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Erin Burnett Outfront
Addicted to Ben Bernanke; House Government Oversight Committee Recommends Citing Attorney General Holder for Contempt of Congress; Sanford Police Chief Terminated
Aired June 20, 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: OUTFRONT next, America has a drug problem, the drug, Ben Bernanke's money, and it's time tonight for an intervention.
And at the 11th hour, President Obama jumps head over heels into the fast and furious controversy, hours later, the attorney general of the United States one step closer to being held in contempt of Congress.
And later, they say they were just protecting their daughter. So why are they being charged with murder today? Does it add up?
Let's go OUTFRONT.
Good evening. I'm Erin Burnett and OUTFRONT tonight, America's drug addiction. It's not cocaine. It's not heroin. It's not even bath salts. We're addicted to Ben. We want more Ben and we want him now, but tonight, the truth. There's not enough Ben for America. More Ben is bad. I'm talking, of course, about this Ben, Fed Chair Ben Bernanke.
Today he announced he'll continue so-called "Operation Twist". The goal is to bring down interest rates. Theoretically that would spark borrowing, spending and hiring. It would be a panacea. It would fix the whole economic problem. But even Bernanke admits his supply of easy money is drying up.
(BEGIN VIDEO CLIP)
BEN BERNANKE, FEDERAL RESERVE CHAIRMAN: Monetary policy is not a panacea. Monetary policy by itself is not going to solve our economic problems.
(END VIDEO CLIP)
BURNETT: Well you know what the Fed's drugs didn't come cheap either. There have been three rounds of Fed stimulus with a total price tag of $2.7 trillion. And that doesn't include the $267 billion extension to "Operation Twist" that was announced today. So the question is, were the highs that we got worth the price of 2.7 trillion?
Check this out. When the financial crisis hit, the Fed stepped in with an unprecedented plan to lower interest rates. It was called QE1 or quantitative easing, 1.0. It was in effect from November 2008 until March of 2010. Now over that time, we did see, as you can see there, a drop in borrowing rates according to BankRate.com.
We're looking here at the 30-year-fixed rate mortgage, so the rate did drop. That's a pretty decent high, 6.3 percent to 5.2. The cost to everybody to get that drop in rates was $1.7 trillion. So when the economy was still dragging after that, Ben gave up a little bit more. QE2 in effect from November 2010 until June of the following year was like a bad trip. The 30-year mortgage rate actually went up by the end of QE2 and the cost, $600 billion.
And the economy still as we all know didn't get better. So Ben gave us a little more, an even more creative cocktail called "Operation Twist". That launched in September of last year and mortgage rates fell but only a little bit from 4.2 to 3.6 percent. Not nearly the buzz of the first hit and frankly everyone the reason rates went down had a whole lot more to do with Europe falling apart than the Fed spending another $400 billion.
The bottom line every time we got another injection from the Fed the highs got lower and the $2.7 trillion total cost of the Fed stimulus? Well another way to add it up is whether it succeeded in the Fed's ultimate goal to create jobs. And wow, wow, wow, there it does not add up. For every one job created from the beginning of QE1 until today, the Fed has spent $810,810 per job. I don't think those people who got those jobs even including benefits and a whole lot of wishful thinking are earning anything close to that.
Maybe I spoke incorrectly. It adds up, just not in a good way. Ben Bernanke knows the good and bad of the Fed drug. So today he did what a good American should, facing reality and telling America it needs to get off the drugs. He could have done what a lot of people wanted today, launched another giant hundreds and hundreds and hundreds of billions, maybe even trillion-dollar another round of QE. But he had the guts to say yes, the economy is slowing. Yes things are bad.
And that doesn't mean we should pay a whole lot more money to move interest rates pretty much nowhere. They are already low. Wow, are they low everyone. The Fed addicts in this country need to be told no. They need an intervention. Ben needs to save whatever is left of his QE for an even rainier day. And we need someone other than Ben to lead, but who?
(BEGIN VIDEO CLIP)
BERNANKE: Investors, I know, would like to see Congress take actions that put us on a long-term, sustainable fiscal path.
(END VIDEO CLIP)
BURNETT: Congress, it's your turn. Robert Reich is the former labor secretary under President Clinton and author of the book "Beyond Outrage". Stephen Moore is with "The Wall Street Journal" Editorial Board. Robert Reich let me start with you. I mean we are addicted to Ben. Obviously a lot of people today were saying oh give us more, give us more, give us more. I mean it really does sound like we're a bunch of addicts. But it is a little depressing when you look at the numbers. I mean gosh without QE at all, the world economy probably would have fallen apart. But here we are and what can we do from here?
ROBERT REICH, FORMER LABOR SECRETARY: Well, strictly speaking, Erin, the Fed is not borrowing money. The Fed is not spending money. The Fed is actually creating money.
BURNETT: Printing money --
REICH: There is a danger that if the Fed -- well it's printing money -- if the Fed creates too much money, if it prints too much money in effect it could generate inflation. That is a danger. And it also, as you said before, wants to keep some reserve in its quiver. It just wants to make you know for a worse situation.
The real problem right now is that even though interest rates are low and even though they have gotten lower, it's not stimulating the economy. It's not boosting the economy because I don't know if you've tried to get a -- refinance your home, I tried just a couple of weeks ago. It's very difficult to do it because the banks are sitting on so many bad loans still that they just don't want to, even with very low interest rates.
BURNETT: Right, so you know Stephen Moore, I've got to say I bet you agree with Robert Reich on this one.
STEPHEN MOORE, WALL STREET JOURNAL EDITORIAL BOARD: Well Erin, I was going to say, I'll give you an "A" in economics today because I agreed with almost everything you said and I'll give Robert Reich maybe a C-minus. Look --
BURNETT: Whoa, whoa, whoa.
MOORE: I think there's an attitude --
REICH: Steve Moore, that is the best grade you've ever given me --
(CROSSTALK)
REICH: Very impressed.
MOORE: But look there's an attitude by Robert Reich and others of his philosophy that the Fed can essentially print money and create growth and create jobs. And as you showed, Erin, that hasn't worked very well. We've had four years now of very easy, cheap money in this country. And it just hasn't worked in terms of creating jobs and wealth. Now, it is true, by the way that the Fed is going to spend some more money. They are going to buy more long-term bonds according to what Ben Bernanke said. But what I was most happy about, Erin --
BURNETT: Yes. MOORE: -- is that Ben Bernanke said, look, we've injected so much money into this economy with these low interest rates, there's not much left. There's not many arrows left in that quiver. And I think that was an important declaration. One last thing if I may, Erin.
BURNETT: Yes.
MOORE: Maybe the most important thing he said today, look at that growth forecast, Robert Reich, for the second half of the year, barely two percent. That's barely treading water and I don't know if that's enough to get Barack Obama reelected.
BURNETT: Robert Reich, what though can be done from this point? I mean if you're saying you agree with Ben Bernanke, don't do more now. You save whatever you have left for -- if things get even worse. But at this point it does seem like it's up to Congress, right? I mean who else is left?
(CROSSTALK)
BURNETT: -- accept that we're going to have a terrible economy?
REICH: Erin we shouldn't not ever accept a bad economy. We don't have to, but you're right. It is up to Congress. I mean the president has put several proposals before Congress in terms of helping state and local governments, in terms of tax cuts, even more of a tax cut with regard to employers who are hiring people. And nothing has happened. Particularly the Republicans just say no and I think that Congress really does have to bite the bullet here.
Steve Moore, my friend, who gave me a C-minus, may disagree with what (INAUDIBLE) I'm about to say. So still yourself, Steve. You can do this. But I do believe that we are going to have to have more of a boost, either a spending boost or a middle class tax boost that gets the economy going. And then when we hit an inflection point, let's say there's three percent growth and five percent unemployment, that is the trigger for serious deficit reduction, but we don't want to do it before that.
MOORE: All right, Bob, let me explain why I disagree with that, why it's not going to happen. The first reason it's not going to happen is what you explained all this new spending and aid to states and cities, that's exactly what Barack Obama did in 2009 and look it just didn't work very well --
BURNETT: Well it's not going to happen -- I mean Stephen --
MOORE: It's not going to happen --
BURNETT: -- because Republicans don't want it to happen --
MOORE: Right.
BURNETT: -- because they don't want the president to be reelected, so they're not going to do it even if it's the right thing to do.
(CROSSTALK)
MOORE: No it's not because of that.
REICH: That's the bottom line.
MOORE: I believe they're not doing it because they really just don't think more spending is the right thing to do and that's actually what Republicans -- got Republicans elected in 2010, is stop the spending. That's not what voters want. But I'll tell you one thing Robert Reich that I think could really help the economy and actually help Barack Obama a lot as well and that is maybe to call off the big tax increase in January for everybody.
Let's just not -- I mean you and I probably could agree on that right now. This is not the time to be announcing that we're going to have this major tax increase on anybody when the economy is so fragile. I mean you agree with that, don't you?
BURNETT: OK.
(CROSSTALK)
REICH: I don't -- I really -- I don't understand why for a Republican or for a conservative who is ostensibly worried about the long-term budget deficit that you want to extend the Bush tax cuts for the very rich. I mean I think they should be extended for average working people, for people all the way up to $250,000. In fact even for the rich up to the first $250,000 that they earn, but beyond that, why not go back to the Clinton rate? I mean the Clinton rate was not that onerous. We had a wonderful economy if I do say so myself.
BURNETT: All right, we're going to have to hit pause there.
UNIDENTIFIED MALE: As part of the former Clinton administration.
BURNETT: That's right. All right, thanks very much to both of you. (INAUDIBLE) it's only an increase from 35 to 39.6. It's hardly going up to 75 percent like they want to do in France.
All right, still OUTFRONT is Eric Holder an albatross on the neck of the president and did it just get a whole lot worse?
And the man who has been called the most powerful Republican in America leading a coalition of tax-cutting disciples but are his disciples fleeing? And the defense rests in the Jerry Sandusky. He did not take the stand. Will that flip-flop cost Jerry Sandusky his freedom?
(COMMERCIAL BREAK)
BURNETT: And now our second story OUTFRONT, it would be unprecedented. Eric Holder, a sitting attorney general, held in contempt of Congress. Today, a Republican-led House committee recommended that Holder be cited for contempt after an 18-month showdown with the Department of Justice over the fast and furious gun trafficking operation. Now, we throw away -- around those words so often, I thought it was worth just explaining it again.
Fast and furious was an operation launched to track weapons purchases by Mexican drug cartels. The Bureau of Alcohol, Tobacco and Firearms lost track of some of the guns and you know they were purposely selling them to these guys. They wanted to know where the drug lords took them so they could arrest them. But then obviously drugs got -- it got -- guns got in the wrong hands and killed a border agent.
Republican Congressman Darrell Issa, chairman of the House Oversight Committee, went forward with the contempt vote on Holder even after President Obama raised the stakes today, playing his first- ever executive privilege card. John Avlon is with me. Michael Waldman (INAUDIBLE) President Clinton and a constitutional lawyer, David Frum also an attorney, former president of the Federalist Society at Harvard Law School and a speechwriter for George W. Bush.
Well, a lot of lawyers not using their degrees in their day-to- day jobs. OK, but isn't that what law is about? Michael let me start with you, though. Putting on your hat as a constitutional law expert, the executive privilege was meant to protect Holder so he doesn't have to hand over all of these documents. Legally will it actually do that?
MICHAEL WALDMAN, BRENNAN CENTER FOR JUSTICE, NYU: We lawyers don't always charge by the hour, you know, so we'll try. When Congress asks for a document or a court asks for documents, sometimes the executive branch says hey wait a minute this is not appropriate for your branch of government to be asking us. That's when they claim executive privilege.
BURNETT: Right.
WALDMAN: The Supreme Court has actually said that under limited circumstances, executive privilege is OK, but the fact is when -- and Congress can try to hold an executive branch official in contempt, which means that they bring legal proceedings. The reality is the committee brought a contempt action. Then it has to go to the full House and guess who it gets referred to eventually if it gets voted on, the Justice Department. So the one thing we know, this is about something very real --
BURNETT: Yes.
WALDMAN: -- but it's also kind of Washington make-believe because it looks to me more like a kind of classic, let's harass the guy in the office thing than really -- I don't think this will end up with a very meaningful solution.
JOHN AVLON, CNN CONTRIBUTOR: This is contempt kabuki. This is a classic case in Washington of where you stand; it doesn't matter where you sit. When the Republicans have the White House they love executive privilege. When the Democrats were doing an inquiry and they invoked the same sort of a measure against Harriet Miers, John Boehner led Republicans off the floor calling it a partisan fishing expedition. Well the same principles and rules apply and the party line vote in the House today just underscored that --
BURNETT: Right and it's interesting, we'll break that down in a moment. Doesn't Democrats use this more against Republicans than the other way around, actually significantly so, but I want to just David Frum ask you something based on what then Senator Barack Obama said about a president invoking executive privilege back in 2007. Here he is.
(BEGIN VIDEO CLIP)
BARACK OBAMA (D-IL), PRESIDENT OF THE UNITED STATES: You know there's been a tendency on the part of this administration to try to hide behind executive privilege every time there's something a little shaky that's taking place.
(END VIDEO CLIP)
BURNETT: Now as John said, where you stand depends on where you sit. Maybe David Frum that's the most obvious example, but there could be real confidential information in here about other raids, plans, ways of getting at these drug cartels that may be fair or it could be that the president is hiding something, that somebody's been lying over the past 18 months, so which is it?
DAVID FRUM, CNN CONTRIBUTOR: Well I don't know the answer to that question. But what I would say is the president is entitled to get advice and the president is entitled to get bad advice. The president is entitled to get dumb advice. In this case, the advice seems to have been very dumb. It's not just one U.S. border agent who is a victim of it. It is probably a couple of hundred Mexicans and let's not forget them.
BURNETT: Right.
FRUM: They are the real victims of this carnage. So I am very sympathetic to the executive branch's claim of the need for scope and discretion. I felt that way in '82, in '92, 2002. I feel the same way with the Democratic president in 2012.
That said I don't know why the Obama people are playing this game in this particular way. The Republican theory about what's going on here is so outlandish. What they think the administration is hiding is a plot to violate Americans' Second Amendment rights by doing an elaborate project that would discredit gun ownership and allow them --
(CROSSTALK)
BURNETT: Which is ridiculous, right?
FRUM: OK -- which is so outlandish. The idea that that document is waiting in the files, which is the Republican theory of the case -- let them -- I don't know that -- you don't want to let people have a lot of access. I don't know why you would want to fight this on the executive privilege round. Fight it on the merits, which is this was a very foolish project --
(CROSSTALK)
FRUM: -- the Republican theory of the case is just outlandish.
BURNETT: Yes.
WALDMAN: It almost looks to me like both sides are taking hostages at the beginning of something. This is going to end up with a negotiation in the end, but David is exactly right that there's kind of a controversy without an underlying scandal from anything we've heard about it.
BURNETT: Right.
WALDMAN: And you know this is something where it feels like this time of year they're looking to throw a brush-back pitch at Eric Holder. He's enforcing the voting rights laws. A lot of the Republicans don't like that in Congress.
BURNETT: Right.
WALDMAN: They want to make him a controversial figure and to me it has a bit of a whiff of that.
BURNETT: Right. I have to say, just the bottom line, to imagine the government to be that smart, to have this whole plan to go in a backdoor way -- I mean they wish they were that smart.
FRUM: On the other hand no one has been fired and no one has resigned.
BURNETT: Right.
FRUM: It was a fiasco and it claimed lives.
BURNETT: Yes.
FRUM: And people should be accountable.
BURNETT: True. All right, well thanks to all three, appreciate it.
And OUTFRONT ahead, breaking news from Sanford, Florida, where Trayvon Martin was killed. Someone has been fired and we have that next.
And later two parents charged with murder, the victim the man they said was using their daughter as a prostitute, but does it add up?
(COMMERCIAL BREAK)
BURNETT: We have breaking news right now. Bill Lee has been terminated. He was the police chief in Sanford, Florida. Sanford City Manager Bonaparte has decided to terminate his contract with Lee as of today. Details are still being worked out. Of course police chief -- then Police Chief Lee was the man who was the police chief the night that George Zimmerman shot Trayvon Martin.
As we all now know, George Zimmerman went into the police department for questioning and Chief Lee decided not to arrest him. A key, key element in what happened in this case and Paul Callan is with me now. What do you make of this though? Obviously there's been an interim police chief. You know Bill Lee, it had been unclear what his status was, but this is terminated, fired. This is not amicably --
PAUL CALLAN, CNN LEGAL CONTRIBUTOR: I find it --
BURNETT: This just feels different.
CALLAN: I find it very interesting for a couple of reasons. First, the city council voted three to two in favor of keeping him on when he was first kind of being forced out after the controversy about not arresting Zimmerman. Now all of a sudden he's being fired. We don't know the details of why he's being fired.
But the second thing, I wonder if it's related to, the mystery of why the original prosecutor on the case was forced off the case? Because now you have prosecutor originally decides not to prosecute, forced off the case.
BURNETT: Right.
CALLAN: Police chief decides not to prosecute -- fired. What's the back story here? What's the misconduct? You don't usually fire somebody unless they've done something wrong. And two major law enforcement officials are terminated for some reason.
BURNETT: Right, because then of course you had Angela Corey replace the prosecutor --
CALLAN: Yes and I think that --
BURNETT: -- straight ahead and go around the grand jury, which Mark Nejame talked about yesterday. Some say she was worried the grand jury wouldn't --
CALLAN: Yes.
BURNETT: -- charge.
CALLAN: That's right. And I should say the prior prosecutor hasn't been terminated. He's still around but he's not prosecuting -- he was taken off the Zimmerman case.
(CROSSTALK)
CALLAN: Yes, she decides -- Corey decides not to use a grand jury, which is her right.
BURNETT: Right. CALLAN: And now you know two key officials are gone. And we don't know why, so that's -- there's going to be an interesting back story to this.
BURNETT: All right, well we'll keep following that, but again the news we just had that Bill Lee has been terminated.
OUTFRONT next, new evidence from Parchan (ph), Iran, new satellite information. Is there a cover-up?
And Grover Norquist going to Congress to push his anti-tax pledge, but things have really changed for Grover.
(COMMERCIAL BREAK)
BURNETT: We start the second half of our show with stories we care about, where we focus on our own reporting from the front lines. The Federal Reverse announcing it's extending "Operation Twist". That's their program that's designed to help lower interest rates. UBS economist Maury Harris says the announcement really buys the Fed some time to see if Europe actually gets its act together. The Fed also cut its projections for the U.S. economy. They say it's not going to grow as quickly as they thought over the next few years and unemployment will stay north of 7 percent all the way through 2014.
After 12 days of deliberation, jurors have been unable to reach a verdict in a landmark pre-sex abuse trial of two Philadelphia priests. Sources tell us that jurors are deadlocked on four out of the five charges. Monsignor William Lynn is accused of letting dangerous priests continue in ministry roles that gave them access to children. Also on trial, Reverend James Brennan, accused rape of a 14-year-old boy. Both have pled not guilty. The judge has instructed the jury to keep deliberating until they reach a verdict.
And we have new satellite pictures tonight that show what analysts say is more clean-up at the Parchin military complex in Iran. It's a site believed to be involved in the country's nuclear program. Let's show you the first picture, this is on May 25th. And this is what you're looking at. Analysts at the Institute for Science and International Security say you're looking at raise razed buildings and heavily artillery tracks.
Now, let's just show the same picture on June 7th, water is coming out of an object in a building, analysts say it's high explosive test building. You've shown you that before where they say a nuclear test explosions could have happened inside a container. You can also see a security fence has been removed. And there's earth- moving machinery.
Many people allege that Iran is trying to clean that site up before allowing inspectors in. Inspectors have demanded access to Parchin. Iran still has refused.
Well, Duluth, Minnesota, has suffered its worst flooding in decades. Forcing evacuations and destroying roads. According to the National Weather Service, five to nine inches of rain fell last night. And the area could see up to three more inches. It's leading to other problems also. In a statement, Lake Superior Zoo said several animals died in the flooding. Its polar bear Berlin was able to escape for habitat. She was darted by vets before she could escape the zoo.
Well, it's been 321 days since America lost its top credit rating. What are we doing to get it back? Well, we're not doing pretty much anything. But lower oil and gas prices might help us. Oil fell to $81.88 a barrel. That's an eight-month low which will obviously help at the pump.
And now, our fourth story OUTFRONT, anti-tax crusader Grover Norquist has been called one of the most powerful men in Washington, rallying congressional Republicans to sign his pledge not to raise taxes under any circumstances.
But there are signs of rebellion tonight. A growing number of Republicans choosing to distance themselves from the pledge. At least a dozen Republican representatives from the House and nine members of the Senate, including Senators Tom Coburn, a regular on this show, and Lindsey Graham have decided to oppose the anti-tax pledge.
Former Florida Governor Jeb Bush actually came out against it earlier this month and launched a war of words after he said this --
(BEGIN VIDEO CLIP)
FORMER GOV. JEB BUSH (R), FLORIDA: I've ran for office three times. The pledge was presented to me three times. I never signed the pledge. I cut taxes every year I was governor. I don't believe you outsource your principles and convictions to people.
(END VIDEO CLIP)
BURNETT: Now, Grover Norquist is headed to Capitol Hill. He's going to be there tomorrow. The president of Americans for tax reform is OUTFRONT tonight.
Grover, when I lay all this out, I hear Jeb Bush. I hear all these senators, Tom Coburn, Republicans saying, look, we're not on board. And you're going up to talk to them. It sort of sounds like you're a little afraid.
GROVER NORQUIST, AMERICANS FOR TAX REFORM: No. This is a request from the Ways and Means Committee and the Republican Study Committee to talk about how the taxpayer protection pledge will help with tax reform next year.
The taxpayer protection pledge was created in 1986 in order to help pass the Reagan Tax Reform Act, which was revenue neutral and it was designed both to protect -- to get that passed and to protect passage, so that in the future, politicians wouldn't raise rates or broaden the base.
Point of fact, the pledge is not only important for stopping tax increases. It's necessary to get real tax reform because if you don't have enough numbers committee to not allow tax reform to be corrupted into numbers, the American people won't trust Congress to reform taxes, which is what we need to do.
BURNETT: All right. What about, Grover, though, these headlines? I mean, we've just got a few of them. I mean, "The L.A. Times" has talked about these people saying, I'm not sure about the pledge. They call it breaking Grover Norquist spell.
"Christian Science Monitor": 'Are cracks beginning to form in GOP's bedrock anti-pledge?"
It sounds like a lot of Republicans are realizing that maybe as part of broader tax reform, rates need to go up and your line in the sand is going to leave you out of the conversation.
NORQUIST: Well, several things. One, the taxpayer protection pledge is to the people of the state that an elected official runs in. It's not a pledge to me or to Americans for Tax Reform, although Harry Reid, the Democratic Senate leader, misstates this frequently and unfortunately some people in the press read his press releases rather than read the actual wording of the pledge.
The pledge is something that if you want to run for office, you say to people, here, in writing, I'm going to tell you if elected, when I see a problem I'm going to reform government, I'm not going to raise taxes.
BURNETT: OK. What about that Steve LaTourette said, Republican, close to John Boehner, from Ohio -- quote, 'We're on track to owe $20 trillion. And to be beholden to some pledge when the future of the country is at stake is kind of silly."
NORQUIST: Well, of course, the too much spending problem needs to be fixed and that's fixed by spending less. You mentioned Mr. Boehner who reiterating just last week the Republican Party is not going to tolerate tax increases to pay for Obama's spending increases.
You interestingly quoted a politician, Jeb Bush, who hasn't run for office in 10 years but the man who is running for the president of the United States has taken the pledge. And just last weekend Sunday, on "Face the Nation" stated that, no, we're not going to raise taxes. We're going to introduce spending, not raise taxes.
So, you have 236 Republicans who have made that commitment in writing to voters -- not to me, to voters -- in the House, 41 in the Senate.
BURNETT: OK.
NORQUIST: We have more pledge-takers this year than two years ago at the end of the election cycle.
BURNETT: All right. Grover, you said something earlier about Ronald Reagan. I've got John Avlon here. All of tax (ph) went up.
John, take it away. You've got a question on that.
JOHN AVLON, CNN CONTRIBUTOR: Grover, obviously, you revere Ronald Reagan and rightly so. But sometimes when we idolize people, we oversimplify. The whole reason we're having this debate right now about the pledge is because of Bowles/Simpson, "gang of six," other plans that offered a deal that could have reduced long term deficit and debt, lowered tax rates but raised revenue by closing loopholes.
Here's the thing --
NORQUIST: Two trillion dollars.
AVLON: That is exactly the outline of the plan that was put forward in 1986 by Ronald Reagan.
NORQUIST: No, no, no. Absolutely not.
BURNETT: Grover, I'm sorry, you're wrong and here's why: the Reagan Library today confirmed for me that that 1986 tax deal closed loopholes and raised revenue. So, you're at war with Ronald Reagan and his library himself. You've got to face the facts.
NORQUIST: The facts are on the numbers. That was a revenue- neutral tax increase -- tax reform. Sure, revenue goes up when you put more people to work, when you have lower rates and you actually move the -- have more economic growth.
I support -- of course, taxpayer groups support lower tax rates to have more growth. That will mean more revenue, but not a tax increase. The tax reform of Reagan's was deliberately designed in a static model to be revenue-neutral.
Sure, with growth you get more revenue. Advocates of lower rates do so because they understand that means more growth. Simpson/Bowles is a $2 trillion tax increase over the next decade. Of course, they don't even put it fully in writing and score it because of that. But that's what Paul Ryan, who did score it, counted it as $2 trillion. The Heritage Foundation thinks it was $3 trillion in tax increases.
BURNETT: All right.
NORQUIST: That was a massive tax increase pretending to be tax reform.
BURNETT: All right. We're going to hit pause there. Grover, I've got to say, we have to give you credit. I mean, you have put the whole issue of spending front and center. And a lot of Americans have embraced that.
NORQUIST: Yes.
BURNETT: Yes. I mean, regardless of this -- we're going to continue this argument later. I know neither one of you are finished.
I want to go to a story about vigilante justice in San Francisco. The parents of a 17-year-old young girl took the law into their hands, when their runaway daughter a life of prostitution. According to prosecutors, they shot and killed her alleged pimp in a drive-in shooting earlier this month, after unsuccessful attempts to get police to help them get their daughter back. The parents are now in jail, awaiting arraignment.
Our Dan Simon was there and is OUTFRONT with the story.
(BEGIN VIDEOTAPE)
DAN SIMON, CNN CORRESPONDENT (voice-over): She was a 17-year-old runaway, leaving the Bay Area behind for Los Angeles and lured into a life of prostitution. Her parents tried to rescue her, but according to prosecutors, when those efforts failed, they devised another plan -- to kill her alleged pimp, a 22-year-old from the rough streets of Compton, Calvin Sneed. Barry Gilton and Lupe Mercado are in jail under $2 million bond charged with his murder.
GEORGE GASCON, SAN FRANCISCO DISTRICT ATTORNEY: What our offenders did in this case is basically they became the judge, the jury and the executioners all at once. And this is not acceptable in our society.
SIMON: As a father, San Francisco district attorney, George Gascon, says he understands how frustrated the parents must have felt, watching their child fall into a wretched life.
GASCON: The problem is that we cannot run a country. We cannot run our society based on how emotional a parent might get in a situation like this.
SIMON: The shooting happened near this intersection around 2:00 in the morning on June 4th. The father, according to the prosecutor's complaint, fired a fatal round at Sneed in his car. Within days, the investigation led police here, two blocks away to the parents' house.
Attorney Eric Safire is representing the father.
(on camera): When they realized their daughter was working as a prostitute, what did they do?
ERIC SAFIRE, DEFENSE ATTORNEY: Well, they had contacted local authorities. They had contacted registries for missing persons. They had actually traveled to Los Angeles to confront her and, you know, try to get her to come back.
SIMON: And what happened?
SAFIRE: She didn't come back.
SIMON (voice-over): Victims advocates say leaving the lifestyle can be extremely tough for a young woman because of the control exerted by pimps. Safire says the girl's parents will plead not guilty, but he doesn't deny the parents had motivation to take things into their own hands.
SAFIRE: I think that most people would agree they had a motive, yes.
SIMON (on camera): They have a motive to kill their daughter's pimp? SAFIRE: Well, I think most people would agree that that's a motive, yes.
SIMON (voice-over): A Los Angeles TV station tracked down the alleged pimp's father who said while his son had plenty of sins --
CHARLES SNEED, ALLEGED PIMP'S FATHER: The fact of the matter is he didn't deserve to die. That's the bottom line.
(END VIDEOTAPE)
SIMON: Well, at this point, we don't know what the direct physical evidence is in this case. But we're aware of at least one piece of powerful circumstantial evidence and that is apparently the mother called the father at 1:57 a.m. the night of the shooting, four minutes before it occurred and prosecutors say that is hardly a coincidence, Erin. And we should tell you that the girl in this case, the 17-year-old prostitute, apparently she's now in a better spot. She's now staying with relatives -- Erin.
BURNETT: Dan, just a question, the D.A. said the parents tried to kill the pimp before, right? I mean, this was -- they found some sort of a pattern, at least they're going to say they did?
SIMON: That's right. That's in the complaint that apparently in May, in late May, you know, just about a month ago, they say the parents actually drove to Los Angeles, found the pimp there and actually fired a round at him. He was shot, apparently not seriously injured. Then, just a couple of weeks later, they tracked him down here to San Francisco and confronted him again. At that time, they were successful, according to prosecutors.
BURNETT: All right. Thanks very much to Dan Simon.
And OUTFRONT next, just-released 911 calls from the father of Trayvon Martin just hours after his son was killed. We have them to play.
And the defense in the Jerry Sandusky case rests. Jerry Sandusky didn't take the stand. But why he thinks a piece of audio played during the trial is the smoking gun that's going to set him free.
(COMMERCIAL BREAK)
BURNETT: New developments tonight in the George Zimmerman case. Earlier this hour, we learned Sanford Police Chief Bill Lee has been fired. City Manager Norton Bonaparte has decided to terminate Lee's contract as of today. Lee, of course, was the police chief who determined, decided that night not to arrest George Zimmerman. We also tonight have obtained newly released audiotapes from the day after Trayvon Martin was shot and killed by George Zimmerman.
On the tapes, Tracy Martin can be heard reporting his son missing to the police department. Martin called a police line more than 12 hours after his son was killed from his girlfriend's apartment where he and Trayvon were staying. Here's the tape.
(BEGIN AUDIO CLIP)
UNIDENTIFIED FEMALE: What was your son last seen wearing?
TRACY MARTIN, TRAYVON MARTIN'S FATHER: Probably had on a pair of khaki shorts and a gray sweatshirt. Probably has on slacks. I'm sorry, and a pair of Jordan tennis shoes. White and red tennis shoes.
UNIDENTIFIED FEMALE: OK. Can you give me a specific time or the last time you saw him?
MARTIN: Around 8:30.
UNIDENTIFIED FEMALE: Eight-thirty.
MARTIN: Yes, 8:00, 8:30 last night.
(END AUDIO CLIP)
BURNETT: All right. Police followed up with Martin with more details and informed him his son had been killed just yards from where he was staying.
Mark NeJame is CNN legal analyst and criminal defense attorney and he's OUTFRONT tonight.
Mark, what is your take on this? I mean, obviously, when this call first came in, the police department did not connect the dots that the boy that they were calling in about was the same boy who they had obviously responded to the shooting of just hours before.
MARK NEJAME, CNN LEGAL ANALYST: It's heartbreaking. You're hearing a parent on the phone who doesn't know that their child is dead. Any parent's worst nightmare. And, you know, doesn't know that his son has been gone for 12 hours and had passed away. You know, that 12 hours ago, he was dead. It's just heartbreaking to hear it to me.
BURNETT: It is. I'm just curious about how it could have happened, at least according to our understanding tonight is when he made that call, obviously the police department -- they didn't tell him on that call. They didn't connect these dots.
Does that do anything for the Martin side of this, in terms of the police -- the police chief was just fire a few moments ago. I mean, is there any possibility that those two things were linked, that they didn't tell him that we know this was your son, they didn't connect that dot?
NEJAME: We know there's been a lot of criticism laid towards the investigation of this case. And one's got to imagine that not that many other people were killed that night. And so, it seems a natural jump if somebody's missing and he fits the description of the deceased that they had in their reports, the dots should have been connected right away.
So it's just heartbreaking and it should have been caught. You know, one cannot understand why you've got a dead teenager and people do not understand right away that there's a call-in on this. One would think they would jump out of their chairs on this right away.
BURNETT: You would think so. It's hard to understand and hard to hear.
Thanks to Mark NeJame.
And now our fifth story OUTFRONT: the defense resting today in Jerry Sandusky child sexual abuse case, without the expected testimony of Jerry Sandusky.
"In Session's" Jean Casarez has been covering the trial in Bellefonte, Pennsylvania, has been in every day. CNN legal contributor Paul Callan is also with me.
Jean, let's start with you. You were there again in court this morning. Obviously, they decided to wait until the final moments as to whether Jerry Sandusky would take the stand. Did you get the feeling that he was going to. Or what was -- just talk to me about the moments before that decision was made and whether you could tell it was happening.
JEAN CASAREZ, CORRESPONDENT, "IN SESSION" ON TRUTV: You know, when court began this morning, there was a confident Jerry Sandusky. He was dressed in a beautiful suit and I think everybody believed he was going to take the stand because it was his decision. And it appears as though he likes to talk, he likes to try to communicate.
But then, right before the moment would come he would take the stand, all the attorneys and the judge went in chambers and they were there for a long time. Came out and the defense rested.
So what happened in that meeting that they had with the judge? Well, most likely the defense wanted to know how far the prosecution would be able to cross-examine him, because that could be disastrous. Remember, there's a part of an interview that the prosecution has that they haven't yet let the jury hear. And maybe that was the tell-tale sign this wasn't going to happen, that meeting before.
BURNETT: Right. For sure, you're referring to the interview that Jerry Sandusky did with Bob Costas of NBC where a part of it was cut out where Jerry Sandusky was -- sort of seemed to apply the way he answered the question, that he's not attracted to all young boys but left open the door whether he was attracted to some.
Paul Callan, hearing what Jean said, what do you think happen? What was the reason they made the choice at the last minute for him to not take a stand?
PAUL CALLAN, CNN LEGAL CONTRIBUTOR: There could be something else that happened in chambers, too. Remember, the grand jury investigation has continued in this case and supposedly, there are other victims out there. Were they afraid that he would be cross- examined about other victims who aren't even part of this indictment if he said I'd never hurt a child, I've never touch a child. So, there could be things --
BURNETT: But you wouldn't be able to do that, would you?
CALLAN: Oh, you most certainly could.
BURNETT: Really?
CALLAN: It's all about what we call opening the door. If the defense said something on stand that puts something an issue, you can cross-examine him about it.
So, I'm wondering if they were worried lot of other names would be thrown into the pot here.
BURNETT: And, Jean, the defense wrapped with two young witnesses. What did they say on behalf of Jerry Sandusky?
CASAREZ: Well, these were men, young men, that were part of the Second Mile and they said they both have personal relationship with Jerry Sandusky. They spent a night at his home, one said over times that they went to Penn State and exercised with him, went to games but that he never touched them. They never showered with him. He never did anything to them as they spent the night in the basement.
And one young man said, you know, law enforcement called me up and it was like they were pushing me to try to say things, to try to admit that he did something to him, and he didn't do anything to me. So, that was really I think an important part that the defense will drive home in closing arguments tomorrow.
BURNETT: Paul, will that go a long way towards -- I mean, that is the defense's whole point here.
CALLAN: Well, it's the defense's whole point, there's one thing I want you to remember as we proceed into jury deliberations in the case. This place -- people bleed Penn State blue. Somebody said to me yesterday, if Centre County was a person, its heart would be the Penn State football. And this jury is going to be putting a knife through the heart of the football team if they convict Sandusky.
So regardless of the evidence in this case, there's going to be a lot of pressure on this jury. And the defense has put some interesting things on the board that these kids are doing it for money, that the cops are telling them what to say, by prepping them, by telling them what other people have said.
And as inept as the defense has looked at various points during the trial, they've put a lot up on the board for somebody who bleeds Penn State blue. And more than six of the jurors are closely connected to Penn State.
BURNETT: All right. Jean, Paul, thank you very much. It's been seven days of testimony, everyone, 21 witnesses for the prosecution, 29 for the defense. A very quick trial. We'll see whether the jury deliberations are equally as quick.
And OUTFRONT next -- we love our cars more and more. But there's something about cars I hate. And it looks like you agree.
(COMMERCIAL BREAK)
BURNETT: J.D. Power and Associates came out today with its latest on report on car quality. The headline is -- and this is a good headline -- cars hit all-time high in quality, fewer defects and problems than ever before, which is great news.
Now, top of list, Lexus was ranked number. Jaguar and Porsche, number two. And the first American brand on the list was Cadillac, tied at fourth. Honda rounded out the top five.
When you look at the worst, Smart, which actually surprised me. It has good things about it. But anyway, Smart was the worst and Fiat. MINI, Volkswagen, Mitsubishi, Dodge, also near the bottom.
All in, by the way, when you look the regionally, U.S., Asia, Europe, we were third. Best cars from Asia. Next Europe, then us.
But what were drivers not happy with? The new technology. Things like entertainment and navigation systems. There were all kinds of complaints about the installed hands-free devices. As a matter of fact, complaints have surged over the past four years on that stuff by 137 percent the past four years.
The top complaint -- new technology doesn't recognize voice commands. Yes, it's not just Siri that has that problem, huh? It used to just be technology available on high end cars. Now it's ubiquitous and some of the systems just don't work very well.
Now, the interesting thing about this, it wasn't older people complaining about the technology. It was actually younger drivers, expect the devices to do more than they're currently doing.
The bottom line was I was glad to hear this, because you know, I kind of think -- I don't like it. I don't like the hands-free devices, the backup cameras, night visions, all that. You know, you should be parallel park yourself. Everybody should be able to do that, you know?. Don't need beeps to tell you how to do that.
And you know what? You don't need -- you should use a map and drive around and explore. I don't know. I like to do it that way.
Plus, stick shifts, they do a combat. I think they're by far better than the automatic. Drive better, too, at least that's my preference. Got to drive a stick.
Thanks so much as always for watching. "ANDERSON COOPER 3606" starts now.
