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ANDERSON COOPER 360 DEGREES

Retail Sales Slump; Santa Slayings Shock California; India- Pakistan Tensions

Aired December 26, 2008 - 22:00   ET

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


ERICA HILL, CNN ANCHOR: Good evening, everyone. I'm Erica Hill at the CNN studios in New York, in tonight for Anderson Cooper.
Up now: new details in a story that gets tougher to tell and, frankly, even harder to take with each twisted revelation, the carnage at a home in the Southern California town of Covina, where nine people were murdered by a man dressed as Santa. Well, apparently, he was stoked by insane jealousy and equipped to recreate, almost literally, a vision of hell of earth.

The 911 tapes released a short time a lot. And we have correspondent Thelma Gutierrez on the scene. She is pointing today all of the day's develops. We will be checking in with her shortly for the latest on that story.

First tonight, though, it is an early look at the numbers so many people have been waiting for, numbers which tell a story in dollars and cents, and, ultimately, in jobs -- those numbers, holiday sales. In other words, we are talking about your money, your future.

Tom Foreman joining us now with the latest.

And I guess, Tom, the question is, how bad is it?

TOM FOREMAN, CNN CORRESPONDENT: Well, Erica, holiday sales appear to be down as much as 4 percent from last year, according to SpendingPulse, which is a market analysis arm of MasterCard.

Look at this, leading the losses, clothing purchases in November and December dropped 21 percent. Electronic sales, which are usually hot at Christmas, stone-cold this time around, down by 26 percent. And luxury items, things that cost more than $1,000, like fancy handbags or jewelry, down 34 percent. That's a whopper for this market to take right now.

The primary cause is certainly the fear that people have about their jobs, but other factors also hurt, including a shorter-than- usual holiday shopping season. Thanksgiving, as you may recall, came later this year. And bad weather across many of the Northern states kept some people away from the malls, although that seems to have kept online sales relatively stable, one of the few brighter spots in all of this dim news -- Erica.

HILL: Well, but let's get back for a second, Tom, to that overall number. You mentioned that 4 percent drop in retail sales. You don't want a drop, but yet it doesn't sound like a really large number. So, why is this being perceived as -- as being so bad?

FOREMAN: Yes, you know, it doesn't really sound that big, does it? But the problem is that retail sales jobs are some of the first to fall when an economy goes bad.

Look, you're trying to watch your budget. You have lost your job. Can you stop eating? No, you have to buy food. Can you cut down your house payments? No, you better not, not in this market.

What we cut back on first in tough times is the things we buy, TVs, clothing, items for our homes. So, retailers can't keep folks on the payroll. More people can't buy things, and it snowballs. That's a big part of why we lost a half-million jobs nationwide last month.

Look at that, 500,000 jobs lost. And that's why, with these poor holiday numbers, some economic analysts say that, while, right now, unemployment is under 7 percent, in the coming year, we could see employment hit 8 percent or even 9 percent. That's what they have in Michigan right now, and you know how tough it is up there -- Erica.

HILL: That is not a pretty picture of what may be to come.

Thanks, Tom.

So, what can be done, with all of these numbers? Well, banks already have bailouts, as does Detroit. So, the question tonight, what about the retailers? Not surprisingly, it's the retailers who are asking that question.

Here's Joe Johns.

(BEGIN VIDEOTAPE)

JOE JOHNS, CNN SENIOR CORRESPONDENT (voice-over): If super sales aren't enough to pry open wallet wallets and purses in the weeks ahead, the nation's retailers have a plan to make it easier to splurge. They're asking president-elect Obama for a tax holiday -- or, rather, three tax holidays, each lasting 10 days, in March, July and October, 30 days where what you see is what you pay, no sales taxes of any kind on just about anything with a price tag.

The National Retail Federation says, without action, "the current economic weakness could worsen, creating a more rapid downward spiral beyond what economists are predicting for 2009."

Still, the Retail Federation says, the savings to consumers over the 30 tax-free days could be $20 billion, or $175 a family.

(on camera): Do these things really work? Do they make that much of a difference?

ERIC BEDER, RETAIL SALES ANALYST, BREAN MURRAY CARRET: They make a little bit of difference. Historically, they move savings from one period to the other. But, usually, it just robs Peter to pay Paul. The real piece is going to be the full economic stimulus. That's how they drive the consumer, give them confidence that they can shop once more and really have them out in the stores again.

JOHNS: But if shoppers aren't paying taxes, what happens to state budgets? The retailers are asking the federal government to make up for all the lost state and local tax revenue by dipping into the federal treasury.

And retailers aren't the only ones asking the new president and the new Congress for help. The nation's homebuilders want Congress to pony up $250 billion in tax credits for homebuyers, up to $22,000 a buyer, nearly three times what Congress approved this summer. The homebuilders' plan is also wrapped up in a shiny pitch called Fix Housing First.

Christmas may be over, but the wish lists for the new administration are only getting longer.

(END VIDEOTAPE)

HILL: But, Joe, I want to be clear here. This money that the homebuilders would be asking for, are they asking for part of the bailout money Congress had already approved, or are they actually looking for new bailout money?

JOHNS: The answer is new money, Erica. The -- the homebuilders want this money to be taken out of the big economic stimulus plan that the Obama administration is expected to put in as soon as they come into power.

What they're arguing is, housing is the real power here, so the Obama administration can address it, they say, by stimulating new home sales. They get a lot of pushback on that because so many people have been led to believe that what started all of this was not a housing problem, but a mortgage problem, toxic subprime mortgages. And, still, though, there's no question the homebuilding industry is certainly suffering -- Erica.

HILL: And, as you mentioned -- you mentioned at the end of your piece there, Joe, about the wish list that is growing. What's the word in Washington? What is -- what is the thinking there? Because, obviously, there are only so many industries who can benefit from this, who can get help. Choices have to be made.

JOHNS: Sure. And there's basically bailout fatigue here in Washington. A lot of people on Capitol Hill are saying, we can't bail out every single industry that comes to us for help. You sort of have to look at it and try to decide which one of these industries you have got to save, or else it's going to make the economy much, much worse, and try to do it in a piecemeal fashion.

It's a real challenge for the Obama administration, and also for the people up on Capitol Hill, you know, and there are some people up on Capitol Hill who will say, don't come to me talking right now about tax cuts. We need to increase revenue.

So, there's that issue too.

HILL: Boy, tough decisions to make all around. Thankfully, for us, Joe, we don't have to make them. We just tell people about them.

Joe, stick around.

Joe, Ed Henry, and David Gergen all going to join us in a bit to talk about how this latest batch of bad news is affecting president- elect Obama's economic rescue plan.

Also, I'm about to log on to the live blog. Maybe I will type better than I'm speaking tonight. You can join us at AC360.com.

Also just ahead: There's a new twist in the Blagojevich scandal that could put two top Obama aides squarely in the hot seat.

And, as we just mentioned off the top of the show, the late developments tonight out of Southern California -- there are new clues in a Christmas Eve massacre, the man who police say is responsible, and 911 tapes also of that horror as it unfolded.

Plus, there's another brutal blast of winter. We're going to ask Chad Myers when the worst will be over -- that and more ahead, right here on A.C. 360.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D-IL), PRESIDENT-ELECT: Hey, man, it's good to see you. You a football player? Absolutely. I can tell. Is that your brother over there? I have not met him.

(CROSSTALK)

UNIDENTIFIED FEMALE: Hi, sir. Thank you very much. Great. Thank you.

(CROSSTALK)

OBAMA: Thank you. You guys have a wonderful new year. All right, take care, guys.

(END VIDEO CLIP)

HILL: Whether on his way to the gym in Hawaii or just plain old prepping to become the 44th president of the United States, it's a pretty good week to be Barack Obama.

Consider this. He hasn't even taken office yet, but he's just been voted the most admired living man in America. That's according to the annual "USA Today"/Gallup poll. The question, though, will that love last through the new year?

Tonight, there are new developments in the corruption probe of Illinois Governor Rod Blagojevich and how they could overshadow the incoming administration.

Joining us now with more, senior White House correspondent Ed Henry with the "Raw Politics."

(BEGIN VIDEOTAPE)

OBAMA: Thank you. You guys have a wonderful new year.

ED HENRY, CNN WHITE HOUSE CORRESPONDENT (voice-over): His daily visit to the workout room at a Marine base dubbed "Semper Fit" is about the only activity making president-elect Barack Obama sweat in Hawaii.

But the question in the days ahead is whether the scandal engulfing Illinois Governor Rod Blagojevich will take a bite out of Mr. Obama's Honolulu honeymoon.

ROBERT BENNETT, ATTORNEY: It is like Count Dracula. The count needs fresh blood every day, and if he doesn't get his daily dose of blood, he withers away. And that is what a scandal is. It needs fresh blood every day.

HENRY: The latest wound? CNN has confirmed Blagojevich's attorney has written to the Illinois state panel considering impeachment, urging lawmakers to issue subpoenas to incoming White House aides Rahm Emanuel and Valerie Jarrett for testimony about the governor's alleged attempts to auction Obama's Senate seat.

Power lawyer Bob Bennett says this is a typical defense tactic that probably will not work. Prosecutor Patrick Fitzgerald is likely to squash the subpoenas to prevent interference with his criminal problem, though the drip, drip of scandal can be politically damaging.

BENNETT: It certainly can take the president and -- and his people off-message. And it certainly prevents them from dealing with the issues they want to deal with in the timeline they want to deal with them.

HENRY: But Bennett, who represented then President Clinton in his impeachment drama, notes, the current president-elect seems well- served, having Clinton vets on his staff, from Emanuel to incoming White House counsel Greg Craig, who led the internal investigation the transition team is hoping will the turn the page for the president- elect.

STEVE ELMENDORF, DEMOCRATIC STRATEGIST: I think he and the people around him have nothing to hide. And they have done this perfectly. They have answered every question. They have put out all the information. And they have a U.S. attorney who said at the beginning, in his first press conference, that Barack Obama was not open to any sort of a deal.

HENRY: Bennett, author of a book on how to deal with political scandal, says the transition team was particularly shrewd about making the president-elect available for an interview with the prosecutor, suggesting he has nothing to hide.

BENNETT: I think it was a very smart thing for the president- elect to do. HENRY: A sharp contrast from some previous Bennett clients, who did not seem forthcoming, only bringing more attention to the scandal.

(END VIDEOTAPE)

HILL: So, Ed, the fact that Obama and his team have been so forthcoming, that their report came out -- granted, it was their report, but it said they did nothing wrong, what's the danger? Or is it just that getting off-message that Bennett mentioned?

HENRY: That's one danger, politically.

Legally, a potential bit of danger, of course, is that, if you have got this impeachment inquiry going forward in Illinois, as well as this criminal investigation going forward in Chicago, there's potential that, with subpoenas flying and whatnot, that other witnesses start having accounts that do not square with what Rahm Emanuel told the U.S. attorney or what the president-elect told the U.S. attorney in their interviews behind closed doors last week.

The good news for Rahm Emanuel, for the president-elect, so far is, there's not a shred of evidence suggesting they did anything wrong at all. So, if they did tell the U.S. attorney the truth, they have obviously got nothing to worry about.

But there's a long investigation still ahead. And let's not forget we have these tapes that are out there -- they're going to come out eventually at some point -- of the governor on tape. We know that Rahm Emanuel had at least one or two phone conversations with Blagojevich, several phone conversations with his chief of staff.

We do not yet know what's on those tapes. But, again, the good news so far for the -- the transition team is, there's no evidence of any wrongdoing. They just don't know what's coming down the road, though. That's the danger -- Erica.

HILL: Ah, well, we're going to get out the -- the magic ball here to take a look at what may be coming down the road.

So, Ed, stick around with us, because David Gergen also joining us next, along with Joe Johns. We're going to dig deeper into the economic mess, those Chicago politics and much more.

Also, not sure if you have heard the song "Mocking Barack Obama." You may not believe who thought it would make the perfect Christmas gift, even though some would call this flat-out racist.

And it is the wild, wild West, at least when it comes to the weather. Look at those pictures. We will show you just who's getting hit the hardest as we head to the weekend.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

GOV. ROD BLAGOJEVICH (D), ILLINOIS: I think the accomplishments for people speak for themselves. And, if, somehow, that's impeachable, then I'm on the wrong planet and I'm living in the wrong place.

(END VIDEO CLIP)

HILL: Just days after saying he wouldn't be doing any TV interviews, the embattled governor of Illinois speaking today, as you saw there, with our Chicago affiliate, Democratic Rod Blagojevich again denying allegations he attempted to sell Barack Obama's Senate seat and also sharing this news.

You heard him just refer to accomplishments. Well, he was talking about that because he says he's giving his attorneys a list of 25 accomplishments to present to the legislative committee that is considering whether to impeach him.

And, as Ed Henry told us a little bit ago, the attorneys want the impeachment committee to subpoena president-election Barack Obama's chief of staff, Rahm Emanuel.

We are digging deeper now with senior political analyst and former presidential adviser David Gergen, senior correspondent Joe Johns, and senior White House correspondent Ed Henry, who's traveling with the Obama team, all back with us right now.

David, I want to start with you.

We're hearing Blagojevich's attorney wants to -- to subpoena not only Rahm Emanuel, but, we're also told, White House adviser Valerie Jarrett, this coming out right after that report from the Obama team on Tuesday saying they did nothing wrong. Are the two directly connected?

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: This is -- I still continue to think this is a great ado about very little.

The -- the -- the Blagojevich people, who are into this scandal, not the Obama people, have asked that subpoenas be issued for 12 individuals, including two on the Obama team. They're clearly just trying to stir things up, throw sand in people's eyes in Illinois, as the -- as the legislature looks at impeachment.

As for the Obama people, both of them, Valerie Jarrett and Rahm Emanuel, there's no evidence, as Ed Henry as said, that they have done anything wrong. I think this is -- from their point of view, it's one of these classic cases. If, unfortunately, you lie down with dogs, you get up with fleas.

HILL: Is it...

GERGEN: And you know what? It's a -- it's a nuisance. And I think, if it wasn't such a quiet news day, I doubt we would be talking about it very much.

(LAUGHTER)

HILL: That is a possibility, David. I will give you that one.

But -- but, as we did hear from Ed in his piece a little bit earlier when he was speaking with Bob Bennett, he said, well, you know, look, this could potentially -- down the line, as things progress, it could be a -- a bit more than a nuisance, perhaps.

So, David, are you concerned at all that ultimately something more could come of this, especially if those subpoenas are granted?

GERGEN: We -- there's nothing that we have seen so far, Erica, which would suggest anything will come of it.

Now, you and I have been around this long enough to know that there are always surprises. And, so, you can never rule out anything in a legal proceeding.

But there's zero evidence that anybody around Obama, or Obama himself, even knew that there was this kind of horse-trading going on for a Senate seat for money or favors of one sort and another.

HILL: Ed, you mentioned earlier the tapes which have not yet been released. Has there been any discussion, has the Obama team said anything about whether or not they're pushing for the tapes to be released and -- and if they want them released at this point?

HENRY: They have not said they're pushing for them.

But, you know, in private, Obama advisers will sort of joke about the fact that, look, if these tapes were to come out some time soon, they might actually help Barack Obama, in the sense that what we know about what Rod Blagojevich has said on at least some of those tapes is that he's cursed out Barack Obama. He's used four-letter words to complain that the president-elect and his people were not helping Rod Blagojevich enough.

So, there are some people in Barack Obama's orbit who privately say, look, the governor may be one of our best allies in the end. He is somebody we don't really want to associate ourselves with, but, on the other hand, he himself has said that the president-elect and his people were not helping. They were not giving him money. They were not giving him jobs, anything like that, in exchange for who was going to be appointed to this Senate seat.

So, the bottom line is that it appears that the governor himself was sort of making clear that the Obama people were not on the take. So, in the end, that may be actually helpful.

HILL: All right. We will all be waiting for those tapes.

And while we wait for them, though, I do want to move on to the economy, because this has turned into such a big story today. Every industry, it seems like, ever sector is asking for help from the government. We're talking retailers, homebuilders, as we heard earlier.

David Gergen, how does the president-elect decide which ones are the most worthy of that economic bailout?

GERGEN: That's a darn good question, Erica. And, pretty soon, they're going to have to have some standards or principles by which to judge this, because, just in the last few days, we have had the commercial real estate people. We have had the homebuilders. Now we have got the retail folks.

We have got the insurance people waiting in the wings, state and local government. The list is going to be a very long one, indeed. And unless there are some standards or principles by which to judge, you're going to get besieged. And then some people are going to feel very much left out, and they're going to be angry and one thing or another.

So, I think the politics are becoming much more treacherous for Barack Obama. This is the real problem he's going to have to deal with. The numbers are going up, as we well know. But I honestly don't know, because there -- there is an appealing case to be made for, say, the retailers.

There's an appealing case to be made for all of these. I think there's an appealing case to be made for national service or for the non-profits, which haven't been part of this conversation so far.

But, somehow, Barack Obama and his team -- and it's really important now that he have bright people around him. I think that's the reason why, early on, when he had veterans and really, really talented people around him, it was so important. They have to come up with a -- a game plan that has some standards, that has some rules to it. And, right now, we're playing with no rules.

HILL: And -- and which has been a topic of discussion several times, I know, on this program. So, it will be interesting what those rules are and -- and which industries actually -- actually fit the bill.

Joe, in your piece, you spoke with a retail sales analysts who likened this tax holiday request to robbing Peter to pay Paul. Is there any concern that you have come across in Washington -- I know a lot of folks gone for the holiday, but, still, any concern that, in fact, this may be sending the wrong message to Americans?

JOHNS: Well, lot of ways, sure.

You know, there are some states that are actually doing away with their own sales tax holidays because of budgetary concerns. So, there's that. There's just that other issue that I spoke a little bit about -- ago -- and that is the issue of bailout fatigue. People on Capitol Hill are saying, look, we can't bail out everybody. How much longer can this possibly last? We're putting together this huge stimulus package that is going to come through Barack Obama.

And hopefully the Congress is going to try to work on it by the time he takes office. When do we stop giving money to these various different industries? And then you have to look at the question of which industries are most deserving. You look, for example, at the homebuilders. Are there some homebuilding companies out there that actually sort of encouraged the idea of selling homes to people they knew couldn't afford the mortgages?

Maybe those guys have to be weeded out. Maybe those are people you don't want to give such a break to, if you're going to give a homebuilders bailout. So, there are a whole lot of other considerations here, just about who is most deserving and who gets in line first.

HILL: Well, in addition to who is most...

(CROSSTALK)

GERGEN: And, Erica?

HILL: Yes, go ahead.

GERGEN: Erica, I just wanted -- I just wanted to add that one of the scary things about all of this right now is, this -- these bailouts are a lot about lowering prices.

And, look, as Joe Johns just reported, about the -- the retailers have lowered their prices dramatically during this Christmas season, and people are not buying. The -- the mortgage rates have gone down dramatically, and people aren't buying homes. So, you know, just lowering prices may not be enough to change the psychology.

HILL: That, they won't.

Ed, I only have time really for a yes or no, so don't -- don't get mad at me, but, with all of this bad news about the economy, has there been any word from the Obama camp that they are thinking about making some changes to the economic stimulus plan?

HENRY: Yes.

HILL: OK.

GERGEN: Only bigger.

HILL: Did you just say yes or no, right?

(LAUGHTER)

HILL: I did.

(CROSSTALK)

HILL: And you know what, Ed? You're one of the few people who ever has followed that direction. So, thank you.

And we will -- we will continue to talk more about that, then, Ed, next week.

But we did need to get this in, because, you know, Ed, we have talked a lot about what you have been wearing the last few days, this assignment, this plum assignment in Hawaii.

(LAUGHTER)

HILL: And, as I understand, it was really rough for you, especially on Christmas.

I think we have some video.

(LAUGHTER)

(BEGIN VIDEO CLIP)

HENRY: I'm getting a lot of grief from anchors like you about how this is a really sweet gig to be here in Hawaii. I'm probably doing what you're doing for Christmas.

I'm going to sit down on the beach. I'm going to put on my shades. And I'm going to throw on some beads. And I have even got a Santa hat with a Hawaiian design, to be festive. I will put that on.

And some of the traditional meal is this Spam musubi, which is basically Spam wrapped up with rice, like sushi. And not too bad, a little salty, but it's really not much different from what you were doing. I mean, in the mid-80s right...

(END VIDEO CLIP)

(LAUGHTER)

HILL: That looked a lot like my Christmas, Ed.

(LAUGHTER)

HENRY: You know, I thought David Gergen threw me under the bus the other night, but you have now outdone David Gergen...

(CROSSTALK)

HENRY: ... tonight.

HILL: But you know what, Ed? Both David and I, I think, do it with love...

(LAUGHTER)

HILL: ... and a little bit of jealousy, perhaps, for your assignment.

(LAUGHTER)

JOHNS: I just want the assignment. Let me go out there.

(LAUGHTER)

HENRY: Merry Christmas, all right?

(LAUGHTER)

HILL: We will play rock, paper, scissors for it next time.

(LAUGHTER)

HILL: Ed, Ed Henry, appreciate you being a good sport about it.

HENRY: Thanks a lot.

HILL: Joe Johns, David Gergen, thank you all.

All right, sadly, it's not all fun and games tonight, as much as we would like it to be. There is much more serious news to tell you about -- about. And, just ahead, one of those stories we have been following for you throughout the day, more and more disturbing as we learn more about the story -- 911 calls now, other new developments in this Christmas Eve massacre that left Southern California in a state of shock, much of the country, really, as well.

Also, an anniversary we simply cannot ignore. Four years after a killer tsunami wrecked lives and changed the landscape, why are things still so grim in the hardest-hit places, four years later?

And a bit later, what it takes to be a president's best friend, and new developments on Joe Biden's best friend. The dog has a new name. We will tell you what it is -- when 360 continues.

(COMMERCIAL BREAK)

HILL: The scene and, tonight, firsthand accounts of terror, chaos, and carnage on a Southern California Christmas Eve -- the terror slowing giving way now to shock and sadness, the chaos slowly lifting, as authorities learn more about the man who dressed as Santa, armed himself with four guns and a makeshift flamethrower, booby- trapped cars, and then proceeded to bring fiery vengeance to the family we're told he once loved.

New details tonight from Thelma Gutierrez.

(BEGIN VIDEOTAPE)

THELMA GUTIERREZ, CNN CORRESPONDENT (voice-over): Their frantic screams for help coming from the inside of this home. These are the transcripts of the 911 call.

"He's shooting. He's shooting."

Two dozen people are at a Christmas party when a man dressed as Santa Claus goes on a rampage. The panicked caller tells the 911 operator she knows the shooter. "His name is the Bruce Pardo. He's my ex-brother-in-law. He's still shooting. He's knocking out the lights. He came in through the entrance of the door in a Santa Claus suit. I didn't see them when he shot."

Police say 45-year-old Bruce Pardo went to the Christmas party dressed as Santa, because he knew it was an annual family tradition. When an 8-year-old girl opens the door, Pardo pulls out a semiautomatic weapon and shoots her. The caller tells the operator, "My daughter's been shot in the face. She was shot in the face, and she's bleeding."

Police say Pardo then begins shooting at everyone in sight. Some hide under furniture. Others jump from windows to escape. Then he pulls out a canister of racing fuel disguised as a holiday package.

KIM RANEY, POLICE CHIEF, COVINA POLICE DEPARTMENT: The package he had appears to be a homemade pressurized device.

GUITTIEREZ: The two-story home belonging to Pardo's former in- laws is engulfed in flames. The bodies of nine people are burned so badly they have to be identified using dental records. Pardo is also severely burned.

RANEY: He suffered third-degree burns on both arms. It appears that the Santa Claus suit that he was wearing did melt onto his body.

GUTIERREZ: Pardo flees to his brother's house, but investigators discover he had an elaborate escape plan.

RANEY: Pardo did have $17,000 in cash, Saran Wrapped to his legs or concealed inside of a girdle that he was wearing. He also had a plane ticket for a flight on an early morning flight Thursday, Christmas morning, from LAX to Canada.

GUTIERREZ: he hadn't counted on suffering third-degree burns himself. Unable to escape, Pardo fatally shoots himself in the head. His motive for the rampage, a failed marriage and a bitter divorce that had just been finalized.

(END VIDEOTAPE)

HILL: Thelma, he had been planning this for some time. And you mentioned that recent bitter divorce. Was there a history of violence, though, between the couple?

GUTIERREZ: Police, Erica, say that they looked into the couple's history. They say they did not find any restraining order, anything like that, but that didn't mean that there wasn't a history between the couple themselves. They say that he absolutely was planning this. They went through his things, and they found detailed manuals with drawings and plans for how to carry out these devices and how to make them.

HILL: So how to make those devices, and we know that he was planning on escaping after that. Any information on whether or not he planned to continue this rampage and hurt anyone else after leaving this home?

GUTIERREZ: Yes, absolutely. When police went to look through his car, they actually found a Santa suit inside that car. They say that Santa suit was booby trapped to set off hundreds of rounds of ammunition. When they were going through it, trying to detonate it, the ammunition did go off, it destroyed the vehicle, burned it completely. But thankfully, none of the investigators were -- or the officers were injured in any of this.

HILL: Amazing they weren't harmed. So disturbing. Thelma Gutierrez, thanks.

Up next, our "360 Dispatch." Four years after the devastating tsunami, we traveled back to Indonesia. What has changed and why so much has not after a catastrophe that claimed so many lives.

Plus, 2008 ending on a -- bitterly cold note. Many parts of the nation shivering tonight. Our severe weather center has the forecast you need to make it through the weekend.

And Barack Obama makes picking a cabinet, perhaps, look easy, so why still dog that he promised his kids? Coming up, what the first dog will need to earn a water dish and perhaps some extra treats in the White House.

(COMMERCIAL BREAK)

HILL: More than 220,000 people lost their lives four years ago today when walls of water smashed into beaches and into homes along coastlines of the Indian Ocean. The tsunami destroyed communities. It ripped apart families, forever changing that corner of the world. Many survivors, in fact, were never found -- never found, rather, the bodies of their loved ones.

Anderson Cooper, as you know, was on the scene in the days just after the disaster. Here's a reminder of what it was like through some of his reports.

(BEGIN VIDEOTAPE)

ANDERSON COOPER, CNN ANCHOR (voice-over): This is where the little girl's body was finally brought, we're told. We're going to go to the morgue right now and try to find if there's a picture of her. We're told she was buried in a mass grave.

(voice-over) More than 1,000 bodies had been laid out in this room. Nurses were still trying to clean the floor to get rid of the stench that had seeped into the concrete. No amount of washing seemed to work.

(on camera) Once you're actually here, looking at the photographs of the dead who have been recovered, you can see how it's virtually impossible for -- for a lot of parents or family members to find their missing children. You know, I mean, the photos that everyone has of their child is, you know -- this is how they looked in life. In death, they look completely different. They're nearly unrecognizable.

(END VIDEOTAPE)

HILL: Today, four years after the disaster, Indonesia marked the anniversary with tsunami drills. In Sri Lanka, 25 out of 50 planned early warning towers are operational, but the progress is really uneven. Despite an outpouring of aid from around the world, thousands of families, four years later, are still homeless and living in camps. Back in the U.S., a tough haul for thousands of travelers this week. But the rough weather, we're told, is not done yet for the year. Still a few days to go in 2008. And we're going to have to work for it.

Meteorologist Chad Myers joining us from the severe weather center with an eye on the weekend.

You're going to be busy, my friend, aren't you?

CHAD MYERS, CNN METEOROLOGIST: Yes, you know. In Spokane, Washington, their record snowfall they've ever seen in any December is 42 inches. They're already 46 and at least another 10 to go. So they're going to shatter a record there.

But the ugliness that went through Chicago earlier today, with an ice storm basically, in the morning has now moved to the east only as a rain event. Now it's turned into a fog event. CLTV, our affiliate there. You can barely see across the street. That fog is slowing down O'Hare 90 minutes. And also now slowing down Midway. Although technically Midway is not closed, every plane you see on the map is heading to Midway.

HILL: There aren't any planes.

MYERS: Zero. Zero on the way. So there's a whole potpourri of weather we have here. There's a flood watch and flood warning around Chicago. We're going to see three inches of rainfall in that area.

And then this potpourri of weather continues. Avalanche warnings are out for the west, because we have seen three to four feet of snow that eventually is going to slide down the mountains. So if you're skiing out there, you want to stay in the in-country, rather than the back country, Erica.

HILL: So those avalanche warnings you mentioned about the rainfall in general, the weekend, what is still to come?

MYERS: What is still to come is actually a warm event. The snow is basically gone. It's going to be raining all the way up into Ontario. Severe weather for the central plains. Could be some tornadoes for tomorrow. And the only snow, the only real winter weather at all, is above 2,500 feet and into the mountains of the northwest.

So unlike where we were a week ago, we're 10 to 15 degrees warmer across the board. So we're not seeing any snowfall for the way home from Grandma's house, maybe on Saturday or Sunday.

HILL: But a little bit of mess all the same.

MYERS: All the same.

HILL: Even if it doesn't come in the frozen variety. Chad, thanks.

MYERS: You're welcome.

HILL: Just ahead on AC 360, some saber rattling in South Asia. A terrorist attack last November stoking a bitter conflict between two nuclear powers and that now threatens to derail the hunt for al Qaeda terrorists. We'll help make that connection for you.

Plus, a football superstar throws a matrimonial pass. Stay tuned to see if it's complete.

(COMMERCIAL BREAK)

HILL: A terror attack and now a dramatic escalation of tension between two nuclear powers in South Asia. Pakistan has redeployed thousands of troops to the border now with India, fearing an incursion by Indian ground forces.

India believes the ten men who carried out last month's Mumbai massacre were trained in a terrorist camp in the Pakistani-controlled area of Kashmir. Where there are fears that the saber rattling may lead to a regional war. And as senior international correspondent Nic Robertson explains, the conflict is also a setback in the war against terror.

(BEGIN VIDEOTAPE)

NIC ROBERTSON, CNN CORRESPONDENT (voice-over): Three days of terror attacks that shocked India, and now fears that it could have that country marching towards war with Pakistan.

Pakistan officials now confirm they're moving troops away from the fight against the Taliban and al Qaeda in the border region neighboring Afghanistan and towards India. The move comes in response to Pakistan's belief that India is building troops along its border.

PRANAB MUKHERJEE, INDIAN EXTERNAL AFFAIRS MINISTER: We will expect that instead of raising war hysteria, they will address this problem. This is a menace to the regional peace and stability.

ROBERTSON: The long-simmering tensions between the two nuclear- armed neighbors were reignited when India claimed the attackers were trained at terror camps in Pakistan.

Pakistan arrested leaders of the terror group, which denies any part in the attack, but claims India has yet to give them sufficient evidence to specify their role.

In India, many people are demanding their government strike Pakistan. During the attack, India's air force was put on stand by.

UNIDENTIFIED MALE: You cannot rule out the possibility that India (UNINTELLIGIBLE) that. We will also have to respond to it.

ROBERTSON: Both sides are now accusing the other of, quote, "war hysteria," but neither is stepping back.

(on camera) This march towards conflict could be exactly what the 10 attackers and their terror masterminds intended: with that bloody assault, ignite tensions, bring chaos and keep the region a fertile breeding ground for radical extremists.

Nic Robertson, CNN, London.

(END VIDEOTAPE)

HILL: Let's talk strategy now with CNN national security analyst Peter Bergen.

And Peter, Nic really set it up there. When you talk about this breeding ground, how could these troop movements affect the U.S.-led -- U.S.-led war on terror?

PETER BERG, CNN NATIONAL SECURITY ANALYST: Well, the Pakistanis, according to Pakistani officials I've spoken to, they've moved 20,000 soldiers from the area near the Afghan border towards the Indian border. You know, that's not a huge troop movement, given the fact that Pakistanis have a very large army. It's a way of signaling the Indians, according to Pakistani officials that, you know, a unilateral Indian strike into Pakistan is going to be unacceptable to Pakistan.

The reason that that's serious, of course, is that Pakistan and India have fought three major wars in the last six decades. They've fought minor engagements, in addition to those wars. And both sides now have nuclear weapons.

At the end of the day the only country that can really bring these countries back to a position where they're not potentially going to war is the United States. And as the Obama administration comes into office, this obviously, is going to be the most important foreign policy decision that President Obama will take.

HILL: Peter, is the Obama administration equipped to handle this? Are they ready to deal with this on day one as that sole country that has perhaps the power and the influence over both India and Pakistan?

BERG: I believe so. I mean, one of Obama's advisors is a guy -- a man by the name of Bruce Riedel, who actually was in the room back in July 4, 1999, when President Clinton saw the Pakistani prime minister at the time, at a time when Pakistan and India were going to go to war. So people on Obama's team are people with experience of this precise problem.

So I would anticipate that the Obama administration will move pretty quickly, as indeed, the George W. Bush administration will to try -- and has done to try and temper down these tensions.

HILL: And what, specifically, do you believe both the Bush administration and the Obama administrations need to do to send a message to the Taliban and to al Qaeda that, even though this may be a small amount of troops, seemingly, that's being moved out of the area, this doesn't mean that, especially from the U.S. perspective, that the fight in their area to control the Taliban and to go after al Qaeda is -- is diminishing in any way? BERGEN: Well, you know, I mean, that could change if the Pakistanis start, you know, moving substantial numbers of troops. I mean, 20,000 is -- they're moving already, which is not a small number.

Clearly, if you start talking about 50,000, 60,000 being taken out of the western border with Afghanistan, that would make a pretty large difference to what's going on. All we can hope is that the Obama administration and the Bush administration make it clear that they don't want -- that a war is in nobody's interest. I think everybody understands that.

HILL: And then hopefully, it will not come to that. Peter Bergen, thank you.

BERGEN: Thank you.

HILL: Just ahead, it is a word you'd probably never use, yet, a powerful Washington insider is making no apologies for using it and not just using it, but in using it in a Christmas gift that he sent. It takes aim at Barack Obama and his supporters.

Plus, twins by the truckload. The baby boom that has one town feeling a whole lot of deja vu.

And it isn't often you get to laugh at a crime, but our "Shot of the Day" features a four-legged beast who is bad to the bone. Just like that pun, but totally necessary.

(COMMERCIAL BREAK)

HILL: Lots more ahead, including the latest on that quest for the old White House pup. But first, Randi Kaye joining with a "360 Bulletin."

Hey, Randi.

RANDI KAYE, CNN CORRESPONDENT: Hi, here, Erica.

He said it was meant as a joke, but the song's title, "Barack the Magic Negro," might not strike most of us as funny. It's one of the songs on a Christmas CD compiled by Chip Saltsman, who's in the running to take over the Republican National Committee.

The CD was mailed to RNC members. Take a listen.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE (singing): Barack the magic Negro lives in D.C. "The L.A. Times," they called him that, because he's not authentic like me.

(END VIDEO CLIP)

KAYE: Saltsman said the song, written by a friend of his, was political satire and based on an article in "The Los Angeles Times." Brand new estimates say one billion gallons of sludge containing coal ash spilled on Monday after a dike burst at a power plant about 40 miles outside Knoxville, Tennessee. Authorities say there appear to be no health threats from the sludge. Environmentalists say it was a preventable disaster.

Twins, 11 sets of them, are wowing the staff at Methodist Medical Center in Des Moines, Iowa. The twins, 16 girls and six boys, have set a record for multiple births at the hospital for just one month. No one is exactly sure what triggered this baby bonanza.

And superstar model Giselle Bundchen is set to wed superstar New England Patriots quarterback Tom Brady. Yes, it's true. The entertainment magazine E! online reports that Brady popped the question on Christmas Eve and, yes, of course, she accepted. They were apparently on some private jet, and they were making their way.

HILL: Nice.

KAYE: And his family was on board. There was lots of roses and champagne.

HILL: That's how you got engaged, too, right? That's how I did it, on a private jet.

KAYE: Exactly the same way.

HILL: Yes. Maybe they'll be the next couple to have twins.

KAYE: No wedding date set yet, by the way.

HILL: OK. I'm sure we'll both get an invitation.

KAYE: Oh, I'm sure.

HILL: We'll be sure to check out the registry, too, for everything (ph). Tomkat and Brangelina, make room for Giselle and Tom, or as our writer, Ethan Harp (ph), likes to call them, Brady Bunch. Get used to that one. That's right. You heard it here first.

And in case you think it's a sign that the program is going to the dogs, you're right. Presidentially speaking. From Louise Schiavone. Take a look.

(BEGIN VIDEOTAPE)

LOUISE SCHIAVONE, CNN CORRESPONDENT (voice-over): Sometimes when you're on agenda overload, as the Obama-Biden team might be, it's good to try to do the most simple things first. For both the vice president and the president, the move with the fewest policy implications...

SEN. BARACK OBAMA (D-IL), PRESIDENT-ELECT: Sasha and Malia, I love you both more than you can imagine. And you have earned the new puppy that's coming with us to the White House. SEN. JOE BIDEN (D-DE), VICE-PRESIDENT-ELECT: He said, "I'll make you a deal." He said, "If you take the vice presidency and get elected, you get a dog."

SCHIAVONE: Joe Biden got straight to work with a German Shepherd puppy-elect, not only in hand but also now named Champ, for sentimental reasons.

BIDEN: My dad's was this. He said, "Champ, when you get knocked down, just get up. Just get up."

SCHIAVONE: For the Obama family, it's apparently going to take a while, a good idea, given the sometimes high-profile roles played by executive mansion canines, like Bella, FDR's loyal companion; LBJ's pet beagle, Him; Richard Nixon's legendary dog, Checkers.

RICHARD NIXON, FORMER PRESIDENT OF THE UNITED STATES: The kids, like all kids, love the dog. And I just want to say this right now: that regardless of what they say about it, we're going to keep him.

SCHIAVONE: And the rambunctious Barney now packing his doggie bags. For the first family, say the experts, the right dog should be part politician.

UNIDENTIFIED FEMALE: You want a dog who loves everybody. You know, you want a dog who's like, "Hi, who are you? Are you a human? I love humans." You don't want a dog who's cautious and suspicious and is going to bite reporters.

UNIDENTIFIED MALE: How you doing?

UNIDENTIFIED FEMALE: That's not how Barney normally is.

SCHIAVONE: About the idea of a rescue dog in the White House. Maybe not, says this animal behavior icon.

CESAR MILAN, DOG EXPERT: Rehabilitating a dog, it takes a lot of effort. The president already has a big job, which is rehabilitating the country. So I'd rather have a balanced dog in my house than an unstable dog trying to rehabilitate a country.

SCHIAVONE: If you're a student of history or old enough to remember when President Truman said it, you're probably thinking this: "If you want a friend in Washington, get a dog."

Louise Schiavone for CNN, Washington.

(END VIDEOTAPE)

HILL: Just ahead in our "Shot," the perp or the pup? Of course we're not done with dogs. You knew that, right? What a steal. He walks into a grocery store like he owns the place, does a little shopping, and then makes his escape. But does he get away with it?

Post-holiday shopping was a steal of another kind today, but were there enough sales to break through that Christmas retail gloom? That's ahead.

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HILL: Marley, the superstar lab of book and movie fame, a book we both love, I know, Randi, attaining now celebrity status as the world's worse dog. But in our "Shot" tonight, it is clear he's getting a little competition in the "high crime and misdemeanor department" from this guy.

A four-legged hustler who trotted right into a grocery store -- oh, there it is -- in Murray, Utah. You know, it looks like my dog, by the way.

KAYE: He's shopping.

HILL: It looks exactly like Jake.

He's doing a little shopping, sails past the checkout. He knows exactly where he's going. This is a man on a mission. Right to the pet supply aisle. "Oh, look, a raw hide bone? Love one. Thanks, got to go. Bye. Mission accomplished. Yes, my mom's going to get that. She's right behind you. She'll pay you."

The suspect apparently is still at large. However, I imagine this is one happy dog on his way to being a folk hero, perhaps, amongst his fellow canine members.

KAYE: It really makes me wonder. He seems to really have that store mapped out.

HILL: He does.

KAYE: It's almost like he cased the joint...

HILL: I think he did.

KAYE: ... some other day, maybe with his owner, and just went for it.

HILL: Or maybe with some of his fellow dog friends.

KAYE: Oh, yes.

HILL: Could be.

All right. Real quickly, our "Beat 360" winners. As you know, our daily challenge to viewers, your chance to show up the staff. You make a better caption than we do, some days. Some days you don't. Let's see how you did tonight.

Tonight's picture: Santas on cycles in Hanoi, the capital of Vietnam. The communist country allows Christmas celebration, because a small percentage of its population is Catholic.

Our staff winner tonight, Gary Tuchman, with this admission -- submission, that is: "Riding on the Ho, Ho, Ho Chi Minh Trail." (SOUND EFFECT: "Oooh!")

HILL: The ever clever Gary Tuchman.

And Bob from Macelon (ph), Ohio, sent this one in: "Where's Dasher? Where's Dancer? Where's Prancer and Vixon? Comet, Cupid, Donder and Blitzen? Outsourced."

Bob, your 360 T-shirt's on the way.

Just ahead at the top of the hour, more troubling signs for the economy, and all of those bargains mean retailers had a lousy Christmas. We'll tell you about some ways to kick start the cash registers and how it affects your money and your future.

Also, the chilling accounts just now coming to light of that Christmas Eve massacre in Southern California. Those details and much more ahead on 360.

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