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ANDERSON COOPER 360 DEGREES

GM Getting Another $4 billion Loan; New Trouble for Ill. Sen. Burris; Search for Answers; Fire in the Sky; Cell Phone Smut

Aired February 16, 2009 - 23:00   ET

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


JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: Tonight, some breaking news from the multibillion dollar breakdown lane that runs through Detroit. Two things are supposed to happen tomorrow. GM and Chrysler will submit detailed restructuring plans. And the White House will decide whether to free up billions more bailout dollars.

A source involved in the GM discussions describes the company's plan to CNN as aggressive but also concedes it is still a work in progress as the deadline approaches. But even as it waits for the new GM proposal, the White House has already decided the situation is too dire not to pony up more cash -- more of you cash.

Ed Henry has got the late details -- Ed.

ED HENRY, CNN SENIOR WHITE HOUSE CORRESPONDENT: John, some fast moving developments tonight. An Obama official as well as a General Motors official confirming to CNN that the president tomorrow is going to release $4 billion more in loans to keep the company afloat [AUDIO GAP] already expecting that money as part of a commitment made by the Bush administration back in December.

The more important question moving forward is whether or not GM as well as Chrysler can deliver the viability plans tomorrow to the Obama administration, and convince them they can survive long term and deserve more government cash down the road.

In fact, right now GM officials are locked in 11th hour talks with their bondholders as well as their union to try to win some last minute concessions, make the company more viable and a lot of people watching that very closely.

That's why a senior GM official told me this report is still being put together. Because they're trying to pull all these various strands together; stakes could not be higher for GM but they're also very high for the Obama administration.

This whole auto bailout situation is just one of many, many economic challenges this president is facing right now.

(BEGIN VIDEOTAPE)

HENRY: On the road again for President Obama now pitching his plans for dealing with record home foreclosures and trying to thaw frozen credit markets. White House aides say it's one of several lessons learned from the stimulus fight. He's better at selling his ideas when he gets out of Washington. HILARY ROSEN, DEMOCRATIC STRATEGIST: He has learned over the course of the last few weeks, getting out to the country, getting the people to remember why they elected him. And I think he's going to continue to take the case directly to the American people.

HENRY: Lesson two was articulated to a handful of newspaper columnists, including E.J. Dionne of the "Washington Post," who were invited aboard Air Force One on Friday.

The president suggested he will no longer let bipartisanship become the barometer of his success, telling the columnist, "You know, I am an eternal optimist. That doesn't mean I'm a sap."

E.J. DIONNE JR., COLUMNIST, "THE WASHINGTON POST": By talking so much about bipartisanship, he allowed others to judge him by how much Republican support he got. He wants to get things done with or without Republican votes, preferably with them. But he'll be happy if he just gets it through.

HENRY: Lesson three -- the president faced all kinds of criticism for the meandering nature of the stimulus negotiations. But in the end he won anyway.

So Mr. Obama is saying he will not be afraid to experiment with the next phase of the bank bailout even if he has to re-evaluate and change course mid-stream. Telling the newspaper columnist, "We will do what works."

DIONNE: He wants to be pragmatic without being unprincipled. There are things he wants to get done. He's much more concerned about where he's going than the road there. If the road is a little crooked, but it gets you there, but it's better than not getting there at all.

HENRY: Lesson four -- It may have been a mistake for the president to give Republicans large tax cuts early in the stimulus talks. In his first presidential press conference, Mr. Obama suggested he would take a harder line with Republicans in future negotiations.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I mean, I suppose what I could have done is started off with no tax cuts, knowing that I was going to want some and then let them take credit for all of them. And maybe that's the lesson I learned.

But there was consultation. There will continue to be consultation.

HENRY: Or, as the president's chief of staff, Rahm Emanuel, put it, the president has an open hand but he also has a firm handshake.

(END VIDEOTAPE)

KING: So Ed, as they assess the lessons learned, what is their political calculation? When he signs that stimulus bill tomorrow, he takes possession of an economic rescue plan. As he gives more money to the financial institutions, yes it started under President Bush; it will now be Barack Obama's program.

As he sends more money out to GM and maybe this week and again in the future, it's Barack Obama signing those checks. At what point do they understand this is his economy now and he can't keep looking back and blaming the Bush administration?

HENRY: You're absolutely right. They realize and they will tell you in private that this economy officially becomes Barack Obama's economy when he signs his name to that bill tomorrow in Denver.

When you look at the landscape of all these tough issues, he is taking on many challenges. But there's really no other option. One after the other these problems that he inherited.

The political calculation from the White House's standpoint they'll tell you in private, is they believe that while the Republicans feel like they're standing strong by most of them standing against the president's economic plan, the White House believes that in the end, if this stimulus plan and some of the other pieces work, the Republicans will be on the wrong end of history.

That's at least their hope in their expectation if in fact the economy over the next year or two turns around.

In terms of the president, when he talks about the political calculation, just last week he said something very interesting at a town hall meeting.

Where he said, he said I realize I'm taking ownership of this economy. And if my plan that I'm pushing through Congress doesn't work, you're going to have a new president in four years, John.

KING: Ed, as your piece was airing at the top of the program, we received word that Arnold Schwarzenegger, the governor of California, is going to lay off 20,000 -- 20,000 state workers out in California.

California the largest state, of course, but another sign of the punishing actions state governors are having to take to deal with the budget shortfalls in this recession. They will get some help in this stimulus plan. But more proof I guess to the White House point that even as he signs this legislation, things are going to get worse before they get better?

HENRY: Absolutely. The president has been using that dire rhetoric. His critics have said look, he's using the politics of fear, he's talking down the economy, that there's a psychological factor.

And when he keeps saying that it could get worse, people start thinking it could get worse. The White House will reply, look, it is getting worse. It's a fact, it's not just rhetoric. Look at what's happening in a state like California.

As you know Governor Schwarzenegger is the one of the Republicans who sort of broke party ranks and said we need more money from the federal government. And as you also noted the key part of the stimulus plan is to put aid out there to the states. But it may just -- may not be enough. They want to try to prevent layoffs of cops, and firefighters, teachers that so many states have been warning about. But they've got to get the money in the pipeline as quickly as possible. Because as you've mentioned the problems in California; Kansas also having big problems; all across the board. They've got to get the money in the pipeline as quickly as possible, John.

KING: Ed Henry for us tonight at the White House. Ed, thank you.

And more now on the home front and more truly staggering numbers. Foreclosure notices up 57 percent nationwide last month from a year ago. And it's not just people with shaky credit.

According to "The Washington Post" the number of prime mortgages in delinquency, prime mortgages, now exceeds the number of delinquent sub-prime loans. People are hurting. The question tonight, how much help can they expect.

"Your Money, Your Future." Here's Tom Foreman.

(BEGIN VIDEOTAPE)

TOM FOREMAN, CNN CORRESPONDENT (voice-over): More than a million homes have been taken by banks since the housing crisis began a year and a half ago. More than twice as many risk foreclosure this year. That is the cornerstone of this recession.

And this week, the White House is expected to roll out its plan for attacking the problem.

TIMOTHY GEITHNER, TREASURY SECRETARY: Home prices are still falling as foreclosures rise. And even creditworthy borrowers are finding it harder to finance the purchase of a new home or to refinance their existing mortgage.

FOREMAN: The administration is directing $50 billion of the bailout money toward ending the avalanche of foreclosures and stabilizing home prices. But how?

(END VIDEOTAPE)

FOREMAN: Financial analysts believe first this plan could call for widespread loan modifications for families on the verge of defaulting. What that means is determining, probably based on a federal formula, how much a family can afford to pay each month. Maybe they're supposed to be paying at this level up here. Maybe they can only reach this level down here.

At the same time, they go to the lending institutions and say, can you swallow this reduced payment? Is that a better deal for you than watching the house go into foreclosure? If they can work that out, the government might help these deals along with financial help of some sort for the homeowners and for the lenders, too. So that's one of the many possibilities that we're dealing with here when people talk about what might be done under the Obama plan.

Beyond that, secondly, for people who want to buy homes, the stimulus bill provides an $8,000 tax credit for first-time homebuyers. And that could be an important part of the overall plan that we're going to hear more details of. Why is that? Because look at this.

If you have a neighborhood like this, and let's say just a few homes in here have real problems with their mortgage and get into trouble that affects everyone around them. Property for miles around gets affected. Then businesses around them get affected. Then jobs get lost. It costs more and more and more.

That could be avoided if you could just address these homes in the middle. The Center for Responsible Lending says 75 million of you could see your home values drop like this because homes near you got into trouble. If these homes can be resold quickly, maybe you can avoid that.

And third, there is this question of standardizing what you can do with this process because that's one of the real issues right now. Losing your home may depend on which bank you're using, where you live, how willing they are to help you. And that adds to the uncertainty of this whole idea of who gets a modified loan.

A clear government definition of which loans can be saved could help everyone know where he or she stands, John. So maybe that's one of the things that could be in the Obama plan. Nobody really knows right now. But all of these seem to be real considerations.

KING: And so Tom, two concerns seem to keep come up again and again. One -- that all these elaborate plans are moving way too fast. And two -- that they're moving quite too slowly, some say. What's the read on that?

FOREMAN: Well you know, John, the read is that both are fair concerns. These are complex ideas. And the potential for mistakes are there and the consequences could be enormous.

But waiting is just not working out very well. If you look at it, the number of homes lost through bad loans is now quickly being inflated by defaults from people who have lost their jobs because the economy is bad, because the housing market is bad, and on and on it goes.

Unless that situation gets better, 8 million more houses could be taken by the banks in the next four years. The simple truth here, John, is until you fix the house problem, all the rest of it doesn't really matter. It can make it worse, but it can't fix it until you fix this.

KING: Sobering details, Tom. Thanks very much.

In a moment, President Clinton weighs in on President Obama.

Let us know what you think. Join the live chat happening now at AC360.com and check out Erica Hill's live web cast during the break.

Up next, our panel weighs in on the stimulus and the politics of it.

And later, the politics and economics of the next Marine One helicopter. Would you believe it could cost as much as the current Air Force One 747? Wow. We're "Keeping them Honest."

And later, sexting: we'll tell you what it is and why you're going to want to keep a close watch on your kids.

That and much more tonight on 360.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: I find it amazing that the Republicans, who doubled the debt of the country in eight years and produced no new jobs doing it, gave us an economic record that was totally bereft of any productive result, are now criticizing him for spending money.

And you know, I'm a fiscal conservative. I balanced the budget. I ran surpluses. If I were in his position today, I'd be doing what he's doing.

(END VIDEO CLIP)

KING: The 42nd president talking about the 44th responding to John McCain's criticism of President Obama's first weeks in office.

Mr. Obama on the road, signing and selling the stimulus on a night of breaking news: more money for GM and the state of California announces it will cut 20,000 jobs.

The president earlier saying he's learned a lot from the experience of getting the stimulus through Congress. Maintaining that when it comes to working with Republicans, he's an eternal optimist, but in his words, "not a sap."

No saps here as we bring in senior political analyst David Gergen and Gloria Borger who join us now along with correspondent Joe Johns.

David, let's start with the president's big day tomorrow. It's a huge victory. He'll sign the stimulus bill into law tomorrow. What now, though, as the American people say, this is his economy and his plan, what's priority number one once he's done with the signature?

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: Well John, I think there are a range of priorities for him now. Having cleared this hurdle, and it is a major victory for him with the stimulus package, the White House knows that he has tougher, higher hurdles ahead.

Tomorrow just as he's signing, he does have this automobile bailout problem hitting his desk with a big thud. My sense is that unlike where we were a few weeks ago, the possibility of the administration allowing some sort of structured bankruptcy to occur is higher today than it was a while back.

I think there's not a big stomach to keep putting money, dollar after dollar after dollar, into this. The day after that he's going to announce his housing plan. That's going to be expensive. People are going to be looking for details.

He's got the banking bailout still to come back to, the biggest of all of the problems, three times the cost, probably, of the stimulus package. Nobody knows what -- how to deal with these toxic assets. A real question whether we're moving toward nationalization.

And then, at the end of the month John, as you well know, he has to face the deficits and produce a budget that's going to forecast deficits out ten years. And I think they're going to be eye-popping.

KING: Well Gloria, let's follow on that point. Republicans are now saying Obama is presiding over the era of big bailouts. I asked Senator John McCain yesterday if he thought the stimulus plan indicated at the beginning of a partisan war.

He didn't go quite that far but he did say this it's a bad beginning he says. Because what we promised the American people -- what President Obama promised the American people, we would sit down together.

A bad beginning, Gloria? Is that just political criticism or are we going to see Republicans drawing this line as we go on and on and on?

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: I think it is political criticism. I think that the American public doesn't care so much about the process as it cares about the results.

And you know, in the end if you look at public opinion polls, John, the president remains at 60-plus percent approval rating. And Republicans remain at 31 percent. So in this fight over the stimulus, they haven't done themselves any good. And the president gets credit for reaching out.

Having said that, I think he's going to concentrate a little bit more on the substance and a little bit less on selling the process to the American people. Because that's the mistake they made with the stimulus package. They forgot about selling what was in it and they instead talked an awful lot about reaching out.

KING: And Joe, we're seeing more and more evidence of the pain at the state level. Kansas saying today it doesn't have the money to give people their income tax refunds. California tonight saying 20,000 people will be laid off.

As the governors deal with this pain, A, how soon might this money get to the states to help them, and B, are people out there going to blame their governors or might they start to blame their president? JOE JOHNS, CNN CORRESPONDENT: Well, the truth of it is, if you look at the economic models on this recession, a lot of people are suggesting the main thing the president has to do is avoid another big blow to the economy. And certainly you want to manage and minimize the economic turmoil in the states.

So the way a lot of people see this is first you're going to see some maintenance projects. Then the hard work of appropriations in the state legislatures begin and that could take some time. A lot of people think the bulk of this money is going to hit the economy in 2010.

That, of course, would mean it would be presumably closer to the recovery than anything else. But the challenge, of course, in the states will be things like permitting and licensing, which could take so long on big projects; especially when the administration wants to get the money into the process quickly.

People may want to blame Barack Obama, but at the end of the day, once this money goes out the door, in a lot of ways it's going to be up to the states and how well they're prepared to try to get this money out quickly, John.

KING: And David, we're talking about the long list of domestic challenges. But another huge issue facing this president, his press secretary saying he is close to making a decision on sending potentially thousands of more American troops into Afghanistan.

Frame the stakes for us as the president makes essentially his first big decision as commander-in-chief.

GERGEN: The real issue for him on this Afghanistan question is what he's trying -- what's the mission? When Joe Biden went there around Afghanistan, he found that there was huge disagreement about what we were trying to accomplish.

And what the president does not want to do, John, is to get himself committed to a victory that is elusive and can't be -- he doesn't want to get himself into a Vietnam in Afghanistan. And I don't think he will.

But I think -- the military has been looking for him. They thought last week they were going to get some numbers from him on Afghanistan. I think he's been wise to delay until he gets Dick Holbrook back in town. He can have a chance to figure out what's his mission and then figure out what the military commission ought to be.

BORGER: And John, it was his own Secretary of Defense, Mr. Gates who was warning him about making a premature decision before he could weigh all the risks. And so, like lots of things that are on his plate right now, it started out as kind of a narrow discussion but became a much broader discussion.

And I think that's where they are right now.

KING: And Joe, will he get bipartisan support if he sends more troops into Afghanistan, or will the Republicans oppose him like the Democrats did Iraq?

JOHNS: Well, I've got to tell you, it's weird. And I can't say all bets are off after this last fight they had over the stimulus.

But the truth is, when you talk to Republicans on the Hill, particularly over on the Senate side, a lot of them seem much more amenable to anything the president wants to do about sending more troops into Afghanistan, as long as he has the support and cooperation of the Defense Secretary, who we all remember, was George W. Bush's man before he was Barack Obama's man.

So the challenge may be for Barack Obama, bringing in some of those liberal Democrats who are suffering from war fatigue and think that there ought to be a lot of spending on other places than defense spending. And saying you guys need to come along with us.

So the tables could well be turned here with a lot more Republicans on the president's side.

KING: Joe Johns, Gloria Borger, and David Gergen, many thanks tonight.

And coming up: new trouble for the new Senator from Illinois that could -- could land him a perjury charge. A Blagojevich connection that Roland Burris didn't fully disclose until now comes back to bite him.

Also tonight, new revelations about the final fatal minutes of Continental Flight 3407 and how it was configured at the time of the crash.

And later, look up at the sky. It's -- it's -- well, what is it? Some possible answers when 360 continues.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

DAVID LETTERMAN, HOST, "LATE SHOW WITH DAVID LETTERMAN": Why exactly are you here? Honest to God.

ROD BLAGOJEVICH, FMR. ILLINOIS GOVERNOR: Well, you know, I've been wanting to be on your show in the worst way for the longest time.

LETTERMAN: You're on in the worst way, believe me.

BLAGOJEVICH: That's true.

(END VIDEO CLIP)

KING: The familiar face of former Illinois Governor Rod Blagojevich speaking there on "David Letterman" shortly after he was booted from office. Blagojevich is still facing criminal charges that he tried to sell President Obama's vacant Senate seat.

And tonight the man he appointed to fill that seat, Roland Burris, is under attack after amending his testimony to the panel that impeached Governor Blagojevich. Burris says the new information in an affidavit released over the weekend doesn't contradict his previous testimony.

But not everyone sees it that way.

Gary Tuchman with the "Raw Politics."

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: So you give us is the truth, the whole truth and nothing but the truth?

GARY TUCHMAN, CNN NATIONAL CORRESPONDENT: Roland Burris was under oath when he testified during Rod Blagojevich's impeachment hearings. While under oath he can go to prison. So what exactly was going on when he was asked a critical question? Did you have conversations with Blagojevich's brother or other close aides of the governor about the vacant Senate seat?

SEN. ROLAND BURRIS (D), ILLINOIS: I talked to some friends about my desire to be appointed, yes.

TUCHMAN: Does that imply that Burris did, indeed, have such a conversation with Blagojevich's brother? In a testy news conference this weekend Burris suggested you should think that.

BURRIS: That's when I said yes. I said yes. There's a yes answer in there. That means I talked to all of those -- no.

UNIDENTIFIED MALE: You said you talked to friends.

BURRIS: Hold it. Hold it.

TUCHMAN: But Burris said because it wasn't explicit, he decided to file an affidavit declaring, "I recall that Governor Blagojevich's brother, Rob Blagojevich, called me three times to seek my assistance in fundraising for Governor Blagojevich."

However, the affidavit was sent out after Burris was safely in the Senate seat. Which raises the question, if he would have uttered the wording of his affidavit at the impeachment hearing, would he now be the Senator?

UNIDENTIFIED MALE: Given that the whole impeachment process was dominate by the issue of Rod Blagojevich, the governor allegedly trying to sell the U.S. Senate seat held by Barack Obama, why would you not discuss the issue of someone very close to the governor, the governor's brother, asking you to raise money?

TUCHMAN: Burris says he has been completely honest and truthful. And that's why even today he was clarifying things.

BURRIS: It was done because we promised the committee we would supplement information in case we missed anything. End of story. God bless you all, and thank you very much. TUCHMAN: But it's likely not the end of the story. The Republican state legislator who asked him the brother question says he should resign.

JIM DURKIN (R), ILLINOIS GEN. ASSEMBLY: At some point in state government, we're going to have to tell people that when you get before a committee and that you are sworn in to tell the truth, we're going to take it serious.

TUCHMAN: Democrats aren't going that far. But they're expressing their disappointment. The new Democratic Governor, Patrick Quinn, released a statement saying, "My opinion is that he owes the people of Illinois a complete explanation."

Senator Burris says he did not donate to the governor following the conversations with the brother. And there's no sign of any affidavit amending or clarifying that.

(END VIDEOTAPE)

KING: And Gary, no doubt this is a continuing soap opera. But is it realistic to believe that Senator Burris could be charged with perjury?

TUCHMAN: It's probably unlikely, John. Based on cases I've covered over the years in legal minds I've listened to today; the fact is that Burris never said directly, I did not talk to Blagojevich's brother.

At best, he was very vague. And vagueness is often your friend; often a defense attorney's friend when facing the possibility of perjury charges. What seems to be bothering most people, politicians, observers in Illinois, observers in this country, is what they see as the possible continuation of political slipperiness.

The fact is during his impeachment hearings, Burris did not need on what -- he wasn't in legal trouble. So a lot of people say if he was there and he said, yes, Blagojevich's brother called me three times and I told him to buzz off, that perhaps he might have gotten a standing ovation.

So I think John, sometimes some good legal advice might be "don't use so much legal advice." Be a man or a woman, and be out there and say your own thing.

KING: Gary Tuchman, creating a new bumper sticker for the politicians tonight. Vagueness is your friend. Gary, thank you.

Next on 360, 26 seconds of terror: the last moments of Flight 3407, new details on the investigation. Did ice doom that plane?

Also tonight, it's called sexting. If you have teenagers there's a pretty good chance they're doing it. What sexting is and why the cops are cracking down.

And later, will he be charged for smoking pot? Michael Phelps hears from the law; the sheriff's decision coming up.

(COMMERCIAL BREAK)

KING: A memorial there to the victims of Flight 3407. Flowers left near the site of last week's deadly crash. All 49 people aboard the Buffalo-bound commuter plane and a man on the ground were killed.

Tonight we're learning much more about the final few seconds of the flight and how the plane violently pitched and rolled before plunging to earth.

Randi Kaye joins us now with the latest on the investigation -- Randi.

RANDI KAYE, CNN CORRESPONDENT: John, the final moments for the passengers on Flight 3407 can only be described as terrifying and violent. The final 26 seconds or so were the worst.

As the plane tried to land, the NTSB says the landing gear was brought down and the wing flaps were opened. But then investigators say the plane indicated that it was going to stall. Something, possibly ice, apparently affected the wings or the tail so seriously the plane lost its balance and was unable to fly normally.

So now, let me walk you through those final 26 seconds. The NTSB says the plane's flight data recorder indicates the plane rolled violently and the force jerked the nose up. The plane pitched up at an angle of 31 degrees and then pitched down at an angle of 45 degrees. The passengers likely would have felt like they were on a roller coaster at that time.

At one point the investigators say it rolled so far from side to side, once as much as 105 degrees, that the plane actually almost rolled on to its back as you can see there. 105 degrees would have been 15 degrees beyond vertical. Some experts have told media that the passengers may have felt like they were flying upside down.

Also in those final moments, the plane suddenly dropped from 1,800 feet to 1,000 feet; a drop of 800 feet in just five seconds. Probably felt like the bottom was dropping out. The NTSB says at that point passengers and crew would have been experiencing G-forces twice as strong as on the ground.

Something else, when the plane smashed into that house, it was facing away from the airport.

Investigators are still trying to figure out why. We've also learned that the plane was on autopilot as it approached Buffalo's airport. Turns out in December the NTSB issued a safety alert that recommended against flying on autopilot in severe icy conditions so pilots don't miss the indication of ice buildup. That alert was only a recommendation. Only the FAA has the power to change airline regulations.

The final seconds of this doomed flight were so violent, in fact, the NTSB says the autopilot disengaged and an alarm sounded warning of that imminent stall.

(BEGIN VIDEO CLIP)

GREGORY FAITH, FORMER NTSB INVESTIGATOR: Now the airplane's in an unusual latitude and the pilot has to try and do so many mental gymnastic things like trying to figure out what the position of the airplane is and what the appropriate corrective action is. And at a low altitude that is just not possible for successful recovery.

(END VIDEO CLIP)

KING: Horrifying details there, Randi. But do we know yet specifically what brought the plane down?

KAYE: Investigators, John, are focusing on the autopilot, of course, and the icing. Today we learned there was also icing on the tail.

Here's the real issue. The crew reported the ice on the plane was "significant" -- that's a quote, but never used the word "severe." So technically, the tower didn't get a report of severe icing. So it's hard to say if the autopilot should actually have been turned off. That's what is recommended by the NTSB in the case of severe ice so the crew has that manual feel for the changing conditions. Even the plane's manufacturer recommends it.

Still, the NTSB tonight, john, won't go so far as to say that they should not have been flying on autopilot.

KING: Still many more questions, Randi Kaye. Randi, thanks very much.

Up next, the infamous bong hit. Will Olympic swimmer Michael Phelps face charges? The sheriff makes his decision. That's ahead.

And the mysterious fire ball blazing across the Texas sky, look right there. Was it a UFO or something else?

Plus, sexting -- teens charged with child pornography for text messaging. Parents, beware. Your child may know all too much about this.

President Obama has blasted Wall Street executives for their pricey jets. Now he must decide if his own helicopter's too expensive. The Marine One price tag problem, next on "360."

(COMMERCIAL BREAK)

KING: Date night there for the president and first lady. Mr. and Mrs. Obama were in Chicago over the weekend; part of the trip, a Valentine's Day dinner out.

Today they were ferried back to O'Hare airport on a White House military helicopter; there are 19 in all. The one the president is aboard is always called Marine One. And Marine One is about to get a very, very expensive makeover. So it's safer and more modern. But some think the price tag is just too high and that the commander in chief should save money instead of spending it.

"Keeping Them Honest" tonight, here's Chris Lawrence.

(BEGIN VIDEOTAPE)

CHRIS LAWRENCE, CNN PENTAGON CORRESPONDENT: President Obama may have to put a price tag on his own safety. The current fleet of presidential helicopters is old. The replacements will be safer, fly farther and faster. But the new fleet is years behind schedule. And the cost has nearly doubled to $11 billion.

RICHARD ABOULAFIA, TEAL GROUP: This helicopter assumes that money is no object in ensuring the safety of the president.

LAWRENCE: It has to be more up to date than this current equipment. Shot inside the cockpit by National Geographic. It has to jam tracking devices and deflect missiles. It's got to have Internet, phones, and faxes; the kind that still work despite low level radiation or after an electromagnetic pulse from a nuclear blast. 64 feet of armored technology for relatively short flights.

ABOULAFIA: This is basically a niche machine; 15 minutes here, 30 minutes there.

LAWRENCE: The new helicopters cost $400 million each. That makes Marine One, one of the most expensive aircraft in the world. And President Obama must decide if the high price is worth the political cost.

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: Concerns that in terms of what that means for the taxpayers as well as what that means for the military. I think those are many questions that have to be addressed.

LAWRENCE: Critics say during the bush administration, the pentagon rushed to give the contract to Lockheed Martin. The company had never built helicopters before. And having to add all those features sent the price soaring.

It's possible these helicopters could save his life. But after President Obama criticized corporate executives for flying such high- priced jets, buying such a pricey fleet of his own may not fly.

The contract's been frozen while the Pentagon reviews it. And keeping them honest, some Connecticut Democrats see a chance to move the project to a company in their state.

REP. ROSA L. DELAURIO, (D) CONNECTICUT: What are the alternatives? What's more cost-effective and still maintaining national security?

LAWRENCE: during the campaign, candidate Obama said, "We should be spending a lot more money trying to figure out how to get our energy policy right than we should on helicopters for the president." Well, now they're his helicopters. Better watch the overhead.

Chris Lawrence, CNN, Washington.

(END VIDEOTAPE)

KING: Next on 360, the fire ball mystery. Over the skies of Texas, what had so many people looking up and wondering? The story and the images, ahead.

Plus, caught on camera smoking marijuana. But will Michael Phelps be busted? The sheriff speaks out.

Cell phone smut: the growing trend in high schools, sexting. But should teens face pornography charges?

First, now our "Beat 360" winner -- it's been a while for this for me, Erica. It's our daily challenge to viewers.

ERICA HILL, CNN CORRESPONDENT: It's like riding a bike. Don't worry.

KING: Like riding a bike -- a chance to show up our staffers by coming up with a better caption for the picture we post on our blog every day. Tonight's picture is a favorite here, Nikki and Paris Hilton taking a runway show today in New York's Brian Park where fashion week is under way.

Our winner tonight is Gabe. Erica, I'll let you read this one.

HILL: I will take the honors. By the way, we like to call Paris, "she who must not be named." His caption, "OMG, John King is at the magic wall. Call Lindsay and Britney." I think Gabe forgot a "totally" in there, somewhere.

KING: I'll see Gabe next trip to New York; don't you worry, Gabe. Our viewer winner is Brad. His caption, "The Hilton sisters check their cell phone call logs to make sure they had no illegal conversations with aides to the former Illinois Governor, Rod Blagojevich.

HILL: Very important. Especially for the Hiltons.

KING: Drumroll for Brad. Brad, your "Beat 360" T-shirt and maybe a Blagojevich T-shirt, too, out on the way.

HILL: Maybe some hair spray or a brush, perhaps.

KING: Very good, touche. We'll be right back.

(COMMERCIAL BREAK)

KING: Look closely there. What's flying over the Texas sky? This video -- stunning video taken yesterday. Just the latest in a series of strange sightings across the state. To some, the objects are easy to explain. Others believe they prove we're not alone.

David Mattingly reports.

(BEGIN VIDEOTAPE)

DAVID MATTINGLY, CNN CORRESPONDENT: Sunday morning. Eddie Garcia is covering the Austin marathon. His camera fixes on the race, but Garcia begins to focus on the strange glow from above.

EDDIE GARCIA, NEWS 8 AUSTIN: There was something burning and falling really fast.

MATTINGLY: You can see the object blazing across the Texas sky. The fire ball, a strange sight and a loud one, too. Creating sonic booms as it broke the sound barrier.

GARCIA: We get calls from other people, just citizens who saw the thing. And, you know, we heard reports of what it can possibly be.

MATTINGLY: And there were plenty of reports.

UNIDENTIFIED MALE: I think it's part of the satellite that crashed last week.

MATTINGLY: The FAA this weekend said it might have been space debris from colliding satellites. But today the FAA changed its tune, calling it a natural phenomena, most likely a meteor. NASA says millions occur in the earth's atmosphere each day. Some are spectacular.

This meteor or falling star was videotaped over Edmonton, Canada. Not everyone is convinced.

ASHLEY COLLINS, SAW STRANGE LIGHTS: What I saw was three lights. There were two on the bottom and there was one on the top. And then the one on top disappeared, then the other two disappeared.

MATTINGLY: UFO sightings have skyrocketed in Texas. This one was captured last month near Stevensville where dozens said they saw a hovering, color changing shape. Scientists believe there are reasonable mundane explanations such as airplanes, hallucinations or optical illusions that play tricks on the eye.

However, a few true believers suspect a massive government conspiracy to prevent us from knowing we're being watched.

ED GRIMSLEY, UFO RESEARCHER: I think that we are being manipulated and controlled, and we might not be able to handle the truth. And there has been a great deal of activity with UFOs and battles in space.

MATTINGLY: Space battles? That's probably a stretch. But consider this; 34 percent of people polled in recent years say they believe in UFOs. That would be as many as 100 million Americans.

Whatever it was that was spotted in the skies over Austin, Eddie Garcia says he's just glad he was there to capture it on camera.

GARCIA: I have no idea what it is or what it can be. I'm just grateful that I got a shot at it and hopefully that'll help.

MATTINGLY: David Mattingly, CNN, Miami.

(END VIDEOTAPE)

KING: That's pretty cool; a nice mystery.

Just ahead, the new texting craze. Teenagers say it's just a modern way of flirting. But now some of them are facing criminal charges ranging from child pornography to obscenity.

But first Erica Hill joins us with a "360 News and Business Bulletin" -- hi, Erica.

HILL: John, a South Carolina sheriff says he doesn't have enough evidence to prosecute Michael Phelps on drug charges and has now ended the investigation into the party where the Olympic swimming champion was photographed using a bong. Welcome news for Phelps.

(BEGIN VIDEO CLIP)

MICHAEL PHELPS, OLYMPIC SWIMMING CHAMPION: Pretty happy to have this thing sort of rest a little bit. I realize that I have made a mistake, a bad judgment. This is something that I need to learn from, I will learn from and have learned from.

(END VIDEO CLIP)

HILL: Pakistan's government agreeing to suspend military offensives and impose Islamic law in a northwest region where Taliban militants have a stronghold. The deal struck today is at odds with Washington's calls for tougher measures against militants in Pakistan's tribal region.

In Tokyo, Hillary Clinton beginning her first foreign trip as secretary of state. Over the next week she will meet with the leaders of Japan, China, Indonesia and South Korea. She is in the region to talk about climate change, clean energy, and the worldwide financial crisis.

Secretary Clinton, as we know, arriving in Tokyo. As the numbers show Japan's economy did much worse than expected in the fourth quarter. In fact, its GDP shrank nearly 13 percent from the year earlier. That is its fastest contraction in 35 years.

The economy will be the focus of a special "360" hour tomorrow; a CNN Money Summit with Anderson Cooper and Ali Velshi. Be sure to tune in for that -- John.

KING: Erica, thanks very much. Sobering economic news.

HILL: Very. KING: Still ahead here, extreme texting: teens sending sexually explicit pictures of themselves to their friends. Police and prosecutors are going after them. Is your teenager at risk?

Also ahead, the secret life of Erica Hill. On Valentine's Day we caught her at one of her day jobs. You won't want to miss this one. Just ahead.

(COMMERCIAL BREAK)

KING: Uncovering America -- teenagers like to text. That's a fact of life in 2009. Another fact, most teenagers occasionally use poor judgment, sometimes really poor judgment.

Texting a nude picture of yourself to friends -- that would definitely qualify. So would uploading a classmates' nude picture to your Facebook page.

But that's in fact what many teens are doing. And police and prosecutors in some cities are far from amused. They're pressing serious charges.

Again, here's Erica Hill.

(BEGIN VIDEOTAPE)

HILL: Text messages are convenient, quick, and in some cases a fast track to charges of child pornography.

CLIFFORD HARRIS, FALMOUTH, MASSACHUSETTS POLICE: Under 18, a child can't consent, or you can't have an image of a child under 18 on the cell phone, on the Internet. We look at it very seriously.

HILL: So seriously that six boys aged 12 to 14 in Falmouth, Massachusetts could face felony charges of child pornography. The boys are accused of using their cell phones to send around a naked picture of a 13-year-old girl. The father of one of the boys thinks charging them would be a mistake.

UNIDENTIFIED MALE: It was wrong, but did they really know it was wrong? No. They're 13-year-old kids.

HILL: In Pennsylvania, three 14 or 15-year-old girls allegedly sent nude and seminude pictures of themselves to three boys who were 16 or 17. All six now charged with child pornography.

Dr. Jeff Gardere is a clinical psychologist working with young people.

DR. JEFF GARDERE, CLINICAL PSYCHOLOGIST: A lot of that is peer pressure. I've talked to a lot of young people who say, "I do it because I want to get noticed. I do it because a lot of my friends are doing it. It's a new way of dating."

HILL: The kicker for many parents, plenty of kids do know it's wrong. In a recent study of 600 teens nationwide, 75 percent of teens said they know these messages can have "serious negative consequences."

Yet, one in five teens claim they sent nude or seminude pictures. Nearly 40 percent said they sent sexual text or e-mail messages. And the damage goes far beyond a rap sheet.

DR. GARDERE: This isn't just about their being exposed to activities around issues of pornography. But it's about what happens in the future. Will they then be into these sorts of activities that are to the extreme where people just really don't learn about sexuality and love, it just becomes a sex act?

HILL: The best way to stop it, Gardier says, education from parents, teachers, and the police is key. In Pennsylvania and Massachusetts, it's a lesson now hitting a little too close to home.

(END VIDEOTAPE)

KING: And Erica, you mentioned in the piece, Dr. Gardere says education is the key. What about these very, very serious charges? Does that deter the kids?

HILL: I asked them that because I was guessing that maybe it was. But he said -- he was almost of two minds. He said sometimes the charges can be a little severe but that it doesn't hurt in terms of sending the message home. He also said in terms of education, what may be one of the most powerful lessons is to have someone a victim or been convicted, perhaps charged with this who's also a teen because he said that teens will take the message best from their peers -- John.

KING: Disturbing a bit, as a parent, but also fascinating stuff. Erica, thank you very much.

Up next, you like getting the news with Erica, how about tying the knot with Erica's help? How she played a big role in a Valentine's Day wedding. It's our "Shot."

(COMMERCIAL BREAK)

KING: OK, Erica, tonight's "Shot" is about you.

Our viewers know you're here on 360, they also know you co-anchor "The Early Show" Saturday mornings on CBS. But this weekend on Valentine's Day doing a little bit more than anchoring. Let's run the clips. Stay right here.

(BEGIN VIDEOTAPE)

HILL: By the power vested in me by the city and the state of New York, I officially proclaim you husband and wife. Mr. Lin (ph), you may kiss Mrs. Lin.

UNIDENTIFIED MALE: Thank you so much.

UNIDENTIFIED FEMALE: Yes.

(END VIDEO CLIP) KING: All right. Look at that. We know you were talented, Erica. When did you start marrying people?

ERICA: Jonathan and Bonnie were the first couple I had married. It came up briefly in the meeting the week before the show. And I said, "Oh, is one of us going to marry them?" When my husband and I got married, we asked a very good friend of ours to get ordained on- line because we wanted someone that we knew and who knew us to perform this ceremony.

This couple graciously agreed. I got ordained not through the Internet, through an actual church. I did do it on-line. I also got certified by the City of New York. So there you go. They're legal.

KING: There you go. I just posted on the blog, any single person out there thinking they need a priest or need a rabbi, how about Erica Hill? Will their request make you come?

HILL: I can do it all, it's nondenominational. Whatever you would like, I can do.

KING: That's a blast. I'm betting that one is on YouTube already.

HILL: It might be, yes.

KING: All right, Erica, thank you.

That does it for this edition of 360.

Thanks for watching.

"LARRY KING" starts right now.