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In the Arena
Way Below Expectations; A Country in Chaos
Aired June 03, 2011 - 20:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ELIOT SPITZER, HOST: Good evening. I'm Eliot Spitzer. Welcome to the program tonight.
Dismal jobs numbers, let's take a look. You can see the unemployment rate went up to 9.1 percent. The wrong direction it's moving and in fact, the real unemployment rate, 15.8 percent. That totals 24.3 million people when you include the unemployed, the underemployed, and those who are too discouraged even to be counted anymore.
I'm going show you math that makes it even worse. Let me show you. We created 54,000 jobs last month. It doesn't sound too terrible until you remember we have got 24 million unemployed folks who are simply not going get back to full employment ever at that rate especially when you consider population growth.
We're going to talk about that and the concerns about a double- dip recession with the White House in just a moment.
But, first, here are the other stories we're drilling down on tonight:
(BEGIN VIDEOTAPE)
SPITZER (voice-over): Yemen, a ticking time bomb. Missiles fired on the presidential compound, and violent protests. And a humanitarian crisis in the making.
And -- John Edwards today indicted by a grand jury. Jeffrey Toobin joins me. Is this an American tragedy?
Then the presidential hope, Ralph Reed hosts a conference of the evangelicals this weekend and every Republican hopeful will be there to kiss his ring. Who will get his blessing?
(END VIDEOTAPE)
SPITZER: So, now, to the jobless number. Any way you look at them, they're not pretty. So, how does the White House respond and what will the recovery really look like?
Joining me now from the White House is the president's top money man, Austan Goolsbee, chairman of the White House Council of Economic Advisors.
Austan, thanks for coming on the show.
AUSTAN GOOLSBEE, CHIEF ECONOMIST, ECONOMIC RECOVERY ADVISORY BOARD: Thanks for having me again, Eliot.
SPITZER: Now, look, I know the president was out there again saying this was a bump in the road. I mean, I don't want to be harsh, but it seems like more than a bump in the road. It begins to look to me, looking at all the economic data, like there's an argument that we're dipping into a double-dip recession.
What's going to change in the near-term to bring job creation back?
GOOLSBEE: Well, hold on -- I don't think, you know, the one month is not a trend. One month ago, we came in 100,000 above expectations. And if you remember, I said don't ever make too much out of any one-month report. This month we're 100,000 or so below expectations.
And again, don't make too much out of one month's report. Multiple-month average is a far more accurate barometer of where is the labor market and the last six months, we've added about 1 million jobs in the private sector.
What happened is we had some relatively stiff headwinds that slowed the growth rate coming from gas prices, coming from the tragic events of natural disaster origin in Japan and some of these European financial issues. And if you slow the growth rate, you're going to slow the job creation engine. But, you know, we have an official forecast that we update every six months, so we don't update that in response to any one month's numbers.
SPITZER: Couldn't agree with you more, that (a), don't make too much out of one data point. But if you look at the trend line, fourth quarter growth last year above 3 percent, first quarter this year down to 1.8.
You mentioned gas and you're right -- Japan, the tsunami and a disaster and horrendous. Hopefully, you don't have a repeat of that. But you still have the gas and energy cost, that is a continual crisis. Housing is a continuing crisis. Long-term structural unemployment, that is a continuing crisis.
We still haven't persuaded corporate America, which has record profits, to begin to hire again. So, what is going to change their psychology or the demand curve to get corporate America to begin to hire?
GOOLSBEE: Well, I know you say that, but we have added more than 2 million jobs in the last 15 months and more than 1 million in the last six months. So, I don't think it's accurate to say that this is -- that there has been no turnaround and that companies do not express willingness to hire.
I think the growth rate makes a big difference. Now, you're right, the headwinds of the beginning of this year slowed growth compared to what it has been over the last year and that is the root of -- of what the -- of what the problem would be with the slowdown. And so, the question is are those aspects of rising problems going to continue rising?
So, gas prices have come down a bit. We have had the investment tax incentives and the payroll tax cut passed by the president in December, have come online and those will be contributing over the entire course of 2011. You've seen the president outline start-up America to encourage entrepreneurship. You've seen business investment growing at double digit rates.
SPITZER: I'm not -- I'm not saying the president hasn't been using every policy leverage available to him. He has been. It just hasn't been working as effectively as we would hope, or as effectively, certainly, as it did in the -- when we were coming out of prior recessions, which is why people are worried there's a structural problem.
GOOLSBEE: No, I don't think that's quite accurate. You know, through the last recession, it was 22 months before we added any jobs. So, in the last 15 months, we've added more than 2 million jobs in the private sector. In the comparable period after the last recession, we had lost almost 200,000 jobs.
So, I don't actually think that that's true.
SPITZER: Last question for you, Austan. Is there some inherent tension between the effort and the policies you want to put in place to begin to drive the engine of growth faster and faster, and the negotiations you're having on the debt in the sense that if you want to drive the economy, you want stimulus, you want spending, you want more activity -- on the other hand if you're going to be cutting government spending in some sort of deal on the debt, that that seems to stand in opposition to what you might do in terms of growth? Is -- how do you work through that?
GOOLSBEE: I see where you're going with it. I would say most of the discussion about the deficit that the president is putting forward is about our long run fiscal challenge. It's not about the next six months or that kind ever thing.
I would say as regards to the recovery, you know, when the president comes into office and we're losing 780,000 jobs a month and we're teetering on the edge of depression, government is really the driver of recovery. It's the private sector is in freefall at that moment, and so, the only thing we can do is rely on the government to prevent something worse.
We are now transitioning to a completely different environment and this is one where the private sector's got to be the leading arm of the recovery.
So, what the government's trying to do is give the incentives to help the private sector stand up so I don't think we should not think of it all as being about the amount of government stimulus. We should be thinking of -- are we preserving in the budget while living within our means, those things are going to foster the growth rate of the country going forward -- the education spending, the research and development, and the things like that. And if we adopt a balanced plan like what the president's proposing, I think we can preserve that stuff.
SPITZER: All right. Austan Goolsbee, thanks so much for joining us. Let's hope next month's numbers are going to be more affirmative than today's numbers were. Thanks so much for joining us.
GOOLSBEE: Take care.
SPITZER: Earlier today, President Obama traveled to a Chrysler plant in Toledo, Ohio and he talked about the jobless numbers. Take a listen.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: There is nobody here who doesn't know someone who isn't looking for work and hasn't found something yet. Even though the economy's growing, even though it's created more than 2 million jobs over the past 15 months, we still face some tough times. We still face some challenges.
This economy took a big hit. It's just like, you know, if you had a bad illness, if you got hit by a truck, you know, it's going to take a while for you to mend, and that's what's happened to our economy. It's taking a while to mend.
There are always going to be bumps on the road to recovery. We're going to pass through some rough terrain, but even a Wrangler had a hard time with --
(END VIDEO CLIP)
SPITZER: There is that phrase, a bump in the road. We talked about it with Austan Goolsbee and the president says that's all these numbers are.
Those words caught the ear of senior political analyst David Gergen as well.
David joins me now.
David, what do you think? Was this the right tone for the president to take on a day when the job numbers are pretty bleak at best?
DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: I was surprised about this, Eliot. I -- basically, the president and his chief economic adviser, Austan Goolsbee, earlier in the day both said -- called this a bump in the road. And, you know, of course, for most Americans, what they've seen is a flood of bad numbers not only on jobs, but in manufacturing, housing, consumer confidence is down and the economists are lowering their growth projection for the second quarter.
And what this number seemed to do today was to confirm that there is a sharp deceleration in the economy. There's a softening here. And so, I would have assumed that rather than calling this a bump in the road, they would say, look, there are some alarm bells to go off in the economy, and I want to tell you that we're concerned. We're listening closely and we are ready to act if we se that this is definitely softening and we're treating it as a one-month number, but I want to tell you, we're on top of this, and we believe if there's deceleration, we're going to move and move to protect American jobs.
And I do think it's going to have an impact on his negotiations over the deficits.
SPITZER: I couldn't agree more with you. He seemed almost blase about these numbers and I think everybody, as you said, is going to look at this and say this crystallizes our deepest fears. He said when you're recovering from an illness it takes time. I think most people are wondering whether we're going to the right doctor.
And so, as a doctor for the economy, he's going to tell us what is the game plan? I didn't hear that today.
GERGEN: Yes, I agree with that, Eliot. I think there were two things we look for from a doctor, and that is the first place, what is your diagnosis of what's going on and do I understand it? And, secondly, what is the best plan for fixing things. And I don't think we got either one of those today, the voting public.
You know, it's not a big deal that he said this, but I was surprised. I thought it was a mistake. I thought he should have been much clearer about how serious this -- this -- these numbers are, not only on jobs, on housing and that sort of thing and then had a much clearer plan.
And I think absent those two things, there are a lot of Americans who are going to wonder who's in charge in Washington and what is our plan to get out of this?
SPITZER: Is Mitt Romney, who has just announced yesterday -- who is basically saying change your doctor for the economy. He's going to hit this one out of the park I presume, look at these job numbers and confirms everything that the Republican Party's been saying?
GERGEN: Well, this was a -- you know, you never want to have bad news help a candidacy, but this is a situation where the news today was very consistent with what Romney was talking about as he declared yesterday, and I do think he can step forward and say, look, I'm the guy who's created jobs in the private sector. I know something about this. I have a better diagnosis.
Now, the danger for Romney is he may come up with the wrong set of solutions and he's got to be very careful about this himself now. He's going to -- the spotlight -- Romney is going to have more of a spotlight here after these numbers, and he's got an opportunity to be more convincing about the Dr. Fix It. But he's got to make sure he's got diagnosis and the answer right.
SPITZER: I think it's interesting -- to come back to Mitt Romney just for a moment -- the contrast between Mitt Romney on the economy and John McCain on the economy. John McCain, a great admiration for him is an individual on many levels and looked a bit like a deer in headlights when he was talking about the economy when it crashed in the middle of the '08 campaign, Mitt Romney is comfortable talking about these issues -- whether he's right or not is a separate issue.
And given the track record of his president, Mitt Romney may have a lot more traction on that issue as this conversation carries forward.
GERGEN: I agree with that. You know, John McCain was an authority on foreign affairs, especially on war. Mitt Romney is more of an authority on the economic picture and this is -- this plays consistently with his emphasis. There are some other candidates that are going to have to step up to it as well on the Republican side.
But I do think that it, in effect, beckons Mitt Romney to stand in the spotlight and tell us what you would do. This is your moment. It's come earlier than people might have expected.
SPITZER: That's exactly right. David Gergen, as always, thanks so much for your insights on these issues.
GERGEN: Thanks, Eliot. Good to talk to you.
SPITZER: As always, thank you.
Coming up: chaos in Yemen as the opposition fires into the presidential compound.
But, first, Jeffrey Toobin is here. Jeff, not a good day for John Edwards, the former presidential candidate. What happened?
JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: He was indicted on six counts and the certainty is, if he's convicted, he's going to lose his law license and in all certainty his freedom. He'll go to prison if he loses this case.
SPITZER: I would say that qualifies as not a good day.
TOOBIN: Yes.
SPITZER: All right. Jeffrey, fascinating conversation and we'll have that and more coming up. Fareed Zakaria on a country on the brink of civil war when we come back.
(COMMERCIAL BREAK)
SPITZER: Now to the increasingly dangerous situation in Yemen. There is a full-blown civil war going on there tonight. What began as a protest today became an assault on the center of power in the Yemeni capital of Sanaa. Protesters attacked the presidential palace. Explosions rocked the mosque inside the palace during Friday prayers. And reporters say embattled leader Ali Abdullah Saleh was, quote, "lightly injured." In fact, later in the day, Yemeni television played an audio recording from Saleh claiming that seven people were killed in the attack.
A quick prime run on this latest Mideast country to be plunged into the state of crisis. Yemen is adjacent to Saudi Arabia, twice the size of Wyoming, with a population of 24.1 million, most of them poor. The GDP per capita is $2,600, a fraction of what it is here. Unemployment at last estimate was 35 percent which, of course, was a trigger for the unrest that began there back in March.
Joining me now from the capital city of Sanaa by phone is Abdul Ghani al-Iryani, he is the founding member of the Democratic Awakening Movement in Yemen.
Thanks for joining us.
ABDUL GHANI AL-IRYANI, DEMOCRATIC AWAKENING MOVEMENT (via telephone): Thank you.
SPITZER: So, the president spoke today. Is there any progress in reaching a resolution ever what is increasingly being viewed as a violent civil war?
AL-IRYANI: The speech that the president delivered just a few moments ago did not indicate that he intends to resolve to peaceful negotiations and the supplement of the situation, although, it's very clear to me that if he chooses to go to sort of vengeance, the country will drive into civil war.
SPITZER: And if the alternatives are civil war and chaos on the one hand and a peaceful resolution on the other, several times there appear to have been resolutions that were incipient, that were close. What is the stumbling block that is preventing a resolution of this by peaceful means?
AL-IRYANI: Saleh never accepted the idea that he will leave office. And therefore, he refuses to sign at the very last moment an initiative which would have given him honorable exit and protection from prosecution afterwards.
Right now, I think he will consider, given the fact that while he was striking at the al-Ahmad (ph) clan with immunity. That the immunity is no longer. And now, he is as vulnerable as they are with this violence.
SPITZER: And meanwhile, we seem to get the sense and, of course, we're not there. But the sense we get is that the economy of Yemen is in freefall. That it is almost grinding to a halt, that a country that is already impoverish side getting to the point where people will be -- destitute and without food.
Do you not need an immediate resolution of this to prevent chaos at an economic level? AL-IRYANI: The economic crisis was already very bad before the violence started. Right now, maybe one-third of the population, this famine, if this continues, we will have people falling dead on the streets.
SPITZER: All right. Mr. Al-Iryani, thank you so much for joining us and I look forward to continuing this conversation.
AL-IRYANI: Thank you.
SPITZER: Now to understand more deeply Yemen's importance to us here in the United States and to the rest of the troubled Middle East, let's turn to CNN's own Fareed Zakaria. He is the wisest foreign policy thinker I know and the host of "FAREED ZAKARIA GPS."
All right. Fareed, Yemen -- first of all, why do we care? I hate to be flippant about it, but where is it, why does it matter, and what is the relationship of the government of Yemen?
FAREED ZAKARIA, HOST, "FAREED ZAKARIA GPS": You know, actually, we should care about Yemen.
There are two countries that matter directly to the American people -- Saudi Arabia because of the price of oil, and Yemen because of al Qaeda. The al Qaeda in the Arabian Peninsula, which is the sort of offshoot of al Qaeda that exists in Yemen is probably -- and intelligence sources agree on this -- probably the most dangerous al Qaeda offshoot outside of the one in Pakistan. So, this is the one, if you remember, that planned the printer cartridge bombs.
SPITZER: Yes. The toner cartridges were going to be sent on the airplanes and blown up sent over to Chicago.
ZAKARIA: And actually quite worrying. You know, as you know, I don't tend to hype these things -- those were very sophisticated bombs. So, clearly, there is a pretty advanced, technically advanced terrorist operation out there, and al Qaeda is actually gaining right now strength in Yemen.
SPITZER: Look, in Yemen, we are seeing the complete breakdown of civil society. The rebels are pushing back against an autocratic regime that's been helpful to the United States and we see chaos emerging. And in that chaos, you're saying al Qaeda and the Arabian Peninsula may get a foothold or cement a foothold that will be a launching pad that we got to be terrified of.
ZAKARIA: It's chaos but there is a sort of matter (ph) to the chaos, which is that President Saleh is finding himself battered, pushed from all sides including the international community. So, he is withdrawing his army from all peripheral parts of Yemen. So, he's consolidating.
Now, what he's doing effectively is ceding those peripheral parts to al Qaeda and that is what's happening. They're taking town after town, area after area, and what he's doing is he's presenting Yemen and the world with a stark choice. Either you support me or al Qaeda takes over Yemen.
John Brennan, the president's counterterrorism adviser has gone to Yemen to see if he can try and broker some deal. This is one of those cases where it has been very valuable that President Obama has not jumped up and down and said, you know, President Saleh has to go, because we certainly want to see if we can ease him out, but we don't want Yemen to be taken over by al Qaeda.
SPITZER: But having said that, the U.S. statements have gotten somewhat stronger in terms of his response which has been repressive, there has been violence used by the government and not to the extreme of Syria or Libya, certainly, but our statements in response to his use of force have gotten stronger over time.
ZAKARIA: Clearly, we are trying to engineer an exit strategy for him, and it's been very frustrating because he seems to agree to an exit strategy and then has buyer's remorse the next day partly because he's trying to protect various elements of a very corrupt entourage of family and things like that. But at the end of the day, we need to find a way for him to go without total chaos, because that will certainly benefit al Qaeda.
SPITZER: But, again, once again, we have this paradox where we have the greatest leverage with countries that are closer to us and therefore tyrants -- and let's acknowledge, most of them are tyrants -- who are closer to us and are most likely to be deposed where as an Assad or a Gadhafi reject this out of hand and use unlimited violence and manage to hold on.
So, there seems to be that tension between so, people will say, why should it be closer with the United States and they'll just turnout on us and force us out? Isn't this a paradox of sorts?
ZAKARIA: It is a paradox. And if you are a dictator who tends to repress his people, it's a good thought which is being ally to the United States has a down side, which is that in the end, the United States is very uncomfortable supporting dictatorships. I don't think this is such a bad thing for the world.
SPITZER: But their economy continues to collapse and is that not a backdrop? And can we resuscitate it in a way that al Qaeda is gaining more turf in a country like Yemen?
ZAKARIA: No. I mean, Yemen is a basket case. It is the basket case. It had a civil war of south Yemen and north Yemen, they've unified. It's a great tragedy.
And it's worth remembering, though, just how much of this problem is manmade. Yemen's economy is not destined to be the kind of basket case it is. When the British ruled -- when they had an empire, there were two British trading posts. One was Aden which was in Yemen and the other was Singapore.
Fast forward 40 years later, and Singapore has higher per capita GDP than most European countries, and Aden has turned into a hell hole. SPITZER: And I think the GDP of Yemen is something approaching $25 billion. This is a pittance of an economy, 30 percent to 40 percent of the nation, I believe, lives below the poverty line, on $2 a day, just numbers that we have a hard time fathoming almost without access to food.
ZAKARIA: We are just trying to stabilize. All we want is order because if you don't have that, I think you will have two phenomenon come out of Yemen -- one is al Qaeda which will get stronger because it will have territory on the basis and communications set up that it can do. The other is kind of Somali pirate syndrome because it is turning into a kind of gang land, and each of those gangs will need money and they will use crime. They will use drugs and they will use piracy.
ZAKARIA: Let me change gears totally for a minute. You have this Sunday night, 8:00 p.m. here on CNN, a critically important special about innovation as the key to the U.S. economy. What if you wanted to say to our viewers -- what do we need to invest in to make innovation once again the driver so that we don't have months like the last one where jobs don't get created? What should we be doing?
ZAKARIA: I think there are two or three crucially important things. The government of the United States has to get much more heavily involved in basic research. We have to -- we're doing a lot of it in the 1950s and '60s. I think we have to do much more because in the 1950s, there was a huge steel industry in the country. There was still a huge automobile industry that employed millions and millions of people.
All those kinds of jobs which are high-skilled and low education are going away because the Indians and the Chinese do them and machines do them better. All that will's going to be left for us are knowledge workers, knowledge industries, innovative industries. So, we've got to figure out how to produce a lot of more of that stuff.
And instead we've been cutting back, and we've been cutting back on so many of those kinds of things. We cut back on state university funding. The University of California system after all is what created Silicon Valley at some level. All of that is being gutted. California now builds more prisons than it does college campuses.
SPITZER: Right.
ZAKARIA: If we don't get our act together on research of basic science and technology, other countries are doing it now.
SPITZER: Eight p.m. here on CNN, "FAREED ZAKARIA GPS" special, Sunday night, on innovation. Fareed, thank you.
Be sure, everybody to watch this Sunday night at 8:00 p.m. Thanks so much.
And when come back, the resurrection of the Christian coalition. Remember Ralph Reed? He used to be a Republican kingmaker. Now, it looks like he may be playing that role again and I'll find out who he may anoint next.
(COMMERCIAL BREAK)
SPITZER: It's the place to be in Washington this weekend. The Faith and Freedom Coalition Conference is where Republican presidential hopefuls try to prove their bona fide base and woo the base. And there's one man the conservative power players are courting, Ralph Reed. Reed started this conference just two years ago, but for years he has been a towering figure among evangelical voters. Ralph joins me from outside the conference.
Thanks for joining us.
RALPH REED, FOUNDER, FAITH AND FREEDOM COALITION: Good to be with you, Eliot.
SPITZER: So Ralph, it seems to me you threw a party and everybody out there suddenly flocked to be at your party. Have you become the kingmaker within the conservative piece of the Republican Party?
REED: No, Eliot, not at all. I think the kingmaker is going to be the primary voters. It's going to unfold beginning probably in Iowa. And as you know, there's a lot of jockeying going on with Florida, Nevada and Michigan and others, but I tend to think it will remain Iowa, New Hampshire and then South Carolina and it will be bunched up after that. And what we know, Eliot, from the exit polls in 2008 is that 44 percent of all the voters in the 21 out of the 29 primary states where exit polls were conducted were self-identified evangelicals or social conservatives. And so the reality is that this constituency is vibrant, it's big, it's going to turn out in a big way. And Eliot, when you combine it with the Tea Party constituency and there's a lot of overlap, there's just no road to the nomination without going through this.
SPITZER: That's why I ask if you are in effect the kingmaker. It does seem to me any candidate who comes into your conference and does not succeed and appeal into your constituency will have a tough road ahead of him or her. So what is the single issue that those who were at the conference want to hear about from the candidates in the next day or two?
REED: I think everybody's got to have some kind of a compelling and coherent vision that combines limited government, less spending and less debt with a growing economy that's going to create jobs and opportunity. That was, you know, Eliot, we have not had since the depression three election cycles in a row that were referendums in the economy, but we're now going to have it, because that's what it was in '08. That's where it was in '10, and that's what it will be in '12 more than likely. That's number one.
SPITZER: I agree with you.
I agree with your analysis there and it seems to me that the public has gone back and forth sampling different ideological answers and hasn't yet found anything either that works or that it finds compelling. And so the question is, is any of the candidates you're going to hear from in the next day or two saying something as sufficiently new to get folks excited about the possibility of real success?
REED: Well, we haven't heard from all of them yet, but I think what they're really talking about is re-limiting government so that instead of relying on government to create jobs and federal stimulus and borrowing 42 percent of what we spend every year, let's have the government live within its means and allow the private sector to create the opportunities. I think the other thing that you're going to see this weekend and not just this weekend, but also in Iowa, South Carolina, New Hampshire, Florida and the other early states that these candidates will go is that even a lot of these Tea Party activists and people who are concerned about debt are also pro-life and pro-marriage and pro-family. So I think they don't necessarily have to lead with those issues, but they clearly have to demonstrate that they share the voters' commitment to those issues.
SPITZER: Well, you know, it's interesting because our conversation certainly began about jobs and economics and jobs and economics and you're bringing up the issues that have been more traditional issues within the faith community here in the end, but it sounds like economics is trumping faith right now within the conservative base that you are leading or speaking for right now.
REED: I wouldn't say trumps it, but I think that, you know, the reality is that when people are hurting and they don't have a job and they can't find a job, you have a responsibility, I believe, as a steward and a servant to meet their need. So this isn't a distinction between your faith and the economy. This is about servant leadership.
SPITZER: I certainly agree with you. Economics is going to drive this entire campaign, but let me ask you one question about faith. Two of the leading Republican contenders are Mormon. How will that sit? Maybe --
REED: I've heard -- I've heard that.
SPITZER: Is it an uncomfortable issue? Is it dicey? Do people feel comfortable talking about it? How does that fit within a community that has been evangelical Christian and how does that play out?
REED: Well, you know, it's interesting. Obviously, any time you've got an overwhelming majority of a constituency that is evangelical and Roman Catholic and somebody is a member of a different faith, different religious tradition, it's always something that's going to be talked about, but I don't believe -- I think it may have been an issue for Romney in '08, but that was because he was the first truly viable Mormon candidate for a party nomination in American history. I mean, even when his dad looked at in '68 and ultimately ended up not running, he was anything but a major contender by the time he got out.
So I think Romney was sort of the path breaker. My sense is that it's going to be a lot less of an issue this go around and I certainly hope it isn't a major issue because in the end what we're electing is a CEO of the country and a president, and I don't think that there should be a litmus test based on one's denominational or religious affiliation for that job.
SPITZER: Right. That's certainly a metaphor Mitt Romney likes to hear. He is always talking about himself as a CEO, so we'll see how this plays out.
All right. Ralph Reed, always great to talk to you.
REED: Good to talk to you, Eliot.
SPITZER: Thank you.
Up next, dictators never learn. The more they crack down, the more they incite the opposition. Case in point, Syria, when we come back.
(COMMERCIAL BREAK)
SPITZER: More cruelty, violence and outright murder in Syria today as the government cracked down on tens of thousands of protesters. It's the single highest day death toll since the protests began. Dozens were killed in the city of Hama (ph) alone and once again, children took to the streets. They came to honor Hamza Ali al- Khateeb, the 13-year-old boy who was tortured and murdered by government thugs. But no amount of brutality has stopped the protesters. The numbers on the streets seemed to grow by the day.
CNN's Arwa Damon joins us now from Beirut, Lebanon. The Syrian government will not allow reporters inside the country to tell us what's happening. Arwa gathers the disturbing details from smuggled information and pictures.
Arwa, what's the latest?
ARWA DAMON, CNN CORRESPONDENT: Well, Eliot, as you mentioned, there most certainly appears to be -- have been the deadliest day to date since this uprising began. The bulk of the casualties concentrated in the city of Hama where according to eyewitnesses and activists, tens of thousands of people gathered in different neighborhoods in the city trying to converge on a central square, when they say Syrian security forces as we have seen in the past as activists have claimed in the past, once again indiscriminately opened fire.
We were speaking with one activist who have been in touch with a number of medics in that city who said that they were simply in tears because of the sheer volume of dead and the sheer volume of casualties that they were having to deal with. And we also saw, according to activists, demonstrations in other parts of the country as well. In some cases, they were also met with lethal force, in other cases with tear gas. But Eliot, unlike in the past where it has continued to be incredibly difficult to get information on this day, it has been even more challenging because according to activists, the Syrian regime shut down the Internet and that meant that the flow of videos we have been seeing emerging on to YouTube had been significantly decreased. Activists are saying that the regime did this because they don't want the outside world to see what is happening inside Syria.
SPITZER: You know, Arwa, another consequence of this shutting down, the Internet and the communication systems it would seem to me, at least, is that it would become more difficult for those who are in the opposition to communicate with each other within Syria. So do we know how they do that? Is there any organization? Is there any structure? And if there, certainly we don't want to reveal anything we shouldn't reveal, but are they able to communicate so they can maintain a unified front against the tyranny of the Assad regime?
DAMON: They are to a certain degree, Eliot. But again, for them it also becomes just that much more difficult. What we have seen the opposition do is create a web of communication. They have smaller coordination councils within each area that tries to gather information that try to gather these YouTube videos and then it is all filtered and brought together and they put out regular statements about what is happening inside the country. But it's very challenging.
I mean, just to give you an idea of how difficult it is, we were trying to get through some eyewitnesses in the town of Rastan (ph), that's outside of the city of Homs that has seen a significant military crackdown that began on Sunday. And one eyewitness I was speaking to was talking about how in certain pockets of this area he couldn't get cell phone reception. So to be able to speak, to be able to get his account of what was happening, he either had to literally risk his life to go on to a rooftop and get reception or try to somehow sneak past the military and get into an area where he could get cell phone reception. So that just gives you an idea of just one of the many challenges that faces the opposition inside Syria right now.
SPITZER: Arwa Damon, thank you for another great and troubling report.
Coming up, former presidential candidate John Edwards indicted for violating campaign finance laws, but just how solid is the case? Jeffrey Toobin joins me to examine the evidence. Stay with us.
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SPITZER: Seven years ago, John Edwards was a presidential candidate. Today, he's indicted on felony charges, forced to surrender his passport, released on his own recognizance. Here's what he had to say outside court.
(BEGIN VIDEO CLIP)
JOHN EDWARDS, FORMER PRESIDENTIAL CANDIDATE: There's no question that I've done wrong, and I take full responsibility for having done wrong. And I will regret for the rest of my life the pain and the harm that I've caused to others. But I did not break the law, and I never, ever thought I was breaking the law.
(END VIDEO CLIP)
SPITZER: How did the former presidential candidate get here? Joe Johns is in Winston Salem, North Carolina where John Edwards appeared in court today. I spoke with him earlier.
JOE JOHNS, CNN SENIOR CORRESPONDENT: Hey, Eliot. Well, this was a long day for John Edwards and certainly one of the most extraordinary for him and one of the most extraordinary in North Carolina politics and perhaps in American politics. This is a guy who was one of the top three contenders in 2008 for the Democratic nomination for president, indicted on six counts relating to his activities during that election. So what we had are six counts ranging from conspiracy on one hand, a number of accepting illegal campaign contributions and there was a false statement charge tacked on at the bottom.
The information came out here on the docket in Winston Salem, North Carolina, and that's where John Edwards showed up this afternoon to face a judge. He came outside after that and talked to reporters for just a minute. He didn't answer any questions outside the court. Inside the court, he answered only a few and the judge imposed some conditions on him and set him free on his own recognizance. So it's clear John Edwards is going to fight. He's a litigator. He knows how to fight. He has a great attorney, Greg Craig, who, you know, went up and down the road with Bill Clinton on the impeachment. So that's where we are here in Winston Salem tonight.
SPITZER: All right. Joe Johns, this is going to be a big battle coming in months ahead. Thanks so much for that report.
To talk about the compelling legal questions raised by this case, I'm joined by our own Jeffrey Toobin, senior legal analyst, also a former prosecutor.
You've been in the courtroom. You've written about it. So in broad brush, what is the essential fact or point that the government has to prove to win this case?
JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: The core of the case is this, is John Edwards had this child with Rielle Hunter. He wanted her kept away from the press. $1 million came from two of his closest supporters and they went to his aide Andrew Young who used it to keep her out of the press to support her. The question in the case is, was that nearly million dollars a campaign contribution which would have been illegal under the campaign laws? Or was it simply a gift to their friend, John Edwards?
SPITZER: OK. Now, the Edwards camp, his lawyers are arguing vehemently. They're saying forget it. He has acknowledged his wrongdoing in terms of the morality of this, in terms of his personal shame. But there's saying there's absolutely nothing in the case law, the rules, the regs, no prosecution ever to suggest that this was an illegal campaign contribution. Do they have a point?
TOOBIN: Well, and they have put out statements by former high officials in the Federal Election Commission saying based on what we know of the facts, this is not a crime.
I don't know. It's a close question. It strikes me as a difficult road for the government to prove because, you know, campaign contributions, I think we all know what they look like. But this immoral though it may have been, doesn't exactly look like a campaign contribution.
SPITZER: This money didn't go into his campaign fund to get used for ads, to be used to pay staff. This was to him to support an illegitimate kid and he's acknowledged that wrongdoing. It had nothing to do with the campaign technically.
TOOBIN: And the government response isn't look, why in the world would these two people who are not part of Edwards' family give this money except to keep his campaign alive. That's the argument we're in favor of.
SPITZER: Then the question becomes and sort to a little technical here as a lawyer. Even if the government could be correct, to be deemed right by a judge that this could be viewed as a campaign contribution, John Edwards would have to have known that for him to have the intent to violate the law, am I right about this?
TOOBIN: Well, Edwards' intent, it's not clear to me what his understanding, that's the main fact in this case. Another complication here is that the two people who gave the money, Fred Baron is dead. Bunny Mellon is literally 100 years old and may not be capable of testifying. How do they prove what their intent was? But obviously the key witness in this case is going to be Andrew Young, the close aide whom Edwards initially persuaded to say that he was the father of Rielle Hunter's child. He has since turned on Edwards. He is likely. And certainly the evidence the indictment suggests he's going to say Edwards knew this was a campaign contribution and that's -- I mean, the prosecution is betting that Andrew Young will bury John Edwards.
SPITZER: He better say that because you can also bet John Edwards could take the stand and say I've admitted my sins, but I will --
TOOBIN: What are the chances of John Edwards taking the stand when the government can play the videos of him going to, you know, Barbara Walters saying I didn't -- I didn't have --
SPITZER: I disagree with you. Disagree with you.
He will simply stand, look the jury in the eye and say mea culpa. I've acknowledged my sins, but not the illegality, not the fraud. There is no case ever like this. Moreover, I would suggest --
TOOBIN: Let the lawyers say that, not him saying it.
SPITZER: He will say it more effectively. I think there's also the question why did they not bring this as a civil case. In other words -- the question then becomes, why do you bring this as a civil enforcement action because there's nothing like it in the case books rather than jumping immediately to the criminal case where you have to prove intent?
TOOBIN: You're raising the most important issue of any prosecutor which is prosecutorial discretion. You used to run a prosecutor's office. You can bring a lot of cases if you want. The question is which ones do you choose to bring? This one is -- it does seem like a bit of a stretch. It seems like they're out -- you know, they really want to punish John Edwards again for something he's certainly been punished for in the public eye. The question is, is this an appropriate use of prosecutorial resources?
SPITZER: It also raises I think a deeper question. And this goes to the Justice Department's use of its discretion and enormous resources which are vast. DOJ is enormous prosecutors, the FBI, across the nation and the world. In fact, they are pursuing Barry Bonds about use of steroids, Lance Armstrong, use of steroids, John Edwards, for however you want to characterize this.
Where are the cases against Wall Street? Where are the cases that matter to most of the American public about the destruction of our middle class based upon the fraud, fraud, fraud, corruption, and crimes committed by senior executives on Wall Street? I don't see anything out of them.
TOOBIN: I think you ought to run for office, maybe.
SPITZER: No.
TOOBIN: The U.S. attorneys, the U.S. attorney's offices will respond to that and say, look, our job is not to solve the American economy. Our job is to punish crimes that we can identify and prosecute. They have prosecuted some white collar crime like insider trading. The case just finished here in Manhattan. But, you know, the Lehman Brothers, the Goldman Sachs, you're right. Those cases have not been brought.
SPITZER: Disappeared. And two years they have spent investigating this. Two years investigating Lance Armstrong, Barry Bonds.
Look, independently, they may stand on their merits. But then you do come to your point which is the discretion vested in the prosecutor to choose where to allocate resources is ultimately the most important decision being made. That's I think the question they're going to have to answer.
TOOBIN: Interesting though, common cause, which is the campaign -- you know, the good government, they came out big in support of this. They said it's good that the president and his people are supporting enforcement of the campaign.
SPITZER: It will be interesting to see in due course.
All right. Thank you, Jeffrey.
SPITZER: Up next, in space, no one can hear you scream for room service. A hotel in orbit? It's not science fiction, when we come back.
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SPITZER: The space shuttle Endeavour is now in retirement. Its final mission ended with a smooth landing earlier this week after a trip up to the International Space Station to drop off a piece of scientific equipment. The entire space shuttle program scheduled to shut down in July. So we've got a question, what's going to happen to the space station?
Shuttles have been the chief support of the space station which is essentially a floating science lab, circling 200 miles up in the sky. It's built kind of like a Lego set. It all started with a Russian module in 1998. And since then, we've added 14 pressurized modules built by the United States, Russia, Japan and the European Space Agency. Kind of like prefab housing but more expensive. It's an intricate structure that supports the modules in 20 sets of solar panels. The estimated cost, a mere $150 billion. The station is also a place where astronauts learn to live in space. That's going to be useful when we start sending them over to the moon and mars.
Over the years, the men and women in the station have learned new ways to exercise. Take a look at this. Move cargo, including people, and even how to drink water when there's no gravity. Watch this video. Kind of amazing stuff. Then there's the issue of how to sleep when there's no way to figure out which way is up or down or how to shave in zero g's.
One final thought, some of us wonder when we might be able to take a vacation in space. So far, seven space tourists have made the trip, paying tens of millions of dollars for the privilege. So what's next for the space station? One possibility a Russian company is already talking about opening a hotel inside the space station. Make those reservations.
Thanks for joining me IN THE ARENA. Enjoy your weekend. Good night from New York.
"PIERS MORGAN TONIGHT" starts right now.
