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Parker Spitzer

Rebels Gain Control of Several Cities in Libya; Libya Revolt Causes Spike in Oil Prices

Aired February 24, 2011 - 20:00   ET

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


ELIOT SPITZER, CNN ANCHOR: Good evening, I'm Eliot Spitzer.

KATHLEEN PARKER, CNN ANCHOR: And I'm Kathleen Parker. Welcome to our program.

SPITZER: Tonight in Libya, Moammar Gadhafi is hanging on by his fingernails and I'm just not sure how much longer this can go on. Many Libyan cities have now fallen to the rebels. And it appears the turning point for the future of Moammar Gadhafi's Libya will likely be the battle of Tripoli. The capital city is his last real stronghold.

Here are the cities now in control of the rebels. In the eastern part of the country, Tobruk, Beyida, Benghazi, Mesrata. We reported last night that Benghazi, Libya's second largest city, was in rebel hands. But today the people there came out to celebrate what they are now calling the free republic of Libya.

They are singing a song of freedom. And you can see from the numbers, the unbelievable numbers of rebels and their joy that they may well be no coming back for Moammar Gadhafi.

And these are the cities in the west that have already fallen to the rebels, Zuwarah, Zentan and Al Zawiyah, where fighting was especially fierce today. Gadhafi forces attacked the city with automatic weapons and an anti-aircraft gun destroying the mosque where rebel forces are headquartered.

Despite the fierce fight put up by Gadhafi's forces, the rebels say they have taken Al Zawiyah.

Moammar Gadhafi is digging in, preparing to make what could be his last stand in the capital city of Tripoli and Libyans still loyal to Gadhafi must be troubled by his unbelievably erratic messages.

Today he phoned into Libyan state TV to blame the rebellion -- and you can't make this up -- on milk and Nescafe spiked with hallucinogenic drugs taken by rebellious youth, provided by Osama bin Laden.

Take a listen.

(BEGIN VIDEO CLIP)

MOAMMAR GADHAFI, LIBYAN LEADER: Why do you try to drag bin Laden into our country? Why do you listen? You are taught and you are brainwashed by bin Laden telling you what to do. Those who are inside, who are brainwashing our peep, we have to look for those gangs. We have to dismiss those from our lands. Those who offer (INAUDIBLE) to your children, arrest them and bring them to account.

(END OF VIDEO CLIP)

SPITZER: The man you saw on the screen there was the anchor on Libyan state TV. I almost feel sorry for him needing to listen to that.

In one especially ironic development, the United Nations Human Rights Council holds an unprecedented special session tomorrow to consider investigating Libya.

Why is it unprecedented? It's the first time the council has considered action against one of its own members. That's right. Libya holds a seat on the U.N. Human Rights Council.

So Gadhafi sits isolated, surrounded by hostile rebel forces, seemingly detached from reality.

This is the nightmare scenario. The dear Brother Leader, what he call himself, with his back against the wall, using all the force at his disposal as he desperately clings to power.

PARKER: As Gadhafi fights on desperately trying to hold on to power, Libya's second largest city is trying to erase memories of his rule.

CNN senior correspondent Ben Wedeman was the first journalist to enter the rebel controlled city and he join us now -- Ben.

BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Yes. Here in Benghazi, it's been celebrations for days now. And people are also getting a chance to go to where Gadhafi sometimes lived in Benghazi. And it is open house at the Gadhafis.

(BEGIN VIDEOTAPE)

WEDEMAN (voice-over): A few uninvited guests have popped by the Gadhafis' home in Benghazi. The place, however, is a mess. Like almost every building associated with the Gadhafi regime, it was ransacked and torched by angry protesters.

(On camera): This is all that's left of a conference room in one of the palaces that Moammar Gadhafi and his sons stayed in when they visited Benghazi. And if it were up to the people of the city, they'll never visit again.

(Voice-over): The sightseers don't seem to have much regard for their absent hosts. This man parodying one of Moammar Gadhafi's recent appearances on state television.

The atmosphere may be cocky but memories of the recent past are still vivid in a place most Benghazi residents feared to tread, says Abdul Omar (ph).

UNIDENTIFIED MALE: This is like one of the places in Benghazi where, like, the most scariest places in Benghazi.

WEDEMAN (on camera): And now the public --

UNIDENTIFIED MALE: And now it's --

WEDEMAN: Museum.

UNIDENTIFIED MALE: It's a museum for everybody. Everybody is like -- everybody left their houses just to come see what's going on. What is in here.

WEDEMAN: Beyond the blackened walls and shattered windows, there isn't much left to look at. Smoke and flames still belch from some of the buildings in the compound which also housed the military command for eastern Libya.

The fire department isn't exactly rushing here to put out the flames in buildings that were symbols of a hated regime. Heavy equipment has been brought in to search for hidden tunnels and other underground bunkers and prisons. It seems given here that most secrets lie just below the surface. Though after all the effort and tension, they find nothing here.

This was the heart of the Gadhafi regime in the east. Its gates were blasted open during the final battle. The weapons used to defend it now a platform for chants against this former leader and more posing for the camera. But the joy is genuine, says (INAUDIBLE).

UNIDENTIFIED MALE: For this feeling, I'm not like flying, like picnic. No one -- no Libyan, ordinary Libyan citizen can even come close to that door. So you can imagine that feeling you have it here inside.

WEDEMAN: Also genuine, hatred for the man sometimes called this place home.

(END VIDEOTAPE)

WEDEMAN: And it's not all, however, this sort of high spirits in Benghazi. Today we were at the Jalaa Hospital which has been handling so many of the dead and wounded. And there we saw staff traumatized by day after day of casualties and fatalities.

SPITZER: Ben, absolutely amazing footage and images that we're seeing there. Two questions. One, do you have any sense at all what the magnitude of the casualties are that you just referred to? We have gotten such wildly disparate numbers here. And second, is there a sense of inevitability to the fall of Gadhafi or is there some sense that this is going to be a long, protracted civil war?

WEDEMAN: Regarding the death toll, it's really hard to say. People are saying at least 300. But we went into the morgue at that hospital and I can tell you, there are pieces of bodies that nobody seems to be able to put together. There are bodies charred beyond all recognition. So it is very difficult at this point.

And they're also finding in places like that palace compound that we were showing in that report, they are finding more bodies there almost every day.

Regarding the sense of what's coming, nobody really knows. Certainly, it does seem, if you look at sort of the big picture, diplomats resigning around the world. You have here within Libya, military officers, soldiers, defecting, the justice minister, the interior minister have both resigned and come over to the anti-Gadhafi forces. There is a sense that Gadhafi's fall is inevitable. The question is, how is that going to happen.

PARKER: All right, Ben, thank you for that report. Before you sign off, I just want to tell you that all of us here at PARKER SPITZER so appreciate your heroic work over there. You've been all over the map and you've put your life in danger so thanks so much for that.

WEDEMAN: My pleasure.

SPITZER: Thank you, Ben.

All U.S. citizens in Libya should depart immediately. That's the word today from the State Department. But it's easier said than done for the some 6,000 Americans trapped in the chaos of Gadhafi's power struggle.

PARKER: Hundreds of Americans still sit on a ferry boat waiting to leave Tripoli but that ship remains docked because of 16-foot waves. And some Americans have been taking their escapes into their own hands.

Franz and Erika Fearnley are two of those people. Just today they have escaped from that dangerous situation and they're here now to tell us their story.

Franz and Erika, thank you so much for being here.

FRANZ FEARNLEY, JUST ESCAPED FROM LIBYA: You're welcome.

PARKER: And welcome home.

F. FEARNLEY: Thank you.

PARKER: I know you're happy to be here. We're happy to see you safe and sound. At what point did you realize that Libya was not safe enough for you to stay? That you might be in danger yourselves, Erica?

ERIKA FEARNLEY, JUST ESCAPED FROM LIBYA: Well, I think it was Saturday night was the first night we started hearing protesters and gunshots. People were honking their horns and a lot of activity outside.

And I think hearing the gunshots that we estimated were maybe about a mile away, I think that was, you know, getting very worrisome at that point.

PARKER: But you were in a protected community outside of Tripoli, right? And, France, and -- did you feel that your own lives were in danger? Did you just start getting nervous because it was clearly falling apart?

F. FEARNLEY: Yes. We started getting nervous then and then later on we heard reports that the protesters were coming from Mesrata and also coming from the west as well. So, you know we just -- we just figured we would get caught in the crossfire perhaps.

SPITZER: And over the next couple of days from Saturday through until Monday, did it get worse and worse and worse? More gunfire and more activity in the streets? What was going on? Describe it for us.

E. FEARNLEY: The activity would take place in the evening hours. During the day it was pretty quiet. We weren't hearing anything. But at night there was just -- I think the protesters, the crowds sounded as if they were more and more people were joining in. And then hearing the gunfire and just knowing that people were probably losing their lives.

And a friend of ours had reported that he had heard that 15 people were killed in Zanzur, which where we were.

SPITZER: Which is where you were.

E. FEARNLEY: Yes. So at that point, yes, I think we knew it was time to go. And I would say Monday morning, a lot of our friends, not having access to the telephone, not being able to call people. People were running back and forth between houses to communicate.

The Internet was getting shut down completely in the evening around 12:30 at night until the morning hours. There was absolutely no Internet, no Skype, which is how ultimately we were able to call Franz' mom and ask her to get us a plane ticket out because it couldn't be done from inside the country so -

PARKER: And tell us about that. Tell us about your escape. How did you get to the airport and what happened?

F. FEARNLEY: We had local drivers. They -- thank goodness, that the cell phones were working on Tuesday morning. There was actually -- the airport had closed. We had confirmed reports that the -- that travel zone, the air zone was closed and the airport was closed. But then we found out that it was -- they were supposed to be flying the commercial flights.

So our drivers took Erika and I and my boss and his wife. We did a little convoy. Just a two-car convoy. We avoided Tripoli. We were on the outskirts. So we only saw one burned out tractor-trailer and then we came to a military checkpoint. And we were stopped.

Our driver tried to just do a rolling stop. And the guards knocked on the car pretty aggressively and we had to pull over. And there was probably -- right at that checkpoint, there was probably eight men with machine guns. And they're talking Arabic and they wanted to see our passports.

PARKER: That can make you nervous.

F. FEARNLEY: Yes.

E. FEARNLEY: They came to the back door of the car.

F. FEARNLEY: Wherever it was.

(CROSSTALK)

E. FEARNLEY: Yes, it was scary.

F. FEARNLEY: And meanwhile, my boss passed by and -- so, you know we were a little nervous. But then in a couple of minutes it was OK, we got our passports back and continued to the airport.

SPITZER: And it was mayhem at the airport. Describe that for us.

F. FEARNLEY: The airport had still been closed. No flights were going up at the time. So there was -- the airport was full to capacity. They were not allowing anyone else in. Our driver had an uncle at the airport, thank God, and he was able to get us in. Once we got in, you could not move. There were families laying down sleeping.

E. FEARNLEY: We see people at the airport. It was just packed.

PARKER: What about your trip on the way to the airport? What was in the streets? Can you just describe what you saw?

E. FEARNLEY: We actually went very early in the morning. Around 8:00 in the morning. So there was -- there were actually not that many cars on the street. We didn't really pass too many people with the exception of once we got to the checkpoint. But we saw one burned out car and that was about it.

SPITZER: You lived in Libya for about a year, working on a construction site, a development effort on the Mediterranean. You're seeing images here of the country in revolt. Have you sensed this sort of seething anger against Gadhafi while you were there?

F. FEARNLEY: No, actually. In Tripoli, they really seemed to support him in Tripoli. But you saw that change real quick with what was happening in Benghazi where they went to supporters to (INAUDIBLE).

E. FEARNLEY: So I think once he decided to start killing his own people, you know, everybody, you could see the anger and the grief from the local population, you know. It was just incredulous. And I think you know once he chose to make that decision to start massacring his people.

PARKER: Yes.

E. FEARNLEY: That, you know, that their support for him changed very quickly.

PARKER: How much involvement in the Libyan community did you have? Or were you mostly isolated among your development corporation and your development community?

F. FEARNLEY: Mostly isolated. But we -- I work with Libyans and our Libyan drivers and Erika went to their house, met the family. And we met several other Libyans and their --

(CROSSTALK)

E. FEARNLEY: Going into the Medina, and going downtown, into Tripoli, Green Square.

PARKER: But you had no contact with them once this all started?

E. FEARNLEY: Well, no. I mean we had some contact. We also have another friend of ours who is actually a Libyan. He has dual citizenship, American. He's lived in America.

PARKER: And do you fear for his welfare?

E. FEARNLEY: Absolutely. Very concerned for the people that we know there.

SPITZER: The behavior of Gadhafi just seems so completely bizarre and aberrant and hard to understand. Is he viewed by the Libyan population as somehow not being connected to reality the way we view him?

E. FEARNLEY: Well, you know, I didn't get a sense of that from the people that we spoke to. The locals. And I don't know. And perhaps they do and it was the language barrier because I don't speak Arabic. But no, I mean, from the people we spoke to, a lot of people always give their thumbs up, you know, until this started occurring.

PARKER: Yes.

F. FEARNLEY: Right. Right.

PARKER: Well, we're delighted you made it back and we appreciate you both so much coming on and telling us about your experience.

All right. Coming up, rising oil prices and gas prices aren't far behind. What Libya means for your family budget, next.

(COMMERCIAL BREAK)

SPITZER: Oil prices today crept to $100 per barrel. And gas prices are expected to spike. Why? In a single word, Libya.

PARKER: Here to explain is former Shell president John Hofmeister, now CEO for Citizens for Affordable Energy.

John, welcome back.

JOHN HOFMEISTER, FOUNDER & CEO, CITIZENS FOR AFFORDABLE ENERGY: Thank you, Kathleen.

SPITZER: All right, John, let me -- we're going to put up a chart that shows that the price of a barrel of oil has gone from about $75 to about $100. It's bouncing around $100 right now. Spiking up in the last couple of weeks, obviously. But even before the revolution swept through the Middle East, it had gone from $75 to about $85.

What is driving this price up and what is the direct impact of the revolution sweeping through the Middle East?

HOFMEISTER: What's been driving the oil price really from last summer until the present is the world economy has picked up and the supply of oil is not -- not so far but is barely keeping up with the demand. So as the demand grows and the supply doesn't grow, you're seeing pressure.

Inventories have been liquidated in many warts of the world. There are still some OPEC overhang but not very much. And so what we have is a classic supply and demand relationship change. Now add on top of that the volatility, the turmoil and the turbulence in the Middle East, and oil hates turbulence.

Oil is as necessary to a refinery, to an airline, to a chemical plant as flour is to a bakery or as milk is to a family. And so what's driving the crude oil price right now is fear. It's irrational, it's illogical but you've got to have oil. And so people are out there bidding up future contracts to make sure they have oil, regardless of what happens in Libya. Regardless of the supply-demand relationship.

So we're into what we were into 2 1/2 years ago. A supply-demand imbalance. We've got to get the supply up or we're going to face ever increasing oil prices.

PARKER: So, John, as I look at that chart, you see that it goes up precipitously over -- about Libya. I mean it just spikes up. So -- but Libya only produces 2 percent of the world's oil. So my question is, why is the effect so great? Is this uncertainty and fear that you're talking about?

HOFMEISTER: It is a compounding effect, Kathleen. What happens is, it's not just Libya. It's the seven other countries in the Middle Eastern region where all bets are off. Nobody knows for sure. They have pipelines, they have access points, they have transportation points, they have refineries.

It's not just the half a million or 75 -- 750,000 barrels shut in in Libya right now. It's the whole connectivity of the thing. We don't know what's going to happen in Bahrain. We don't know what's going to go on in Iran and oh my goodness, what about Saudi Arabia?

You know the $36 billion gift to the Saudis paid for mostly, I would tell you, from American consumers who are paying high prices for crude oil.

You know these are all factors that come together that in the minds of future buyers say, buy now.

SPITZER: You know, John, we're going to get to what U.S. policy should be in a moment. But explain to us and to our viewers why is it that when the price of the future of -- in the oil futures market goes up today, the price of the -- that we pay at the pump seems to go up today as well.

Doesn't it -- it makes sense to people that six months from now I'd have to pay more at the pump if you, the oil company, are paying more for it to Saudi Arabia -- Saudi Arabia today. Why do they go up at the same time? Why is the price at the pump immediately jumping?

HOFMEISTER: It's all a very interconnected marketplace. And again it's all about the fear of the future. If you're a retail gas station, somewhere in Des Moines, Iowa, let's say, and you don't know today what the wholesale price of your next tank truck delivery is going to be, you're going to take advantage of the situation to raise the price today in order to guard against the price rise you expect next week when that next tanker arrives.

If you don't raise your price, you may not have enough cash on hand to pay the tank truck driver, or the oil company that's shipping you the finished product. So there is an interconnectedness that happens almost immediately on the upside. On the down side, as the price falls, it's really just market capitalism at work.

So if you have a high price, and you're now -- your wholesale price has dropped, you're going to hole the price if you can to make a little money along the way down. And so prices tend to drop more slowly but they rocket up very quickly to pay for that next truckload of gasoline.

SPITZER: Fascinating. So the price is going to jump very quickly, come down only very slowly. We import I think at -- right to this, about 7.5 billion barrels a year in the United States. And so if the price a barrel has gone up about 10 bucks a barrel, that's $75 billion we're shipping overseas.

So two questions for you. One, what should we do to reduce our dependence upon foreign oil, and two, what can we do to reduce our dependence on oil at all?

HOFMEISTER: Well, let's take each question in turn. We have so much oil in the United States that we will never run out. Forget these politicians that tell you we only have 3 percent of the world's oil reserves. We can't drill our way to independence.

That's a technical definition by the SEC of proven reserves. We have unproven reserves and probable reserves out the kazoo. We have a trillion barrels in the Piceance Basin in Colorado. We have -- who knows? Hundreds of billions of barrels perhaps in the -- in North Dakota.

Offshore we have 100 billion barrels. We're not going to run out of oil. We're just choosing not to produce it. We'd rather have tyrants and crooks produce oil in their countries than go to the trouble of producing it ourselves because it's dirty. It's nasty.

But we use 20 million barrels a day. And we only produce seven. I testified in Congress two weeks ago, why don't we increase our daily production by three million barrels? Like we used to. We used to produce 10 million.

And by the way, member of Congress, we could create three million new jobs in the United States of America if we did that. So there's no reason we cannot produce more domestic oil in the near term, over the next decade or two, to take better care of ourselves.

PARKER: John --

HOFMEISTER: Secondly, to your other question, you know, longer term, we need a transition plan to get off the internal combustion engine, replace it with batteries, hydrogen fuel cells, other alternatives -- mass transit. But that doesn't happen overnight. That happens over decades. But we've never stepped to a plan in this country.

Nixon started talking about energy independence. President Obama is still talking about energy independence. Eight presidents have failed to do anything material and 19 Congresses about energy independence.

PARKER: But John, don't you think that this is a tipping point for us? As we witness these revolutions throughout the Middle East and North Africa, not knowing what's going to happen next? Don't you think the American people are now going to demand a serious energy policy?

HOFMEISTER: We demanded it in '73 with the Arab oil embargo. In '78 with the second Arab oil embargo because of Iran. We had low prices in the '80s. We had moderate prices in the '90s. Then we had the run-up in 2007, 2008.

Everybody said that $4.50 gasoline in 2008 was a transition point. Guess what? The 111th Congress which just finished its business did not pass a single energy bill. Despite having a Democratic majority in both Houses and the White House, not a single energy bill was put into law in the last Congress.

I'm sorry, Kathleen. But our elected officials do not take this problem seriously. And as only grassroots Americans who get fed up with it who will say fix it. Please. Fix it.

PARKER: All right. John Hofmeister, thanks so much.

We'll be right back.

HOFMEISTER: Thank you.

(COMMERCIAL BREAK)

SPITZER: The budget ruckus in Wisconsin has dominated the debate about state deficits but there's another perspective on how to handle the financial crisis the states are facing. Here to present it is Maryland Governor Martin O'Malley. He's chair of the Democratic Governors Association.

Governor, good to have you with us tonight.

GOV. MARTIN O'MALLEY, MARYLAND: Thanks, Eliot. Good to be with you both.

SPITZER: My pleasure. Well, here's the question I've got for you.

The debate about state finance has been dominated by Chris Christie, Chris Christie by Scott Walker, who have come at this with a pretty aggressive approach which is to slash spending and also to sort of take away public sector union organizing rights. You are facing a deficit of about $1.4 billion in your deficit in Maryland. And your debt and your budget is about, how is it? About $34 billion if I recall.

O'MALLEY: More or less.

SPITZER: How are you addressing your deficit and how was it different from what Governors Christie and Walker are doing?

O'MALLEY: In Maryland, Eliot, we have a AAA bond rating. We're one of only eight states who still has a AAA bond rating. Time and again we've had, because of this recession, to go back and cut our budget, reduce spending, reduce the size of government. But we've done something else at the same time. Two other things really. One is we protected the investments that allow us to come out of this recession, create jobs by improving education and spurring innovation, and the other thing we've done is we've focused on solving the problem and creating jobs. Not on trying to settle old political scores or trying to do away with labor unions.

Every time we've gone back to do cuts and there have been many, we've always made sure that we sat down with our workers and explained, look, we don't want to have to do furloughs. But these are the choices. These are the options. And we've managed to come through this together even as we've reduced the size of our state bureaucracy. It's the smallest it's been since 1973.

SPITZER: You know, Governor, I want to pick out because I think when you pierce the rhetoric, and clearly the rhetoric from Governor Walker and from you is very, very different. But in point of fact, some of the things you're doing and he's doing are not that different.

O'MALLEY: Yes.

SPITZER: You have cut your state employee workforce by about a thousand, am I correct? Or even more than that.

O'MALLEY: 4,200.

SPITZER: 4,200. You have asked your state employees to increase their contribution to the state pension fund -- O'MALLEY: That's right.

SPITZER: -- by an amount actually roughly equivalent to what he is asking them to do.

O'MALLEY: Right.

SPITZER: And you've gotten them to agree to that. I'm correct about that.

O'MALLEY: That's right. I guess it is my perspective, Eliot. You know, I used to be a mayor. I was mayor of Baltimore for seven years. And I never found that driving people into corners or vilifying your opponent was a good way to get thing done. I don't think that running a corporation that anybody is successful in that corporation in getting their employers to produce by running them down. So the fact of the matter is we're having to ask our employees for many of the same things that they are and that the governor in Wisconsin is. The difference is, we haven't chosen to set this up as some sort of big ideological battle, trying to bring our state back to the days of Coolidge and Hoover. We're respectful of the sacrifice that's entailed and we're asking everybody to step forward so we can have an adult conversation and not drive people into corners.

Look, I feel badly for people in a lot of those states where it looks like their government is no longer working. As Democratic governors, we know that we have to focus on creating jobs and moving our states forward to create jobs and greater opportunity in a fast- changing new economy.

SPITZER: Now, look, at the same time, you've also needed to put in place some of the same cuts that Governor Walker is talking about. You cut your state Medicaid I think by what? $254 million last year. And you have not been able to put in place some of the additional spending you wanted in your community colleges.

O'MALLEY: That's right.

SPITZER: So you are facing the same deficit structure that he did. Am I correct? You had a revenue drop of about five percent two years ago which is what's driving all this.

O'MALLEY: Absolutely. That's right.

What's causing the shortfalls in revenues is primarily the recession and what it's done to everybody's revenues. And for moms and dads, business owners, and also in our state, government. So sometimes, Eliot, when you listen to some of the more bombastic and colorful Republican governors, they wrapped themselves in this mantle and pretend that they're the only governors that have to balance their budget. The truth is every governor has to balance his or her budget. The difference between the Democratic governors and the Republican governors is this. We balance our budgets while focusing on job creation, protecting innovation, protecting our investments and education. They balance their budgets by trying to focus the ire and confuse the public into attacking public employees as if they're the cause of the recession.

I think our method is far preferred by most people throughout this country and we've had our best year now of new job creation in Maryland and other states are starting to come out of this. But states that focus like Wisconsin is, on the old political battles, they're not going to move forward in this new economy.

SPITZER: Governor, you've also done something that they have not been willing to do and people can get very exercised on either side of this debate. You have raised taxes.

O'MALLEY: That's right. Occasionally we have. I think I probably have cut more than we've raised in taxes but we did ask all of our people if they would be willing to pay another penny on the sales tax. We went from a 42nd lowest sales tax to the 32nd lowest sales tax in the state. We did that before the recession hit because we knew that no progress is possible in good times or bad unless you're fiscally responsible. But in return, our kids, our teachers, our parents, we now have for three years in a row been rated the best public schools in America by "Education Week" magazine. So we're not looking for someone else to solve our problems. A lot of the things we've asked our public to do have not been popular but they're the right thing to be fiscally responsible and move forward.

SPITZER: But you also are not proposing any tax increases this year. So point of fact again to come back to the similarities which I think interestingly are more numerous than your disagreements, you're not raising taxes. You are cutting Medicaid. You're cutting what you wanted to do to education and you're getting your public employees to chip in five to seven percent towards their pensions. So really, the building block pieces of your recovery plan, the way you're dealing with the deficit are really very similar to what Governor Walker is doing and what every governor needs to do. But the rhetoric is different. That's really what I hear you saying.

O'MALLEY: I would say -- much of what you say is true. I would add one other thing, Eliot, and this is very important.

We were the only state in the country to go four years in a row without increasing college tuition. We're the only state probably that has increased education funding by the degree that we have over these last four years. And yes, for the last couple, we're only able to do that with the president's help. But we've made the tough decisions in cuts, tough decisions on taxes in order to invest in education, innovation and also expanding opportunity for our people to go to college so that we can create the new jobs of this new economy. And that's a fundamental difference. You see the same thing happening in Massachusetts. You see the same thing happening in Washington State. Now in Connecticut with the new Democratic governor. That's the difference between our style of governance and the choices that they make. We know that we have to balance and move forward in this new economy to create jobs. And that's what we're going to be coming to Washington to discuss tomorrow with the president and it's going to be a good weekend.

SPITZER: Look, I applaud you for what you've done and I think that many of the decisions you've made are certainly the right ones and I'm with you on all of them. But I think also the public should understand that when you're a governor who's got to balance a budget and you can't really raise taxes in this environment, the things you've got to do, whether it's cutting Medicaid, limiting your investment in education, asking employees to pitch in, those things span the ideological spectrum. And really a lot of the screaming and shouting is just that. Screaming and shouting. At the end of the day, what you've got to do is driven by the number and that's where you've come out and that's frankly where Scott Walker has come out and Chris Christie. Different in tone but certainly not as different in terms of the substance underneath it.

O'MALLEY: And the important point though is, you have to keep moving forward. And you can't vilify the people that you need to depend upon to make your state go and to make your economy grow.

SPITZER: Governor O'Malley, I agree with you. And thank you so much for being with us.

O'MALLEY: Thank you, Eliot.

SPITZER: Coming up, Anderson Cooper joins us with a gripping eyewitness account of the dangerous situation in Tripoli. You want to hear this.

(COMMERCIAL BREAK)

SPITZER: We've watched city after city fall to the people of Libya. But one city remains a holdout for the Gadhafi regime. Tripoli. But tonight, Anderson Cooper just spoke to one woman in Libya's capital. Anderson joins us now from Los Angeles.

Anderson, we understand you've just had a dramatic conversation with the woman in Tripoli. Tell us about it.

ANDERSON COOPER, CNN CORRESPONDENT: Eliot, you know, I think after so many days of covering this, it's very easy for people who are watching this around the world on television to kind of feel like every day is just the same. But it's important to remember that for the people who are trapped in their homes in Tripoli, unable to go out on the street, unable to get food for fear of their lives because of mercenaries and thugs roaming the streets, it is not just any day after day, it is not the same. Each day is getting worse and worse and worse.

I just got off the phone with speaking to a woman for about 20 minutes. We're going to play most of that tonight on "360" at 10:00 p.m. because what she says is startling and heartbreaking. It is a desperate plea in the night for the world to pay attention to what is happening. This woman who has not left her apartment in five days for fear of her life, says that she feels she is near the end.

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COOPER: What do you mean when you say you've reached the end point? UNIDENTIFIED FEMALE (via telephone): You know, everybody has had enough. We've had enough, not just this last week or this month or this year or even before things happening internationally in neighboring countries. We've all had enough. But what I mean in the end point is that I don't care. Like I'm talking to you now. You know, this is not safe for me. Not safe for my family.

COOPER: You know you're taking a great risk right now. You know you're taking a great risk.

UNIDENTIFIED FEMALE: A great risk. And I ask of you and CNN and anybody to please just come and see what is going on.

(END VIDEO CLIP)

COOPER: It was startling, Eliot, to talk to her. She really has no idea whether the world is even watching. And when I told her that people around the world were watching and were praying, she was thankful for that. But kept saying, that is not enough. That something has to be done because Gadhafi is in control of the streets and she says he is a madman.

KATHLEEN PARKER, HOST: Well, Anderson, this is Kathleen. We'll certainly look forward to hearing the rest of that interview tonight. Did she make a plea directly to the U.S.? To President Obama? Did she mention any of that?

COOPER: She is hopeful that the U.S. or somebody will institute a no-fly zone as a first step. But she says unless outside action is taken, that he can hold on to Tripoli and she is fearing that people are going to start coming house to house, apartment to apartment searching for people who are against this regime.

SPITZER: You know, I think, Anderson, that is the great fear of those who are in Tripoli and those whom we have spoken to and had on the show. Everybody outside Tripoli seems to take it as a given that the days of Moammar Gadhafi are few and numbered and he is done. But Tripoli is that stronghold and that's where he has mercenaries, he has what remains of his army. And if he does go door to door, the carnage could be awful. You begin to wonder when some type of military response is going to be necessary. Just an amazing thing to watch.

COOPER: Yes, the other concern is if he is able to kind of regain control fully, in control of Tripoli and then kind of organize his forces and his mercenaries and maybe even fly in more mercenary forces, he could then launch attacks theoretically on a city like Benghazi. And as we've been talking to Ben Wedeman, that's not a city that's really able to defend itself because they simply don't have the manpower, the military manpower to fight back.

SPITZER: Did she indicate to you whether she and the others who are in Tripoli have a view of Gadhafi the way we have been seeing him and hearing him? Kind of a madman -- who -- his statements are just hard to square with reality, blaming the revolution that is going on in his country on Osama bin Laden and drugged the Nescafe. So bizarre you can't make it up. Does she share that view? COOPER: She does. She says everyone there knows what he's saying is just completely crazy. That it's made up and it's lies. She was fearful and it was so touching. She was asking me, a, whether people were paying attention around the world, and whether we realized that Gadhafi did not represent the Libyan people. That Gadhafi represented himself and his family and no one else. And it was sort of heartbreaking to hear her kind of wondering whether people around the world who are even watching what was going on and whether they really cared about what was going on.

SPITZER: You know, one of the things that's hard to get a grip on, because we have so few contacts inside Tripoli right now, what is the military context? Are there mercenaries? We keep hearing about the mercenaries. How many are there? Did she give you any indication of what the military presence was? And who was winning the fight for the streets in Tripoli?

COOPER: Well, I mean, she hasn't been out on the street in the five days. She does call around though to her other relatives. She said she has a relative who works in one of the big hospitals in Tripoli. And that mercenaries have actually come in to the hospital, taken out blood, taken out medicine and even taken away injured patients who the doctors were trying to treat. Her allegations were that they're trying to cover up the bloodshed that has already taken place. We can't obviously independently confirm that.

We have seen -- we've seen corpses of people with passports held up that were -- I saw one passport from Niger in West Africa. We've also heard reports from captured mercenaries who said they're from Chad. Obviously Gadhafi for years has sponsored a lot of different rebel movements all throughout Sub-Saharan Africa and kind of trained this cadre of fighters that he's sent to Sudan and other places. The allegations are now that he has called them home to protect him.

PARKER: All right, Anderson. Thanks so much for joining us. You can watch all of Anderson's dramatic interview tonight at 10:00 p.m.

Coming up, Gadhafi's hired guns. We'll take a look at the mercenaries terrorizing Libya. Stay with us.

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SPITZER: Mercenary. The word conjures up images of guns for hire or magazines like "Soldier of Fortune." But in Libya right now, mercenaries may be Moammar Gadhafi's last line of defense. Who are these guys? Your typical Gadhafi hire is in his 20s with little education and next to no military training. He's handed an AK-47, your basic point and shoot combat weapon, and sent in to do the dirty work for the Libyan army increasingly won't do. Namely, turn those weapons on the Libyan people.

Reports are these pay for play soldiers come from Africa. And protesters have found I.D. cards from Niger Chad to prove it. What kind of money can they expect to make? Reports vary. Some say $1,000 a day. Indeed, Nigeria and Ghana, recruits have been offered as much as $2,000. Think about that. The average income in Nigeria is no more than $2,500 a year.

PARKER: And where does the money come from? For decades, Gadhafi has used Libya's oil well to prop up unstable African regimes in such places as Liberia, Sierra Leone, Ghana and Ivory Coast. In turn, some of those countries have provided mercenaries for Gadhafi's paramilitary by deliberately keeping the nation's army weak so it wouldn't turn on him. Gadhafi has relied more and more on his own private army. It's a brutal, violent business but it looks like no amount of money may be able to keep Moammar Gadhafi in power. We'll be right back.

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SPITZER: It was disguised as a snail mail letter in legalese with a lot of footnotes. But it could prove a crucial piece of American history in the battle over gay marriage.

PARKER: Yesterday, Attorney General Eric Holder sent a provocative six-page letter to House Speaker John Boehner about two upcoming court cases challenging the Defense of Marriage Act in New York and Connecticut. Holder's message, after careful consideration, the president has told the attorney general not to defend the law.

SPITZER: Wait a minute. I thought defending the law was what attorney generals were supposed to do. What's going on here?

Joining us now is CNN senior legal analyst Jeffrey Toobin. Welcome.

JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: Senior footnote analyst. That's what I am. I did read --

SPITZER: I didn't do that until I got out of law school. But footnotes matter.

TOOBIN: Yes.

PARKER: Oh, dear.

SPITZER: What is going on here? This DOMA statue, Defense of Marriage Act, has been controversial. It said same-sex marriages would not be seen as being legal under federal law.

TOOBIN: Correct.

SPITZER: And now Attorney General Holder is saying he won't defend the constitutionality of the statute. How can he say that and why?

TOOBIN: It's something that administrations do very rarely but it has happened before. What the administration is saying here is this law passed in 1996, signed by President Clinton, is so outside what we believe is what is permissible under the constitution. We are going to argue to the courts that it is unconstitutional, even though we usually defend the law. And they are going to still uphold the law in terms of administering it. They will enforce the law but they will support the people challenging it.

PARKER: Jeffrey, before we get too far --

TOOBIN: Right.

PARKER: -- explain what it was. It defend -- what it did was say, you can have state laws allowing same-sex marriage but that those marriages would not be honored under federal law. Is that right?

TOOBIN: Exactly. And I think the facts of the Massachusetts case are very illustrative. They illustrate the problem here.

Under Massachusetts law as we all know, same-sex marriage is the same as straight marriage. The people are treated exactly the same way. Under the Internal Revenue code, if a husband or a wife dies, the money flows to the spouse. There are no taxes, no estate. It just goes to the spouse. The spouse, it's two women who sued. One of the women died. The spouse died. The Internal Revenue code doesn't treat them as married and they had to pay $350,000 in taxes that they wouldn't have had to pay had they've been a straight couple. It's a very compelling case.

SPITZER: Here's the question I've got.

TOOBIN: Yes.

SPITZER: I was an attorney general of New York.

PARKER: No way.

SPITZER: I had to defend a lot of statutes that I disagreed with.

TOOBIN: Right.

SPITZER: I think DOMA is a bad law.

TOOBIN: Right.

SPITZER: It is a black mark on our statutory structure in history, violence of the civil rights. But the Supreme Court has not yet said that. The Supreme Court has not yet agreed with any of the assertions that Eric Holder made in his letter about the outcome of the case challenging it. So isn't Eric Holder stepping into the shoes of the court and doing what the court is supposed to do? And his job is to defend the statute and say to the court, now you decide.

TOOBIN: Well, I think the -- that's a tough call right there. I don't know. I mean, I think his position is unusually aggressive in a setting like this because as you say, it's usually the job -- the president of the United States has to enforce all sorts of laws including the ones he doesn't like. I mean, including ones that Barack Obama voted against when he was a senator. But there are certain circumstances when the president is, feel justified in saying, this law is so far outside the mainstream that I can't -- SPITZER: But here's the thing. And when I was A.G., there were a lot of laws that I really disagreed with but there were non- frivolous arguments to defend them. And so we made those arguments. What Eric Holder has done here is redefine the type of analysis he's asking the court to go through. Basically rearranging the constitutional critique the court is supposed to undertake and he's saying because I believe this, you will find the law unconstitutional. Therefore, it's a frivolous argument. I'm not going to defend it. Is that right?

TOOBIN: Well, you know, I don't know. I don't know if it is right or not. But I think the status of gay rights is changing so fast in this country.

SPITZER: As it should be.

TOOBIN: Well, you say it should.

SPITZER: The question is how?

TOOBIN: Well, historically, the Supreme Court has never said that gay people are a category that deserves protection the way racial minorities are, the way women are. What Holder's letter says is we want you to treat discrimination against gay people the same way you treat discrimination against women. The court has never said that before. Some lower courts have. Some lower courts haven't. And that's going to be the real challenge about -- but the thing that's so interesting about what Holder said, I think, is that if the court adopts that analysis, not only will they strike down DOMA. I think they will say same second marriage has to be legal.

PARKER: Can we talk about the politics of this for a minute? Because, you know, it's a terrible thing for the Republicans, actually because now that Holder is not going to defend this law, it goes to the House. And this letter to John Boehner laid that out. So in a sense doesn't this cause problems for the Republicans? They're now in a very unpopular position of having to come down on something that a lot of Americans, it's a very divisive --

TOOBIN: Well, I don't know it's so bad for the Republicans. I mean, here on West 58th Street, same-sex marriage is very popular. In the middle of the country, you know, three Iowa Supreme Court justices were voted out of office entirely because they voted for same-sex marriage.

PARKER: That's a very divisive subject.

TOOBIN: I don't know what the politics are.

SPITZER: No.

TOOBIN: I think it's a mixed bag.

SPITZER: I think it is bad for the Democratic Party as a matter of partisan politics because it injects into next year's presidential race the very social issues that have hurt the Democratic Party. Gay rights 20 years from now I think it will be a landslide in favor of the position Eric Holder has taken. The position I took out. I was at one point the only governor in the nation supporting same-sex marriage. That isn't the question here. The question is whether or not legally this is the way to get to that point. You said something interesting. You think that the court will agree with Holder in 30 seconds, why? You think Kennedy goes this way?

TOOBIN: I think the law has changed so much and the country has changed so much. That if you say to someone, you cannot have a government benefit, a job, any sort of right, simply because you're gay. I just don't think the courts can put up with that anymore. I think -- I think the world has changed too much.

PARKER: Plus it offends Americans' sense of fairness ultimately.

TOOBIN: Well, it offends some Americans' sense of fairness. I mean, you know, I thought you're the southerner here. Gosh, you know, it's not that popular in the south.

SPITZER: You know, it might offend our sense of fairness. But anyway, thank you, Jeff. Always a pleasure.

Thank you for watching. Good night from New York.

PARKER: "PIERS MORGAN TONIGHT" starts right now.