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Erin Burnett Outfront

Interview with Bill Gross; GOP Candidates; China's Military Power

Aired January 04, 2012 - 19:00   ET

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

ERIN BURNETT, HOST: Thanks, John.

A royal murder mystery tonight, a young woman found dead on the queen's estate. Who is she and who killed her?

And the United States and China in an arms race, but the U.S. facing severe cuts in defense spending, can we keep up? What is China putting all that money in right now?

And then Mitt Romney, just barely won the Iowa caucuses, but guess who might be number one? Let's go OUTFRONT.

I'm Erin Burnett. OUTFRONT tonight, Romney on a roll. Mitt Romney squeaking out a win in Iowa and immediately hitting the New Hampshire air waves.

(BEGIN VIDEO CLIP)

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: It's time for this pessimistic president to step aside and let American optimism that built this greatest nation on earth build a greater future for our children.

(END VIDEO CLIP)

BURNETT: But are people buying what Mitt's selling? Conventional wisdom says the former CEO will be the Republican nominee and that the quote, unquote "establishment" is behind him. Well, we wanted to know if that is really true. So we reached out to the OUTFRONT ""Strike Team"", our exclusive group of the best and brightest minds in the business world in this country and we asked them which GOP candidate is best for the economy?

All right, here are the results. It turns out that most do support Romney, 12 of 15. Two preferred Gingrich over all other candidates and one person said Ron Paul and I'm going to get to that because that's really important. But here's another thing. In a head-to-head matchup the "Strike Team" member said they would support Rick Santorum over Obama, that's right.

This is important because a lot of pundits and Washington insiders may be surprised to hear what they consider long shot contenders, Santorum and Paul. Not being dismissed by mainstream and major entrepreneurs, business leaders, CEOs and donors in this country, but in fact one of the most influential of them all, a man who manages the largest bond fund in the world says the man with the best economic vision for America is Ron Paul.

Bill Gross is the founder and co-chief investment officer of PIMCO. Bill, of course Ron Paul is coming off of a third place finish, very strong in Iowa, and before I ask you why you like Ron Paul, let me just run through a couple of the things here that people may know him for. He wants to cut $1 trillion in the budget in the first year, wants to get rid of the Federal Reserve. What do you think about those policies?

BILL GROSS, FOUNDER & CO-CIO, PIMCO: Well, I responded to you and said that Ron Paul was the best Republican. I didn't say he was the best candidate and we can talk about that later. But you know I think it was -- it wasn't necessarily Ron Paul's economic policies which garnered 21 percent of the vote, Erin. It was really a case of what I would call anti-disestablishmentarianism, remember that word, it used to be the longest word in the English language.

BURNETT: That's right.

GROSS: And I have no idea what it means, but it's a good sound bite and maybe Ron Paul should use it in it. In other words, Ron Paul represents the disenchanted vote, the anti-business as usual vote and for me at least his idea to bring the troops home from South Korea, from Germany, from Japan and you know a host of other countries would certainly help balance the budget if you consider that we spend $1 trillion or so on Iraq alone and so that's really why I like him. I think some of those policies in terms of the gold standard and you know eliminating the Fed, I think those are overboard and certainly nothing that I would advocate.

BURNETT: So you're saying in terms of the focus on the deficit in particular, but one of the things you're talking about is troops from, well, you know, we're not talking about the wars here, right, Iraq and Afghanistan, you're talking about more established bases, you know the broader Ron Paul point of cutting back in some of our military commitments.

GROSS: Right. I think that's what he talks about you know frequently. He talks about South Korea. He talks about Japan and he talks about Germany and why for 50 years we've had bases there and 30,000 troops, for instance in South Korea. You know, to the extent that they alone come back, you know would provide a source of lowering the deficit, and so that's, I think, very much of a positive. He has other things going for him, too.

I mean he does have the strongest sense, I think, of all Republican candidates in terms of monetary policy. Yes, he goes too far in terms of the gold standard. Yes, he goes too far in saying we should eliminate the Fed, but he does know how the monetary system works, and that's something I think that Romney and Santorum and others don't have much of a clue on.

BURNETT: But this is interesting because I know you're saying all right, he goes too far, but you know a lot of the people on the "Strike Team" it's not going to surprise you, Bill, they said Ron Paul, he's crazy because he wants to get rid of the Fed and I just dismissed that out of hand. You're the guy who deals with the Fed more, relies on the Fed more and American monetary policy more than anybody else in this country, our mutual funds, our 401(k)s, a lot of them are in your hands. So what would happen in a Ron Paul presidency? Why would you be all right with it given those ideas? How do you think he would temper them? How -- would you become comfortable with that if he did?

GROSS: Well, back again, you know I think Obama is the man although I'm not satisfied with what Obama's done from the economic standpoint, but in terms of the Republicans, you know, I think Ron Paul has a sense, again, of monetary policy. He does know that it's important to have a stable currency and a stable sense of value going forward, that inflation you know basically is not the clue going forward to our economic problems.

You know, I have a sense that Romney and Santorum basically, you know, suggest that the policy for job growth should be one in which regulation is cut, in which Obamacare is eliminated, in which taxes are perpetually kept low. I don't think that's really the way to create jobs. I think we need to focus, to bullet, you know, basically policy on job creation as opposed to permitting and encouraging the private sector to do it. They haven't done it for the last, you know, five years.

BURNETT: All right. Well Bill Gross, thank you very much. We appreciate it.

GROSS: You're welcome.

BURNETT: And Bill Gross, as we said, biggest manager of bonds in this country. Obviously that means he buys all that debt that this country is issuing.

Ron Paul has energized and excited people all over the country this year. Forty percent of first-time caucus-goers supported the Texas congressman last night. On the flick (ph) wall it was one of the most flick (ph) and amazing things that we saw. And if Bill Gross' support is any indication, he may have more staying power than anybody thought.

So let's bring in David Frum, CNN contributor and James Carville, Democratic strategist and let me start with you, David Frum. Obviously of course important to note Bill Gross is saying while he would be an Obama man, but when it comes to looking at that Republican field, he does not dismiss someone like Ron Paul out of hand, which it did seem like the establishment was doing and similarly in our results from our "Strike Team" with Rick Santorum. So what do you make? Do you think that these guys have the capability to become a more mainstream candidate?

DAVID FRUM, CNN CONTRIBUTOR: Ron Paul has no capability of becoming a more mainstream candidate. He is a man of the margin, and I think if you are a Democrat and you want to do a little mischief in the Republican field, you might well favor him because he is a man -- Ron Paul is a man who couldn't be elected mayor of a town, let alone president of the United States. Here's how the Ron Paul message worked. I was in one of those precincts in Iowa and I saw the speech that was given by a very effective and intelligent Ron Paul supporter. He presented Ron Paul as pro-life, anti-gay marriage, a veteran, in favor of strong American military, and by the way a supporter of the mission to kill Osama bin Laden. Now that is a different Ron Paul, because Ron Paul in fact was not in favor of the mission to kill bin Laden.

He said shortly afterwards that he wished that it had all been done in conformity with international law and that bin Laden had been arrested with the cooperation of Pakistan, a total fantasy. If the Republicans had known that I don't think Ron Paul would have done that well in that room. Ron Paul is inherently marginal. He's a boutique candidate. He may raise a lot of money out of this race, but he's not going anywhere.

BURNETT: I don't know. I got to say you know 21 percent doesn't sound that marginal, but hold -- hold that thought for a second because, James Carville, I want to bring you in here and put up a screen again asking the "Strike Team" here. We went through and asked them who they would vote for, Obama versus, OK, so versus Romney, 12 of them for Romney, two for Obama.

Santorum, nine for Santorum, this was on economic policy here, purely on economic policy, nine for Santorum, six for Obama, Gingrich, 11 Gingrich, four Obama, and Ron Paul eight Obama, seven Paul. I mean, that wasn't even a sweep. Now, these people generally are going to trend Republican. There's no question about that, but I would have thought on the economy some of this surprised me. What does this make you think about President Obama?

JAMES CARVILLE, DEMOCRATIC STRATEGIST: Well, look, first of all, I think he's a slight, slight favorite to win re-election. It's going to be a tough fight. There's no question about this. This is, you know, not a particularly great economy and he's -- he's in a tough fight. I wouldn't deny that. Pretty small sample here (ph), Bill Gross, I have nothing but admiration for him and the guy that he works with, Mohammed el Iran (ph) I think is his name.

BURNETT: Yes.

CARVILLE: PIMCO is a heck of an organization, he's a bright guy, but I completely agree with David Frum. Ron Paul is not going to be the president of anything, and if you go and it's -- yes, there's a couple of ideas he has that there's enough that somebody can like, but if you go anything deeper, some of the stuff is really disturbing and really out there. I'd declare him -- I wouldn't declare him out of the mainstream. I'd declare him way out of the mainstream --

BURNETT: But does it make you think --

CARVILLE: He's a nice affable (ph) guy.

BURNETT: Does it make either one of you think twice though --

(CROSSTALK) BURNETT: -- that people will say, all right, well if Mitt Romney doesn't have what it takes, you get a lot of that have establishment money and support would be willing to back someone like a Rick Santorum, obviously more so than they would a Ron Paul, but willing to do that, David Frum? Does that surprise you at all?

FRUM: I don't believe it's true. I think that Ron Paul -- that Ron Paul is going to dwindle. I think Mitt Romney is going to go here from strength to strength. You have to understand that Ron Paul's economic news -- he's essentially a monetary policy crank and Ron Paul's views are what the United States needs is to abolish banking. We need to abolish the currency system.

We need to go back not before the Fed -- the great depression, not before the creation of the Federal Reserve. He wants to go all the way back to before the Civil War when the federal government was really out of the business of money creation all together. He's against fractional reserve banking. These are crank -- he doesn't believe that there should be such a thing as commercial credit, that there should be just chits (ph) against gold deposits.

BURNETT: OK.

FRUM: It is a formula for perpetual depression if you take it seriously, which --

(CROSSTALK)

FRUM: -- which I don't --

BURNETT: OK.

FRUM: Neither does Bill Gross.

BURNETT: All right, let me ask you one question here about Rick Perry because the tweet today was pretty amazing. Last night obviously giving his concession speech then tweeting out today a picture of himself in what I don't know, to me, looked quickly like a wet suit running in the middle of -- yes, in Texas, see, right, doesn't that look like a wet -- land wet suit -- anyway saying the next leg of the marathon is the "Palmetto State". Here we come, South Carolina. Have you ever heard anybody, James Carville, get out of the race and then decide the next morning, oh wait, I'm back in?

CARVILLE: No. Look, last night was -- is weirder thing as I've ever been, maybe one of the most fun things I've ever done and it just continued this morning. It was a very strange thing and you know he's going to take his shot, I guess. I don't know. I have no idea what goes through Rick Perry's mind, if anything goes through Rick Perry's mind. I'm not even certain of that, but you know, he's entitled to take his shot, and I don't think he's going to do very well, but why not try.

BURNETT: All right, literally five seconds, David Frum, if Rick Perry gets out, Michele Bachmann obviously already out, where do those votes go? FRUM: They end up going all to Romney. It's just a matter of time at this point. It may take all the way to Florida --

BURNETT: With the caveat it's just a matter of time, yes sir, I hear you.

FRUM: But that's where they go.

BURNETT: All right. Well thank you very much.

FRUM: Thank you.

BURNETT: Viewers let us know what you think about Rick Santorum and Ron Paul and how some in the economic establishment think they would be OK.

All right, still OUTFRONT, a royal murder mystery, a young woman found murdered on one of the queen's estates. We're on that case and the U.S. Defense Secretary Leon Panetta has to make major cuts to defense spending at the time China is building up its military in a massive way. What are they doing tonight? And "Under Surveillance", who wants to inspect your Facebook page and how it could prevent you from getting a credit card.

(COMMERCIAL BREAK)

BURNETT: All right, so get ready for what may be a seismic change to America's military and the consequences in costs and physical might will be extraordinary. Tomorrow Defense Secretary Leon Panetta will be addressing the Pentagon's budget. It's going to be cut by half a billion dollars in cuts, at least 47,000 fewer Marines and troops are expected in the next year.

Now while America is downsizing and, of course, as you all know, those Super Committee automatic cuts, half of them, $600 billion come from defense, China is doing the opposite, massive buildup. "The Wall Street Journal" today doing a story we found fascinating about China's naval strength, dozens of submarines and arsenal ballistic missiles that can reach U.S. warships thousands of miles away.

"The Wall Street Journal" says these missiles are going to be delivered by 2015. One of them hits one of our carriers you could take out 5,000 troops with one missile. Now we are slashing and China is growing. It's a frightening scenario. We've been talking a lot about here on this program. Peter Brookes is a military expert with the Heritage Foundation, a conservative think tank, and I appreciate your joining us, Peter.

PETER BROOKES, HERITAGE FOUNDATION: Thanks for having me.

BURNETT: Let me just ask you this question because it seems that part of the problem is, is that when you have conversations with former defense secretaries, for example, they are honest with us in their point of view, right. They see China as a threat. They see China as not a friend of the United States and a real -- a real enemy is not the right word at all, but a real contender and a real competitor, but when you ask people in the government they categorically refuse to acknowledge that.

BROOKES: Well they have to be careful. They're the people that are actually doing the policy, the people doing the diplomacy. They're the people that are sitting down across the table from the Chinese, so that sort of stuff coming out of the government is always very much watered down, you're right. People who are out of government, people who are in think tanks can speak quite frankly about this issue.

BURNETT: Now China's been increasing its defense budget for the past 20 years. Fastest growing peacetime military budget, should this alarm the United States? I think as a caveat we need to acknowledge of course this country still pays multiples of what they do on an annual budget.

BROOKES: Right, but China has -- you're right. China has the fastest peacetime growing defense -- fastest growing peacetime defense budget in the world. They have been increasing their defense spending by 10 percent or more, Erin, for more than 20 years. It has the world's second largest defense budget. Now those are just numbers.

Those are budget numbers. Things are cheaper to make in China. The Chinese military is cheaper than the United States military in terms of maintaining it, but they are developing an aircraft carrier program. The have the J-20 (ph) Stealth Fighter, which was unveiled just about a year ago and then Secretary of Defense Bob Gates was in Beijing. They are spending a lot of time and effort on cyber warfare, counter space.

They have the world's largest navy in Asia, the world's most prodigious submarine building program. I mean they are really developing significant capabilities that we need to be paying attention to. While we're building down, China is building up.

BURNETT: Particularly on the navy side. I mean, as "The Journal" pointed out, it's something you know that I think is always worth pointing out, that it's really all about the sea even now. You know 95 percent of the world trade goes by sea. That's where the U.S. is going to take a lot of -- the bulk of the budget cuts that are coming, just as China is building up. I mean, how does this end, Peter? I mean I guess this is the way nations are, right? They want to build up their military, but how does this end?

BROOKES: It's not quite clear. The problem is we can see China developing capabilities, but we don't know what China's strategic intent is and we need to be cautious of that. Is China a fire- breathing dragon or is a cute, cuddly panda? You know it takes -- you know intentions can change overnight. China is claiming large parts of the Pacific Ocean. You need a large navy for -- to be able to patrol the Pacific.

They talk about the tyranny of distance. You need a capable air force. I mean this -- these are things we really need to think about as we look at our defense budget. Erin, it may not surprise you that if I told you that if these cuts come into play --

BURNETT: Right.

BROOKES: -- we may build down to 220, 240 (ph) naval ships which would be the smallest Navy we've had since 1916, World War I.

BURNETT: That is pretty amazing, almost back to the time where I guess, as Bill Gross was saying, Ron Paul wants to take us when it comes to monetary policy. All right, well thank you so much, Peter. Appreciate it.

BROOKES: Thanks for having me.

BURNETT: OK, OUTFRONT next, Santorum just missed winning in Iowa by eight votes last night, but how will he fare in the more liberal New England state of New Hampshire? There is a huge social conundrum here and speaking of New England, Dunkin' Donuts, a lot of us probably go there every day for our coffee and doughnuts, but how much do you really know? We'll be back.

(COMMERCIAL BREAK)

BURNETT: Dunkin' Donuts, the stock, not the doughnuts themselves, was upgraded by Goldman Sachs today in a research note issued to investors. Now this followed some earlier upgrades by Jay Davidson and Jeffries (ph). That's right doughnuts and coffee actually trade on the Stock Exchange. Now the pile on of optimism comes as the coffee and doughnut chain which is based in Canton (ph), Massachusetts announces a plan to double the number of its locations from 7,000 to 14,000 Dunkin' Donuts in the United States.

That was a 20-year projection, but, you know, we love our doughnuts so much in this country. No matter how bad they are for us because, yes, this brings us to tonight's number, 290. That is the number of calories in a Dunkin' Donut chocolate glazed doughnut, which is the only food I ate all day. Well I did just stuff something else in right before the show but for 11 hours that was it and those calories did not burn off as expected and leave me starving and wanting more empty calories, they actually worked.

The ads say America runs on Dunkin' Donuts and you know what sometimes that's just true. I can't help myself. I love double "D's". So where do you get your coffee and doughnuts and how do you like them? Let us know on Facebook at OUTFRONTCNN.

Well speaking of Facebook, tonight "Under Surveillance", banks are using tweets and Facebook to play big money brother. This is a growing trend and it starts with a loan application. So in the process the banks want to know all about your social media connections, on Twitter, Linkedin, Facebook and others. It's the bank's way of finding out whether you are a good financial risk and along with snooping for a credit profile they also check out your friends on your social networks to see if they will be good customers, too. I asked senior legal analyst for his take on lenders and the Internet.

(BEGIN VIDEO CLIP) JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: When it comes to social networks and privacy, it's really the Wild West out there because under the law no one knows for sure what the rules really are. Banks are starting to ask what's your Twitter handle. What's your Facebook page and is it legal for them to ask for that? Probably, although no one knows for sure, but they are getting that information and they are using it.

(END VIDEO CLIP)

BURNETT: OUTFRONT reached out to a lender who uses social networking, he said that's part of a routine background. Don't worry about it. Are you? Let us know.

(BEGIN VIDEO CLIP)

BURNETT: Still OUTFRONT the "OutFront 5": Preemptive strike.

UNIDENTIFIED MALE: No one will ever say that Mitt Romney will lead from behind. He will lead from in front.

BURNETT: New leads.

UNIDENTIFIED MALE: Could be a dead body, could be a diaper, it could be as much as a broken nail.

BURNETT: All this OUTFRONT in our second half.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

BURNETT: All right, we start the second half of our show with stories we care about where we focus on our own reporting, do the work, and find the "OutFront 5".

Up first, does Mitt Romney have the backing of the business community? We reached out to our "Strike Team", an exclusive group of the best and biggest minds in the business world and asked which GOP candidate is best for the economy -- the results show most support Romney, two preferred Gingrich and one said Ron Paul.

But here's what else. We asked them who would they support between President Obama and Santorum on economic issues. Six of nine said they would support Santorum, as you can see. It's drum sticks for Obama.

That number might surprise some pundits and Washington insiders. They are saying Santorum is a long shot contender. It might be interesting to watch how this plays when you look at numbers like that.

Number two, President Obama testing his constitutional power today by making high-profile appointments while Congress is in recess. The most controversial, Robert Cordray, to be head of the new Consumer Financial Protection Bureau. At a speech in Ohio, Mr. Cordray by his side, the president said the appointment is necessary for the new agency to begin protecting consumers.

Republicans say the agency is bad for jobs, bad for the economy, and they won't confirm any nominee until it's changed. House Speaker John Boehner also says he expects the courts will find the president's appointment illegitimate. The president, for his part, has no time for that.

Number three, a man charged with a spree of arsons in L.A. also under investigation for arson in Germany. That's his home country. Harry Burkhart was charged today with 37 counts of arson. Authorities believe he set more than 50 fires after learning his mother may have been extradited to face fraud charges in Germany.

We have also now learned Burkhart is a suspect in a fire which destroyed his family's home in Germany just days before he came to the United States.

Number four: Fed Chair Ben Bernanke outlined today to Congress the actions needed to help stabilize the housing market. We looked through the 26-page letter, Bernanke suggested making it easier for borrowers to get credit and containing the number of foreclosures. The Fed says there is no single solution but that doing nothing at this point will, quote, "push house prices lower and prolong the downward pressure on the wealth of current homeowners." It's a pretty important statement.

So, at this point to prevent the drop in housing prices there, he's more dramatic possibilities under consideration.

Well, it's been 152 days since the U.S. lost its top credit rating. What are we doing to get it back?

You know, John Avlon, I've been away for a week, and 152 days. It just somehow feels like it's too many days, everybody.

JOHN AVLON, CNN CONTRIBUTOR: Too many.

BURNETT: All eyes are on New Hampshire. State's primary is less than a week. Mitt Romney has a strong lead as you're probably aware, but on the heels of his surprising finish in Iowa last night, Rick Santorum has doubled his support in the state.

Now, I don't want to emphasize too much because doubling is still a low number in New Hampshire but still a big upward move for him. And today, a big endorsement for Romney from Senator John McCain who won the primary in New Hampshire in 2008, gave him some legs.

But not everybody has been rushing to throw their support behind Romney -- including our next guest, Republican Congressman Frank Guinta, Republican of New Hampshire.

Congressman, good to have you with us. We appreciate it.

And what's been holding you back from endorsing anyone?

REP. FRANK GUINTA (R), NEW HAMPSHIRE: Well, like many Granite Staters, I wanted to watch the field and see how they react to issue that Granite Staters ask all the time. So, I'm still in that undecided column. I've got a few more days left before I make my decision, and I'm glad all these candidates are here in New Hampshire to try to convince me and other Granite Staters how to vote on Tuesday.

BURNETT: So what is it though -- you have John McCain coming out today who won New Hampshire last time around, coming out for John -- coming out for Mitt Romney. What's holding you back from loving Mitt Romney, for lack of a better word? You know, the guy -- the guy is really trying to get some love and what's been holding you back from connecting with him?

GUINTA: Well, Mitt Romney's got plenty of love in the state of New Hampshire, and he's got a home here. He was a governor of Massachusetts. So, he does have a lot of friends and supporters here.

But this is about Barack Obama and who is best capable of beating the president of the United States because we're -- he's taking, I believe, our country in the wrong direction.

So, like Granite Staters, I am making a final decision in this final week --

BURNETT: So you're not convinced at this point --

GUINTA: -- when we go to talk and meet with every single candidate.

BURNETT: But you're not convinced at this point. Interesting last night, we were -- we were up until 4:00 a.m. covering Iowa, and even in Iowa, when the voters who cared about electability overwhelmingly voted for Mitt Romney. When they cared about the deficit, it was Ron Paul. Social issues, it was Rick Santorum.

But you say you care about electability and you're still not convinced Romney is your guy.

GUINTA: Well, look, I think the two people who came out on top in Iowa, Rick Santorum and Mitt Romney, are both great candidates and bring a lot to the table and both have strengths in their own right, and we'll see how it plays out over the next several days. But I think either candidate would represent the Republicans very well in a general election.

BURNETT: What do you think the number needs to be more Mitt Romney to get a resounding win in New Hampshire? At least he's been polling up around 47 percent. What do you think the number needs to be for a home run for him?

GUINTA: You know, I honestly suspect that that number will tighten a little bit and he probably won't get quite that high.

BURNETT: Right.

GUINTA: It's pretty normal that going into the final week of a campaign, things do tighten up. Nobody expected Rick Santorum two weeks ago to be eight votes behind Mitt Romney. That's certainly going to help him in New Hampshire. He's doubled his numbers overnight, and he'll probably get another five, six points after some polling is done today or tomorrow.

So, I think they are all going to barnstorm for the next several days, but I think Mitt Romney is going to do well. I certainly think Rick Santorum is going to do much better than originally expected.

BURNETT: All right. Well, thanks very much. Good to talk to you, Congressman.

GUINTA: My pleasure.

BURNETT: You look at New Hampshire as this season unfolds for the primaries. It's one of the most liberal states in the nation. Social issues have not been at the forefront of this campaign for Republicans, but they are now.

So if you check this out, this is -- these are the flicking walls, OK, and this is -- this is the wall that you flick to, and this is what I thought was really interesting. When you look at people last night in the entrance polls in Iowa for whom abortion was the most important issue, they went overwhelmingly for Rick Santorum, 58 percent of them.

Gloria Borger has been talking a lot about how she thinks when you got debates this weekend on television, that you're going to start having social issues, gay marriage and abortion right at the center of the conversation.

Romney has avoided talking about social issues in an effort to push for some independent voters. Rick Santorum has embraced social issues. We know Santorum supports a constitutional amendment to ban abortions and not only is he against gay marriage, but he supports a federal marriage amendment which would define marriage as only between a man and a woman.

There are two debates this weekend, and it seems fair to assume that these issues will come up.

Will it get Romney into trouble is the big question.

John Avlon is with us

Reihan Salam is a columnist with "The Daily" and co-author of "The Grand New Party," also with us.

So, John, let me start with you, and, again, for those who don't know -- I mean, everyone would watches this show, your background. But you used to work for Rudy Giuliani, who was a pro-choice Republican. Mitt Romney is not that, at least not now.

AVLON: Ten years ago, a different story. But he's done a 180 on every social issue since he's started running for president. BURNETT: All right. I want to play very quickly an ad to get a little bit -- this is from Newt's PAC running now in New Hampshire stealing from a John McCain ad back in 2008, of course, on the day John McCain endorses Mitt Romney. Here it is on the social issues with Mitt Romney.

(BEGIN VIDEO CLIP)

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: I believe that abortion should be safe and legal in this country.

I will preserve and protect a woman's right to choose and a devoted and dedicated to honoring my word in that regard.

I am pro-life and favor that legislation.

You will not see me wavering on that or be a multiple choice. Thank you very much.

You can go back to YouTube and look at what I said in 1994. I never said I was pro-choice. But my position was effectively pro- choice. I said that time and time again.

(END VIDEO CLIP)

AVLON: Yes, those clips are going to be around a lot. And, frankly, they should be, because I mean, look, hypocrisy is the unforgivable sin in politics. And Mitt Romney really has -- these aren't evolution of individual views.

This is a 180 across the board and it's for a simple reason. It's not more complicated than what it looks like. He's a salesman and he needs to make a different sale now to get the Republican presidential nomination than when he did when he was running for governor of Massachusetts. It's exactly --

BURNETT: What do you think he really stands? You spent some time looking at this?

AVLON: Look, I think, you know, if you look at his family lineage, look at his father, George Romney, who is a center-right governor, a leader of the old progressive wing of the Republican Party in Michigan when he was governor. His mom ran for Senate in 1970 in Michigan, actually as a pro-choice Republican in 1970.

I think his family lineage as a leader of the old progressive Republican tradition, but that's a killer in today's Republican Party.

BURNETT: And, Reihan, that is a big question. This is going to be on the table now, right? All these clips are going to come out because Rick Santorum is right now obviously coming out as a dead heat out of Iowa, and he wants to talk about social issues.

REIHAN SALAM, FELLOW, NEW AMERICA FOUNDATION: Well, Mitt Romney's rivals have to make this happen now. They have to derail Mitt Romney quickly because if they don't, all of this stuff works to his advantage. This whole idea that oh, this boogie man that Mitt Romney is a secret moderate, what are general election voters going say?

Swing voters -- look, Ronald Reagan was a New Deal Democrat who became a Republican. He was the guy who signed the most liberal abortion law in America when he was the governor of California and then became a staunch pro-lifer. This happens.

AVLON: No.

SALAM: When have you a growing political movement, and some people change their minds about stuff, and I think that this idea that voters -- actual swing voters in actual swing states are going to be terrified by a guy who hasn't had the same exact views his entire adult life --

BURNETT: But would they be if he was forced to go much more in the direction of Rick Santorum?

SALAM: He's not going to. Here's the thing about Mitt Romney: everybody says he's a robot, his great advantage. He's super disciplined. Keep trying to take him off course and he keeps going forward relentlessly.

Newt Gingrich --

BURNETT: You call him the energizer bunny.

SALAM: Newt Gingrich tries to derail him. Now, Santorum and Perry are going to try to derail him in South Carolina, and he keeps going.

This guy, it's creepy. In 2007, he answers the question one way. He answers the same question the exact same way now.

And that's the kind of hyper discipline that you need to handle this kind of a campaign.

AVLON: That's a very generous description of what's gone on. I mean, the reality is, is that there is individual evolution on issues, of course, and what we have here is 180, and it's a direct reaction to a political problem. He's a salesman. He's got a different sale to make.

And I don't think people in the general are going to say oh, but, you know, way back when he was center, so therefore, we're going to follow through.

SALAM: Winning teams attract opportunists.

BURNETT: All right. We're going to have to leave it there. But I got to tell you this, watching this whole social issue discussion start is going to be fascinating and exciting certainly coming into South Carolina.

All right. Thanks to both of you. Now, let's check in with Anderson.

Anderson, what's coming up on "A.C. 360"? I hope you got, I don't know, five minutes of sleep.

ANDERSON COOPER, HOST, "A.C. 360": Couple hours of sleep. Yes, couples of hours of sleep, as I hope you did as well.

We're keeping them honest tonight on the program. Huge amounts of money being raised and spend, funding attack ads that are shaping the presidential election by groups that remain completely unanimous until after the votes are counted. The ads made a big difference in Iowa. Just ask Newt Gingrich about that. It's all legal, of course.

Tonight, we're going to take a look about the truth of super PACs -- keeping them honest.

Also, crime and punishment tonight, a story you touched on, Erin. New details on the suspected arsonist who terrorized Los Angeles over the weekend. A live report, how a simple traffic stop may have fueled the rampage.

Those stories and tonight's "Ridiculist" at the top of the hour, Erin.

BURNETT: I can't wait to see more on that fire story. It's really just amazing how those details have come out.

See you in a couple minutes, Anderson.

COOPER: Sure.

BURNETT: All right. Well, a murder we are a royal connection. A young girl found murdered on one of Queen Elizabeth's estates. We'll look at who could be responsible.

And an update a story that's been important to us over the past three months -- three months since baby Lisa disappeared.

And a Chinese government calls the country's dating shows crass and vulgar. Well, we went OUTFRONT to China to a dating show to check it out.

(COMMERCIAL BREAK)

BURNETT: We do at the same time every night, our "Outer Circle," where we reach out to our sources around the world.

And tonight, we go to Iran where the country's parliament said it was preparing a bill that would bar all foreign warships from entering the Persian Gulf, unless they received permission from the Iranian navy. Now, that would be a big problem for the United States which has said forces in the Persian Gulf since World War II. Its ships sail through the Strait of Hormuz obviously every day.

Michael Adler is a public policy scholar at the Woodrow Wilson Center. And we asked him could Iran get away with this.

(BEGIN VIDEO CLIP)

MICHAEL ADLER, PUBLIC POLICY SCHOLAR, WOODROW WILSON CENTER: I don't think that the Iranians are seriously thinking of cutting -- coming to a military conflict with the United States Navy in the Gulf. And what you find is that the parliament often enunciates positions which are more radical than the government is actually going to carry out.

(END VIDEO CLIP)

BURNETT: It's a murder mystery of royal proportions -- a young woman's body was found in the woods near the queen of England's Sandringham estate. The remains, which have been identified, were found less than two miles from the queen's residence by a dog walker on New Year's Day.

The gruesome discovery came just days after the royal family had been enjoying Christmas vacation. Investigators believe the victim has been dead anywhere from one to four months. They are treating the case as a murder investigation.

Max Foster is our royal correspondent. He's in London tonight.

And, Max, how do they know this is a murder at this time?

MAX FOSTER, CNN ROYAL CORRESPONDENT: Well, Erin, at moment, we're not getting that much information. The police really want to protect this investigation, but what they have said is that -- that this woman was very unlikely to have died of natural causes. They have launched a murder investigation and we were hoping to get some more information today because they are going out with DNA tests on the body. They weren't conclusive.

So, Erin, we're hoping to hear more tomorrow where more tests will be carried out. What they are doing is opening up cases of disappeared women in the U.K. Locally to the Sandringham estate, but also nationally, to try to link up that to the body. But they need those DNA test results.

BURNETT: So, what more can we say about the victim or do we potentially about the victim or who she might have been?

FOSTER: Well, using traditional techniques as they told them, the police have managed to work out this. The body is described as a young white adult female, aged between 15 and 23 years old. And as you said, the body would have been there between a month and up to four months.

And what they are doing is looking at these previous cases. They have given us photos, for example, of two women of east European origin who have disappeared in the area. They have matched that. Trying to link it up and still need the DNA. But obviously the families of these young women, you know, they must be extremely concerned at this point, wondering if this is the body. The police just don't know at this point.

BURNETT: All right. Well, thank you very much, Max. Pretty amazing story just to watch and the queen and Prince Philip, we should note to our viewers, are still at their palace just a couple of miles away.

Well, where is baby Lisa Irwin? Three months after her disappearance from her Missouri home, the mystery continues to baffle investigators. The 10-month-old vanished on the middle of night of October 4th after her mother Debra Bradley put her to bed.

After being questioned by police, Bradley admitted she was drinking the night her daughter disappeared and she admits she failed a polygraph exam. But she denied she had anything to do with Lisa's disappearance.

FBI and police searched the home with a cadaver dog and say they're sure they found evidence of a dead body. But no charges have been filed and police say they don't have any suspects.

Joe Tacopina is the attorney representing the Irwin family. And right before the show, he told me about the investigation and how he just spoke with the parents last night.

(BEGIN VIDEOTAPE)

JOE TACOPINA, IRWIN FAMILY ATTORNEY: They are still holding out hope. I mean, it's remarkable. I think that's how they get through each day.

I mean, this is a tragic mystery, and there's real been no clues other than those three witnesses who, you know, unfortunately, I think law enforcement got to a little bit too late who actually placed a baby matching baby Lisa's description in the hands of an individual matching this fellow Jersey's description at midnight, 2:00 and 4:00 a.m. in different parts of the neighborhood.

BURNETT: Jersey is a local guy, sort of a ne'er-do-well us a described him who you think may be responsible and we have surveillance video that we'll remind everyone and we can show again.

You think that it may have been him that night.

TACOPINA: Three to four individuals, three sets of individuals, husband and wife couple, and two other individuals have identified a man matching his description carrying a baby matching baby Lisa's description at midnight, 2:00 and 4:00 a.m. in a diaper.

There's also the mystery phone call placed from one of the missing cell phones that went to one of the ex-girlfriends of this Jersey fellow. So, there are some pretty damning circumstantial evidence.

BURNETT: And I know, when you mentioned this man to us before, and viewers following this story may remember it, but it does seem like there's something there. And police tell us, though, they've talked to this guy. They've interviewed this guy, they've looked into it and they don't see anything there.

If not him, then what? Are there any other leads that you're looking at?

TACOPINA: Well, of course, we're not going to stop pursuing leads. And we are looking at leads every day. We get hopeful on occasion. And we're going to keep pursuing things. Things have not dried up completely.

So yes, we are looking. But we don't have the subpoena power of law enforcement or the wherewithal of the FBI. So, hopefully, they are continuing to look.

BURNETT: Kansas City police have said they're still interested in questioning the parents more. And I know we've talked about there's been some tension. The parents felt they've sort of been targeted by the police. The police felt the parents have not been completely forthcoming.

Why is there hesitation? Or why are you advising the parents not to talk further with the police?

TACOPINA: You know, it's not about advising not to talk. But I want to make sure that the questioning is done in good faith. They have answered questions over a period of four different interviews for about 19 hours. They've answered every question repeatedly.

I want to make sure that they're not bringing them in just to attempt to trip them up. These are people who are tragic victims. They're missing their baby. They're taking care of two other young children.

They had absolutely nothing to do with the disappearance of this little baby. And I want them to be treated as victims. So far to date, the Kansas City police department has not impressed me on how they're handling this family.

BURNETT: What about this issue that keeps coming up with the cadaver dogs?

TACOPINA: That is an enormous red herring. I would love someone to tell me from the P.D. to tell me that that was a dead body. That is not what that says. We've consulted with the number one, you know, cadaver dog expert in the country. That finding was of human fecal matter, or human DNA.

BURNETT: It could be a dead body, could be a diaper, it could be as much as a broken nail that was thrown on the floor of the bedroom.

That would leave the remains that that dog would, you know, react to. So, it doesn't necessarily mean a dead body. It's human -- fecal matter is something it could be. It's basically it's DNA that is degenerative. It's not alive.

So it's easy to say it's a dead body. It's certainly one of the possibilities. But, you know, I'll point out, they didn't even take that piece of the carpet from the bedroom. If they really thought there was evidence of a dead corpse in that room, they would not leave that piece of carpet there. So, let them come out here and say, instead of releasing little rumors and innuendoes to the press.

BURNETT: All right. Well, thank you very much, Joe Tacopina. Good to see you. And, of course, we're all hoping that baby is still found. And it will be a miracle, but miracles happen.

TACOPINA: Miracles happen.

BURNETT: Thank you so much.

(END VIDEOTAPE)

BURNETT: All right. Coming up, dating shows, the Chinese government is trying to take them off the air, calling them crass and vulgar. Well, is it?

Hmm. That's what we saw, because we went OUTFRONT to see for ourselves. We're going to show you behind the scenes, next.

(COMMERCIAL BREAK)

BURNETT: When it comes to getting a girlfriend in China, it seems that men have no pride. That's what gets a girl.

There are many negatives to China's one-child policy which has been in place since 1979. Because boys traditionally care for their parents and girls moved away, some families chose to abort girls. Experts say there are 300 to 400 million fewer people in China today than there would be thanks to the one-child policy.

But more boys than girls grow up to be young men without wives or girlfriends. And that's led to increased social unrest and crime.

But it's also led to this.

(VIDEO CLIP PLAYS)

BURNETT: The dating show "One in 100," it's the number one dating show in Shanghai. And it reaches nearly 5 million viewers throughout China. It gives young women the pick of 100 men. Having women so much less than men is actually finally succeeded in putting them on top.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: There are 60 million single men in China now. And lots of women, we have a shortage.

(END VIDEO CLIP)

BURNETT: Well, the day we visited the set, 10 young women in their early 20s were in the final stages of picking a date. We watched them getting ready from pigtails to tiaras, to bras over sweat shirts.

Twenty-two-year-old Seaya Li, see her there. She was demure and accomplished and she has a job in Beijing. She's pretty picky.

(BEGIN VIDEO CLIP)

SEAYA LI, CONTESTANT, 1 IN 100: Small eyes.

(END VIDEO CLIP)

BURNETT: See what she means? Seeing that one young man on the show who was, she told me cute, but didn't seem to be much more.

(BEGIN VIDEO CLIP)

LI: I have a traditional family. But I'm also modern. I just want love.

(END VIDEO C LIP)

BURNETT: Love, with a man of her very, very specific choice. Maybe one of these men that you see in the finalists, and maybe not. But thanks to the one-child policy, in China at least, one of the more important ways now, girls finally rule.

Just today, China's broadcasters cut the talk shows, game shows and dating shows, like the ones we've visited, because the government thinks that they're crass and vulgar.

You know, if I hadn't been there on the set, I think I probably would have agreed, I would have said, you know, girls getting pigtails put in and going in to get dates. But, you know, in this situation, it wasn't just about good and bad, because something important was really happening on the set for those girls. They were accomplished and they were going places and doing things. And they had the freedoms to come, you know, from Beijing to Shanghai and go on a dating show and pick any guy that they wanted.

And Seaya said that was completely different from what her mother got to do.

So, maybe some would say crass and vulgar, and maybe the Chinese government has too much control over what goes on the air. But there was something good in those shows, at least for women.

Let us know what you think. You can tweet me @ErinBurnett or Facebook at OutfrontCNN. But on the meantime, at least on OUTFRONT, we do believe in the song, the "One-in-100."

(MUSIC)

BURNETT: "ANDERSON COOPER 360" starts right now.