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ANDERSON COOPER 360 DEGREES

Sarah Palin Lashes Out at Media; Republicans Targeting White House for Investigation?; President Obama Visits Indonesia

Aired November 09, 2010 - 22:00   ET

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


ANDERSON COOPER, CNN ANCHOR: Thanks for watching, everyone.

Tonight: Sarah Palin attacking a "Wall Street Journal" reporter for not having his facts. The problem is , it's Palin who doesn't have her facts. We're "Keeping Them Honest."

Also tonight: bracing for a blizzard of subpoenas, Republican Congressman Darrell Issa promising to hold hundreds of hearings to investigate the White House when the Republicans take control of the House. Now he seems to be scaling back his tough talk from the campaign. Is he flip-flopping? We're "Keeping Them Honest."

And later, "Crime & Punishment": a horrific murder that shook a New Hampshire town to its core. Prosecutors called it a thrill kill, and today the killer was convicted and sentenced. The judge says he belongs in a cage. Find out where he will be sent. We will take you inside the trial.

We begin, as always, "Keeping Them Honest," with a politician who has made a mistake, but, instead of just admitting it, has chosen to attack the reporter who dared point it out to her. We're talking about Sarah Palin, who lashed out at a "Wall Street Journal" reporter after he correctly pointed out a factually incorrect statement she had made in a speech.

Now, on the face of it, you would think it's not a big deal. After all, everyone makes mistakes. But, rather than just admit her mistake, Palin doubled down, using her Facebook page to attack the reporter.

Let's go over to the wall now and show you just how all of this began.

Yesterday, in a speech Palin made in Phoenix, she blasted the Federal Reserve's recent decision to buy $600 billion in long-term U.S. Treasury bonds over the next eight months to help jump-start the economy. It's known as quantitative easing. It's also called priming the pump.

Palin said that it deeply concerns her, and she went on to say: "Everyone whoever goes out shopping for groceries knows that prices have risen significantly over the past year or so. Pump priming would push them even higher."

Now, "Wall Street Journal" economics blogger Sudeep Reddy posted an article titled "Sarah Palin's QE2 Criticism Includes Inflation Hyperbole." Reddy wrote in that article: "Grocery prices haven't risen all that significantly, in fact. The consumer prices -- the consumer price index's measure of food and beverages for the first nine months of this year showed average annual inflation of less than 0.6 percent, the slowest pace on record since the Labor Department started keeping this measure back in 1968."

So, not a big deal, right? I mean, he pointed out a mistake. But confronted with Reddy's facts, Palin chose to attack, firing back on Facebook and Twitter, saying about the reporter -- this is what Sarah Palin wrote -- "Mr. Reddy takes aim at this. He writes, 'Grocery prices haven't risen all that significantly, in fact.'"

Sarah Palin says: "Really? That's odd, because just last Thursday, November 4, I read an article in Mr. Reddy's own 'Wall Street Journal' titled 'Food Sellers Grit Teeth, Raise Prices: Packagers and Supermarkets Pressured to Pass Along Rising Costs, Even as Consumers Pinch Pennies.'"

Sarah Palin goes on, saying: "The article noted that an inflationary tide is beginning to ripple through America's supermarkets and restaurants... Prices of staples, including milk, beef, coffee, cocoa and sugar, have risen sharply in recent months."

She goes on to say: "Now, I realize I'm just a former governor and current housewife from Alaska, but even humble folks like me can read the newspaper. I'm surprised a prestigious reporter from 'The Wall Street Journal' doesn't."

Now, it's the kind of attack on the so-called "lamestream" media that Sarah Palin relishes and that her supporters love. The problem is the "Wall Street Journal" article that Palin mentions by name in this posting actually supports Reddy's take, not Palin. And Palin actually must have known that, because see the ellipses that she added?

Come over here. Just take a look at these ellipses that she added into this sentence, the dot-dot-dot there. She intentionally cut out part of the sentence that proves she's wrong. The actual sentence from "The Wall Street Journal" reads -- let's take a look -- "An inflationary tide is beginning to ripple through America's supermarkets and restaurants, threatening to end the tamest year of food pricing in nearly two decades."

This is the part that she cut out and added the ellipsis, "the tamest year of food pricing in nearly two decades."

Palin's original statement, remember, was that the grocery -- quote -- "prices have risen significantly over the past year or so."

Now, Mr. Reddy responded to Palin's attack by simply pointing out where she was wrong, saying the article that she referenced -- quote -- "does indeed report that supermarkets and restaurants are facing cost pressures that could push their retail prices higher, but it hasn't happened yet on a large scale." So, "Keeping Them Honest," you would think, after mocking this reporter, saying he doesn't read his own paper and is wrong, and being incorrect about it, then Ms. Palin would, if not apologize, at least just admit her mistake, correct herself. She hasn't.

And, see, there's a pattern here. Often, when a reporter challenges a statement Ms. Palin makes or writes something she doesn't like, she lashes back, attacking the messenger, attacking the reporter, the lamestream media giving them advice on how to do their jobs. It is kind of a constant refrain.

(BEGIN VIDEO CLIP)

SARAH PALIN (R), FORMER ALASKA GOVERNOR: Don't get sucked into the lamestream media's lies.

This B.S. coming from the lamestream media lately.

(INAUDIBLE) lamestream media (INAUDIBLE)

You're not getting the truth from the lamestream media about the real Joe Miller.

(END VIDEO CLIP)

COOPER: Now, supporters of Sarah Palin will say this story is nitpicking, much ado about nothing, a gotcha attack by both "The Wall Street Journal" and I guess now by me.

It is a small matter in the grand scheme of things, but all the more reason to just admit the mistake. And as for not being worth reporting on, well, politicians' words do matter. Fact do matter.

There are good arguments to be made against what Fed Chairman Bernanke is doing, but you don't need to base them on a mistaken fact. We all make mistakes. The difference between the so-called lamestream media and politicians, however, is that responsible media outlets have an obligation to correct their mistakes. Responsible politicians should do the same thing as well.

Joining me now, senior political analyst David Gergen, and also Dana Loesch, editor of BigJournalism.com and radio host at KFTK 97.1 FM.

David, is this much ado about nothing?

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: Well, Anderson, I'm very torn on this.

I think your whole series about "Keeping Them Honest" is extremely important to journalism. It's been very effective. On this particular one, I have to say, she was the one who was attacked by "The Wall Street Journal" first. And she responded.

COOPER: But attacked by -- he pointed out a mistake.

GERGEN: Well, he said -- well, he said, you know, she made a mistake.

COOPER: Right.

GERGEN: And, as you read the article, I think it did say that inflation was coming back.

COOPER: Right.

GERGEN: So that she wasn't entirely incorrect in saying that there was higher inflation in groceries -- on groceries.

COOPER: She had been saying that food prices had been going up the last several years...

GERGEN: Yes.

COOPER: ... which is not correct.

GERGEN: I think that's where she was incorrect.

COOPER: Right.

GERGEN: I think it was partially correct and partially incorrect.

COOPER: Right.

GERGEN: And, you know, in -- in all honesty, she should have just sort of said -- I don't think she should have taken the bait and gone after him. And I think it would have been better to go ahead and admit it.

And, you know, there was -- a fellow named Dickerson today from "Slate" went on -- on her Facebook page and pointed out the in -- corrections. And they wiped him out. Twice, they wiped him out. And I think that's sort of silly.

But I have to say, I -- I have a hard time getting really excited about this. I do think that the larger significance is that Sarah Palin has gone after the Federal Reserve. I mean, a lot of her critics would say she doesn't know what the Federal Reserve is, and yet she's been willing to take on this thing.

And she's gotten favorable -- in "The Wall Street Journal," she got a favorable editorial today, saying she was right on something that was fairly sophisticated. And I found that very, very interesting. It will be interesting to see what kind of -- how she answers questions when she doesn't have a script in front of her.

COOPER: Dana, I'm pretty sure you also think this is probably much ado about nothing or nitpicking?

DANA LOESCH, ORGANIZER, ST. LOUIS TEA PARTY COALITION: Well, it is, yes and no.

I think that the larger point is -- is being missed, Anderson. And thanks for having me back.

And I also have to echo what -- what David said as well. "The Wall Street Journal," also, the editorial board came out with a column sort of affirming some of the things that -- that Palin was saying. And it seems to me that it's kind of an argument between, well, which adjective was the best one to use, significantly or moderate?

All the while, everyone is ignoring the bigger problem, the bigger thing that needs to be addressed, the fact that the Fed wants to print more money, and she's calling them out. So, I think it -- the whole -- the whole point got lost in semantics.

COOPER: I do find it interesting, though, that she, like a lot of politicians -- and it's not just her, and it's Republicans and Democrats -- people don't admit when they make a mistake.

And I don't get -- I think -- I think, frankly, people, the voting public, would like it if somebody just said, well, look, yes, look, I -- OK, I made an error, we all make errors, rather than attacking the messenger.

LOESCH: Well, right.

And we see that from our -- our government almost daily, especially with some of the -- the stimulus estimates. But this -- I mean, this -- this whole situation with -- with Palin calling out the Federal Reserve, calling out Ben Bernanke, that, to me, is supremely important.

And it got completely lost. And whether or not she should have said moderate or significant, the bottom line is -- and I think that this is relayed as well in "The Wall Street Journal" article that she criticized -- is that food prices have been increasing.

But I think she was more or less talking about the fact that you're talking about increasing deliberate inflation from the Fed, which is going to have an effect on consumers, who are already hanging on to their dollars, and it's already giving grocers headaches and making everyone scared. So, I think the bigger point was missed.

GERGEN: I -- on that, I disagree.

I -- Dana made some very good points. But Ben Bernanke is not -- and he's not really trying to lift the inflation rate very high. What he's trying to do is to get this economy moving. He's trying to get long-term interest rates down. And he's trying to get the value of stocks up, sort of asset prices, as they're called, in order to give people more confidence both to buy long-term and to borrow long-term, as well as people -- give more confidence in the consumer.

So, I -- you know, there is a legitimate argument about what he's doing, but I don't think it's fair to say and I don't think Sarah Palin would be fair to say he's deliberately trying to sort of inflate our way out of this.

COOPER: Dana, do you -- do...

LOESCH: Right. Well, I...

COOPER: Go ahead.

LOESCH: I disagree with his approach.

I was just going to say, I disagree with Bernanke's approach on this, because I think it -- it further contributes to the environment, the -- the economic environment that we are currently in, where businesses are terrified, investors are terrified. Thus, we see growth stunted.

GERGEN: Yes.

And I want to go back to your fundamental point, Anderson. There -- there is in this country a very deep reluctance on the part of politicians to admit error. And that's because they somehow think, if they admit it, it's going to be -- they're going to get killed. You know, their opponents will run ads about it, one thing and another.

COOPER: And which is a fair argument. They will probably will. I mean, their opponents probably would run...

(CROSSTALK)

GERGEN: Yes. And I think we have gotten to the point where you can't -- the -- the public increasingly doesn't think people are telling the truth. And when they don't tell the truth, they won't admit they're not telling the truth.

(CROSSTALK)

COOPER: Do you think Sarah Palin, if she was running for president, is too thin-skinned? There are those who say, well, look, she -- she goes after the media every time. And Politico writes an article with -- with you know, unnamed sources and she attacks the Politico...

(CROSSTALK)

GERGEN: I think backing-and-forthing like this in a presidential campaign would -- would really hurt her campaign a lot. I think it's just -- it would -- to go to Dana's point, it took the focus tonight off her argument. And we got off into this sort of -- you know, this -- this side thing, which is actually -- you know, it's sort of fun and interesting, but it took the focus off her more substantive point.

Yes. And I do think, if she's going to run for president, she's going to have to have a much thicker skin and she's going to have let some of this stuff go.

I found it interesting that she would make a speech about the Fed, because, for the first time, I thought maybe she is running for president. To give a speech like this, I thought, wow. You don't give a speech like this, you don't wander into this terrain, which is very complicated stuff, unless you are getting -- you want to grab -- get more gravitas. She's been accused of not having gravitas.

COOPER: Yes.

Dana, do you think she's running?

LOESCH: I don't know. I don't know if she's running or sort of solidifying her position as a kingmaker, because she's sort of batting .900 right now in terms of her endorsements and the people who won on November 2.

But it is very -- I mean, it's a very interesting criticism that she had, because she sort of went above normally what she -- what she typically goes after. But I also agree with the fact that I don't believe in fighting down.

GERGEN: Yes.

LOESCH: And I think that what she demonstrated in this particular instance was fighting down. And it sort of gave leverage and gave greater importance and distracted from her whole criticism of going after Bernanke, going after the Fed.

GERGEN: That's -- that's a good way to put it. Fighting down is exactly the right way to put it.

COOPER: David Gergen, Dana Loesch, appreciate you being on. Thanks very much.

Let us know what you think. Join the live chat right now at AC360.com.

Still ahead: Republican Congressman Darrell Issa has promised to hold hearings, hundreds of hearings, targeting the White House. But just how tough does he intend to be when he takes over a powerful House committee? Some say he's sending mixed messages. We're "Keeping Them Honest."

Also ahead: President Obama delivering a big speech to the Islamic world tonight, as he wraps up his trip to Indonesia -- his message to Muslims ahead.

(COMMERCIAL BREAK)

COOPER: "Keeping Them Honest" tonight: promises made and words used on the campaign trail and how, once a politician gets elected, the promises and words, well, they begin to change.

When Congressman Darrell Issa, a California Republican, ran for reelection this year, he had some pretty tough things to say about the Obama administration and what he would do if he was sent back to Washington. Issa is expected to run the House Committee on Oversight and Government Reform, which is a powerful committee charged with investigating federal programs. As chairman, he would have subpoena power to investigate the Obama administration.

The question now is, how is he going to use that new power, and what will he investigate?

Last spring, when Congressman Joe Sestak revealed the administration was ready to offer him a job if he dropped his primary bid against Pennsylvania Senator Arlen Specter -- Remember that? -- well, Issa called it a bribe, called it Obama's Watergate, and said -- quote -- "A crime has been committed by the White House."

(BEGIN VIDEO CLIP)

REP. DARRELL ISSA (R), CALIFORNIA: An allegation has been made that multiple sources in both parties -- Anthony Weiner, Dick Morris and other Democrats have made it very clear that -- even Axelrod -- that they should answer, that, in fact, this is serious. This is an impeachable offense, according to Dick Morris.

It's not about what was done wrong. It's about the cover-up. An, right now, there's a cover-up going on at the White House.

We can no longer trust this administration when they say: We're more ethical and we're -- we -- you should trust us.

(END VIDEO CLIP)

COOPER: Well, last month, at the height of the midterm campaign, when he needed votes, Congressman Issa had this to say about President Obama on Rush Limbaugh's radio program.

(BEGIN AUDIO CLIP, "THE RUSH LIMBAUGH SHOW")

ISSA: He has been one of the most corrupt presidents in modern times. He has ignored the very laws that he said were so vital when he was a senator.

(END AUDIO CLIP)

COOPER: Since Election Day, however, Congressman Issa seems to have changed his words and his tone. He told Wolf Blitzer on "THE SITUATION ROOM" yesterday that he can't criticize President Obama on the Sestak situation because the Bush administration did the same thing.

And when asked directly if he believes President Obama's corrupt, here's what he had to say.

(BEGIN VIDEO CLIP)

ISSA: Do I think the president is personally corrupt? No. I should never have implied that or created that in a -- in a quick statement on a radio call-in.

(END VIDEO CLIP)

COOPER: So, this weekend, he also sounded conciliatory, saying he will conduct investigations out of the public glare, in a less partisan way.

(BEGIN VIDEO CLIP)

ISSA: I have no plans to subpoena any of the current administration. I have over 100 letters out requesting information. I hope those will be provided voluntarily, pursuant to the law.

(END VIDEO CLIP)

COOPER: So, his critics say, while trying to get votes, he said this is one of the most corrupt presidents in history. Once he has the votes, he said he's not. So, is he backing off the heated language?

Well, not exactly. Late yesterday, for instance, he told Politico -- Politico posted an interview with Mr. Issa, who said he's prepared to hold upwards of 280 hearings in a single year -- 280. Just by comparison, in the last two years of the Bush administration, the Democratic-led committee held 203 hearings, but that was over two years.

Now, oversight is part of the checks and balances in our government. It's a curb on federal power or protection against corruption. On his Web site, Congressman Issa points out that Republicans on the Oversight Committee have sent Democrats who have controlled the committee dozens of requests for hearings, joint investigations, subpoenas to investigate allegations of government waste, fraud and misconduct, but to no avail.

So, it's absolutely appropriate that the Republicans would want to set their own agenda, now that they're in the majority. What's not clear right now, however, is exactly what Mr. Issa's agenda will be.

A short time ago, I spoke to Erick Erickson, CNN contributor and editor in chief of RedState.com, also Jeffrey Toobin, CNN senior legal analyst, and Cornell Belcher, Democratic strategist and President Obama's campaign pollster in 2008.

(BEGIN VIDEOTAPE)

COOPER: Jeff, on the one hand, Representative Issa is saying he's learned the lessons of past Oversight Committees, and he is not going to be issuing subpoena after subpoena after subpoena, as was done after Clinton lost in the midterms back in '94-'95.

Yet, on the other hand, he's quoted in Politico as saying, "I want seven hearings a week times 40 weeks."

JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: Well, it depends what he's investigating.

I think -- you know, he issued a report earlier this week, and he said: I want to investigate Homeland Security. I want to investigate whether the stimulus is working.

This is entirely appropriate stuff, and I think it's good for Congress to investigate these important subjects.

COOPER: Right. I mean, there's an important role -- I mean, there's a reason there's oversight.

TOOBIN: Absolutely.

The problem is, he has also given signals that he's going to indulge these crazy right -- right-wing obsessions, like the New Black Panther Party, ACORN, which is just nonsense.

COOPER: Erick, you have no concerns that, for -- for the -- for Republicans, who have been elected by talking about financial issues and -- and focusing on jobs and the economy, that it's not going to seem like a distraction, focusing on -- on ACORN, for instance?

ERICK ERICKSON, CNN CONTRIBUTOR: Well, it -- that -- that's the balance, and -- and that's the game as well.

The Democrats will try to make it look like Republicans are distracted by this, and the Republicans will have to work very hard to make sure they're not. There are 20-some committees in the House of Representatives. They all function concurrently, not one at a time, so they can do multiple things at once.

COOPER: Cornell, is this just the way the game is played in Washington? I mean, I was looking at Henry Waxman when he ran the Oversight Committee. He had some -- more than 200-something hearings, about the same number that Issa is talking about doing.

CORNELL BELCHER, FORMER OBAMA CAMPAIGN POLLSTER: No.

Well, actually, he had roughly 208 over two years. Issa is talking about doing 280 in a year. Look, you just had a referendum election that was primarily about the -- about the economy. What's the unemployment rate at right now? And you have this congressman in sort of wanting to expand these powers and actually start new subcommittees for investigations.

This is why, broadly, Americans get so disgusted with Washington and politics as usual, because it's not focusing on what they're focused on.

TOOBIN: Well, we will -- we will see. I mean, I think...

COOPER: Well, Waxman held 203, but just -- just for accuracy's sake.

TOOBIN: But -- but -- but...

(CROSSTALK)

BELCHER: Well, still -- well, over two years.

COOPER: Right.

BELCHER: And this is 280 in a year.

TOOBIN: And -- and it just depends on what the hearings are about. I mean, Erick says, fine, let's investigate the New Black Panther Party. So, the question is, is it important? Are they talking about issues that matter to people? The economy matters. National security matters. Homeland Security matters.

COOPER: But -- but were Democrats complaining when -- when Waxman was doing it?

(CROSSTALK)

TOOBIN: Well, it's -- I mean, I think Waxman was dealing with very substantive issues. I mean, Waxman was talking about issues like smoking. I mean, the most famous Henry Waxman hearing was when he brought in all the -- the CEOs of the tobacco companies. I think that was a huge turning point.

COOPER: But -- but let me -- let me just -- but let me just show you some of -- during 2008, the last year of the Bush administration, Democrats held on -- oversight committees held 96 committee and subcommittee hearings.

This year, with the Obama administration in power, the committee held 76 full and subcommittee hearings, a drop of 21 percent.

(CROSSTALK)

COOPER: And here are some of the -- the topics the Democrats on oversight committees decided to hold hearings on.

One, are superweeds an outgrowth of USDA biotech policy? Female D.C. code felons, unique challenges in prison and at home. Defining and fulfilling the mission of National Archives Administration.

I mean, is that...

TOOBIN: I mean, I don't those are trivial subjects. I mean, you know, in the context of a big federal government, you know, one hearing on those subjects is -- doesn't strike me as inappropriate at all.

BELCHER: And, Anderson...

(CROSSTALK)

ERICKSON: But I think that's the point, though. I mean, one person's trivial subject is one person's -- is another person's substantive subject.

If the Republicans aren't getting traction with these things, you can bet that John Boehner will shut them down.

BELCHER: But, look, Erick, see, again, I'm not even trying to score political points.

And, Erick -- and, Anderson,, I have got to push back on you here, because you're trying to make it seem like it's equal. He's talking about doing 280 investigations in one year, more than what Waxman did in -- in two years, so it's a little different.

TOOBIN: I don't think the number matters. I mean, if...

BELCHER: The number matters.

TOOBIN: ... Darrell Issa can come up with 280 hearings that are important and useful, more power to him.

The -- the question is, can he do that? I mean, no one in the history of Congress ever has, so I think the odds are against him. But I just don't think the number is all that important.

COOPER: He -- he's already walking back the idea of the ACORN investigation. I haven't heard on the New Black Panther thing.

But he's -- already seems to be trying to send a message that what he's looking at and focusing on is stuff related to jobs, stuff related to the stimulus and the like.

BELCHER: Well -- well, here's the thing. If he's going to focus on that sort of thing, that's fine.

But, from what I have read him focusing on, and some of the -- the hard partisans that he's trying to put in the -- also in place in some of these subcommittees, it sounds -- it sounds like a witch-hunt, it feels like a witch-hunt.

ERICKSON: Well, you know, I mean, this is like Henry Waxman investigating Bush ties to Halliburton. These things come up. Elections have consequences.

The Republicans will investigate a few of the things that Republican partisans want investigated, but, by and large, these -- however many hearings he actually has, they are going to be on substantive things, on Homeland Security, on White House policy on health care, on White House policy on immigration, on actual substantive legislative things. That's perfectly within the purview of Congress.

COOPER: Well, then, Erick, do you think he's stepping back from some of the rhetoric he was using to -- to get elected? I mean, is he -- he talked...

ERICKSON: Oh, yes, absolutely he's stepping back.

COOPER: He called President Obama the most corrupt president. He, you know, talked about ACORN an awful lot. To you, now -- does it seem now he's walking this back?

ERICKSON: Look, there -- there is -- is campaign trail rhetoric, and there is leadership rhetoric, and he's gone into full leadership mode. They all walk it back, whether they're Democrat or Republican, once they get into office. That's just part of it.

That's why Americans are so cynical about politics, frankly.

(CROSSTALK)

TOOBIN: I mean, wait a second. I mean, do you just accept that -- that there is a complete difference between politics and government?

I mean, I appreciate the cynicism, but I -- you know, I -- I think we should have people held to a little bit of a higher standard that than, Erick.

ERICKSON: You know, I have gone beyond holding politicians really to any standard.

(LAUGHTER)

TOOBIN: Well, I -- I'm not.

COOPER: But -- but -- but, Erick, seriously, though, I mean, do you believe that -- I mean, the American public, you know, clearly votes with their heart and -- and -- and believes in people, and if somebody on the campaign trail is saying one thing and then...

ERICKSON: Yes, but, look, Anderson...

COOPER: ... singing a different tune when they get to D.C., isn't that hypocritical?

ERICKSON: ... 90 percent of the American public -- 90 percent of the American public has never even heard of Darrell Issa. And they certainly don't know what he said on the campaign trail.

Yes, they will have some of these hearings. But, by and large, people get elected to office and they realize that governing is different from campaigning.

COOPER: Cornell, are you cynical like that, too?

(LAUGHTER)

BELCHER: I may be even more cynical than Erick, which is hard to believe.

(LAUGHTER)

COOPER: You -- well, you're a pollster, so you have got to be cynical.

(LAUGHTER)

TOOBIN: I guess I'm -- I saw "Mr. Smith Goes to Washington" most recently of all these people.

(LAUGHTER)

TOOBIN: And, you know, it's like, all right, Darrell Issa, innocent until proven guilty. Let's see what he does. And -- and, you know, maybe he will do a good job. COOPER: Jeffrey Toobin...

(CROSSTALK)

TOOBIN: ... could happen.

COOPER: ... Erick Erickson, Cornell Belcher, appreciate it. Thank you.

BELCHER: Thank you.

(END VIDEOTAPE)

COOPER: Well, of course, Republicans campaigned, won back the House on promises to cut the federal budget deficit.

Tonight on "PARKER SPITZER," Eliot Spitzer asked senator-elect Rand Paul of Kentucky, who had the full backing of the Tea Party, to be specific about cuts he's going to propose.

(BEGIN VIDEO CLIP, "PARKER SPITZER")

RAND PAUL (R), KENTUCKY SENATOR-ELECT: My answer to the question is that nothing is off -- off to -- off-limits.

ELIOT SPITZER, CO-HOST, "PARKER SPITZER": Well, then let's...

PAUL: Nothing is off-limits. And we will -- let me finish.

The other thing is, is that we will look at each individual program and we will do a stepwise process to this. We will say, can it be downsized? Can it be privatized? Can it be eliminated? Or can we not look at this program at all, because it's too important that it can't be cut?

So, we will look at this in a stepwise fashion, and we will look at everything within the budget, and we will make those determinations.

But I'm not prepared to look at all thousand different categories and tell you exactly what we will cut from each one, other than to tell you that I'm serious about doing this, and I will introduce a budget. And we will be happy to come on back in January if you want to go into each individual item.

But I think it's impossible to go through each individual item of the budget and tell you exactly what percentage and what we will cut at this juncture.

SPITZER: Well, but...

(END VIDEO CLIP)

COOPER: Well, obviously, you can see more every weeknight, "PARKER SPITZER," 8:00 p.m. Eastern right here on CNN. Up next: President Obama speaking to the Muslim world. Did he have anything new to say? We're going to give you the highlights from the president's speech. We will play you several minutes from it, the most important part. It just happened, just finished moments ago in Indonesia.

And back in this country, "Crime & Punishment": a teen who killed just for the thrill of it. That's what a prosecutor said. And a brutal thrill kill, they called it. The verdict from the jury -- ahead.

(COMMERCIAL BREAK)

COOPER: President Obama just finished speaking in Indonesia in what was his second major address to the Muslim world since taking office. There's been so much focus on Muslims in the United States this past year, and it's gotten a lot of international attention.

So we thought it worthwhile to try to hear for several minutes what Mr. Obama has to say to the Muslim world. More Muslims live in Indonesia than in any part of the world. The president touched on that in his speech and how he wants to try to build a better relationship between this country and the Muslim world.

(BEGIN VIDEOTAPE)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Now, religion is the final topic that I want to address today. And like democracy and development, it is fundamental to the Indonesian story.

Like the other Asian nations that I'm visiting on this trip, Indonesia is steeped in spirituality. A place where people worship god in many different ways. Along with this rich diversity, it is also home to the world's largest Muslim population, a truth I came to know as a boy, when I heard the call for prayer across Jakarta.

Just as individuals are not defined solely by their faith, Indonesia is defined by more than its Muslim population. But we also know that relations between the United States and Muslim communities have frayed over many years. As president, I've made it a priority to begin to repair these relations.

As part of that effort, I went to Cairo last June, and I called for a new beginning between the United States and Muslims around the world, one that creates a path for us to move beyond our differences. I said then and I will repeat now, that no single speech can eradicate years of mistrust.

But I believed then and I believe today that we do have a choice. We can choose to be defined by our differences and give in to a future of suspicion and mistrust. Or we can choose to do the hard work of forging common ground and commit ourselves to the steady pursuit of progress.

And I can promise you, no matter what setbacks may come, the United States is committed to human progress. That is who we are; that is what we've done; and that is what we will do.

Now, we know well the issues that have caused tension for many years, and these are issues I addressed in Cairo. In the 17 months that have passed since that speech, we have made some progress, but we have much more work to do. Innocent civilians in America, in Indonesia and across the world are still targeted by violent extremism.

I've made it clear America is not and never will be at war with Islam. Instead, all of us must work together to defeat al Qaeda and its affiliates. We have no claim to be leaders of any religion, certainly not a great world religion like Islam. But those who want to build must not cede ground to terrorists who seek to destroy.

In Indonesia, you've made progress in rooting out extremists and combating them, such violence. In Afghanistan, we continue to work with a coalition of nations to build the capacity of the Afghan government to secure its future. Our shared interest is in building peace in a war-torn land. A peace that provides no safe haven for violent extremists and to provide hope for the Afghan people.

Meanwhile, we've made progress on one of our core commitments, our effort to end the war in Iraq. Nearly 100,000 American troops have now left Iraq under my presidency. Iraqis have taken full responsibility for their security. And we will continue to support Iraq as it forms an inclusive government, and we will bring all of our troops home.

In the Middle East, we have faced false starts and setbacks. But we've been persistent in our pursuit of peace. Israelis and Palestinians restarted direct talks. But enormous obstacles remain. There should be no illusion that peace and security will come easy. But let there be no doubt. America will spare no effort in working for the outcome that is just and that is in the interests of all the parties involved. Two states, Israel and Palestine, living side by side in peace and security. That is our goal.

The stakes are high in resolving all of these issues, for our world has grown smaller. And while those forces that connect us have unleashed great opportunity and great wealth, they also empower those who seek to derail progress.

One bomb in a marketplace can obliterate the bustle of daily commerce. One whispered rumor can obscure the truth and set off violence between communities that once lived together in peace. In an age of rapid change and colliding cultures, what we share as human beings can sometimes be lost. But I believe that the history of both America and Indonesia should give us hope.

(END VIDEOTAPE)

COOPER: That was President Obama speaking just a few minutes ago at the University of Indonesia before traveling to South Korea tomorrow and the G-20 summit.

Up next, the former head of BP, the guy who got thrown under the bus after a series of public relations blunders, is speaking out for the first time since he resigned. You may be surprised by how blunt Tony Hayward is being now about the Gulf disaster.

And an unsolved mystery in the skies off Southern California. Take a look at that. It looked like a missile being fired or the trail of one. Why can't the government explain what it is?

(COMMERCIAL BREAK)

COOPER: Check in with Joe Johns, see what else we're following with the "360 Bulletin" -- Joe.

JOE JOHNS, CNN CORRESPONDENT: Anderson, the former head of BP is admitting his company was totally behind the eight ball in dealing with the worst oil spill in the nation's history. Tony Hayward told the BBC that BP was unprepared for the spill and the media frenzy that followed.

Hayward also said BP's ability to borrow money dried up, and the company came close to financial disaster.

Meanwhile, there's word remnants of the spill have entered the Gulf of Mexico's food chain. Scientists in Alabama say they're not surprised they found small amounts of oil carbon in plankton in the Gulf which, in turn, is eaten by shellfish.

Off the coast of Mexico, a stranded cruise ship with nearly 4,500 passengers and crew members. Carnival Cruiselines say the ship lost power after an engine room fire. The U.S. Navy is providing food and other supplies until the ship can be towed to shore.

And they're not so happy about Happy Meals in San Francisco. The board of supervisors is banning most of them until they meet certain nutritional standards. McDonald's says it's extremely disappointed with this law.

We'll talk a lot more about this tomorrow on AC 360 when Dr. Phil is our guest. Happy Meals. I mean, they're sort of a guilty pleasure for kids, plus the toy.

COOPER: Yes.

JOHNS: You know, that's the thing. I don't know, man.

COOPER: I was surprised to hear about it.

It's interesting, the story about the oil entering the food chain. It's important to point out, you know, that they do test the stuff very carefully, and there have been no reports of problems. I was in New Orleans this weekend, went to a lot of restaurants, ate seafood just about every night, had oysters, and the food is as great as ever. So I hope the people don't read that and -- or see that and cancel trips.

JOHNS: Right.

COOPER: Because the food is safe and it tastes better than ever.

JOHNS: New Orleans, it is just a wonderful place, and it's just a shame all the sort of perils that city and that area has faced.

COOPER: Yes. I tried a new restaurant this weekend called Upper Line in New Orleans, and it's on my list of favorites.

JOHNS: In the Quarter?

COOPER: It's not in the Quarter. It's in the Garden District, I think, or uptown, not sure which, but it's near Tulane, and it's amazing.

All right, Joe.

Up next, "Crime & Punishment." A judge says a teenager convicted of a horrific home-invasion murder belongs in a cage. That's what the judge said. We'll take you inside the courtroom and back to the beginning of the case that shocked a quiet New Hampshire town.

Also ahead, new details from Elizabeth Smart about her kidnapping, how she almost escaped months earlier.

(COMMERCIAL BREAK)

COOPER: "Crime & Punishment" tonight, a 19-year-old New Hampshire man will spend the rest of his life in prison. He was convicted today and immediately sentenced in the machete murder last year of the woman named Kimberly Cates. Steven Spader, that's him. He was just 18 at the time.

Cates's young daughter was severely injured in the attack by another young man who will stand trial early next year. It was a home invasion that was so brutal the sense of security in a quiet New England community was deeply shattered.

Deborah Feyerick tonight with the story of a senseless crime that officials called a thrill kill.

(BEGIN VIDEOTAPE)

DEBORAH FEYERICK, CNN CORRESPONDENT (voice-over): The judge did not mince words, sentencing Steven Spader to life in prison with no parole for a horrific, senseless murder that shocked a small New England town.

UNIDENTIFIED FEMALE: I could go on for days and days and days about the depth of your depravity, but it is sufficient to say that you belong in a cage.

FEYERICK: It happened October 2009 on a dirt road as the leaves were changing. A thrill kill, prosecutors called it, for 18-year-old high school dropout Steve Spader and three friends. Christopher Gribble, Quinn Glover, and William Marks, who allegedly wanted to kill to see what it felt like. Prosecutors described the teens as followers of the hard-core horror rap group Insane Clown Posse and claimed they formed their own brotherhood, the Disciples of Destruction. Court documents show they took a loyalty oath, methodically gathering knifes, a machete, axe, and gloves to commit the crime.

(on camera) The accused attackers made their way up this dirt road in the dead of night, choosing a home that happened to belong to the Cates family. It took them more than 30 minutes to find a way to break in. Once inside, they made their way searching through the home until they got to the last room, where Kimberly Cates and her daughter, Jamie, were sleeping.

(voice-over) Husband, David, was away on business, and the alarm system was broken. Spader allegedly laid out the events of the grisly night himself in a hand-written note prosecutors say he called a bedtime story to impress fellow inmate Chad Landry. Landry read it aloud in court.

CHAD LANDRY, FELLOW INMATE: Swinging the machete down on the mom. She screamed, then kind of gargled, then made some other weird- ass noises. I told Gribble to stab her just to be sure. He did.

FEYERICK: He refers to Gribble, this man, Chris, a co-defendant, who was 19 at the time.

QUINN GLOVER, DEFENDANT: They were all covered in blood.

FEYERICK: Spader's two other accomplices cuts deals, testifying what they saw and heard as they stood outside the bedroom door.

WILLIAM MARKS, DEFENDANT: Steve Spader walked up to her and hit her in the head with the machete.

GLOVER: I heard cries for help. Begging, "No, no."

FEYERICK: Kimberly Cates died in her bed. Eleven-year-old Jamie, stabbed 15 times, fell near the sliding glass doors and lay still, pretending to be dead.

GLOVER: She was on the floor tangled in the curtains.

FEYERICK: After the attackers left, Jamie crawled to the kitchen and called 911.

UNIDENTIFIED MALE: What is your emergency?

JAMIE CATES, HOME INVASION SURVIVOR: Hello? Somebody robbed my -- somebody robbed our house.

FEYERICK: What makes this crime even more difficult to comprehend is how normal the accused teenagers appeared to behave in the hours following. Prosecutors say Gribble spent some time doing homework before leaving with Spader to meet up with other friends at a nearby mall. The two accused thrill seekers, seen here just hours after the murder, selling jewelry taken from the Cates' home. Prosecutors say the crime was never about money; it was about the thrill. Spader not only bragging to friends, but also writing about it, calling it, quote, "such an adrenaline rush."

The verdict, little consolation for David Cates and his daughter.

DAVID CATES, WIDOWER: Jill and I had dreams, hopes and aspirations like any family. And all those are now shattered.

(END VIDEOTAPE)

COOPER: Such a -- this is such just a sickening, sickening story. Did they just pick this house randomly?

FEYERICK: Completely randomly. They found a house that was sort of set back. Even as a matter of fact there was a house next to it that was simply too big, so they decided to go to this ranch-style house.

And what's amazing is how they just stuck with it. They couldn't get in through the basement, so they actually removed an air- conditioning. One of the people climbed in, opened the door, let the others in. But it took almost 30 to 40 minutes to get into that house.

COOPER: It makes it all the more terrifying that they just randomly picked this. I mean, they could have picked anybody.

FEYERICK: That's what's so scary.

COOPER: It makes no sense to attack the mom. To attack this little girl? How is she doing?

FEYERICK: They happened -- they happened to be in bed together. The father was away on business, so they were together. They were very, very close. But she's doing OK. She's playing sports again, field hockey, lacrosse.

The father, during the sentencing, said you know, her physical scars have healed, but the emotional scars, it's too soon to tell what the ultimate result of that will be. So really horrifying.

COOPER: So horrible. Deborah Feyerick, appreciate it. Thanks very much.

Up next, Elizabeth Smart and what she calls her nine months in hell. She took the stand again today in the trial of the man accused of kidnapping her. She told the court about a missed opportunity to save her. Details on that ahead.

And take a look at this -- these images. Is that a plane or a missile? What is it? Hear what the Pentagon is saying, coming up.

(COMMERCIAL BREAK) COOPER: Let's check in with Joe Johns again for another "360 News & Business Bulletin" -- Joe.

JOHNS: Anderson, Elizabeth Smart took the stand today in the trial of Brian David Mitchell, who's accused of kidnapping her in June 2002.

Smart testified about an encounter with the Salt Lake City, Utah, detective that fall. He wanted her to lift her veil so he could see her face. Smart said Mitchell told the detective lifting it was not allowed in their religion. The detective then asked if he could be part of their religion for a day so he could report she was not Elizabeth Smart. Smart told the jury Mitchell refused.

Her kidnapping ordeal did not end until the following spring, when several police officers saved her from what she called her nine months in hell.

The jurors who convicted a man of killing a Connecticut mother and her two daughters in a home invasion and recommended he be put to death are speaking out. One of them said if Steven Hayes got life in prison, it would have been like he was going home, since he had been in and out of prison for 30 years.

Another talked about the emotional toll of the case.

(BEGIN VIDEO CLIP)

DIANE KEIM, STEVE HAYES TRIAL JUROR: When I looked at the photos of the girls and Mrs. Petit, I hugged the photos, and then I looked at Dr. Petit, and I looked at the family and I -- the pain, their pain became my pain.

(END VIDEO CLIP)

JOHNS: Stocks took a beating today. The Dow fell 60 points. The NASDAQ slipped 17, and the S&P lost nine, while gold hit an all- time high, settling at more than $1,400 an ounce.

And a mystery in Southern California. A news helicopter captured this video. To some it looks like a missile or rocket. To others it's a plane. But the Pentagon and the FAA and others are at a loss and can't explain it.

Anderson, interesting about that, John Pike, who's sort of a friend of AC 360 over at GlobalSecurity.org, says it's not a missile; it's actually a plane flying toward the camera, if can you believe that. But, you know...

COOPER: The angle just looks like it's moving ago way from it.

JOHNS: Exactly.

COOPER: That's interesting. They say they're still investigating, though at this point, the Pentagon says that there's no evidence this has to anything to do with the Department of Defense. So probably by tomorrow I think we'll have some more answers.

Joe, time for tonight's "Shot." This is a very cute video, this baby dolphin, only about two weeks old. He was found -- he actually -- looks like a penguin looking at him, but he was found four days ago washed up on the beach, injured, near the capital of Uruguay, the dolphin's injuries apparently -- yes -- the result of fishing net wounds. There he is drinking, I guess, drinking milk, maybe?

There was no sign of his mom. He's being nursed back to health by marine biologists outside of Uruguay's capital, and they've named him Nipper, which I guess is sort of like -- reminds me of Flipper. But I didn't dolphins were -- I mean, obviously there'd have to be babies. It's like baby pigeons. Who sees baby pigeons? You rarely see...

JOHNS: It's amazing. What a cute little -- I guess you're not supposed to call them fish. You're supposed to call them mammals, right?

COOPER: Technically, I guess that would be correct. There we go.

Joe, thanks very much.

Ahead on the program tonight, Sarah Palin lashing out. A reporter pointed out a mistake with her facts. Why wouldn't she just admit the mistake? Is it important to get the facts right? We're "Keeping Them Honest."

(COMMERCIAL BREAK)

COOPER: Tonight Sarah Palin attacking a "Wall Street Journal" reporter for not having his facts. The problem is, it's Palin who doesn't have the facts. We're "Keeping Them Honest."