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The Hacking Scandal; Spending Cut Debate Unresolved; Balanced Budget Mandate; Rebekah Brooks Released from Jail; Bachmann to sign Pledge; Perry Considering 2012 Run; Hacking Whistleblower Found Dead

Aired July 18, 2011 - 13:58   ET

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

RANDI KAYE, CNN ANCHOR: A new hour starts with a new casualty of the scandal that's rocking an empire built on scandal. "Dateline London." John Yates surrenders his post as assistant commissioner of Scotland Yard over a decision he made two years ago to drop a probe into phone hacking by newspapers owned by Rupert Murdoch. He now says that decision was, quote, "crap."

Yates' boss, the commissioner, announced his resignation yesterday, hours after the unexpected arrest of the newly resigned CEO of Murdoch's News International. Her name is Rebekah Brooks, and she's also a former editor of Murdoch's now-defunct "News of the World." Brooks, Murdoch, and Murdoch's son James are all due to testify tomorrow before a committee of Parliament. And you will see it live right here on CNN.

In the meantime, my colleague Matthew Chance joins me from across the pond. And Matthew, where to begin? I mean, preview tomorrow's Parliament hearingf or us if you can. Can Rebekah Brooks really answer questions if she's the subject of a criminal investigation?

MATTHEW CHANCE, CNN INTERNATIONAL CORRESPONDENT: Well, it's going to be much difficult for Rebekah Brooks to answer the really incisive questions that MPs - members of Parliament in Britain are going to want to ask her because first of all, those MPs are not going to want to jeopardize the police investigation into Rebekah Brooks. And secondly, she doesn't want to say anything that might incriminate her in the future. At the moment, though, she's going into this. She says she is going to answer questions, but she's also said she's not guilty of any wrongdoing, so it will be a very interesting session that we're going to be seeing from the British Parliament, Randi.

KAYE: And it isn't just the Murdochs who really have to answer questions here. They're not the only focus of this investigation. Along with Rebekah Brooks, we're also talking about the police. We mentioned that a couple of top police officials have already resigned their post.

What is the police involvement here, alleged police involvement in this investigation?

CHANCE: Well, at the moment, from Britain, that's a huge aspect to this constantly developing story. We have had two senior most figures in the Metropolitan Police Force, which is the biggest police force in Britain, one of the biggest police forces in the world, actually stepped down from their post because of this phone hacking scandal.

Within the last few hours, we've had John Yates, the assistant commissioner of the Metropolitan Police, stepped down. That comes within 24 hours of his boss, Sir Paul Stephenson, the commissioner of Metropolitan Police stepping down. And, of course, within the last few hours as well, the Independent Police Complaints Commission, which is sort of the independent body which examines what the police do here in Britain, has its own investigation into the conduct of those two figures, as well as into the conduct of two former senior police officials in the Metropolitan Police as well.

So, obviously, this is a huge issue in Britain. This police force is meant to be one of the most trusted figures in British society. And seen its two new senior most figures stepped down over the scandal and there's an investigation by this independent group into its conduct, Randi.

KAYE: And, Prime Minister Cameron, I understand, is cutting his trip to Africa short to come back home and deal with this scandal as best he can. What is his relationship as best you know in terms of his involvement and his work with some of the key players in this investigation?

CHANCE: Well, this is the big, I think simmering developing story underneath the surface of all these developments that we have been witnessing over the past couple of days, to what extent is this building pressure on David Cameron. Remember, David Cameron is the prime minister who hired Andy Coulson, the former editor of "The News of the World," as his press secretary for three years. Andy Coulson, of course, stepped down several months ago because of this phone- hacking allegation.

There's been lots of questions raised about David Cameron's judgment in hiring Andy Coulson about this. Certainly, there is pressure growing on him. There have been backbench calls in the British houses of parliament for David Cameron to step down. He hasn't done that, that hasn't been picked up yet by the sort of mainstream opposition in this country yet.

But there is, as I say, pressure growing on the British prime minister. He's already cut short a trip to Africa to -- it was meant to be five days long. He's now brought it back to 1 1/2 days long, he's coming back. He's agreed to this extra session of parliament on Wednesday to look into this phone hacking scandal.

So, certainly, there is pressure on the British prime minister now.

KAYE: And how -- I'm curious -- how did the apology play? In the British newspapers over the weekend, Mr. Murdoch had said, "I'm sorry," and took out these big ads in the British papers. Were those acceptable there?

CHANCE: Well, it depends on what you mean by accept. I'm sure that those people that might want to give, you know, Rupert Murdoch and his News International group of newspapers and these organizations the benefit of the doubt. But certainly, it's not going to, you know, make the police happy. They're still going to go on with their investigation. In fact, they've been given more resources to dig deeper in this situation and potentially to bring charges that hasn't happened as of yet.

But, certainly, there's a lot of police pressure now from within the police to get to the bottom of this. There's also public pressure as well.

No matter how many times Rupert Murdoch and his News International say that they're sorry, that's not going to be enough for the police and for the British political establishment in this country now -- Randi.

KAYE: And, Matthew, one last question. When they're in parliament tomorrow and they have to answer these questions, are you clear -- is this under oath or not?

CHANCE: Yes, it will be. That's my understanding at least. And certainly, Rebekah Brooks and the other individuals who will be facing, questioning in parliament, including Rupert Murdoch, of course, and his son James, will be taking advice I expect from their attorneys as to what they can and can't say. By the same token, British parliament will be taking advice from legal counsels as well so that they ask questions that could potential jeopardize what's considered to be the all-important police investigation now into the conduct of these figures and this organization in general -- Randi.

KAYE: Matthew Chance in London for us -- Matthew, thank you very much for your reporting on that.

Coming up in just a few minutes, we'll talk more about the stakes for Rupert Murdoch. Howard Kurtz, anchor of CNN's "RELIABLE SOURCES," will be along with that and the possible fallout for Murdoch's media empire.

To Washington now where time is not on the side of the White House and congressional Republicans who need to agree on a debt ceiling increase by the end of the week. The Treasury says the D-Day, the day for default, is August 2nd, but lawmakers need time to draft legislation and vote and still, there's nothing to draft.

They will be voting in the House anyway on a plan that the president is vowing to veto if it reaches his desk. It would cut and cap federal spending and called for a balanced budget amendment to the Constitution.

As you may have seen live last hour, Mr. Obama turned his attention to another money issue. He nominated Richard Cordray, a former attorney general of Ohio, to be the first director of the Consumer Financial Protection Bureau. Cordray, he's a well-known critic of big banks and mass foreclosures in particular.

He also knows his trivia. Way back in 1997, Cordray was a five- time champion on "Jeopardy." You see him there. He used his winnings, more than $45,000, to pay off loans from law school.

Checking some other top stories that we're following with you.

General David Petraeus today handed over command of the Afghan war to General John Allen. The ceremony came on the day of deadly violence. At least five native soldiers and an Afghan district police chief were killed in separate attacks.

And yesterday, another top aid to President Hamid Karzai was assassinated when gunmen attacked his home. Just last week, Karzai's half-brother was assassinated by a long time family aide and guard. The Taliban claimed responsibility for both attacks.

Petraeus is returning to the U.S. to become the new director of the CIA.

Casey Anthony is now free. She walked out of a Florida jail yesterday, 12 days after a jury acquitted her on murder charges related to the death of her 2-year-old daughter Caylee three years ago. Her whereabouts right now, a closely guarded secret. But one thing is pretty much certain, she faces an uphill battle as she tries to return to normal life. One of her attorney says elaborate plans are in place to keep her safe from the lynch mob mentality.

For some parts of the country, there is no relief from the extreme heat, what's being described as a dangerous heat wave baking the central part of the country. It's expected to move eastward in the coming week and eventually cover most of the Eastern Seaboard. The National Weather Service says those in the Midwest today can expect the heat index in the triple digits, making it feel like 100 to 110 degrees or even higher. By midweek, the heat wave will bring temperatures in the mid-90s in the Mid-Atlantic States.

A new report's out on the controversial question of whether parents should sleep with their toddlers. According to the American Academy of Pediatrics, it's OK if the child is at least a year old. There's no evidence that leads to behavioral or learning problems down the road. But the experts warn never sleep with infants before the age of six months, that's when babies are most at risk for sudden infant death syndrome.

Rupert Murdoch is set to testify about the tabloid hacking scandal in the U.K. But is it too late to save face? CNN in-depth, next.

(COMMERCIAL BREAK)

KAYE: CNN in-depth now, and more on the hacking scandal in the U.K.

Scotland Yard's top two police commissioners have stepped down. This is Commissioner Sir Paul Stephenson. His top deputy also stepped down. Both say they didn't break any law.

Police are investigating whether any officers took part or took money as part of the hacking by the "News of the World" tabloid.

Rupert Murdoch will likely face tough questions tomorrow, that's when he'll testify in front of lawmakers for the first time since this scandal really broke.

Joining me now to talk about the testimony and the stakes is Howard Kurtz, host of CNN's "RELIABLE SOURCES," and Washington bureau chief for "Newsweek" and "The Daily Beast."

Howard, we understand that Murdoch has been practicing his testimony for tomorrow. How careful do you think he has to be?

HOWARD KURTZ, HOST, "RELIABLE SOURCES": Well, he has to be extremely careful not to incriminate himself or any of his top lieutenants in any previous knowledge of what was going on in this phone hacking scandal. At the same time, you know, this is more than about -- with all the world attention on that British parliamentary committee, this is about more than mounting a narrow, legalistic defense. Rupert Murdoch has to come across as contrite, as he has been lately with the help of some new PR advisors. That's the message he's trying to send, and concern, and he has to kind of win the PR battle or at least take a step in that direction, while also insulating himself for any law enforcement liability.

KAYE: And, certainly, Howard, I mean, do you believe that he has to say all the right things? Because what's at stake here is a massive media empire. I mean, we're not -- we're talking about, you know, with "The Wall Street Journal," FOX News. I mean, isn't this about in some ways about protecting his empire?

KURTZ: There's certainly -- the financial stakes are certainly huge. Just look at the hit that the News Corp's stock has taken since this phone-hacking scandal exploded. And you see how many billions of dollars potentially are at stake. He's already had to close one newspaper. He's has to drop his $12 billion dollar bid to buy British Sky Broadcasting.

But, you know, in that -- it's not a courtroom. He hasn't been charged with anything, although people who worked for him very high up, like Rebekah Brook, have now been arrested. And so, there really is sort of a two-front war here. On the one hand, he has to credibly come across as an engaged chairman of the company who at the same time didn't know, he will undoubtedly say, what his minions at "The News of the World" were doing.

At the same time, he has to come across as a somewhat sympathetic figure who gets the enormity of the wrongdoing here. So, he's really on trial in a very real sense, Randi, in the court of public opinion as well.

KAYE: We've talked about this apology ads, as they're being called, that's taken out in the British newspapers. Do you think that he needs to do the same thing here in the U.S. to help repair his image and the corporation's image?

KURTZ: Well, it's interesting because I'm told by sources who are familiar with the company's deliberations that Murdoch's company is going to hire a public relations firm in the U.S., just to deal with the mounting inquiries on this side of the Atlantic, having to do with his U.S. media property, that they engaged in any phone-hacking, could he be liable. For example, the FBI under pressure from some Democratic members of Congress, gearing up a preliminary investigation. There's talk of congressional hearings.

So, right now, there's no evidence that any misconduct went beyond the London papers, the London tabloids. But, clearly, with so much scrutiny, he could have a problem here in the States, I don't want to get ahead of the facts, but he's certainly got a media PR headache.

And the brand, the Murdoch brand, the News Corp brand, has certainly taking a tarnishing given the dizzying pace of these allegations day after day after day, paying of the police allegedly, Rebekah Brooks and others being arrested, this "News of the World" reporter who was just found dead after having alleged the former editor of "The News of the World," due of the hacking. It's hard for us to keep up, even those of us who do it for a living.

KAYE: And just very quickly, what about James Murdoch, Rupert Murdoch's son? I mean, he's certainly an up and comer. He probably has been seen as his father's replacement as a News Corp chief. What could all of this mean for him?

KURTZ: Well, James Murdoch will be testifying as well. And he's now next in the line of fire with Rebekah Brooks and others now having left the company under duress. James Murdoch has got some problems because not only was he in charge during this period, but he authorized some payments to the police that some people are viewing as hash money. I'm sure he will dispute that.

So, we have two Murdochs here whose reputation is going to be under a very bright spot light tomorrow in London.

KAYE: Howie Kurtz, as always, great to have you on the show. Thank you.

And once again, Rupert and James Murdoch and former Murdoch executive, Rebekah Brooks, are scheduled to testify before members of the British tomorrow morning. CNN will cover it live and we'll speak once again tomorrow afternoon with Howie Kurtz and others. We'll break it all down for you.

Up next, the same sex couple that New York City Mayor Michael Bloomberg is marrying this weekend, they are here with us to talk about it.

(COMMERCIAL BREAK)

KAYE: Talk about a big day, this Sunday, not only are my next guests getting married, but they're doing it in front of the entire world. And New York City Mayor Michael Bloomberg will be officiating their ceremony. Why?

Jonathan Mintz and John Feinblatt are set to become one of the first same-sex couples ever to get married in New York. As you know, the state became the sixth in the nation to legalize same sex marriage last month. And this Sunday, that new law takes effect.

John and Jonathan both work for Mayor Bloomberg and they join me now.

Thank you, guys, for coming on.

Jonathan, I'd like to start with you because I know you work closely with the mayor and he approached you about officiating your wedding. How did that conversation go?

JOHN FEINBLATT, CHIEF POLICY ADVISOR, NYC MAYOR BLOOMBERG ADMIN.: Well, you know, he -- we work in a bullpen. We're all there together. He called me over and said, could we talk for a second? We went up and got a cup of coffee right in the middle of the bullpen and he said, you know, I don't know whether you and Jonathan are thinking of getting married, but if you are and you want me to do it, I would be honored.

And that was an extraordinary honor for us because we work alongside the mayor in his very, very hard press he made for marriage equality in New York state and to have the mayor who was such a significant part of getting marriage equality passed, then marrying us is such a great privilege. I guess he's sort of our personal hero on this issue.

KAYE: And, John, when you read the news, what did you think?

JONATHAN MINTZ, NYC CONSUMER AFFAIRS COMMISSIONER: I'm Jonathan. I was thrilled. I mean, we were so proud of the mayor. We were so proud of the state for taking a step toward equality. We were so happy for our kids. And it was a fantastic opportunity. We were thrilled.

KAYE: So, I know that you have a couple of daughters.

John, why don't you tell me, what was the reaction when you told them what your plan was?

FEINBLATT: Well, they have been pressing for this for a long time. Kids have a really somewhat primitive but an innate and strong sense of social justice, what they always say is why can't we be like everyone else. And so, they have been campaigning for this inside our house for a couple of years now because they want what their classmates want. They want what everybody else has. And they just want the world to be fair.

You know, Jonathan and I took our older daughter Macy (ph) to hear the mayor speak on marriage equality at Cooper Union, and when we took her home after the speech, what her reaction was, with a tear in her eyes, she said, you know, I thought America was about fairness. So I can promise you, we have made her day.

KAYE: And, Jonathan --

MINTZ: We also want to be --

KAYE: Yes, I was going to ask you do you get the feeling that your children understand how significant a day this is going to be for the two of you?

MINTZ: I think they really understand that this is a big deal for our family. They are very clear -- certainly, our older child Maeve is very clear that this is a big step forward for fairness and equality, something that's really important to an 8-year-old. It's important to all of us, but something very much on their mind as John said.

And they're excited. Right now, our older one is focusing on whether she can get up the nerve to sing a song. And our younger one is angling to see which one of our rings she's going to carry in the ceremony. So, we're very busy.

KAYE: But it's great. That sounds like wonderful planning for the whole family.

Tell me -- because you are -- you both work at Mayor Bloomberg's office. Obviously, we know his stance. He fully supports same-sex marriage. How much of an influence that you think your relationship might have had on him?

FEINBLATT: You know, I think that the mayor has really known us really well for the past nine years. I think you'd have to ask him whether it had an influenced. But, you know, I had the difference of working alongside with him as we press for this case.

But I think from the mayor's point view is New York has always stood for freedom. New York's led the fight for freedom, whether we're talking about the women's right to vote, or we're talking about the right for people of different races to marry. And from the mayor's point of view, this is what New York's all about and freedom is what makes New York New York, and I think his voice was very, very strong and heard in Albany.

And we got to sort of close the circle and then make it pretty personal by having him marry us, which is our privilege.

MINTZ: There's certainly nothing magic about us as a couple. You know, we're like any other couple. We have been together for over 14 years. And I think there's hopefully something that people can see in our family that they can relate, to understand that this is about love, it's about family, and stability and in our case, children.

And I think the mayor just has a very clear sense of that.

KAYE: And you're getting married Sunday. Just very quickly, last question, has the mayor given you both Monday off?

(LAUGHTER)

MINTZ: We need people to call in.

KAYE: We could do that for you.

FEINBLATT: All right. Post the number.

MINTZ: Let's start a campaign.

KAYE: OK. We will start a campaign to get both of you Monday off.

Well, listen, congratulations to you both. I know it's going to be a big day, and certainly a very special day. So, congratulations. Thank you for coming on sharing it with us.

FEINBLATT: Thanks a lot.

MINTZ: Thanks.

FEINBLATT: Thanks. Much appreciate it.

KAYE: Twenty-three minutes past the hour now, and time for a quick look at our top stories.

President Obama has picked the man he wants to head up the new Consumer Financial Protection Bureau. It's former Ohio Attorney General Richard Cordray. You saw the announcement live here last hour. The Consumer Financial Protection Bureau was created under last year's Wall Street reform bill. Some Senate Republicans have promised to block that nomination.

Remember all those fears about "Carmageddon" in Los Angeles? Well, it turned out to be much ado about nothing. L.A.'s busy Interstate 405 was closed for much of the weekend because of construction work. But motorists listened to advanced warnings and, yes, they stayed away. There were no big traffic backups and the road actually reopened 17 hours ahead of schedule.

CCB is the new talk in Washington. Could it be the answer to the country's financial crisis? We'll find out next.

(COMMERCIAL BREAK)

KAYE: Breaking news now into CNN: one of the key whistleblowers in the "News of the World" hacking scandal has been found dead. Sean Hoare is his name. He was found earlier today, according to the British press association.

Hoare was a former "News of the World" reporter. In 2010, he told "The New York Times" that former editor Andy Coulson actively encouraged him and other reporters to hack into the voicemail systems of public figures. Police are treating the death as unexplained but not suspicious.

The debate in Washington over spending cuts has a new catch phrase. The expression is "cut, cap and balance." But what does that really mean?

Here's CNN's chief political correspondent, Candy Crowley.

(BEGIN VIDEOTAPE)

CANDY CROWLEY, CNN CHIEF POLITICAL CORRESPNDENT (voice-over): Buzz word alert --

SEN. LINDSEY GRAHAM (R), SOUTH CAROLINA: "Cut, cap and balance" gets us out of debt over a long period of time.

CROWLEY: Cut a substantial amount of spending to bring down the roughly $1.5 trillion deficit expected this year.

Cap federal spending at 18 percent of gross domestic product is at 24 percent of GDP now.

Pass a balanced budget amendment to the Constitution that includes spending caps and makes it difficult to raise federal taxes.

Cut, cap and balance, CCB, is all the rage on Republican quarters.

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: The answer for the country is for the president to agree to cut federal spending, to cap federal spending, and to put in place a balanced budget amendment.

UNIDENTIFIED MALE: The House will be in order.

CROWLEY: This week, the Republican-controlled House will likely pass a "cut, cap and balance" bill as a perquisite to raising the debt ceiling. There are mighty objections from Democrats on the Hill and in the White House.

JACOB LEW, DIR., OFFICE OF MANAGEMENT AND BUDGET: What these amendments do is not just say you have to balance the budget. But it puts in place spending limitations that would force us to cut Social Security and Medicare more deeply than even the House budget resolution.

CROWLEY: What the House will almost surely approve, the Senate almost surely will not -- leaving the debt ceiling issue precisely where it's been for months, unresolved.

(on camera): If you cannot get the Senate to pass what the House surely will this week, you will allow the U.S. to go in default? Or you will go to a plan B?

GRAHAM: I'm going to focus on plan A. That to me is the only plan that will work. It's the real deal, not a big deal.

CROWLEY (voice-over): The most probable deal, still in the works, would cut spending by $1.5 trillion over 10 years and let the president raise the debt ceiling through the 2012 election. Congress could stop him but only in unlikely event of a veto-proof majority vote in both houses. Everyone gets off the hook and it avoids economic chaos.

SEN. JON KYL (R), ARIZOAN: At the end of day, Republican leaders have made it clear that we will not be the ones who put the country into default.

CROWLEY: It's uncertain whether Republican rank-and-file will follow their leaders. The idea comes from Senate GOP leader Mitch McConnell who has been trashed by conservatives ever since.

REP. JIM JORDAN (R), OHIO: We're in big trouble. Let's have that national debate. Not some cop out like the McConnell plan.

CROWLEY: Sources say the last ditch McConnell plan could be on the Senate floor this week.

(on camera): But a Republican source believes before the McConnell bill, the Senate will take up "cut, cap and balance," because even if CCB doesn't pass, it has endless possibility as CBS, campaign bumper sticker.

Candy Crowley, CNN, Washington.

(END VIDEOTAPE)

KAYE: Talk about precious metal. You are not going to believe how much it will cost you to buy one ounce of gold today. The details, right after this.

(COMMERCIAL BREAK)

KAYE: Top administration and congressional officials are expected to keep working this week on a measure to raise the federal debt ceiling by up to $2.5 trillion, embracing a version of a fallback plan designed by Senate minority leader Mitch McConnell. The debt ceiling proposal stands in sharp contrast to President Obama's preference for a package of roughly $4 trillion in savings over the next decade made up of spending reforms and tax increases on the rich.

But just a short time ago, the president, quote, "We're making progress" when asked about a weekend meeting with House speaker John Boehner on the deficit and the debt.

Gold prices hit a new record today, topping $1,600 an ounce for August. That is more than a one percent increase from the previous session. Skyrocketing prices have been driven by concerns over mounting debt worries in the U.S. and Europe.

Baseball great Nolan Ryan, the president and CEO of the Texas Rangers, is in the hospital, scheduled to undergo medical tests today. Ryan was hospitalized for what is believed to be a recurrence of the heart condition which he has previously experienced. That's according to his team. Ryan expects to be released in a few days.

Political chaos and assassinations in Afghanistan as General David Petraeus hands over command of the war. A live report from Kabul, right after this.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP) CHARLIZE THERON, ACTRESS: Madiba, happy birthday.

WHOOPEE GOLDBERG, ACTRESS: Happy birthday.

MORGAN FREEMAN, ACTOR: Happy birthday, to you. Happy birthday Happy birthday, Madiba.

(END VIDEO CLIP)

KAYE: Three celebrities are among the millions wishing former South African president Nelson Mandela a happy birthday. He turns 93 today. Mandela is spending today with family in his rural hometown. But across the country, South Africans are paying tribute to the anti- apartheid icon through song and community service projects

General David Petraeus today handed over command of the war in Afghanistan. The fact that the war is far from over was underscored by more deadly violence. Another top adviser to Afghan president Hamid Karzai shot dead in his home. The killing of a district police chief and the deaths of four NATO soldiers.

CNN's David Ariosto joins us now from the Afghan capital, Kabul. David what did Petraeus say about the war he's now leaving?

DAVID ARIOSTO, CNN INTERNATIONAL CORRESPONDENT: Well, the former commanding general thanked his Afghan counterparts who he believes, and many are counting on, taking over much of the security of this country in the next coming years.

He also reflected back on some of the games that NATO-led forces have made and some of the southern/eastern provinces which have typically been Taliban strong holds. Petraeus, however, is going - is leaving his position, for his role as CIA chief. So, he's likely to still have a heavy hand here in the region. Randi?

KAYE: And what can you tell us about the new commander coming in, General John Allen?

ARIOSTO: Well, John Allen, he served in Iraq in 2006 to 2008, and that was during the surge there. Again, we had the surge here in Afghanistan, which the United States and NATO made significant gains.

But he said today that he's under no illusions that it's an easy road, that there may be some difficult days ahead. But he plans to still take the fight to the Taliban. What - we - what the coincides with is the drawdown. And as a result that, we've seen some shifting in Taliban tactics, perhaps, as a result of some of the assassination attempts we have seen in the last week. Randi?

KAYE: And speaking of those assassinations, actually, we saw Hamid Karzai's half- brother was killed. Now a close advisor to him has been killed. Any idea why this advisor might have been targeted? What do we know about him?

ARIOSTO: Well, the man's name is John Mohammed Hann, and he was a formal provincial governor and sort of close advisor to president Hamid Karzai. And he was gunned down in his home yesterday along with a member of parliament.

What's significant about this is not only the loss of another key advisor to the Afghan president, but it follows a string of recent assassination attempts and attacks as well as the loss of Hamid Karzai's half-brother, Walid Karzai, who was killed last week on Tuesday in his home by a longtime bodyguard. And the message that many here are getting and the real sense is that the Taliban, who have claimed credit for these attacks, can really attack anywhere.

KAYE: All right, David Ariosto in Kabul for us. David, thank you.

And coming up, an amendment with teeth. The House is set to consider a bill to change the Constitution, forcing a balanced budget. But is that a good idea? Our Stream Team will weigh in next.

(COMMERCIAL BREAK)

KAYE: Balancing the budget. All households struggle with paying the bills: cable, electric, car insurance. But we have no choice, either pay the bill or get cut off. It's that simple.

But the federal government works under different rules, It can pay out more than it takes in. That's what's behind the deficit and the debt ceiling. But should that be cut off?

Republicans are bringing in a new balanced budget amendment up for vote this week. So, we wanted to ask the question, should the Constitution be amended to mandate that the federal government balance the budget every year?

Let's bring in our Stream Team today. Peter Morici is an international business professor at the University of Maryland. Mark Skoda is the founder and chairman of the Memphis Tea Party.

Should there be a constitutional amendment forcing the federal government to balance the budget ever year? Peter, let's start with you.

PETER MORICI, INTERNATIONAL BUSINESS PROFESSOR, UNIVERSITY OF MARYLAND: Absolutely not. I'm a fiscal conservative, the government spends too much money, the deficit is way too large. But there are times when there are good reasons to have deficits. For example, in a recession. You know, as tax revenues are falling with economic growth, to cut spending at a time like that would be an absolute disaster. There's no substitute for self-discipline. This Congress needs to learn self-discipline on its own.

KAYE: So Mark, would you like to weigh in there?

MARK SKODA, FOUNDER, MEMPHIS TEA PARTY: Yes, look, Peter obviously a fiscal conservative just as I am. But the fact of the matter is, even with this debt ceiling discussion, we've had a hundred raise (ph) in the debt ceiling.

The reality is, as long as the federal government, the Senate and the House and the administration continues to dole out favors, they're never going to bring discipline in. And I think like our state of Tennessee, which has a balanced budget amendment in the constitution and we balance our budget, I think the federal government must abide by the same law. I think it's a good idea. Both our senators have supported a balanced budget amendment.

KAYE: But the definition of a balanced budget is taking in exactly the amount that you pay out. So, if that's the case, Peter - I mean, if that's the goal going forward, how do you ever pay down this $40 trillion debt?

MORICI: Well, we certainly should have surpluses in good times, but we have to get this economy growing again. One of the reasons we need a deficit right now is because we're growing so slowly. We have a huge trade deficit. The Congress is unwilling to address that, it has to do with oil and trade with China. If it would address those things, the economy would grow faster and there would be no excuse for these large deficits. And at times we could have surpluses.

I don't know if we need to eliminate the debt, but we certainly shouldn't be accumulating it at the pace that we are. We're way out of line right now and have to do better.

KAYE: And Mark, what about the e-word? Entitlements, Social Security, Medicare. I mean, what about them? They take up a big chunk of the budget.

SKODA: Well, look, I'm very fragile (ph) (INAUDIBLE). I'm in my 50s. I celebrated my 57th birthday last Monday.

I have no illusions about Social Security being there for me or Medicare. The truth of the matter is, I want to see privatization like they saw in Chile and work in quote, unquote "a South American country." And frankly, I think we need to have a practical expectation about moneys in and moneys out. It's unsustainable. Frankly, looking into my later years, I'm going to be working longer. And the truth of the matter is, these entitlements will be, either by fiat (ph) or by good decisions, reduced.

KAYE: And Peter, I want to ask you about Nancy Pelosi's comment. She has this plan by the Republicans, their proposal, really, outrageous. How much of this do you think is political and for show? Because the Republicans can't believe this is actually going to pass?

MORICI: No, this is not going to pass with a Democratic Senate. And I wouldn't blame them so harshly for doing it, you know, to make a statement - put, you know, this is what they believe in so they laid down the gauntlet.

However, time is so short to deal with the critical budget crisis before us. If August 2 comes and we don't have a deal, given the disposition of the president not to make hard choices and ration the money that he still will have, we'll have a full-blown financial crisis on our hands. This is no time for dallying with this kind of nonsense.

For once -- this is a rare occasion -- I'm on Nancy Pelosi's side.

KAYE: That is a rare occasion, knowing what I know about you, Peter!

MORICI: Yes it is!

KAYE: Mark, what do you think? You think this is political?

SKODA: Well, look, the president wants to go past 2012. That's why he's sticking to his guns on a larger increase in the debt ceiling. It's all politics. And by the way, in 2010, when they had a supermajority, he could have increased the debt ceiling to $5 trillion and passed it. He could have increased and proposed a budget that gave him all of his desired entitlements.

But the fact of the matter is, he understands the politics and the nature that he's faced with now. They chose not to do that. They bet on 2010 and they lost and now we're sitting behind the eight-ball. Quite honestly it's an adjective failure of leadership when the Democrats held the super majority.

KAYE: Peter, what do you think about the idea of an amendment setting a limit for the debt ceiling instead of an amendment like this one?

MORICI: Well, it would be the same thing, once you hit the ceiling, you would always have to have a balanced budget. It's just another way of doing the same thing.

Consider this, we have a $1.6 billion deficit this year and the best that Republicans can come up with is a plan that would cut spending this year by $100 billion to $150 billion. If these guys were serious they would show us how we can get there in their proposals they are making. And they could.

You know, Federal spending over and above what's needed for inflation is up by $900 billion over the last four years. I'm sure my colleague and I could cut that in half real quick if they would let us. We could find $450 billion in a $5 trillion package over ten years with little difficulty. But I don't think the Republicans are serious.

KAYE: Peter Morici and Mark Skoda, I think you've solved the problem there, you better head straight to Washington and get it all figured out for us, okay?

Thank you guys for coming on.

New developments just keep coming in Britain's phone hacking scandal. Having trouble keeping all the players safe? We will break it down for you, next.

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KAYE: We've been bringing you in depth coverage of the British phone hacking scandal but with details coming so fast and furious, it may be getting hard to keep track of all the players, so we're going to use today's big breakdown to help you out.

Let's start with a name most people know, that is Rupert Murdock, he's an 80-year-old media tycoon, over the years he's built a huge international media conglomerate called News Corporation, it owns media outlets all over the world, including some well known U.S. enterprises, including the 20th Century Fox, Fox Television Studio, Fox News Network and the New York Post among them.

News Corp. also owns DOW Jones publisher of the Wall Street Journal, DOW Jones CEO Les Hinton resigned last week. Hinton has been described as Murdock's closest advisor and there are claims he may have known more about the scandal than he admitted when he testified before a Parliamentary Committee back in 2007. Rupert Murdock's son James is in charge of News Corps. European and Asian properties, those include News International, the British subsidiary of News Corps. Rebekah Brooks, she was CEO of News International until she resigned on Friday. News International publishes several British newspapers.

Now until earlier this month that included News of the World. News of the World reporters are accused of hacking the answered machine a teenage girl who was later found dead. Rebekah Brooks was the Editor of the News of the World from 2000 to 2003. After Brooks was promoted Andy Coulson became Editor of News of the World from 2003 to 2007. After leaving News of the World Coulson became Communications Director for British Prime Minister David Cameron who is also a friend of Rebekah Brooks.

Coulson was arrested earlier this month, Brooks was arrested just yesterday. Several other News of the World journalists also face charges but the scandal is spreading beyond Murdock's media empire.

The Head of Scotland Yard, Police Commissioner Paul Stevenson resigned yesterday. His Assistant Commissioner John Yates resigned today. The British Home Secretary has launched an investigation into charges police illegally provided information to News of the World reporters and that the initial investigation into the scandal was botched.

Rupert Murdock, James Murdock and Rebekah Brooks were all scheduled to testify before Parliament tomorrow morning. Observers will be watching to see whether the Murdock's can put a break on the scandal engulfing their company. CNN will cover their testimony live.

And it's time now for a CNN Political Update and someone else is set to take the Republican pledge in the deficit debate. CNN Deputy Political Director Paul Steinhauser joining us from Washington.

Hi Paul, who's signing on now?

PAUL STEINHAUSER, CNN DEPUTY POLITICAL DIRECTOR: Michele Bachmann Congressman for Minnesota, who of course is running for the White House and she becames the latest of these Republican Presidential Candidates to do this, just about all of them have signed this pledge. She's going to sign it in Columbia, South Carolina, two reasons why. I think Carolina is the first southern primary to vote and it's also the home of Senator Jim Demint, he was the mastermind behind this cut, cap and balance pledge.

Let's look closely at what it's all about. Cut calls for cutting a substantial amount of spending into bring down $1.5 trillion in that deficit. Cap the Federal spending at 18 percent of the GDP. Right now it's at 24 percent. And balance, that is to pass a balanced budget amendment. As you can imagine, this is a little bit controversial with a lot of Democrats, but on the Republican side, a lot of support, especially Conservatives.

KAYE: Paul, I just want to ask you, as we have been watching the GOP field for the Presidential Candidates, we keep expecting it to grow, a lot of talk about Texas Governor Rick Perry, any more word on his decision.

STEINHAUSER: He had some comments over the weekend, in the Morning Register, the big newspaper out in Iowa. Iowa of course the first state to vote in the race for the White House. Here is what he told them. He said, "I'm not ready to tell you that I'm ready to announce that I'm in, but I'm feeling more and more comfortable everyday that this is what I've been called to do. This is what America needs."

It sounds like he's getting pretty close to an announced for a bid for the White House.

KAYE: This sounds pretty serious Paul.

All right Paul Steinhauser, thank you.

I want to go back to London now and take you there with me. CNN's Matthew Chance has more on the unexplained death of an important whistle blower in the phone hacking scandal that is the Murdoch News Corps scandal.

Matthew, what can you tell us?

CHANCE: His name is Sean Hoare. Just that they said a man has been found at about 10:40 in the morning local time at his house in Watford which is outside of the British Capitol of London. It's important because this individual is, I suppose you could call him the whistle blower on the whole phone tapping scandal, about a year ago, the first accusation formally, Andrew Colson, the former Press Secretary of the British Prime Minister David Cameron - the former Editor of the News of the World was not only aware of the phone hacking went on, he actually approved of the practice by his journalists.

He also came into the news about a week ago giving an interview to the New York Times, saying that News of the World journalists also had access to special police technology, known as pinging, which is basically pinpointing the location of an individual you're looking for in exchange to payments to police officers so he was a central figure in these allegations which are now of course rocking London with those phone hacking allegations.

KAYE: And the death is being called unexplained. Have you heard any word on whether or not this is suspicious?

CHANCE: Well, according to media reports, the police are saying that they're not saying whether or not it's suspicious, they're saying it's unexplained, you're absolutely right about that, it could have been suicide, but some media organizations are looking at that speculatively, at the moment all we can say is that it's unexplained, but we'll get more details in the minutes and hours ahead, it's a very fast developing story.

KAYE: And as it continues to grow, you mentioned that he did speak with the New York Times, he was back in the spotlight again last week, speaking to them about the use of this police technology. How significant, if that is indeed the case, how significant of a turn in this investigation might that be?

CHANCE: Well, it obviously is a very -- is a new, bizarre twist if this death is linked to this scandal in any way. It might not be of course. But obviously if these pinging allegations if that's what you're referring to are accurate, that obviously has huge implications, the idea that this police technology which is reserved for the authorities to pinpoint wanted individuals was basically out to hire in exchange for cash by individual police officers.

That would obviously be extremely shocking to many people in this country, and I expect it's one of the issues that's being investigated now by the independent Police Complaints Committee, which has launched it's own investigation into the conduct, not just relation to the senior most police officers, but also to two other former senior officers in the Metropolitan Police as well, their conduct, how they behaved in regards to this phone hacking scandal.

KAYE: It's certainly going to be interesting as Murdoch is set to testify tomorrow before Parliament along with Rebekah Brooks and now this news.

Matthew Chance in London, thank you very much.

One last thought on the Casey Anthony trial, one last thought in my XYZ set next.

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KAYE: This is the last time I mention Casey Anthony's name, you probably heard the Florida mom who's accused of murdering her 2-year- old daughter Caylee. She walked out of jail this weekend after nearly three years behind bars, and after being cleared in the murder of her daughter. Where will she go, everyone keeps asking, who cares?

I covered the disappearance of Caylee for CNN back in 2008 -- I followed the detectives path to the family home and to Universal Studios where Casey told them she had worked. I even went to the apartment where the nanny Casey Anthony said she left Caylee with lived. The apartment was empty, it was all lies, every word of it. I interviewed Caylee's distraught grandparents and trekked around town with them as they put up missing posters and billboards. Covering the story of a missing child is not something you forget. So, I don't care where Casey Anthony goes or where she decides to live. What I do care about is that a little girl, too young to defend herself, lost her life. If her mother wants to go sell her story for a million dollars as has reportedly been offered then maybe she'll have enough sense to give that money to the Center for Missing and Exploited Children, so other parents who want to find their missing children can get help doing so.

CNN NEWSROOM continues now with Brooke Baldwin.

Hi, Brooke.