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Erin Burnett Outfront

Ryan/Romney Budget Plan; Pros and Cons of Paul Ryan; Bipolar Depression; Interview with Jason Chaffetz; Interview with Ben LaBolt

Aired August 13, 2012 - 19:00   ET

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

JOHN AVLON, CNN CONTRIBUTOR: OUTFRONT next, almost 60 hours of spin and sound bites, name-calling and hype, tonight, the facts. We run the numbers on what is now the Ryan/Romney budget plan.

And Jesse Jackson, Jr., diagnosed with bipolar disorder. What that disease means for someone trying to make it back to work in government.

And intrigue at the Vatican. What was the pope's butler looking for in his personal apartment? Let's go OUTFRONT.

Good evening. I'm John Avlon in for Erin Burnett. OUTFRONT tonight, 60 hours of whirlwind attacks. That's how long it's been, 60 hours, since Mitt Romney announced his running mate, Wisconsin Congressman Paul Ryan. And since then, we've been bombarded with political attacks that are based more on fear than fact.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Paul Ryan has embraced an extremist proposal.

UNIDENTIFIED FEMALE: With a Romney/Ryan ticket, it's like Reagan again.

"Now, Republicans want to privatize Medicare."

(MUSIC)

(END VIDEO CLIP)

AVLON: So tonight we're going to cut through the partisan spin to give you the facts on these key three fronts. First, how the Ryan/Romney deficit reduction plan compares to the president's own $4 trillion deficit reduction proposal. Do they add up? And the pros and cons of Paul Ryan, what his votes have been on the key issues from Afghanistan to abortion to TARP and finally, the politics of "Mediscare", the fear-mongering that both sides do when entitlement reform is proposed.

First we want to look at the two plans to reduce the nation's deficit by $4 trillion over the next decade. We're talking about stacking the Ryan/Romney budget against President Obama's own proposal. That's the debate we should be having in this country. What's the best path for us to take? So tonight we're putting the two side by side. First Ryan's budget is one of the most sweeping plans ever proposed to cut government spending.

And whether Romney likes it or not, he now owns it. The plan's made Ryan a lightning rod because in his view the only way to get our fiscal house in order is to dramatically shrink the size of government. Ryan wants to reduce the deficit by cutting spending by $5.8 trillion over the next 10 years. Additional revenue he says will come from economic growth.

Ryan wants to replace the current four tax rates with two, 15 percent and 25 percent. But he says he's eliminating unspecified tax deductions to help pay for these cuts. Ryan also wants to cut $1.6 trillion in domestic discretionary spending over 10 years and achieve entitlement reforms by voucherizing Medicare for people currently under 55 and replacing much of Medicaid with block grants to the states.

There would be no cuts in military spending. As for President Obama's plan, it reduces the deficit through $3 trillion in cuts and $1 trillion in additional revenue -- big difference. The president wants to end the Bush era tax cuts for individuals making over $250,000 a year. Mr. Obama wants to cut domestic discretionary spending by some 600 billion. That's about a trillion less than Ryan would do.

It would cut military spending by 400 billion over 10 years but it would avoid cuts to education, clean energy and infrastructure spending. OUTFRONT tonight, Stephen Moore of "The Wall Street Journal" Editorial Board and Robert Reich, former labor secretary under President Clinton. Good to see you both.

UNIDENTIFIED MALE: Hi.

AVLON: Stephen, I want to start off with you. Bill Gross, he is a member of our economic "Strike Team" and a founder of the investing firm PIMCO. I know you know him well. Here's what he tweeted.

He said "do bond markets take heart from the Ryan selection? Not me. He talks lower deficits but really believes in lower taxes, the exact opposite." So Stephen, Bill Gross has made billions in the bond market. Tell me why he's wrong.

STEPHEN MOORE, WSJ EDITORIAL BOARD: Well look I think a tax cut is exactly what's necessary right now to get this economy going. One of the big differences between the Ryan budget and the Obama budget, you know you cited a lot of numbers there, John. But one way of thinking about this is that under the Obama budget, over the next 10 years, we'll borrow $10 trillion more on top of the 16 trillion we have right now.

Under the Ryan budget, that cuts that borrowing in half to five trillion. That's a big difference. I think -- this is going to be a really important grown-up discussion we're going to have. You know there's always this talk about not a dime's worth of difference between the two parties. This year, there's $5 trillion worth of difference because that's how big the difference is and how much the Romney/Ryan budget would cut the deficit than (ph) the Obama budget.

AVLON: No question it's a clear contrast, but Stephen, just to press the point --

MOORE: Yes.

AVLON: -- if these cuts are what you're describing, why wouldn't a bond maven like Bill Gross be celebrating?

MOORE: Well I don't know. I can't explain why he isn't. I'll tell you this. There are a lot of people on Wall Street I do know who are celebrating and what Paul Ryan has done very effectively in just the first 72 hours of being named is he has really energized conservatives across the country. There's a lot of electricity now with respect to that ticket, which is something that -- you know let's face it, Mitt Romney didn't have the best last couple of months. But I think this is a bit of a turnaround. It's going to be a sharp contrast, the same kind of debate Robert Reich and I have had for years.

AVLON: Well listen, no question about it. You've got an invigorated base. Robert, let me turn to you. The fact is if we're honest, this president faces a credibility gap on issues of deficit and debt. So why should voters believe his plan would ever be enacted?

ROBERT REICH, FORMER LABOR SECRETARY: Well, I think that voters have only to look at the last several years of Republicans saying "no" to everything the president proposed and hope that the president gets a Congress that actually will say yes. If he does and has a chance to actually implement his budget, we're going to see a budget that not only balances the budget but also doesn't balance the budget on the backs of the working class and the poor and doesn't provide a huge, giant tax break on top of all of the other tax cuts that the rich who have never been as rich in this nation's history have already got.

You know the -- what you said, John, before -- and I thought it was very important that you said it that way -- the Ryan/Romney budget. That's the way you characterized it. Now all day today, the candidate, Mitt Romney as candidate, has been saying, look I'm going to be president. I'm a presidential candidate. Ryan's budget is not my budget. But the fact of the matter is it is his budget. He is going to have to live with the fact that Ryan wants to turn Medicare into vouchers.

That Ryan is kind of -- has a reverse Robin Hood budget in terms of rewarding the rich and sacrificing the poor and the working class. And thirdly that a lot of the investments we believe in, in this country in terms of infrastructure and education and everything else, are going to be absolutely eliminated on the Ryan/Romney budget. Yet the military is going to be held intact. Well these -- this is not a budget about reducing.

This isn't about reducing the budget deficit. I mean the Ryan budget does not reduce the budget deficit. For three decades, we don't get a balanced budget. This is about shrinking government on the backs of average working people. And I think Americans when they hear about it are not going to like it.

MOORE: You know here's the problem --

AVLON: Stephen -- Stephen -- I want to play a clip because Erin spoke with Congressman Ryan. Let's give him a chance to speak for himself -- back in March and she asked him about his plan to simplify the tax system, an important issue. Here was their discussion.

(BEGIN VIDEO CLIP)

ERIN BURNETT, HOST, OUTFRONT: And let me ask you, when you talk about two tax brackets, the 10 percent and the 25 percent, obviously on an absolute basis, assuming that anyone in the current 25 percent bracket or lower goes to the 10 and everybody else goes to the 25, which I know it wasn't clear in your plan. I'm assuming that's what it is, but the wealthy would get the bigger cut there on an absolute basis, clearly.

REP. PAUL RYAN (R-WI), VICE PRESIDENTIAL CANDIDATE: We're also saying take away their tax shelters. Don't forget Erin, there are effective tax rates. And the people in the top two tax brackets are the ones who get almost all of the write-offs, almost all of the tax shelters, so if you're a wealthy person and you park your money in a tax shelter, it's taxed at zero. If we take away the tax shelters and have a broader-based lower rate system then that money's taxed at 25 percent.

(END VIDEO CLIP)

AVLON: Stephen, Romney, we all know, has money offshore, including the Cayman Islands. He claims his taxes are all paid and they've been reported to the government. There's nothing hidden there. But when Ryan talks about this issue as he did again last night on "60 Minutes," doesn't that put Romney on the defense?

MOORE: You know look, I love this idea of closing tax loopholes and tax shelters. I like exactly what Paul Ryan is talking about. Let's lower the rate and gets rid of all these tax breaks for the rich. I mean Democrats always talk about tax breaks for the rich. Paul Ryan wants to get rid of those so everybody pays their fair share of tax. So I think it's a very pro-growth plan. And look, we have cut tax rates four times since 1960.

Under Kennedy, twice under Reagan, we did under Bush and in every instance, John, every single time we did that, liberals said it was going to be a big tax cut for the rich. And what happened was we got more revenues in because the economy grew faster and Robert Reich, the rich paid a larger share of the taxes. That's what's going to happen under the Ryan plan.

AVLON: Robert Reich, final question to you --

(CROSSTALK)

REICH: They pay a larger share of the taxes because the rich --

(CROSSTALK)

REICH: -- are taking home over 20 percent of total income.

AVLON: Just -- Robert, one thing that always mystifies me is the argument of broadening the base, which may be good. Doesn't that necessarily mean raising some taxes on people who either aren't paying any or are paying very little right now?

REICH: Well, look -- it's very interesting. When Ryan talks about closing loopholes and when Romney talks about closing loopholes, they don't specify which loopholes they're going to close. I mean nobody likes loopholes. The word loopholes sounds awful. But you've got to be specific. Are they going to say that nobody can deduct mortgages in excess of what, $20,000 a year?

Are they going to say that we're going to abolish a charitable deduction over $10,000 a year? Are they going to actually close loopholes that have -- that provide -- for example the -- what Mitt Romney -- I mean the carried interest deduction loophole is gigantic. If you are in the business that Romney has been in, in terms of private equity that allows him to treat his income as capital gains. Are you going to get rid of that carried interest deduction loophole? Well none of this has been specified. And until Ryan and Romney specify what loopholes they're talking about, it's a meaningless discussion.

AVLON: Well I want to thank you both for joining us tonight. That is one important missing detail, the plan so far.

Up next the pros and cons of Paul Ryan, politically. Why one stance might cost the Romney/Ryan ticket a number of women voters.

And also, iPhones might be getting cheaper but there's a catch. And the stock market has a down day but there are a number of reasons why it's not as bad as you might think.

(COMMERCIAL BREAK)

AVLON: Our second story OUTFRONT tonight, the pros and cons of Paul Ryan. Is he a political asset or a liability? Now, that's the question many voters are asking themselves tonight as they take a look at what the Republican vice presidential pick brings to the ticket. A new "USA Today" poll, 39 percent of registered voters say Paul Ryan is an excellent or pretty good choice. But two-thirds say the seven-term congressman will have no effect on whether they vote for Mitt Romney.

But let's be honest. Most Americans don't really know who Paul Ryan is just yet. After all, he's never even run for office beyond his district in Wisconsin. So we're taking a closer look at Ryan's voting record and laying out his positions on some of the most important issues of the day. CNN contributors Roland Martin and Reihan Salam are here to help us break down. Gentlemen now it should come as no surprise that Paul Ryan voted with the Bush administration on most issues over the past decade and against the Obama administration. That's to be expected, but let's take a closer look at some of his positions. Paul Ryan supports, of course, his own budget deficit reduction plan which includes Medicare vouchers, making the Bush era tax cuts permanent and cutting domestic spending. He supports partial privatization of Social Security in the past. He voted for TARP and the auto bailout. Paul Ryan is against troop withdrawal from Afghanistan, defense spending freezes, the Bowles-Simpson Commission, voted against it interestedly, and abortion, even in cases of rape or incest.

Now Roland, Dems have been calling his policy proposals extreme and betting they'll alienate swing voters in swing states. But if he's so polarizing on some of these circumstances how come he's been elected eight times in a swing district in Wisconsin?

ROLAND MARTIN, CNN CONTRIBUTOR: Well that's easy. It's all based upon how many of your voters are in your particular district. But look we can talk about all of those things --

AVLON: He's got a lot of Democrats in that district.

MARTIN: But here's the deal. We also need to go deeper than that. When you talk about what did he vote for? Congress voted 361 to 64 to require that credit card companies give 45-day notices of rate hikes, whether they're going to freeze interest rates on new accounts for one year. Guess what? Ryan was one of those 64 who said no. So when you say, I'm with the middle class, how does that shape up? He didn't support the Consumer Protection Bureau.

AVLON: Right.

MARTIN: He also -- he also voted with Republicans to say the Justice Department should not step in and use the Voting Rights Act to stop voter ID laws. And so when someone says, I'm with the middle class, how does your voting record actually stack up when you say you're for the middle class?

AVLON: But there's no question, Roland, he's been reelected numerous times in a district of a lot of Democrats.

MARTIN: But it's a congressional district.

AVLON: But let me move on. Let me move on.

MARTIN: It's a congressional district.

(CROSSTALK)

MARTIN: Sanford Bishop in Georgia represents a largely conservative district, lots of Republicans. He's an African-American who's a Democrat. He won.

(CROSSTALK)

MARTIN: So that's a congressional district, far different from running for the nation. AVLON: All right. Reihan, now Ryan is best known for being a strong fiscal conservative. Now his whole record (ph) is getting more attention specifically that he supports -- he opposes abortion even in cases of rape or incest. How does that position not hurt him with women voters in the fall?

REIHAN SALAM, CNN CONTRIBUTOR: Well it's definitely going to hurt him with pro-choice women voters. But the thing is that over the last 20 years, a lot of pro-choice female voters who had backed Republicans in the past have been migrating to the Democratic Party, so this is a much bigger issue than Paul Ryan. And also Paul Ryan might attract some voters who doubt Mitt Romney's pro-life bona fides because again, as we all know Mitt Romney had previously taken a strongly pro-choice position when he had run for governor of Massachusetts, so on that front it could actually be an advantage among pro-life women voters.

MARTIN: Hey, John, white working class women favor Romney -- the Romney ticket over the Obama ticket. I wonder what those same women will feel when they find out that Ryan voted against the Lilly Ledbetter Act. OK, so when you talk about -- I think when we talk about women we've got to stop this notion of well it's just the issue of choice if you're pro-life. It also goes deeper in terms of your pocketbook. You know Ryan talks about being a budget hawk. When Secretary of Defense Robert Gates said we were wasting $485 million on an engine, the so-called deficit hawk, Ryan, voted against the secretary of defense to get rid of that out of the budget. And so how can you say you want to end or you want to deal with waste in government but then when you have defense waste, then you say, no, keep it in?

AVLON: Reihan, I've got a related question to that. Because one of the things that's surprising to me for all his deficit hawk credentials, he voted against the Bowles-Simpson Commission, which he was a part of. How do you understand that vote?

SALAM: Well there were three Republicans who were nominated by Speaker Boehner to that commission. And all three of them wound up voting against the Bowles-Simpson Commission. And the shared reason they all had for it is that they objected to President Obama's coverage expansion effort, his Affordable Care Act. And they were concerned that the Bowles-Simpson Commission didn't go far enough on reforming health entitlements, so that was the core reason. He liked a lot of the ideas in it and he actually pursued some of the ideas in it elsewhere but he didn't support it for that reason.

AVLON: I want to thank you both --

MARTIN: Hey, John -- John, can I get one more?

AVLON: Hold it -- Roland, we've got to go on. I'm sorry, my friend.

MARTIN: OK. All right, no problem.

AVLON: All right. Up next, we've got a surprising number related to the stock market and what it could mean for the economy. And Dr. Sanjay Gupta explains the latest diagnosis of Jesse Jackson, Jr.

(COMMERCIAL BREAK)

AVLON: Our third story OUTFRONT tonight, bipolar depression. That's what Representative Jesse Jackson, Jr., is being treated for tonight at the Mayo Clinic in Rochester, Minnesota. The Illinois Democrat and son of the Reverend Jesse Jackson has been receiving intensive treatment for a mood disorder since at least early July and his family says it is unclear whether he will return to Congress.

CNN's chief medical correspondent Dr. Sanjay Gupta is OUTFRONT tonight to talk about the disorder and how it was treated. Sanjay, we've heard it called bipolar two disorder and bipolar depression. What exactly are these conditions and how are they different from regular bipolar disorder?

DR. SANJAY GUPTA, CNN SR. MEDICAL CORRESPONDENT: Yes, there are a lot of colloquialisms people use when describing this but the terms do have meaning here John. Bipolar one, first of all is typically what people are used to thinking about when they think about bipolar. It can be pretty remarkable, characterized by very manic episodes. When people become manic they may spend lots of money, make terrible decisions. People may even think they can fly, things like that, and then it's followed by depressive episodes.

With bipolar two it's the same sort of pattern except you typically don't have as much of the mania, but the depression can be even worse. Bipolar depression is what people often -- also use as a term and what that refers to if you keep everything I've just said in mind is it just refers to the depressive episode of that mania depressive back and forth. So that's basically what it means. In the case of Jesse Jackson, Jr., they talk about bipolar two. He says he has both the mania and the depression, but the mania is not as significant as it is with the other bipolar.

AVLON: Well is treating this specific disorder, is it as simple as using anti-depressant medication or something more complex?

GUPTA: Well this is all so interesting because if you think about someone who's profoundly depressed, for example, an anti- depressant would obviously be a good choice. But in someone who is toggling back and forth between mania and depression in either case, bipolar one or bipolar two, you now start thinking about things like mood-stabilizing drugs.

So instead of trying to actually just treat the depression, what you're really trying to do is stabilize the mood. It can be tough to treat, John, which is why people often do end up in psychiatric hospitals for inpatient treatment. Also John, I'll just tell you quickly I recently did a story about using a sort of cutting-edge treatment, an experimental therapy still where they actually put in deep brain stimulators to stimulate certain parts of the brain to try and again modulate that so a person doesn't have any wild highs or wild lows. AVLON: Sanjay, thanks for educating us.

The politics of "Mediscare" next -- Dems say Ryan will destroy the program. Does that add up for a win in the electoral college for President Obama?

And later, the Pope's butler goes on trial for allegedly stealing secret documents from the Vatican. Now was he motivated to expose, quote, "evil and corruption?" We'll have more, next OUTFRONT.

(COMMERCIAL BREAK)

AVLON: Welcome back to the second half of OUTFRONT.

Our fourth story tonight: the politics of "Medi-scare". Team Obama and team Romney both using scare tactics to try and convince voters that the other will destroy Medicare. These "granny off the cliff" ads could be just the tip of the iceberg. Let's take a look.

(VIDEO CLIP PLAYS)

AVLON: Subtle. Well, now let's separate the facts from the fear-mongering, and challenge talking points on both sides.

Joining us first tonight is surrogate for the Romney campaign, Congressman Jason Chaffetz.

Congressman, it seems that the Medi-scare talking points regarding Medicare have been received by all team Romney. Let's take a listen to this Sunday's shows.

(BEGIN VIDEO CLIP)

DAVID AXELROD, OBAMA CAMPAIGN SENIOR ADVISOR: Quite extreme. Good person, you know, genial person. But his views are quite harsh.

REP. DEBBIE WASSERMAN SCHULTZ (D), FLORIDA: Paul Ryan has embraced an extremist proposal.

(END VIDEO CLIP)

AVLON: That was obviously the Democratic talking points. Let's take a listen to the talking points on your side of the aisle regarding Medi-scare.

(BEGIN VIDEO CLIP)

REP. PAUL RYAN (R-WI), VICE PRESIDENTIAL CANDIDATE: What we're saying is take away the tax shelters uniquely enjoyed by people at the top tax brackets so they can't shelter as much money from taxation to lower tax rates for everybody, to make America more competitive.

(END VIDEO CLIP)

AVLON: Congressman, we'll get the right sound in a little bit. But the basic point is all throughout the Sunday shows, I heard the same thing -- President Obama has blood on his hands for cutting $700 billion from Medicaid. Now, how is that Medi-scare tactic any different than what Democrats have done to Republicans in the past? How does this begin to add up?

REP. JASON CHAFFETZ (R), UTAH: Well, look, when people try to suggest that Paul Ryan wants to end Medicare: (a), that's not true, and, (b), you have to ask yourself, if we do nothing, what's going to happen? It's going to fall off a financial cliff.

And I think we're just pointing to what the Congressional Budget Office, a nonpartisan group, has looked at and said that President Obama, under his plan, what he has passed and proposed would cut $700 billion from Medicare. That's obviously going to have an effect on the program. And so --

AVLON: But, Congressman --

CHAFFETZ: -- what Republicans are saying --

AVLON: That's obviously hypocrisy, because your whole point is we need to address entitlement reform in order to reduce the long-term deficit and debt. So, why turn around and all of a sudden play the Medi-scare card against President Obama?

CHAFFETZ: Because that's the reality of the number. What we're trying to say is in order to save Medicare, we have to make some adjustments now. And for anybody who is 55 years old and older, there will be a no adjustment.

For younger generations, we can save the program if we act now. That's what we're trying to say.

So, to suggest that President Obama wants to do nothing about this is inaccurate. We're trying to point that out. He pulled $700 billion out of Medicare. It's fair to talk about that.

AVLON: But isn't it also fair to point out that the Ryan plan would also keep the $700 billion in cuts?

CHAFFETZ: There's a different approach to this plan. What we're trying to say is we have to save it. What I hear routinely from the Democrats time after time and in that ad is that they're going to throw grandma over the cliff.

That's not fair. That's not accurate. That's not what the plan says. Every time they say, we're going to voucherize it as I've heard you say several times on the program, that is factually incorrect. It is a premium support plan. It is not a voucher program.

So, when I routinely hear vouchers, vouchers, vouchers, I have to say to myself, that's not right. They're trying to scare people that we're moving to a voucher program. That is not what Paul Ryan has suggested.

AVLON: Let's be honest, your side is trying to scare people on the other side with $700 billion. Let me ask a practical question -- CHAFFETZ: No, we're not. We're trying to make a point that we're trying to save the program.

AVLON: Well, one criticism of the Ryan plan is that it would move the healthiest, lowest cost seniors out of Medicare and the plan would be left to cover the sickest individuals. How does this just not mathematically drive up the overall cost of the program?

CHAFFETZ: What you have to understand is if you're 55 years old and older, there's going to be no change. What Paul Ryan can point to and the Republicans when we passed out this budget is it was scored by the Congressional Budget Office and that is the independent group which we all look to, to give us a fair and accurate scoring.

So we have it there in black and white. It has been scored. And the reality is the Ryan plan, as we put forward in our budget, does balance over the course of time and pays off the national debt.

President Obama's plan under his budget, it never balances. In fact, it's fair to point out that in four years, that President Obama has introduce add budget, never has he gotten even a single Democrat to support his plan.

He has no plan to save Medicare. He has no plan to actually save this country from the financial cliff that we're going off. That's just the reality. That's just a fact.

AVLON: Final question for you. On "60 Minutes" last night, I notice that Paul Ryan said something very interesting. Let's take a listen.

(BEGIN VIDEO CLIP)

REP. PAUL RYAN (R-WI), VICE PRESIDENTIAL CANDIDATE: What we're saying is take away the tax shelters that are uniquely enjoyed by people in the top tax brackets so they can't shelter as much money from taxations to lower tax rates for everybody to make America more competitive.

(END VIDEO CLIP)

AVLON: Is closing overseas tax shelters a position that Mitt Romney agrees with?

CHAFFETZ: Look, what Republicans have said, what Paul Ryan said, what I've said, what I've heard Mitt Romney say is they want to broaden the base and lower the rate. Now is not the time to raise taxes.

That's what President Obama wants to do. He wants to raise taxes. To hear Democrats say it, they just want to -- we're one good tax increase away from prosperity.

Want to get rid of those loopholes and broaden the base. But we want to lower the rate. Democrats want to broaden the base but raise the rate so they can spend more and expand government. That is the fundamental difference between the two parties and the two candidates.

AVLON: Well, thank you for your time, Congressman. I look forward to hearing some of the specifics about those closed loopholes.

Now, for the other side, let's turn now to Obama campaign press secretary, Ben LaBolt.

Ben, welcome OUTFRONT.

BEN LABOLT, OBAMA CAMPAIGN PRESS SECRETARY: Thanks for having me, John.

AVLON: You just heard Congressman Chaffetz say that there's that fundamentally, his team is not playing the Medi-scare card. When you guys hear the $700 billion attack, what's the reaction inside the Obama camp?

LABOLT: Well, I think you pointed out that this is actually one area where we agree with Congressman Ryan. He preserved the $700 billion in savings that the administration identified by getting waste and fraud out of the system, getting rid of unnecessary subsidies to insurance companies and redirecting those into benefits for seniors. We closed the donut holes so that seniors are saving $600 a year for their prescription drug coverage.

So, this is the type of -- these are the type of savings that we need to promote the solvency of Medicare in the long run.

AVLON: Well, I appreciate that, Ben. But let's also be honest. Democrats are using scare tactics of their own. Let's take a listen.

(BEGIN VIDEO CLIP)

AXELROD: Quite extreme. Good person, you know, genial person. But his views are quite harsh.

WASSERMAN SCHULTZ: Paul Ryan has embraced an extremist proposal.

(END VIDEO CLIP)

AVLON: Your folks keep saying that Paul Ryan is a good person but he's also a radical extremist. Isn't that contradictory?

LABOLT: Well, I think he's the intellectual leader of the Tea Party, somebody who said that his top goal was deficit reduction. But when the president was negotiating a $4 trillion deficit reduction plan with Congress, according to "The New York Times" today, Paul Ryan opposed that because he thought it would support the president's reelection.

His Medicare plan is a radical plan. It would cost seniors thousands of dollars more out of pocket and transfer cost on to them, all in order to pay for $5 trillion tax cuts for the wealthiest Americans. In fact, under Ryan's plan, Governor Romney would pay less than 1 percent on his taxes.

AVLON: All right. I want to read you a quote from "The Wall Street Journal" editorial page today. I'm sure one of your favorites. It read this, "Late last year, Mr. Ryan joined Oregon Democratic Senator Ron Wyden in introducing a version of his reform that explicitly retains Medicare as we know it as a continuing option. The reform difference is that seniors would also for the first time have a choice of government-funded private insurance options. This premium- support model has a long bipartisan pedigree and was endorsed Democratic Senators John Breaux and Bob Kerrey as part of Bill Clinton's Medicare commission in 1999."

So, here's my question, Ben, how is this bipartisan proposal, Wyden-Ryan, in any way extreme?

LABOLT: Well, ultimately, Senator Wyden has made it clear that he disagrees with the Ryan budget writ large. He doesn't think that that's the approach we should take. The president's got a balanced approach on the table. And that's one that he supports.

But ultimately, this really does restructure what the nature of Medicare is. It turns it into a voucher program, increases the out- of-pocket cost for seniors by thousands of dollars each year. And the president is committed to its preservation. The Affordable Care Act extends the solvency of Medicare by eight years. The president's budget finds additional Medicare and Medicaid savings and would intend it solvency by another two years.

The president has been working towards solutions to promote Medicare solvency. But what this does is it radically restructures Medicare.

AVLON: All right. Final question, David Axelrod, your boss, this morning compared Sarah Palin to Paul Ryan, seemingly trying to draw a link between them in the voters' minds. But let's be honest, Paul Ryan is very different from Sarah Palin. He's a policy wonk, an intellectual leader of his party, as you just said. And Sarah Palin isn't even speaking at their convention.

So, why this desperate attempt to link the two?

LABOLT: Well, David was asked about the crowds that Governor Romney has seen at his events for the first time in the past couple of days. And what David was saying was that it reminded him of some of the excitement from the right wing, about the choice of the V.P. candidate.

Ultimately, he wasn't -- he wasn't drawing a parallel on other fronts. But I think that's what we're going to se here, capitulation to the right wing. It's making the "Weekly Standard" editorial board particularly happy. I think the choice of Paul Ryan will be devastating for the middle class, since he would cut programs essential to creating good-paying, sustainable jobs for the middle class in things like education and research and development and infrastructure.

AVLON: Ben --

LABOLKT: And restoring economic security for the middle class is the president's ultimately goal and I think the ultimate question that will be on the ballot in November.

AVLON: Ben LaBolt, thanks for coming OUTFRONT.

Now, let's turn to CNN chief national correspondent John King.

John, you just heard this exchange about the Medi-scare fight.

So, let's take a look at who it might be really aimed at, the states with the greatest share of population of 65 and older. Florida and Iowa are in the top five, where you are today.

Now, here's a look at CNN's toss-up states. The percentage of 65 and older in each of these states, Florida, 17 percent, Iowa, 15 percent, Ohio, 14 percent, New Hampshire.

So, this debate clearly is aimed at those seniors, isn't it?

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: It's aimed at those seniors, John. It's also aimed at the group below them, voters in the 45 to 64-year range, because if you listen to Paul Ryan and the Democrats agree, nobody currently on Medicare would be affected. Nobody about to go on Medicare would be affected. But people who are a few years out, they would be.

And so, if you look at that, if you add up both of those populations, that's half of the vote in Florida. It's close to half the vote here in Iowa. You've been going back and forth through the numbers.

There's a big question here. If they go line by line, if this campaign becomes line by line through the Ryan budget, the Republicans lose. If it becomes, "Mr. President, we need to make tough choices and some are going to hurt, you've been in office three years, where are yours?" -- then the Republicans think they can win.

So, how this campaign plays out in the weeks ahead is critical, whether it's about the line by line or whether it's about the big picture.

AVLON: John, in your experience, do these kinds of attack end up working to change voters' minds or is it really just about playing to the base?

KING: Well, that's what's so fascinating about this, John, because both campaigns are now acknowledging -- they have been for weeks really. And the Romney pick of Paul Ryan cements him cements him in the view that this is a base election. President Obama changing his views on same-sex marriage, appealing to women voters, he's doing everything he can to drive out the liberal base, including now the Medicare attacks and the Republican ticket.

What is Governor Romney doing? Trying to gin up support among the Republican base, very much like 2004, the Karl Rove, George W. Bush versus John Kerry race.

The question is, what happens to that small group, the shrinking group in the middle of the country?

If you go back to 2008, John McCain nationally carried senior citizens. In 2010, senior citizens were critical to the big Republican victories at the governors' level and the congressional level. So, that's part of the tug of war now. It's a fascinating thing. How do you appeal to your base, which both sides are doing fervently, and still fight for that shrinking center?

It is the center that will decide the election, a very tiny slice of the electorate here in Iowa, in Florida, in Ohio, in New Hampshire and Nevada.

But sometimes campaigns have internal contradictions in ginning up the base and then reaching for the middle. We got 85 days now to figure that out.

AVLON: That's going to be the big fight. John King from Iowa.

Up next, the price of your iPhone is going down. But there's a reason you might not want to buy just yet.

And a real-life crime story from inside the Vatican -- private chambers, secret documents and a butler.

(COMMERCIAL BREAK)

AVLON: It's been nearly four years since the height of the recession. And still a lot of uncertainty hangs over the American economy and it's understandable. Unemployment seems stuck, hovering above 8 percent, and then there's the problems abroad. Greece's economy has contracted again. Europe's powers that be can't seem to have a meeting of the minds on how to deal with the ongoing debt crisis.

But here's a does of perspective -- so far this year, the major stocks indexes for the big euro economies, England, France and Germany, are all higher. And in the U.S., the Dow Jones Industrial Average is up 7.8 percent year to date.

The number tonight: 13,169. That's where the Dow closed today. That's double where it was on March 9th, 2009, the day the market closed at 6,547. The low point of the financial crisis, which was also just day 50 of the Obama administration.

That means the U.S. stock market is up more than 100 percent from the height of the fiscal crisis. Not bad performance under a supposedly socialist, anti-business president.

Now, stock markets are traditionally considering leading indicator, meaning there may be brighter times on the horizon. But the disconnect between Wall Street and Main Street where unemployment remains over 8 percent, that should still trouble us all. One person who's taken advantage of the stock market run is Representative Paul Ryan. According to his financial disclosure forms, he's invested in some well known names, McDonald's, Wells Fargo, Starbucks, even Whole Foods. He's also been investing in tech companies like Priceline, Amazon, and Citrix.

Ryan even owned a small stake in Twitter, through a mutual fund he owns. According to the math of (INAUDIBLE) Fortune, it's only at $25 to $50 steak but still more than I own.

Now, one stock that's really performed well is Apple. It's up over 53 percent so far this year and there could be more gains ahead. Retailers like Target and Best Buy are starting to discount iPhone prices. That sounds bad for apple but it's not. Many tech experts are expecting Apple to announce a new iPhone next month. And that could give the stock another boost.

Now to tonight's "Outer Circle" where we reach out to our sources around the world.

To Syria, where rebels are claiming they've shot down military jet and they got proof on video.

Ivan Watson is following the story from Istanbul, and I asked him if their claims add up.

(BEGIN VIDEO CLIP)

IVAN WATSON, CNN INTERNATIONAL CORRESPONDENT: John, rebel cameras filmed Syrian MiG fighter jet bursting into flames in the skies above the eastern province of Deir ez-Zor and then going down. And this seemed to stun the rebel cameraman.

Now, the rebels claim they shot this fighter jet down with a 14.5 millimeter anti-aircraft cannon, which is highly unlikely given the speed that aircraft can move out. Syrian state media has also made an unlikely claim, claiming that the jet was doing a routine training mission when we know they've been bombing Syrian cities and towns for weeks now. But it said it went down due to a technical malfunction and the pilot was still missing after ejecting from his aircraft.

Meanwhile, the rebels have now broadcast another video a man they claim was the pilot, a man by the name of colonel pilot Mufeed Mommamed Sulaiman. He's clearly surrounded by armed men and he does not look happy to be in their presence.

Whether or not this plane was shot down, it is a moral victory for the armed opposition who have been unable to challenge the Syrian military's complete dominance of the skies over Syria -- John.

(END VIDEO CLIP)

AVLON: Ivan Watson from Istanbul.

Our fifth story OUTFRONT tonight: the scandal that has painted an embarrassing picture of corruption and cronyism in the Vatican. Earlier today, the pope's former butler, 45-year-old Paolo Gabriele, and another Vatican employee, were officially charged with aggravated theft. The two are accused of leaking hundreds of secret documents taken from the pope's personal apartment. Gabriele said he acted out of a desire to combat, quote, "evil and corruption" everywhere in the church.

The Vatican has confirmed the authenticity of the documents but vigorously denies the allegations of corruption, leaving many to wonder what other secrets of any could be revealed in the public trial.

CNN's senior Vatican analyst and correspondent for the "National Catholic Reporter," John Allen, joins me now.

John, what does a public trial even look like in the Vatican?

JOHN ALLEN, CNN SR. VATICAN ANALYST: Hi, John. Well, we should say that a public criminal trial in the Vatican is basically unprecedented. So there's a lot we don't know. At the moment, the Vatican's tribunal is in recess until September 20th, so we have to wait until the judges get back from their summer break, to know things like where this trial is going to be held and how much access we're going to have and so on.

What we can say is that in the Vatican, as under Italian law, they don't rely on trial by jury, so this case will be held by a three-judge panel. When they wrap up their work, there's basically an automatic review by an appeals court. Experts say the wheels on this sort of thing grind fairly slowly, so we could be talking about 2 1/2 years before we get a final verdict.

AVLON: John, some of the documents leaked allege some pretty salacious and secular sins. Including letters written to the pope complaining of corruption in Vatican finances, an anonymous memo criticizing a new Vatican law against money laundering.

What other revelations, if any, do you expect to come out of this trial?

ALLEN: Well, I doubt there will be many new documents but there is a pretty big shoe waiting to drop during the trial, which is the question of whether Gabriele acted alone or whether he was put up to this by others higher up in the system, potentially even some Vatican cardinals. Now, the Vatican has strenuously insisted that there are no other suspects beyond the two individuals who were indicted today.

But in much Italian commentary, it's basically an article of faith, that a simple papal butler could not have orchestrated an affair this sophisticated. One of the Italian papers today, John, carried a banner headline that read "Hallelujah, The Butler Did It All, the Vatican Remains holy and Immaculate." You know, sarcasm basically dripping off the page.

Now, to date, Gabriele has not really played that card. One of his attorneys has said his client basically acted alone but of course it's early days. It's going to be fascinating to watch as the defense strategy evolves whether Gabriele or his team at some stage decide to involve someone else in this story.

AVLON: It's all sort of reminiscent of "Godfather 3." Thank you for joining us, John Allen.

Up next, women rule and keep America on top.

(COMMERCIAL BREAK)

AVLON: The Olympics are over. And it's clear, Team USA came out on top, 104 total medals, 46 gold, dwarfing the nearest nations of China and Great Britain.

And beneath that milestone was another historic marker of success. For the first time, a majority of the medals won by the U.S. were won by women. Now, this comes 40 years after President Richard Nixon signed Title IX into law, which aimed to equalize academic and athletic opportunities for both men and women.

Just as elections have consequences, policies have an impact over time. And it's clear the Title IX has had an impact on our nation. It's made us stronger.

And in a larger sense, the Olympics remind us that despite all our interesting differences, there is always more that unites us than decide us as Americans. And when we pull together in the same direction, transcending our team-ism, while aiming for individual and collective excellence, we can achieve great things as a nation. It's a lesson that our politicians in Washington and out on the campaign trail could stand to learn from our Olympic athletes as they come home.

And another woman who rules, our colleague Candy Crowley. She'll be moderating the presidential debate at Hofstra University this fall, the first time a woman has done so in two decades -- an honor well- deserved and overdue.

"ANDERSON COOPER 360" starts right now.