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ANDERSON COOPER 360 DEGREES

Rupert Murdoch Scandal Grows; Debt Deadline Nears

Aired July 18, 2011 - 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: We begin tonight with breaking news: a report that the phone hacking scandal that's already ruined careers, caused a popular British tabloid to fold, led to 10 arrests, and put Rupert Murdoch's media empire under intense scrutiny may be on the brink of claiming its biggest victim yet.

I'm talking about the News Corp. CEO, Rupert Murdoch, himself, the man who is in charge of a global network that owns a dizzying array of TV channels, movie studios, book publishers and newspapers. A report from Bloomberg News tonight says News Corp. is considering replacing Murdoch.

Now, sources tell Bloomberg that it's not a done deal, but it could happen, depending on what happens when Murdoch appears before the British Parliament tomorrow. That's when Murdoch will answer questions about the company's role in hacking the phones of murder victims, royal family members, and celebrities, hacking done by employees of the British tabloid "News of the World."

If Murdoch is replaced it will be an absolute bombshell in a scandal that already grows more shocking by the day. The latest sad and stunning twist, a former "News of the World" reporter, a whistle- blower, found debt in his home. Sean Hoare was one of the first to go on the record, telling "The New York Times" "News of the World" reporters were encouraged to hack into voice-mail accounts.

Now, British reportedly police say his death is being treated as unexplained, but not thought to be suspicious, suggesting it was a suicide. This scandal is rocking Britain but seems ready to explode here in the United States as well. The FBI investigating whether News Corp. journalists tried to hack into the phones of 9/11 terror victims and survivors.

There are calls in Congress for an investigation as well. The FBI also says it's aware of reports that actor Jude Law's phone was hacked while he was in New York. The scandal shows no sign of slowing down. Quite the contrary, given rumblings of Murdoch himself possibly, possibly being replaced as the CEO of his own media empire. A man whose customer base is the whole world, anyone who watches "Glee" or "American Idol" on FOX, anyone who reads "The Wall Street Journal" or "The New York Post," anyone who goes to the movies or reads books.

Joining me now live here, CNN senior legal analyst Jeffrey Toobin, also "The New York Times" media reporter Brian Stelter, and in London our senior international correspondent, Matthew Chance.

Brian, let's start with you. Rupert Murdoch stepping down in the world of media, that's a wow. True or a maybe?

BRIAN STELTER, "THE NEW YORK TIMES": Right now it's a maybe.

News Corp. will not deny the Bloomberg report on the record. We have been asking all night. But they will say on background, people around the company will say there was no meeting today to talk about it.

You can tell that's not a real denial. They may want this out here ahead of the testimony in order to change the tone of the testimony tomorrow. Clearly it's going to be a tough day for Rupert Murdoch and his son James testifying. But the reality is Rupert Murdoch is a pretty elderly man. Whether he leaves this year, or next year or five years there's already been talk about succession plans for him and the report from Bloomberg is that Chase Carey, who is right now the COO, could step up to be CEO.

It's not out of the question. And analysts have been thinking for days it might happen.

KING: So, Matthew, Rupert Murdoch and his son and Rebekah Brooks testify in front of Parliament tomorrow. Obviously Brian just laid out here this leak could be in expectations in advance of that. What are we expecting from this hearing?

MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, obviously we're expecting that Rupert Murdoch in particular will be the big box office draw. He will be grilled by British members of Parliament, cross-examined about the extent of his knowledge about what his executives at News International and News Corp. were up to when they apparently, as the accusation goes, authorized these phone hacking antics to go ahead against celebrities and victims of crimes. To what extent he knew, to what extent he will do something about it.

So it will be a pretty explosive day. And obviously, just the very fact that the world's most powerful media mogul is appearing in front of the British Houses of Parliament to answer questions in this way is just a fascinating event in itself.

KING: And so we're talking about this as a business story. Rupert Murdoch could be stepping down as the CEO of his own empire. As a political drama because he's so influential in British politics and in American politics. But counselor Toobin, to you on this point. He's testifying in a political setting, but he knows there are criminal investigations on both sides of the Atlantic. Rupert Murdoch and his deputies need to be careful, don't they?

JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: Think about how difficult it is for them. Because they have got to do two almost entirely contradictory things in their testimony tomorrow.

One is they have got to acknowledge responsibility. They have to say that what is completely obvious is that this was not some aberration. This was how the "News of the World" worked. It was not one person, it was not 10 people. It was apparently thousands of people who were hacked and the idea that they didn't know is preposterous.

But at the same time, they can't go in there and confess to crimes. Practically everyone around them has been arrested already, Rebekah Brooks, Rupert, Murdoch's protege in Great Britain, arrested yesterday. They have to acknowledge but not admit. Frankly, I don't know if it's possible.

KING: You don't know if it's possible.

Matthew, we get this sad story today, a bizarre twist to this story. The whistle-blower, Sean Hoare, found dead in his home. What do we know about the circumstances of that death and the investigation?

CHANCE: Not a great deal, but it has added this bizarre additional human dimension to this saga which continues to develop almost by the hour here in the United Kingdom.

The police have issued a very kind of terse statement saying that this man was found at 10:40 in the morning local time. He's now been identified as Sean Hoare of course the former showbiz correspondent for the "News of the World" and so a man who would have been very well placed indeed to know about the antics of fellow "News of the World" journalists.

And he was this whistle-blower, he was the first person to publicly go out there and say, look, Andy Coulson, the former editor of the "News of the World," the former press secretary of the British Prime Minister David Cameron, not only knew the phone hacking took place when he was editor of the paper, but he also condoned it and actively encouraged it.

And so this is someone who's been a great source, sort of a font of accusations, fountain of accusations throughout this sandal, John.

KING: And so as the questions shift to the Parliament hearings, Brian, in the sense that Rupert Murdoch himself could be at risk here, could be planning to step down, could come under investigation at some point, as this happens you look at the individual but you say as you look at the individual, look at the power of the individual because of these conglomerates.

(CROSSTALK)

STELTER: That's right. I think this is the best opportunity that critics of the Rupert Murdoch have ever had to speak out against him and to say he just has too much power.

We're hearing a lot of that out of Britain already. We're hearing lawmakers say maybe News Corp. should be broken up, that maybe it shouldn't to own a satellite broadcasting company, as well as books and as well as newspapers. I think we're starting to hear that in the U.S., but it's not nearly the level that it was already being heard in the U.K.

TOOBIN: I was in Britain for the last 10 days, and the scope of Murdoch's power there is so enormous. How much "The Times of London," "The Sun" newspapers, "News of the World," now defunct, Sky Broadcasting -- he's courted by politicians there of all parties.

Sure, he has a lot of power here with "The Wall Street Journal" and FOX News. But it's nothing like in Britain and there are a lot of people who are laying for him, who are waiting to get back at him for exercising that power for so long.

KING: And, Jeff, quickly, as we watch what plays out overseas, when you hear the FBI, the Congress here say we're going to watch a parliamentary proceed in your Britain tomorrow, but there's a lot of activity here. In a sense, where do you see this going?

TOOBIN: I think that's a long shot. The Foreign Corrupt Practices Act, it was designed about bribery of government officials abroad. That's not seemingly what went on here.

The reports of hacking in the United States have been really sketchy, highly unconfirmed. This really seems like a criminal matter abroad so far. But, politically, Murdoch is in obviously desperate trouble.

KING: And the main event in the next 24 hours these parliamentary hearings.

Jeff Toobin, Brian Stelter, Matthew Chance, thanks.

And let us know what you think. We're on Facebook or follow me on Twitter @JohnKingCNN. I will be tweeting throughout the program tonight.

Up next: President Obama says America doesn't need to change the Constitution to balance the budget. Well, the public says otherwise. But there's an important catch.

And you will hear from a Tea Party leader who says the best deal for raising the debt ceiling is no deal. He will tell us why.

And later: a major development with Libya, talks between Libyan and American officials. We will tell what was said and why it wasn't exactly a negotiation.

First, though, let's check in with Isha Sesay -- Isha.

ISHA SESAY, CNN INTERNATIONAL CORRESPONDENT: John, we heard former Egyptian President Hosni Mubarak was in a coma, then he wasn't, that he has cancer and more. What's the real story? And do claims of ill health have anything to do with the deposed dictator's upcoming trial? We will get the story straight from Cairo. That and much more when 360 continues.

(COMMERCIAL BREAK)

KING: Just 15 days now until the Treasury says it will run out money to pay the bills.

Tonight, an influential Tea Party leader who says let's not make a deal. Don't raise the debt limit period. He also says President Obama is lying about the consequences if we don't.

First though "Keeping Them Honest" on what many Republicans especially in the House believe is central to solving the long-term problem. A constitutional amendment to balance the budget. Tomorrow, the House votes a bill on Cut, Cap and Balance. The measure cuts spending to 2004 levels, caps it, freezing it right there, and calls for a balanced budget amendment to the Constitution.

(BEGIN VIDEO CLIP)

REP. JASON CHAFFETZ (R), UTAH: All that we ask in this bill is that we simply allow the states to weigh in, should the federal government live under a balanced budget amendment? Should they do that?

SEN. TOM COBURN (R), OKLAHOMA: I don't understand why people wouldn't vote for the a balanced budget amendment because it's the only real discipline that will ever force the politics of Washington to meet the responsibilities of Washington.

REP. JIM JORDAN (R), OHIO: Let's do something historic. Let's, for the first time in American history, pass a balanced budget amendment through the House and through the Senate.

(END VIDEO CLIP)

KING: The Senate, though, is not expected to pass it. The White House spokesman Jay Carney today promised a presidential veto and in his press conference on Friday, President Obama said a balanced budget amendment is unnecessary.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: We don't need more studies.

We don't need a balanced budget amendment. We simply need to make these tough choices and be willing to take on our bases.

(END VIDEO CLIP)

KING: "Keeping Them Honest," a majority of Americans disagree with the president on the general question of a balanced budget amendment.

In a "Wall Street Journal"/NBC poll in April, 61 percent support a balanced budget amendment. And in a Sachs/Mason Dixon poll back in May, support for a balanced budget amendment was 65 percent. Republicans also are slamming Democratic lawmakers for supporting a balanced budget amendment in the past, but not anymore. This morning, Brian Walsh of the National Republican Senatorial Committee tweeted, "Democrats like Brown, Nelson, Stabenow, Tester, et cetera, all campaigned on a BBA in '06. Now they're flip-flopping. Will have to explain."

And true enough, here's Ohio Senator Sherrod Brown in 2006.

(BEGIN VIDEO CLIP)

SEN. SHERROD BROWN (D), OHIO: I stood up to a president of my own party, not just in opposition to the North American Free Trade Agreement, but also in support of the balanced budget amendment in restoring fiscal sanity to our government.

(END VIDEO CLIP)

KING: And Republican operative Brian Walsh is correct. There are other Democrats who have changed their position since then.

But what Walsh doesn't mention is the new proposed amendment differs significantly from the one those law enforcements supported. The new one caps government spending at 18 percent of the economy. For perspective, the government currently spends 25 percent. The last time the government spent only 18 percent of GDP was four-and-a-half decades ago in 1966, when the population was younger, medical care cost less and the government provided fewer services.

This proposed amendment, part of the Cut, Cap and Balance bill, is making its way through Congress just as the leadership is trying, trying, to hammer out a deal in the White House, legal critics to call it an unnecessary distraction.

That's for them to say, not us, but 71 percent in a new CBS poll disapprove of how congressional Republicans are handling the debt crisis. Democrats get 58 percent disapproval. The president gets a thumbs down from 48 percent.

And then there's the Tea Party, many of whom see this crisis as an opportunity to draw a line to fundamentally change the way the government does business.

Earlier tonight, I spoke with Mark Meckler, the co-founder and the national coordinator of the Tea Party Patriots.

(BEGIN VIDEOTAPE)

KING: So, Mark Meckler, business leaders, government officials from the president of the United States, even key Republican leaders in Congress, they say there will be Armageddon, disaster if the debt ceiling isn't raised, but you don't buy it?

MARK MECKLER, CO-FOUNDER, TEA PARTY PATRIOTS: No, I don't. We have been hearing terms like Armageddon and disaster since the passage of TARP, $720 billion that was supposed to save us from disaster. It didn't do it then. We didn't see the disaster. They haven't even spent that money yet. We're not going to see Armageddon now.

KING: Part is, you say we won't see Armageddon now. Part of it is, I think, to be honest, none of us really know because Congress has never failed to raise the debt ceiling. So all's we can go on are these predictions.

Why are you so confident? When you hear leading economists, leading politicians, why are you so confident that they're wrong?

MECKLER: Well, I hear economists and politicians saying exactly the opposite.

And the reality of what it will do, John, is it will force the politicians to make the difficult choices that they're currently avoiding. We all know there's going to be pain. But the bottom line is the politicians should make the decisions to cut the necessary programs.

KING: You say cut the necessary programs. One of the things the White House pushes back on is if you get to August 3, the debt ceiling is not raised, they that unemployment will go up, they think the economy will be hit, but they think on that next Wednesday, Thursday and Friday, maybe Social Security checks won't go out, maybe VA benefits won't go out, maybe military pay won't go out. The president is warning that right now. Are you prepared to deal with that fallout?

MECKLER: We're not prepared to deal with that fallout because frankly the president is lying. Money is in place to pay every single one of those programs you just mentioned.

And the only way those things won't go out is if the president chooses to make those people victims. The president is threatening the seniors, he's threatening the disabled, he's threatening military. Those threats are nothing more than fear-mongering and they're totally inappropriate coming from the president of the United States of America.

KING: Well, somebody is not going to get a check. Yes, there's probably enough money to pay Social Security, probably enough money to pay veterans, but at some point the government every month, Mark, and you know this, every month, the government takes in a certain amount of money but spends because of deficit spending, and I know you don't like that, but that is reality, spends a lot more. So something's got to give, right?

MECKLER: Absolutely something has got to give.

That's why I think it's so unfortunate and so offensive that the president would go after seniors and the disabled when in reality there are real programs out there that can and should be cut. CBO has identified over 500 duplicative programs that should be cut. Why isn't the president talking about those? Why isn't the president talking about cutting aid to the Palestinian territories or to Pakistan?

Instead, he is victimizing seniors, he is victimizing the military, he is victimizing the disabled. It's totally inappropriate.

KING: Some of those things will be discussed as Congress looks at potential cuts, as Congress looks at next year's budget, as Congress negotiates with this president.

But on August 4, August 5, August 6, you could cut some of these things and people mention foreign aid all the time and you just did, but it still -- even if you cut it all, it's a tiny sliver of the budget. You're not disputing the fact that if we get to August 3, the debt limit is not raised, that there are people who will have pain?

MECKLER: Oh, absolutely. And I think everybody in the country understands that there will be difficulty.

But the thing that we all know for sure, John, that American public opinion is with us on thing. A plurality by 2-1 say don't raise the debt limit. We understand it's time to reorganize this country, it's time to fix what's broken. It's not time to kick the can down the road any further. That's what this president and that is what this Congress are trying to do right now.

KING: I think the latest public opinion polls I think are about even on the split. But you're right. The public is divided. I don't think it's 2-1. I think it's about even. But the Republican leaders in Congress...

MECKLER: Actually, John, to be clear, the Gallup poll just came out last week and by a 2-1 margin, a plurality of Americans say that they don't want to see the debt limit raised.

KING: I think that the CBS poll tonight shows it about even, but depends on the question maybe.

But let's -- you make a point about public opinion. The public is divided. I think that is fair to say. Republican leaders in Congress support raising this debt ceiling, though, so let's assume they're going to negotiate a deal or at least they're going to work on a deal.

What do you hear from the grassroots that lets you stand up to the Republican leadership and say you're wrong? If a Republican, say, in the House and the Senate, votes to go along with some kind of a deal, is your message the Tea Party will run a primary against you or come after you?

MECKLER: I don't think it's that specific.

Our message is they're standing against the American people and there are always electoral consequences for standing against the American people.

The Tea Party movement remembers. We showed that in 2010. You saw a historic transition, the largest turnover in Congress since 1938. I'll tell you, with or without this vote, we will see a much larger turnover in 2012. We are going to take this country back to the founding principles.

KING: Any room for compromise? Is the Tea Party open to raising the debt ceiling if it gets something in exchange? Or is it your view, Mark Meckler's view that, no, just leave it right where it is, the government doesn't get a bigger credit line?

MECKLER: It's not Mark Meckler's view. I have got to be clear, I don't speak for everybody in the Tea Party movement. I can only speak for what we have been told by the national leadership team. That's over 3,500 coordinators around the country.

They voted -- 86 percent of them say do not raise the debt limit period. That's a little bit bigger than what the national opinion is, but it matches up nicely with the national opinion, so we say don't raise it. We're not looking for compromise. We're looking for cuts.

KING: And do not raise it. Again, I just want to come back to this point. Do not raise it even if on the day after somebody out there doesn't get his or her check, whether it's a veteran, whether it's somebody for getting housing assistance, whether it's Social Security checks?

I agree with you I don't think that's likely, but it's a possibility, the administration says. If somebody out there doesn't get a check and they say, but we could have had a deal if those Tea Party Republicans had voted yes, instead of no, will you worry about that?

MECKLER: I'm not worried about that.

Again, and you said it, that decision will come from the president. There's plenty of places to cut on August 3 or August 4 that will not cause people to not get checks. It's nothing but fear- mongering and scare tactics for the president or anybody in Congress to talk about Social Security or veterans or disabled not getting checks.

That would be the president's choice. It would be a cruel thing for him to do. And I would encourage him to step back from those statements. It's outrageous for the president of the United States to be saying things like that.

KING: Mark Meckler, appreciate your time tonight.

MECKLER: Thank you, John.

KING: Thank you.

(END VIDEOTAPE)

KING: Mark Meckler said there flat out President Obama is -- quote -- "lying" -- unquote -- about the consequences of not raising the debt limit.

New polling tonight from the Pew Research Center shows people in the country about evenly divided about whether it's absolutely essential that it be raised by August 2. Now, Mr. Meckler and others acknowledge there will be pain.

So let's head over to the wall. I want to show you a couple of examples, this scenario given to us by the Bipartisan Policy Center in Washington. First, a little basic budget math. The government takes in -- last year in August took in $194 billion, paid $342 billion in bills. Simple math mean it ran $159 billion in red ink. That's last August, deficit spending.

This August, because the economy is slower, they expect to take in the government $172 billion, $306 billion in bills. So the current projection is $134 billion in deficit spending in August. Remember the $172 billion, because here's one scenario. If the government decided to pay its bills, no increase in the debt ceiling, pay its bills based on big-ticket items, well, that would be interest on the debt, Social Security, Medicare and Medicaid, defense venders, a lot of money there, more than $30 billion, unemployment insurance, essentially what you would get under the big-ticket scenario is a drawing off the line right here.

That's your $172 billion. The government now is out of money if you don't increase the debt ceiling. So what gets cut? Military pay. Wouldn't get their checks under this scenario. Veterans checks would not go out under this scenario. IRS refund. If you're waiting for one you wouldn't get it under this scenario. A lot of nutrition services, including food stamps, wouldn't get paid under this scenario.

Federal salaries, the Education Department, other -- you heard Mr. Meckler mention aid to the Palestinians, foreign aid. That's way down here. Under this scenario, remember this, defense contractors up here, you would have to make the choices and cut it off right here.

That's one way to look at it. Suppose you decided instead we will put a priority -- let me push this down -- on the social safety net. Well, under this scenario, interest gets paid, Social Security gets paid, Medicare and Medicaid. Those nutrition services that got cut off last time, you could pay them in this scenario.

Housing grants would go out. Veterans Affairs would go out. Unemployment would go out. Education can go out and tuition assistance. But then under this set of priorities, your line is down here. Then you're at or just slightly above that $172 billion. Again, you cover most of the social safety net here, but defense vendors wouldn't get paid here. Active-duty military pay still would not get paid. IRS refunds and federal salaries and again down there that foreign aid.

So under either scenario, no increase in the debt ceiling, the government then has to make priorities and set them. Whether you do the big-ticket approach or the social safety approach, you're talking about some very tough choices, some of them politically painful and risky.

Up next, just how ill is the former Egyptian President Hosni Mubarak? If we are to believe his lawyer, Mubarak is practically on death's door. But could the claims of failing health have anything to do with Mubarak's upcoming trial. We will talk to a "New York Times" reporter in Cairo.

Plus, Texas Governor Rick Perry says he feels called to run for the White House. If he does join the crowded GOP field, what impact would a Perry candidacy have on the race for the Republican nomination? We will get some answers ahead.

(COMMERCIAL BREAK)

KING: New question tonight about the health of Hosni Mubarak, the ousted former president of Egypt.

Mubarak's lawyer says the 83-year-old ex-ruler fell ill into a coma yesterday. But hospital officials say he regained consciousness by Sunday night. The lawyer also claims Mubarak is battling complications from stomach cancer. Egyptian prosecutors don't go that far. They say he suffers from depression, fatigue, an irregular heartbeat, and low blood pressure.

But this is what Mubarak's lawyer told us our Diana Magnay back in May.

(BEGIN VIDEO CLIP)

DIANA MAGNAY, CNN CORRESPONDENT: Is he fit enough to stand trial?

FARID EL DEEB, ATTORNEY FOR HOSNI MUBARAK (through translator): Honestly, he's now in very bad health. He even needs help to go to the bathroom. The president has serious heart problems and complications with his stomach from the operation he had in Germany last year.

MAGNAY: Is the Torah prison hospital equipped to the requisite level to house Mr. Mubarak given his present medical condition?

EL DEEB (through translator): Well, the previous reports stated that it's not suitable, especially since he has atrial fibrillation heartbeats, which is very dangerous. One atrial beat may cause sudden death.

(END VIDEO CLIP)

KING: So, a skeptic might ask, are these health claims an attempt to prevent Hosni Mubarak from going on trial next month? He's charged with corruption and ordering police to kill anti-government protesters during the uprising.

A short time ago, I spoke with David Kirkpatrick, the Cairo bureau chief for "The New York Times," via Skype.

(BEGIN VIDEOTAPE)

KING: So, David, a lot of conflicting stories out there about Mubarak's health this weekend. Was there a legitimate health scare or was this just another ploy by Mubarak's lawyers to try to avoid a trial or perhaps change public opinion before a trial?

DAVID KIRKPATRICK, "THE NEW YORK TIMES": Well, so far, it looks like a ploy. There was a report from his lawyer on Sunday afternoon that Mubarak was in a coma, that he had suffered a stroke and he was in a coma. The lawyer said that his wife, Suzanne Mubarak, had called him and he was rushing to the hospital.

I, myself, thought this might be serious. So I started calling around to find reactions. And most people in Egypt were already writing it off, if only because, just last month, the same lawyer had said that President Mubarak had cancer, which turned out to be false. And sure enough, about an hour after the lawyer's initial statement or diagnosis, there was a doctor from the hospital on state television saying, "Nothing of the kind happened and Mubarak had suffered from a small dizzy spell, and he was doing fine."

KING: And so it begs the question, why? In the past when he was the president, his health was a closely guarded state secret. Rumors he was leaving the country and all that. But is there reason now to doubt those state TV reports you just mentioned? The lawyer says one thing. State TV says a dizzy spell. Who do we believe?

KIRKPATRICK: Well, no, you're right. State TV is certainly not gold in terms of its accuracy. But in this case, the doctor sounded pretty darn convincing. And I personally find it unreasonable to think that the state TV or the doctor would say one day he's not in a coma, only to have to come back and say the next day that he is.

And what's more, when you think about it cynically, it would actually be somewhat attractive for the people currently running the Egyptian government, the interim military general (ph), if President Mubarak were in a coma. They don't have much reason to say he's not. They're under a lot of pressure to bring him to a swift trial, and they were all ready to punish him. I don't think the military council around the country are really hungry for this and wouldn't mind seeing him in a coma, because it would put off a whole trial.

KING: That's an interesting point, because as this all plays out, you see the protests in Tahrir Square all the time about this debate about the future of Egypt and debates about this military government, traditionally one of the most trusted, esteemed institutions in the country.

Give us a sense right now of how they're handling this as they try to carve out this new role and make clear that they expect to be part of any government down the road?

KIRKPATRICK: Well, they're handling it awkwardly. Everybody who meets with the military comes out and says -- which by the way, is not including me -- they're not very open to the press -- but everybody who does meet with the military comes out and said, one thing's for sure. These guys do not want to be in power, and you can see why. Because every day they run the country, their esteem in the eyes of the public begins to sink.

Everything that goes wrong sticks to them in Egypt, and a lot goes wrong, sticks to them. And they get blamed for it. But at the same time, they've got a lot to protect. They have a lot of economic interests in this country. They run a lot of businesses for making consumer products (ph) to bottled water, to running resorts, cars. All kinds of things that we wouldn't expect the military to do. And their budget has never been disclosed, even to parliament.

So they have a lot to lose in full civilian control of the government. And what we're now seeing is that they're stepping forward to say, "OK. There's a lot of debate about this new constitution. I'll tell you what. We're going to write some guidelines. We're going to write some basic rules that will help protect individual rights which we know many liberals are concerned about. And you know what? We might also lay down some rules governing our own role in the future Egyptian government."

There's a lot of reason to believe that the military -- and something I don't think is suggested -- that the military is moving towards a rather broad description of their own future powers. So one that would allow them to intercede in civilian politics whenever they felt that the community or the country or its secular character were in danger.

KING: David Kirkpatrick, thank you.

KIRKPATRICK: Always a pleasure.

KING: One more note on Egypt: there's a lot more to learn about changes in the interim government that were made today and about demands by the protesters for economic and social reforms in the post- Mubarak era. You'll find it at CNN.com/Videos. Just type in "Egypt" in the search bar. That address, one more time. You want to try this: CNN.com/Video.

Still ahead, the Texas governor, Rick Perry, may jump into the race for the GOP presidential nomination. It's already a crowded field. Who would he hurt the most if he does run?

First, we're following some other stories tonight. Isha Sesay has a "360 Bulletin" -- Isha.

ISHA SESAY, CNN CORRESPONDENT: John, American and Libyan officials met quietly this weekend in Tunisia. The U.S. says the point of the meeting was to send a clear message that Libyan leader Muammar Gadhafi must step down. A Libyan official called it, quote, "a first step,'[ but a U.S. official said it was a one-time meeting and not the start of negotiations.

Tropical Storm Brett is moving away from the Bahamas and out into the Atlantic Ocean. The National Weather Service says it could strengthen into a hurricane by tomorrow. Tropical storm warnings for parts of the Bahamas were discontinued today.

And rapper Ja Rule -- remember him -- was sentenced today to 28 months in prison for failing to file federal income tax returns for five years. The Justice Department says he will have to pay all back taxes and penalties. Ja Rule is already in jail in New York on a gun charge.

And John, a lot of people tuned in to watch the women's World Cup soccer final yesterday. ESPN is reporting that 13.5 million viewers watched as Japan beat the United States on penalties. ESPN also says the match was the sixth most-watched cable telecast this year. Those are quite some numbers.

KING: Were you watching?

SESAY: I was asleep.

KING: You were asleep. OK. That's one. That's one you were not watching. How about this? Were you one of the people who coughed up a combined -- get this $169.2 million -- this weekend to see "Harry Potter and the Deathly Hollows, Part II"?

SESAY: No. I was asleep.

KING: Wow. You're getting a lot of sleeping time there.

SESAY: You know, let's just move on. Did you go and see it?

KING: My son took my ticket. I had a ticket for my son and some of his friends, and he said, "Dad, I need one more," and I lost mine. I was not asleep, though.

SESAY: You were a good daddy.

KING: I was not -- yes, I was -- well, I'm like an ATM machine. If it's not money, it's a ticket.

Now -- wait -- Anderson takes his shot at Potteresque wizardry in just a moment.

But first, tonight's shot, it's a compilation spell casting throughout the year put together by NewYorkMagazine.com. Take a look.

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UNIDENTIFIED MALE: (UNINTELLIGIBLE)

(END VIDEO CLIP)

KING: Need a wand. All I have is a little pen.

SESAY: You're going to have to do better than that, John. Sorry. Not to put any pressure on you.

KING: I need a wand. I'm going to go buy a wand after the show.

But now one night last week in our "Beat 360" segment. You know the segment. We challenge our viewers to outdo the staff by coming up for a better caption for the daily photo we post on the blog. We posted this photo, the stars in the new "Harry Potter." They're attending the New York premiere, but when it came to reading the viewer caption, well, it looks like Anderson, maybe was under a spell. (BEGIN VIDEO CLIP)

ANDERSON COOPER, CNN ANCHOR: Viewer winner is Simon from an undisclosed location. His caption, "Eyemakeupicus is ridiculis!"

(SFX: GROANS)

COOPER: I totally blew that one. Sorry. Yes, it was a spell. Eyemakeup -- eyemakeup is. Eye makeup -- this is pathetic. Eye makeup -- Oh, please, let's stop recording!

(END VIDEO CLIP)

SESAY: And that's where he is tonight. Standing in front of a mirror practicing his spells.

KING: I think he's out there recovering or buying a vowel or doing something like that.

Isha, thanks. We'll see you in a bit.

Coming up, "Raw Politics." He hasn't made it official yet, but Texas Governor Rick Perry says he feels called to run for president. How formidable would a Perry candidacy be, and what would it mean for the bigger Republican field? Tackling those questions next.

Also ahead, a terrifying scene in India. An entire family swept away in a flash flood, sent careening over a waterfall. Details coming up.

(COMMERCIAL BREAK)

KING: "Raw Politics" and a possible game changer. Over the weekend, Texas governor Rick Perry told the "Des Moines register" he felt quote/unquote called to run for president. He said he makes no apologies about his father but trying to downplay the notion he feels called by God to run.

That said, many think he could turn out to be a godsend to a Republican party in search of a fresh contender.

Joining us now to talk about this Erick Erickson. He's the editor of the conservative RedState.com and Mimi Swartz, executive editor of "Texas Monthly."

Erick, let's start with you. He says he's not ready to make it official. I'm told by somebody close to him tonight they're doing a little polling, checking on the fundraising. But when you tell the "Des Moines Register" -- Iowa caucuses come up first -- you feel called to run, that's a pretty strong leading indicator, isn't it?

ERICK ERICKSON, REDSTATE.COM: Yes, I think it is. If Rick Perry chooses not to run for president, to my knowledge, he'll be the only Republican candidate ever who's wife is on record saying he needs to run who disagrees with his wife and doesn't do it. KING: So Mimi, you're right there in Texas. The governor for months said, "No, no, not me, no." Inching forward, any doubt in Texas?

MIMI SWARTZ, EXECUTIVE EDITOR, "TEXAS MONTHLY": I don't think there's any doubt in Texas. I don't think there's been any doubt since the last gubernatorial campaign when he was obviously starting his presidential bid then.

KING: You think he was starting early and now all those "nos" were just waiting his time?

SWARTZ: Yes.

KING: So Erick let's game this out. Assume Governor Perry gets in. Who in the current field, Erick, has the most to lose?

ERICKSON: I think probably Tim Pawlenty has the most to lose, given what he's got to do in Iowa. He's got to win in Iowa, as does Michele Bachmann. I think Rick Perry getting in hurts both of them dramatically.

Long-term what I actually think is it's probably going to hurt Romney. What we've seen throughout the polling consistently with Romney is that he seemed really capped out at about a third of the votes.

So for example, in Iowa, half of the political operatives who were engaged in 2008 for a candidate are still sitting on the sidelines, and he can't break more than 35 or 40 percent of the polls. Short-term, though, definitely Pawlenty and Bachmann.

KING: So Mimi, those who watch this from afar say, "OK, he seems to have some appeal to evangelicals. He thinks he can make his case to fiscal conservatives." You're right there; you've covered this governor. How formidable would a Perry candidacy be?

SWARTZ: I think it would be very formidable. He's the luckiest man in politics. He's never lost a race. He's a really formidable campaigner. And I think people, on the East Coast in particular, underestimate him at their peril.

KING; Underestimate our peril.

SWARTZ: He's relentless.

KING: Mimi, let me stay -- let me stay with you a minute. Because a lot of people will say, "You know, OK, well, we just had a Republican governor from Texas as the last Republican president, and the second half of his last term, anyway didn't go so well. He went out, and a lot of Republicans don't like to remember George W. Bush.: But a lot of the Bush people aren't great fans of Rick Perry, right?

SWARTZ: No. These people have never gotten along. They're completely different camps. Bush, as my colleague, Paul Berka (ph), wrote recently in "Texas Monthly," Bush is from an aristocratic Texas family. Perry is from a very hard-scrabble family and I think their approaches reflect their different backgrounds.

But I think Perry has never been a lazy man. Perry will fight, you know, virtually to the death if he really decides he wants it.

KING: And so Erick, we've been waiting to see who else might get into this race. Governor Perry is one of the people who we're waiting for a final answer from. Governor Palin is another one. She has spoken quite highly of Governor Perry. What happens to Sarah Palin if Governor Perry gets in?

ERICKSON: I really don't think she does get in, nor Rudy Giuliani, for that matter, both of whom in the past week have yet again said nice things about Perry.

I get the sent that it really comes down to looking to see who is going to go between Perry and Palin. And it looks like Perry is going to be the one to go, so Palin won't go. That could always change, I suspect. No one really knows what Sarah Palin is going to do until the moment she does it. We don't even know where her bus is going to show up until the moment it shows up.

But I think Perry getting in does keep her out. And you know, to Mimi's point, I would commend Paul Berka's (ph) article in "The Texas Monthly." In fact, I've gotten it more from Democrats than from Republicans in the past couple days. It's a fascinating read on who Rick Perry is. It gives you a good sense, I think.

KING: And so let's continue the conversation about that, who Rick Perry is. We tend, Mimi, when candidates are thinking about running, we tend to sort of look at the highlights of their records. If you were sitting here today, what would his greatest liability be? When a critic out there, if he starts to get traction in the Republican primary, how is a critic going to come after Rick Perry?

SWARTZ: Well, I think I would come after Perry by saying what about this $23 billion deficit, plus, in Texas? You know, he likes to tout the economic miracle, but there are quite a few people who disagree substantially with that.

And there's issues of education and health care.

ERICKSON: If I were a Democrat, I would try to -- his claim to fame for Republicans right now is that half of the jobs created in this recovery have been in Texas. The Democrats are going to need to go after that.

If I was a Republican, I would go after the HPV vaccine fiasco, where Perry tried to get, basically, 12-year-old girls to take mandatory HPV vaccines, and there was an issue with possible ties to Merck in there. And a lot of social conservatives, they like Rick Perry, but they remember that on.

KING: We'll watch this one as it plays out. Mimi Swartz, Erick Erickson, thanks for your help here tonight. We'll continue to watch Governor Perry. We'll have you back. Thank you so much. Coming up, a 360 follow on the controversial law enforcement operation that allowed thousands of assault weapons to fall into criminal hands. Investigators are demanding answers. But will the federal agencies involved comply?

And remember the self-proclaimed educated lady who was caught on video chewing out a train conduct? Well, she's now looking for an image makeover. We'll show you why she may need one on tonight's "RidicuList."

(COMMERCIAL BREAK)

KING: Coming up, a "RidicuList" classic. An update on the woman who was caught on tape, ranting about how well-educated she is. First, Isha is back with a "360 News & Business Bulletin" -- Isha.

SESAY: John, a 360 follow on Operation Fast and Furious, the ATF program that let thousands of weapons fall into the hands of criminals in Mexico. Congressional investigators have given the FBI and DEA one week to turn over documents related to the controversial gun-buying program.

Investigators met earlier this month with ATF acting director Ken Nelson, who reportedly suggested the FBI and DEA were involved with the project.

A flash flood in a river in India has left three people from a family of five missing. They tried to hang onto rocks and to each other, but the flash flood swept the entire family away, as you can see, sweeping them down a waterfall. Two family members were reportedly rescued.

It looks like the last chapter for Borders. The bookstore chain announced that its deal to be bought out has fallen through, and it will start liquidating its assets as soon as Friday. Borders president says the economy and the advent of e-readers changed the game.

And, John, you may have heard about the Marine who posted a YouTube video asking Mila Kunis to go to the Marine Corps ball with her. She said yes. Well, another Marine posts a similar invitation to no other than Betty White didn't get so lucky. Betty White released a statement saying she loves a man in uniform but she'll be taping her sitcom "Hot in Cleveland," so she can't go.

And John, you're a man of the world. What do you think of this as an approach? Sergeant Ray Lewis said to Betty White, "You're funny, sweet, mature, the all-around perfect woman."

KING: Betty White is the all-around perfect woman.

SESAY: But no one wants to hear that she's mature, though. See what I mean?

KING: All right. You got me there. You got me.

SESAY: I'm just saying.

KING: Men, men. Men, we need editors.

SESAY: Well, that and so much more. Let's not go into it. Don't have time for that.

KING: No, we don't. All right. Well, let's do this instead. Time now for "The RidicuList" classic: the woman who attained online infamy after her rant on a New York train was caught on a cell-phone video. Well, she's back.

Her name is Hermon Raju. Last month she chewed out a train conductor and, well, the video, as you might expect, went viral. Now, according to the "New York Daily News," Raju is looking for a public relations expert to, quote, "repair her reputation."

But apparently, unable so far to find anyone willing to take on the cause.

We tried to reach her but we couldn't. And remember, back before we even knew her name, Anderson put her on "The RidicuList." Take a look.

(BEGIN VIDEOTAPE)

ANDERSON COOPER, CNN ANCHOR: And tonight, we're adding a woman whose name we don't know. But we'll just call her the educated lady.

All aboard, people. Here's what happened. On a commuter train here in New York, a passenger was reportedly being very loud and cursing, and a conductor asked her to quiet down. Now, the only thing I have to go by is a video that someone surreptitiously took of part of the incident. So I don't know if the passenger was indeed cursing. But I do know what happened next. The audio is not perfect, but I think it's worth a listen anyway.

(BEGIN VIDEO CLIP)

HERMON RAJU, TRAIN PASSENGER: Excuse me, do you know what schools I've been to and how well educated I am?

(END VIDEO CLIP)

COOPER: That's right. Excuse me, polite conductor lady. Clearly, you don't know who you're dealing with here.

(BEGIN VIDEO CLIP)

RAJU: Excuse me. Do you know how well-educated I am? That you think I was talking in a private conversation to my friend.

(END VIDEO CLIP)

COOPER: Tell it, sister. I hate when you're having a well- educated private conversation in public and someone tells you to keep it down. Rude. And then the conductor had the nerve to accuse her of using profanity.

(BEGIN VIDEO CLIP)

RAJU: How dare you think I was being profane? I'm sorry. Please repeat to me the words that I was being profane with.

(END VIDEO CLIP)

COOPER: She's well-educated. There's no way she was being loud or profane. As we all know, well-educated people do not raise their voices or use swear words. They're way too busy singing in a cappella groups and tying sweaters around their necks.

Do you need more proof of how well-educated this lady is? Well, here you go.

(BEGIN VIDEO CLIP)

RAJU: I ride this train all the time in the morning to work and from work all the time.

(END VIDEO CLIP)

COOPER: See? She rides the train all the time: in the morning to work, and then later she rides the train again from work. She has mastered the art of telling time.

I cannot tell you how many people I see -- you know, like people who went to state schools -- who have no idea they're supposed to get on the train in the morning to go to work. They just roam around the station all night, all uneducated and disoriented. But not you, well- educated train lady. Oh, no. You know what's what.

(BEGIN VIDEO CLIP)

RAJU: But you claim that I -- oh, I touched you. Oh, I'm sorry. Now I need to be kicked off.

UNIDENTIFIED FEMALE: Don't touch me.

RAJU: All right. Please kick me off. I do not -- I want my money back for riding this train.

(END VIDEO CLIP)

COOPER: The problem is, she can get her money back, but she cannot get back all the time she's wasted having this inane conversation when she could have been doing something, well, more educated.

(BEGIN VIDEO CLIP)

RAJU: I'm sorry. Please stop the train, then. Please stop the train. I would prefer that.

(END VIDEO CLIP) COOPER: That's right. Stop the train. Who cares if it's nowhere near a station? Stop the train.

(BEGIN VIDEO CLIP)

RAJU: Actually, I would prefer to have my money back and not give the Metro North any of my money.

(END VIDEO CLIP)

COOPER: See what you did, nice, calm, conductor lady? Well- educated lady wants her money back. She's going to boycott the train. And she'll be just fine. She won't get run over or anything walking to work in New York City traffic instead, because she has that veritable force field of education that would make the taxis just bounce right off her. They teach that at the better schools.

But then the whole train would just be filled with lesser- educated people, acting all polite. Will that make you happy, calm conductor lady?

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Don't touch me. That's No. 1.

RAJU: I don't need to touch you. Get away from me.

(END VIDEO CLIP)

COOPER: That's right. Get away from her. Some of her education might rub off. Listen, calm conductor lady, I know you were doing your job, and it looked like you were doing it very well. But come on. You're dealing with a very well-educated person. It's not like she's a crazy person.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: I'm not a crazy person. I'm a very well- educated person.

(END VIDEO CLIP)

COOPER: Note to self: when somebody says they're not a crazy person, they seem like a crazy person.

So please, train conductors of America, before you accuse rude passengers of being rude, just take a minute to think about what schools they might have attended. Otherwise, more of them will end up trying to get off the fast track to "The RidicuList."

(END VIDEOTAPE)

KING: So Isha, if she's trying to get some public relations help and nobody will take her cause, you know, you're well spoken. You seem very, very, very well educated. Help the poor woman out.

SESAY: Where would you even start with someone like that?

KING: How about we put her in the quiet car and we take away her cell phone?

SESAY: I think we put her in the quiet car, she faces the wall, and she's not allowed to speak. Let's start there. Let's just calm her down.

KING: It is...

SESAY: The very educated lady.

KING: Cliche but true. Silence...

SESAY: It's golden.

KING: ... is golden.

Isha, you have a great night.

We'll be right back.

(COMMERCIAL BREAK)