to go to Canada to get a glimpse of what universal health care is like.

The truth is you don't. We have an example of it right here in this country, in Massachusetts.


GUPTA: Three years ago when Republican Governor Mitt Romney signed the new law, more than half a million people in the state did not have health insurance. Today, fully 97 percent of the people living in Massachusetts are covered by the state's version of Universal Health Care.

Romney and his partner in the plan, Democratic Senator Ted Kennedy, are a political odd couple, but powerful enough to get it done.

SEN. TED KENNEDY (D), MASSACHUSETTS: It recognizes that there's a common responsibility for people in that state to get health care and to get coverage.

GUPTA: Everyone pitches in.

Government -- the state took more than $200 million from programs offering free care for the poor, and used that money to help them buy insurance.

Business -- the law requires companies with more than 11 employees to offer health insurance.

Individuals -- if you don't have coverage through a job, the law says you must buy it on your own or pay a penalty. It's painful. It can be more than $1,000 a year.

This aspect, pressure on the individual, was especially controversial. This man is a self-employed musician.

MASSPIKE MILES WHEELER, SELF-EMPLOYED MUSICIAN: That means I'm going to have more bills. That's going to be less food for my son. That's going to be, you know, less things that I'm used to having because I am forced to pay health insurance.

GUPTA: But others were more positive.

FRANCES MAHAN: It was better than I expected. And less money than I expected.

GUPTA: Jon Kingsdale runs the Universal Health Care Program in Massachusetts. He warns the biggest threat to universal health care is rising costs.

JON KINGSDALE, EXEC. DIR. MASS. HEALTH INSURANCE CONNECTOR: We're going to have to be in the single digit rates of increase in premiums and the corresponding medical costs that they cover if reform is to be sustainable.


GUPTA: I want to break down these costs a little bit more because I think they're important. And we talk about the vast majority of these costs in Massachusetts we're talking about subsidizing health care.

Let's look at 2008 specifically. The first year, $628 million. A little bit more expensive than what they expected it to be. It went up to $820 million in 2009. In 2010, $880 million is what's projected.

Anderson, here's the discussion point. Some people will say, look, this is a perfect example of how these health care costs are going to continue to rise if you're going to try and achieve this universal health care.

Others will say the costs only went up because more and more people enrolled in the plan and now you have 97 percent of the people covered in the state of Massachusetts. So you can see a little bit of how this argument shapes up, Anderson.

COOPER: All right, let's bring it back to President Obama. Is this really his plan, though? I mean, is he wanting to replicate the Massachusetts model?

GUPTA: I think in some ways, yes. There's this term sort of floating around called incremental universalism. Meaning that you may not get universal health care right away, but you're going to get closer and closer as you proceed.

But it does require help from a lot of different folks, including adding more money to the Medicaid budget, for example. The requirement for employers.

The one thing that I think you're alluding to and I think a lot of time are alluding to is individual mandate. If someone can afford health care but chooses not to buy it, should they be forced to buy it? The White House -- we've asked this question specifically. They have not given a specific position on this. They say that all options are still on the table right now, Anderson.

COOPER: All right, Sanjay thanks very much.

Tell us what you think it's going to take to fix the health care system. It's on the main topic of the 360 blog tonight. Join the conversation at

Up next, Oprah Winfrey's warning for Rihanna. The talk show host is blasting the singer's decision to get back together with Chris Brown. Tonight, what Oprah says Rihanna's alleged abuser may do now.

And later, inside the danger zone -- Mexico's drug war; bringing the country to the brink of chaos and getting closer to the U.S. My in-depth report, ahead.


COOPER: Oprah Winfrey has a warning for music superstar Rihanna, saying if her boyfriend singer Chris Brown hit her once, he will hit her again.

Brown is accused of repeatedly punching Rihanna in the face. Prosecutors also say he threatened to kill her. Despite the charges and the alleged brutality the two are apparently back together.

So why would Rihanna go back to her alleged abuser? For domestic violence experts the answer is simple and sadly, something they see all the time.

"Up Close" tonight, here's Randi Kaye.


RANDI KAYE, CNN CORRESPONDENT: Rihanna, are you listening? Oprah is talking to you.

OPRAH, HOST, "THE OPRAH WINFREY SHOW": If a man hits you once, he will hit you again.


OPRAH: He will hit you again. I don't care what his plea is. He will hit you again.

KAYE: That was Oprah on her show last week, warning singer Rihanna that her boyfriend, Chris Brown, will likely hurt her again. Brown is charged with two felonies, for assault and criminal threats.

Word that after a public apology from Brown, the couple is back together, not only raised red flags for Oprah, but also alarmed Linda Fairstein, former chief prosecutor for the New York D.A.'s sex crimes unit who now tracks domestic abuse.

LINDA FAIRSTEIN, FORMER PROSECUTOR, N.Y. SEX CRIMES UNIT: This is deadly conduct. This is not a late bruising and assault. This is something that has a tendency to escalate.

KAYE: The police affidavit alleges Brown assaulted Rihanna in a Lamborghini after she read a text message from another woman with whom he had a sexual relationship. The affidavit says he shoved her head against the passenger window and continued to punch her in the face. Police say Brown threatened to kill her and placed her in a head lock until she began to lose consciousness.

This photograph obtained from the gossip and entertainment Web site, TMZ, shows the victim's battered face.

FAIRSTEIN: He choked her till she was practically unconscious. Rates very high on that predictability scale. Verbalizing the threats to commit murder, again, rate very high on the charts.

KAYE: Fairstein says she has the numbers to back up her fears. Every 15 seconds a woman in the U.S. is physically assaulted by her boyfriend or husband. Fairstein says more than four homicides each day are committed in this country by a partner or former partner. Women most at risk -- those between 16 and 24 years old. Fairstein says this case reminds her of patterns she's seen before.

What is your advice for Rihanna?

FAIRSTEIN: Get serious counseling about this. She needs to hear what the statistics are. This is fatal conduct that unless his behavior changed, unless he's brought to understand it, she's really not safe with him.

KAYE: Brown will enter a plea next month. He hasn't talked about the charges against him. And it's unlikely he'll be sitting on Oprah's couch any time soon. Her show on domestic violence airs later this week. And no matter how much advice she has, neither Chris Brown nor Rihanna are expected to appear.

Randi Kaye, CNN, New York.


COOPER: Coming up, a well-known Republican calls President Obama the hippest politician around and says being Republican is about as edgy as Donny Osmond. No, it's not Michael Steele. Meghan McCain is speaking out.

And violence on the Mexican border. The war there now spilling over here. President Obama is briefed by our military about options in case it spreads more. I'll take you tonight inside the danger zone.


COOPER: Tonight, a frontline trip to the war next door. The escalating drug war in Mexico ripping apart the country has gotten the attention of President Obama.

Briefed on the crisis yesterday, Mr. Obama is said to be interested in giving Mexico more help in fighting the drug cartels. Thousands have been killed in the drug war. Civilians, soldiers and police officers have been kidnapped and beheaded. The bloodshed and the danger is now spilling across the border. The U.S. Justice Department says cartels are running distribution networks in more than 200 American cities right now.

Recently I went to Mexico for "60 minutes" to report on the escalating brutality. I also asked the new secretary of homeland security, Janet Napolitano, how worried the U.S. government is about the war next door.


JANET NAPOLITANO, SECRETARY OF HOMELAND SECURITY: The stakes are high for the safety of many, many citizens of Mexico and the stakes are high for the United States, no doubt.

COOPER: The stakes are high not just because Mexico is a key American ally and trading partner but because the drug cartels are fighting to control areas right along the U.S. border, just miles from cities like San Diego and El Paso.

Is the violence in Mexico a threat to U.S. national security?

NAPOLITANO: It is certainly something that is of major concern because, again, it's our neighbor to the south. It's a major partner in many areas. So it's something, for example, that I as secretary of homeland security pay a lot of attention to.

COOPER: There's a lot to pay attention to in Mexico. 60,000 Mexican military and police are fighting against the five major drug cartels which control lucrative smuggling routes into the U.S. They've managed to arrest some tough traffickers. But new, more ruthless leaders have filled the vacuum battling both the government and each other. They're terrorizing the country with very public acts of violence.

In December, this group of Mexican soldiers was found with their heads cut off and a note from traffickers warning, "For every one of mine you kill, we will kill ten." This decapitated man was left hanging from a bridge. His head was found in the town square.

Last year alone, nearly 6,300 people were killed in Mexico's drug war. That's more than double the number the year before. Cartels are also increasingly expanding into human smuggling, extortion, and kidnapping. Smaller criminal gangs have also gotten into the game, turning Mexico into one of the kidnapping capitals of the world. CLAUDIA WALLACE, SISTER OF KIDNAPPING VICTIM: We're afraid of getting in a car, getting in a taxi, walking in the street alone, going by the hand with your child.

COOPER: Claudia Wallace's 35-year-old brother Hugo was kidnapped while on a date in Mexico City. A month after he disappeared, his mother, Maria Isabel, got a ransom note with this picture of him.

When you saw the photo, what did you think?

C. WALLACE: For me it was very difficult. At the same time we were laughing and screaming of joy because we were now waiting for someone to call.

COOPER: He was alive, you thought?


COOPER: But when this picture was taken, Hugo was already dead. The kidnappers propped up his body for the photo and asked for almost $1 million in ransom. Months later some of the kidnappers were caught and Hugo's family learned what happened to him after the ransom picture was taken.

C. WALLACE: So they took my brother to the bathroom, went to Wal-Mart, bought a saw, an electric saw. And returned to the apartment and cut my brother. And put it in a black bag.

COOPER: They've never been able to find Hugo's remains.

Kidnappers don't just target the rich. The poor are victimized as well. A 5-year-old boy whose parents had a stall in this marketplace was abducted in October. When his kidnappers thought the police were on to them, they killed the boy by injecting him with acid.

150,000 people marched last summer to voice their frustration over the rising violence. Hugo's mother, Maria Isabel, has become a vocal advocate for victims. But in Mexico today, that can get you killed. Gunmen recently riddled her car with bullets.

MARIA ISABEL WALLACE, HUGO'S MOTHER: I think that we're at the point in which if the government doesn't put all its effort into this. The drug traffickers, the kidnappers and organized crime, will ultimately take control of the country.

COOPER: In some towns, they already are in control. Just last week in the city of Juarez, cartels threatened to kill a police officer every 48 hours until the police chief resigned. After two murders, he did. Juarez's mayor just moved his own family to Texas. Mexico's police are overwhelmed in part because drug traffickers have them outgunned. Mexico's attorney general, Eduardo Medina Mora, is helping to lead the effort to break up the cartels.

EDUARDO MEDINA MORA, ATTORNEY GENERAL OF MEXICO: Half of what we seize, 55 percent are assault rifles. And this is what gives these groups this intimidation power: 2,200 grenades; missile and rocket launchers; .50 caliber sniper rifles.

COOPER: It might surprise you to learn where all these guns are coming from. It turns out 90 percent of them are purchased in the U.S.

MEDINA MORA: The second amendment was never designed to arm criminal groups, especially not foreign criminal groups as it is today.

COOPER: Do you blame the U.S. for not doing more to stop this?

MEDINA MORA: We believe there's much more to be done. We need a much more committed effort from the U.S.

COOPER: There was an assault weapons ban in the United States for ten years, it expired in 2004. Would you consider asking Congress to reinstate that?

NAPOLITANO: I haven't thought that far. What I have worked on is working with customs, with ATF, and saying, OK, what do we need to do by way of identifying who is putting these unlawful guns into the hands of the traffickers who are using them to murder people. And what do we need to do to stop it?

COOPER: It isn't just guns coming from the U.S. that's fueling Mexico's war. It's cash. According to estimates, drug trafficking brings in as much as $38 billion a year from the U.S.

How much responsibility does the United States have in helping Mexico in ending this war?

MEDINA MORA: This is a shared responsibility.

COOPER: Because there's many in the U.S. who see this as a Mexican problem.

MEDINA MORA: If demand comes from the U.S., if cash coming from people acquiring and consuming drugs in the U.S., weapons are coming from the U.S., this is a shared responsibility.

COOPER: To find out how cartels are smuggling cash and drugs so easily across the border, we decided to visit one of Mexico's most famous alleged traffickers, Sandra Avila Beltran. She's the subject of a best selling book. There's even a song about her.

Beltran may not look like your typical drug lord. But when she was arrested after five years on the run, she was brought to prison under heavy security.

Mexican authorities denied our request to talk to her but we showed up anyway on visiting day at the prison. Surprisingly, we got in.


COOPER: Surprisingly, indeed. You're going to hear what this alleged drug lord had to say.

Also, the war at home -- how the cartels are making billions right here in America and how Mexico's gangs are moving into American cities. Can they be stopped? That's next.

And later, a wall of ice crashes into homes; the story and more incredible video ahead on "360."


COOPER: Before the break we brought Mexico's drug war to you. The violence there has killed thousands. And the danger is spreading over the border into America. But how do these murderous cartels actually work?

As part of my investigation for "60 minutes" I tried to find out speaking to one of Mexico's most famous alleged drug traffickers. Her name is Sandra Avila Beltran. She's accused of trying to smuggle cocaine into the United States and is facing extradition.

Officials said we couldn't speak to her but we managed to get into her prison and talk with her. Here's part two of my "60 Minutes" report.


COOPER: How long have you been here?

Beltran is accused of being part of a trafficking operation that smuggled cocaine into the U.S. and now faces extradition. She denies the charges but certainly seems to know a lot about drug trafficking.

SANDRA AVILA BELTRAN, ALLEGED DRUG SMUGGLER (through translator): There are more and more people involved in drug trafficking now than ever before. With more people going into business, there's always someone who wants to control that business. And that's the reason for the murders, the fights to control the cities and to control the drug routes.

COOPER: Beltran was born into a drug trafficking family. Two of her husbands were assassinated. Both were cops allegedly working for the cartels.

BELTRAN: In Mexico there's a lot of corruption, A lot. Large shipments of drugs can come into the Mexican ports or airports without the authorities knowing about it. It's obvious and logical. The government has to be involved in everything that is corrupt.

COOPER: Can the government win this war against drug traffickers?

BELTRAN: I don't think so. You'd have to wipe out the government to wipe out drug trafficking.

COOPER: Wiping out government corruption is one of attorney general Medina Mora's jobs. But even his office has been tainted. Thirty-five members of his elite intelligence unit were recently accused of taking bribes from a drug cartel.

The former drug czar himself was found -- or accused of receiving some -- I think nearly half a million dollars every month from drug cartels.

MEDINA MORA: It's a matter of disappointment and a matter of certainly surprise.

COOPER: Why have drug cartels been so effective at corrupting police forces, corrupting politicians?

MEDINA MORA: Essentially, because they have a tremendous economic power. And a tremendous intimidation power that comes from cash and weapons.

COOPER: Mexican authorities are now trying to rebuild the federal police force from the ground up. They're using background checks, polygraph tests and new technology to monitor what local police departments around the country are doing.

Recent polls show most Mexicans believe their government is losing the war. But Medina Mora insists the escalating violence is a sign the cartels are weakening and becoming desperate.

MEDINA MORA: It will take time. It will cost a lot of money. It will cost lives. But we will certainly win.

COOPER: What is it that gives you hope, though? I mean more than 8,000 dead in the last two years, corruption at all levels of government and police?

MEDINA MORA: We have seized 70 metric tons of cocaine. We have arrested 57,000 people out of which 46,000 are drug-related.

COOPER: Mexico is extraditing more of its high-level alleged drug lords to the U.S. and is beginning to receive some of the $1.4 billion the United States has committed to help Mexico fight its war. The majority of that money will go toward equipment and training. But Janet Napolitano, the new head of homeland security, is preparing in case the violence spreads.

NAPOLITANO: We're in constant contact with law enforcement on both sides. And we have some contingency plans should it escalate and actually spill over into the United States.

COOPER: There have been reports that the U.S. considered the possibility of having a surge on the border, maybe even involving U.S. military personnel?

NAPOLITANO: That would be certainly a last resort because civilian law enforcement is obviously what would be called on first.

COOPER: The power of Mexico's drug cartels has already spread far beyond the border. Just this week, the Justice Department announced they've arrested more than 700 people in the U.S. connected to just one cartel. ERIC HOLDER, U.S. ATTORNEY GENERAL: These cartels are not just operating in Mexico, their reach stretches far and wide.

COOPER: Mexican traffickers are operating in some 230 American cities according to the Justice Department. And they're now considered the number one organized crime threat in the United States.

You're seeing drug cartel involvement in Anchorage, Alaska, in South Dakota, in Atlanta, in New York City.

NAPOLITANO: Right, right.

That's why I say every -- the United States has a real stake in this. We have a stake in it at that level, that they're selling drugs. These drugs are being distributed throughout our cities, the committees, our neighborhood. So this issue in Mexico, this very brave battle that the president of Mexico is fighting is something that every American has a stake in.

COOPER: It affects all of us.



COOPER: It affects all of us.

New details tonight about the pastor shot to death while holding a Bible. The attack took place during a morning church service while horrified parishioners looked on. I'll have the latest just ahead.

Also tonight, Sen. John McCain's daughter, Meghan, blasting conservative commentator Ann Coulter in a blog posted. Doesn't mince words. Will Coulter fire back? We'll wait and see.


COOPER: Just ahead, what former wrestling superstar The Rock and President Obama have in common, at least on Saturday night.

First, Erica Hill joins us with the "360 Bulletin" -- Erica.

ERICA HILL, CNN CORRESPONDENT: Anderson, a suspect is under arrest tonight in the shooting death of an Illinois pastor. The gunman charged with first degree murder opened fire on the pastor during a morning service yesterday. It is unclear whether these men knew each other.

The shooter also stabbed himself and two parishioners who tried to tackle him.

In the latest blog post, Sen. John McCain's 24-year-old daughter, Meghan, ripping into conservative commentator, Ann Coulter, she calls her, quote, "offensive, radical, insulting and confusing" all at the same time. She went on to call President Obama the hippest politician around and says being a Republican is about as edgy as Donny Osmond. No word yet on her dad's reaction. But over the weekend he said he supported his kids even when he didn't agree with everything they said.

Unionized workers at Ford agree to contract changes that include freezing wages and cutting retiree health benefits. The agreement is expected to be a model for Chrysler and General Motors who also struggling to stay competitive.

And check this out, a long stretch of Lake Huron in Michigan, giant walls of wind-blown ice and snow. Ice and snow right there, smashed up against homes, even through some windows. In some of the houses, the ice is nearly 12 feet deep. Residents of three dozen homes had to evacuate. Incredibly, no one was hurt.

But those pictures are just wild.

COOPER: Yes. Bizarre. Yes, crazy.

Still to come, Erica, The Rock does his best President Obama impression. Not too bad, actually. It's tonight's "Shot."


COOPER: Erica, for tonight's "Shot," don't mess with President Obama. If you missed "Saturday Night Live" over the weekend, Dwayne Johnson formerly known as The Rock had some fun with his Hulk-like take on the commander in chief. It's a pretty good impression. Take a look.



DARRELL HAMMOND, CAST MEMBER, NBC'S "SATURDAY NIGHT LIVE": And, my friend, I'm starting to think you may not be up to it.



SAMBERG: What happened was you made Barack Obama angry. And when you make Barack Obama angry, he turns into -- "The Rock" Obama.


HILL: Don't mess with "The Rock."

COOPER: So we have no idea if the real Barack Obama was watching. If he was, he probably got a kick out of this sketch, no doubt about that. "Saturday Night Live" has definitely been on a roll lately. Dwayne Johnson was actually very good on the whole program.

HILL: There was just recently an article -- it might have been "The New York Times" -- about how he's really trying to make this move. He's not "The Rock" any more. He wants to be more of an actor.

COOPER: Well you know like, he sang, he danced. I'm all for it.

HILL: Does it all.

COOPER: He has my support.

HILL: What more does he need? He's golden now. "I'd like to thank the Academy and Anderson Cooper."

COOPER: You can see all the recent shots at our Web site,

That does it for 360. Thanks for watching.

"LARRY KING" starts right now.

I'll see you tomorrow night.