Return to Transcripts main page

ANDERSON COOPER 360 DEGREES

Israel Tightens Grip on Gaza City; Treasury Secretary Nominee Faces Questions

Aired January 13, 2009 - 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: Tonight, we begin with breaking news.
With new diplomatic maneuvering under way to the stop the war in Gaza, Israeli forces appear to be tightening their grip on Gaza City on the ground, effectively choking it off completely and hammering parts of Gaza from the sky.

Video of an Israeli airstrike on Gaza City -- no word yet on what the exact target was, reports, as well, of dozens of airstrikes along the southern border with Egypt.

Nic Robertson is on the ground. He joins us from just outside Gaza along the border.

Nic, what are you hearing about what is going on in and around Gaza City?

NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Anderson, we're hearing Israeli forces closing in on the city, closing in from the southeast and the northwest.

What they appear to be doing is -- is closing off and controlling all the roads and access points in and out of the city, putting pressure on Hamas, pushing and forcing Hamas to come to the negotiating table, as they continue to close in and take out Hamas leaders and the -- and the houses where they hide and store weapons, Anderson.

COOPER: What is the fighting like? I mean, we're not on the ground. Israel isn't allowing international journalists on the ground inside Gaza, but what do we know about what Israel is facing, how tough the fight is?

ROBERTSON: What we're hearing and the image emerging is that Israeli troops are destroying a lot of houses. When they're faced with a building, a property where they think that there might be a booby-trap or in some cases they're finding the gas left on, so if they fire shots and the building can explode, they're taking the buildings out with bombs or they're being bulldozed flat.

So, quite a heavy amount of destruction has been reported from people who have been close to the fight and seen the fight, Israeli troops sometimes fighting through houses, blowing the walls between the houses, so they can move without being targeted by Hamas. Where we are, it's difficult to see, but every night -- and tonight no exception -- hearing those heavy explosions, hearing the sporadic gunfire, seeing that flares that illuminate, so the troops on the ground can see better to move during the nighttime -- Anderson.

COOPER: We're going to more in-depth with Nic Robertson a little later in the broadcast.

Nic, we will check in with you in about 20 or so minutes. We're also going to talk to a "New York Times" correspondent on the ground inside Gaza City itself.

Back home, more breaking news -- some snags in president-elect Barack Obama's transition to power, a showdown with lawmakers, Democratic lawmakers, we should point out, and word that Tim Geithner, his nominee for treasury secretary, the man who would oversee the IRS, didn't pay some of his taxes. What's more, he might have a so-called nanny issue.

Senate Majority Leader Harry Reid said today, it's not a big deal, just a few little hiccups, he said. In D.C., however, as we all know, hiccups have a way of turning into whooping cough. Will it for Geithner?

Candy Crowley has been working her sources. She's got the breaking news and details and perhaps a prognosis -- Candy.

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Hey, Anderson.

They are pushing hard on the Obama team. They say Timothy Geithner, the man they want to head the Treasury Department, made an honest mistake when he failed to pay $34,000 in taxes between 2001 and 2004. Geithner's labs came while he was working for the International Monetary Fund, which does not deduct taxes.

According to papers released by the Senate Finance Committee, Geithner paid two years of those taxes when the IRS notified him, but he did not pay for the earlier two years until the Obama transition team discovered it. Geithner did pay his IRS tab several days before his nomination was announced.

Less troublesome is a Geithner housekeeper whose immigration papers lapsed for several months without Geithner's knowledge, we are told. So far, majority Democrats don't seem to think this is a deal- killer, Republicans still looking at it.

Clearly, whatever it is, it's a distraction and the last thing the president-elect needed on this day.

(BEGIN VIDEOTAPE)

CROWLEY (voice-over): A veto threat before taking office. History continues to be made as a not-yet-president threatens a veto if fellow Democrats try to block his access to the remaining $350 billion in an emergency bailout fund, Barack Obama pushing back in the face of vocal, significant objections.

SEN. BEN NELSON (D), NEBRASKA: People back home generally didn't want the first go-around. And I'm not going to jump out and -- in front of a train on the second one.

CROWLEY: The incoming president played the veto card at a Democratic Party lunch in what is described as a spirited discussion. Furious with the way the first Bush administration handled the first $350 billion, lawmakers are unwilling to repeat that kind of history.

SEN. DEBBIE STABENOW (D), MICHIGAN: Well, it's not enough just to have someone that you trust. We have to have specific criteria as to what is going to be happening. Will there be accountability, transparency? We can't even get answers.

CROWLEY: This has the potential to be ugly and politically damaging. If Barack Obama has to veto a bill from the Democratic- controlled Congress as one of his first Oval Office acts, it would be interpreted as a major setback for a new president, which is why most objections begin with, "I would like to be supportive, but..."

SEN. RON WYDEN (D), OREGON: But you have to examine this new piece of legislation through the filter of some very unfortunate history with respect to the original program.

CROWLEY: Despite the bruising once-over his request is getting, ultimately, the Obama team believes the Senate will not block his access to the money. The Senate's top Democrat concurs.

SEN. HARRY REID (D-NV), MAJORITY LEADER: I think we will get the necessary votes, yes. I feel very confident about that.

CROWLEY: But, first, Democratic and Republican lawmakers want a little cover to calm angry taxpaying constituents, who want to know what happened to the first $350 billion, money that does not seem to have done anything to help their lives.

(END VIDEOTAPE)

CROWLEY: (AUDIO GAP) ... problems that Obama is having with his stimulus package. His aides are all over Capitol Hill, trying to work with Democrats who want some changes made in that $775 billion package -- Anderson.

COOPER: A lot of money flying around.

Candy, thanks.

Digging deeper now with senior political analyst David Gergen, Gloria Borger, and Errol Louis of "The New York Daily News."

David, it is virtually unprecedented for a president-elect to issue a veto threat -- again, a president-elect to issue a veto threat -- let alone a veto threat to his own party. What does this say about the days ahead and the likelihood of this whole thing passing? DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: I think it says it is going to be a very messy process, but I think that Obama's likely to prevail.

Anderson, this veto threat, he has got the high cards here. The Democrats are not going to let the financial community collapse at this point. They want to have changes. And there is a connection, I believe, between the Geithner story today and the embarrassment that he's facing in trying to get this other package done.

And that is that Tim Geithner was leading their efforts to rewrite the TARP bill, to come up with new ways to deal with this remaining $350 billion. And I imagine he, himself, got a little distracted today, as he had to deal with his own issues.

COOPER: Errol, you said this flexing of presidential muscle is really sending a signal about all legislation that Obama wants.

ERROL LOUIS, CNN CONTRIBUTOR: Well, that's right. We know that this is going to be a team of legislators, right?

His secretary of state, of health and human services, of labor, they're all ex-congressmen, and his chief of staff and his vice president. The legislation agenda is going to be central to this Obama presidency. We know that.

So, we're going to see a lot of this kind of a back and forth. I think he may have jumped the gun, though, by saying he's going to jump right into the game even before.

David mentioned the high cards that he's holding. One of the highest cards he has is this optimism. He is going to make history next week. It is going to be a big, big deal. I don't think anybody on Capitol Hill wants to be the one to sort of burst that bubble and puncture it for what will on one level look like relatively small reasons.

And we understand that the first $350 billion was controversial, not popular with the public. Congress has a duty to really do as much oversight and due diligence as it needs to. But this week, of all times, to sort of be, you know, quibbling over these kind of questions, I think it is going to look really small with when the big historical drama gets rolled out next week.

COOPER: And, Gloria, what's at the heart of this? Is it basically just that congressmen are -- and women are feeling the heat from their constituents, who didn't like the whole thing to begin with, and now don't like the fact that the first $350 billion, no one seems to really know how it was spent, or -- or how this new money is going to be spent?

(CROSSTALK)

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: They want to trust, but verify. They want to have oversight here. They don't believe you can just hand some folks $350 billion and not figure out what happened to it.

They have also just survived an election, many of them, by the way, owing their seats in both houses to Barack Obama. So, keep that in mind. That's one of the reasons he will win this fight if he has to have a huge fight on his hands.

But Obama went into a closed-door meeting today with Senate Democrats and said to them, look, this is urgent. We need to get this done. He wants to start his presidency with a full toolbox. And that's what he's going to do.

COOPER: David, on the Geithner story, do you think this is a make-or-break situation for Geithner, or do you think this thing will pass?

GERGEN: I think it is an embarrassment, Anderson, but I do not think it will derail him.

It's embarrassing because here's a man who is paying back taxes, over $42,000 he had to pay, and he's going to be in charge of tax enforcement at the Treasury Department.

BORGER: Right.

GERGEN: The IRS works for him. So, he's got to get people to pay their taxes. That's why it's an embarrassment. And it shows he wasn't paying quite enough attention.

But I don't think it's derailing, because working at the IMF, as he was, it was a 24/7 job. Normally, your employer takes the tax out for you, Medicare and Social Security. These were payroll taxes. And, in this case, what he -- the IMF that he was working for did not take the taxes out, and he was expected to do it himself, and he didn't do it.

He paid all his other taxes, but he didn't take the payroll taxes out. And that's what he got nailed for. So, I think it is an innocent error. I do not think it will derail him, but it is embarrassing.

COOPER: It's interesting, though, Errol. The Obama team knew about it before today, but it wasn't until today that it came out.

LOUIS: Well, that's right. And I think they reckoned as, you know, the explanation we just got from David right on point.

But it's strange. I'm trying to think of any employee I have ever heard of who has an American who didn't have thee payroll taxes taken out or didn't know up front where some of the payroll taxes -- some of the taxes are out, some are not.

BORGER: Well...

LOUIS: It's no excuse by any means, but I think they probably understood in the Obama camp that this was not something that was going to resonate all the way down to Main Street, where people would say, well, I have to do this all the time. Why can't he? Most people don't have to go through this.

(CROSSTALK)

BORGER: But here is the point that is really embarrassing for Geithner, which is that he was flagged about this.

He worked at International Monetary Fund for four years. He was flagged about this by the IRS, and paid two years in back taxes, but not all four years in back taxes. So, folks are going to be asking the question in the Senate. They're going to say, gee, if you paid two years because you made a mistake, and you didn't do it for four, why didn't you just pay all four?

Of course, all of that has now been paid.

COOPER: We're going to leave it there.

Gloria Borger, David Gergen, Errol Louis, thanks so much. Appreciate it.

A lot more ahead tonight. Tell us what you think about this transition so far, how you think it's going, for the Bush legacy, whatever is on your mind. Join the live chat happening now at AC360.com.

We will also continue the conversation shortly with James Carville and Bill Bennett.

Up next: Hillary Clinton on the Hill facing questions over her husband's big dollar-foreign entanglements. I'm not sure who that picture is of. There, you have Hillary Clinton...

(LAUGHTER)

COOPER: ... for the nomination proceedings.

Also tonight, new details about the missing pilot, e-mails received today apparently from the fugitive himself, one of the guys who he was supposed to be dead in the plane crash. Well, we will see. Find out what's happening -- "Crime and Punishment" tonight.

Also, president-elect Obama's future in the highest court in the land, the highest basketball court, that is, the White House going to expand their basketball court -- when 360 continues.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN. HILLARY RODHAM CLINTON (D-NY), SECRETARY OF STATE NOMINEE: I don't think the president should put the prestige of the presidency on the line in the first year to have meetings without preconditions with five of the worst dictators in the world.

(END VIDEO CLIP) COOPER: Well, that was then, when Barack Obama, by her own implication, was dangerously naive. Now he is her boss, or will be, when it's expected she's confirmed as secretary of state.

And members of the Senate Foreign Relations Committee gave her a pretty warm welcome at hearings today. Said one of them, we're always glad when one of our own does well and has a real job.

It was not all smiles and sunshine, however.

Tom Foreman has got the rundown and the "Raw Politics."

(BEGIN VIDEOTAPE)

TOM FOREMAN, CNN CORRESPONDENT (voice-over): Hillary Clinton hit the hearing room like it was the old campaign trail, selling a message of experience, confidence, and subtly swiping at the Bush years in the process.

CLINTON: I assure you that, if I am confirmed, the State Department will be firing on all cylinders.

FOREMAN: Hot spots? There were plenty on the table, but she put Afghanistan at the top of the list, talking about moving more U.S. troops there, as long as NATO and the Afghans step up resources, too.

She called the Afghanistan-Pakistan border region the main front in the war on terrorism. She also called withdrawal of U.S. troops from Iraq a priority, with many troops likely coming out by this summer. And she implied she will do all she can to keep Iran from getting nuclear weapons. She even voiced hope about Israel and the Palestinians.

CLINTON: We cannot give up on peace.

FOREMAN: Above all, she said, the U.S. cannot oversimplify foreign relations.

CLINTON: We must use what has been called smart power, the full range of tools at our disposal -- diplomatic, economic, military, political, legal, and cultural -- picking the right tool or combination of tools for each situation.

FOREMAN: The only rough spot came during questions about her husband. The former president's charity has taken millions in donations from foreign interests.

Ranking Republican Dick Lugar.

SEN. RICHARD LUGAR (R), INDIANA: The Clinton Foundation exists as a temptation for any foreign entity or government that believes it could curry favor through a donation.

FOREMAN (on camera): Senator Clinton denied any wrongdoing and rejected the suggestion that her husband turn away foreign donors in the future. In the end, even the Republicans said she did a good job. And she will likely be quickly confirmed. Then, the hard work will really begin.

Tom Foreman, CNN, Washington.

(END VIDEOTAPE)

COOPER: Just ahead tonight, some of that hard work.

Also, Sarah Palin's newest complaint about the media. Yes, she's still talking about the media, her feud with the coverage she's getting from her home state paper. James Carville and Bill Bennett weigh in on that. They actually agree on what Sarah Palin should do. You will want to hear that. They will also take up Senator Clinton's testimony today.

Also, more breaking news from the Middle East, reports Israel's grip on Gaza City is nearing complete. The relentless bombing, house- to-house combat has ripped the city apart. We are going to talk with someone still inside Gaza City about what it's like and Nic Robertson in Israel.

And the fugitive financier pilot resurfaces on the Internet, as he officially becomes a wanted man -- details ahead on 360.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

CLINTON: The president-elect and I believe that foreign policy must be based on a marriage of principles and pragmatism, not rigid ideology.

(END VIDEO CLIP)

COOPER: Well, polite trash talk there from the likely next secretary of state, Senator Hillary Clinton kind of taking a shot at the old regime during her confirmation hearings today.

As we touched on earlier, she also faced tough questions about her husband's foundation.

And up in Alaska, e-mails from Sarah Palin have surfaced. They are scathing, with the governor staking on critics, bloggers, even her home state newspaper, making sure her message and name stays in the spotlight.

The question is, is she risking her chances for '012?

We will get to Palin in a moment, but, first, Hillary on the Hill and talking about Bill.

Let's talk strategy with our political contributors James Carville and William Bennett. They joined me earlier.

(BEGIN VIDEOTAPE)

COOPER: Bill, Hillary Clinton likely to be confirmed secretary of state. Has she answered all the questions you may have about any potential conflicts of interests between her husband's foundation's donors and her future work?

BILL BENNETT, CNN CONTRIBUTOR: Yes, she answered all the questions, but I think one of them was not answered satisfactorily.

The issue is the Clinton Foundation and foreign contributions to it. There was an interesting today when Senator Vitter raised a question about it. It looked like it was settled. Then Senator Lugar picked it up again. Senator Lugar is one of the senators, Republican senators, the Democrats most respect.

And he said, I don't think you should take any contributions, this foundation, from foreign nations while you are secretary.

The answer Mrs. Clinton gave was, Senator Clinton gave, was -- I guess it's Mrs. Clinton, isn't it? -- no, that's settled. We worked out the agreement. There's no legal requirement to do otherwise. There's no Office of Government Ethics issue.

It's a marker, though, that Dick Lugar put down that, if there are foreign contributions to this foundation, and then there are difficulties, problems, conflicts involving any of these nations, it's going to be an issue.

I think she should do more. I think she could go that extra step, but it shows the confidence -- I will use that word -- of -- of the Clintons. They got the warning. They got the friendly suggestion to do more. They said, nope, we're going ahead this way. I don't think it was a good idea to do that.

COOPER: James, a Clinton spokesperson said, look, they're the most transparent political couple in history.

JAMES CARVILLE, CNN POLITICAL ANALYST: Yes, right.

What I guess I can't understand is, the Clinton CGI is, what, I think $46 billion in commitments, affects 200 lives. Two-thirds of the poor children in the world who get AIDS medication get it from the foundation. I can't understand why they're not having a parade here.

And I think that they run the risk of looking absurd. This is -- every donor has been disclosed. And they did it. They did that. And they said, well, maybe we ought do it quarterly, then annually, then instantaneously.

(CROSSTALK)

COOPER: So, you don't think there's any conflict with foreign donors giving money to this foundation that Senator Clinton might have to have dealings with?

(CROSSTALK) CARVILLE: I don't. Foreign donors, foreign governments give money to President Bush's father library all the time. President Bush, right now, they're raising money for his own library as he's president.

I think, in terms of foreign governments that want to give, like Great Britain, Norway, Australia, Canada, to some of the climate change initiatives, all right? But I don't -- again, it's not a conflict if somebody gives President Bush's father money. But they disclose all of that. They disclose the name of every donor.

So, I mean, you know, and I guess what they're going to have to do is go back and work out some kind of a thing and, you know, a new thing, where they disclose more than they disclosed the last time, and let this woman get to work on the Pakistan-India problem, on the Palestinian-Israeli problem, on the Russian problem, and everything else, and we can -- this absurdity will stop, before these senators all fall apart here.

BENNETT: I don't think so, just quickly.

The foundation does obviously very good work. In terms of the number of children, the amount of money, it's small compared to what governments do, compared to what the United States government does, for example.

It was James Carville who said once: Devoted to the Clintons as I am, I know, if there is potential for trouble, there may well be trouble.

Trouble tends to follow the Clintons around. They survive it, but it tends to follow them around. I wonder what president-elect Obama thinks, having gone through the Blagojevich thing, the whole business about pay -- paying for positions and so on. This is -- this -- raising a red flag.

I just think it's a good idea to go this extra step. They don't need this going in as a potential thing that could blow up.

(LAUGHTER)

COOPER: James, I hear you laughing at the mention of Blagojevich.

CARVILLE: Yes.

Well, first of all, what seems to follow the Clintons around are peace and prosperity and budget surpluses.

(LAUGHTER)

CARVILLE: And, somehow or another, we got Blagojevich compared with the Clintons -- with people that are like negotiating contracts for malaria drugs for tens of millions of people, or people who are providing money for AIDS. I don't know how we got there, but I guess we can compare the Clintons to everything else. We can compare them to Blagojevich now.

(LAUGHTER)

BENNETT: Well, there's a lot associated with the Clintons. We don't have to go into the whole history of the Clintons. If it can happen -- if trouble can happen, it will.

It's a marker.

COOPER: President-elect Obama has now said that, on day one, he's going to sign the executive order closing down Guantanamo Bay. It may take a year. It may take many months to actually do it. There's a lot of legal issues. It is a complicated issue.

Is that the right move, closing down Gitmo?

BENNETT: No, I don't think so.

By the way, it's a bit of a hedge to say, I am going to close this down, details to follow next year and the year after. Meanwhile, where do the people stay? They stay at Guantanamo. So, you're not shutting it down. I think it's a mistake.

Where are they going to go? Where are we going to send them? Is the notion that their human rights will be better respected in Saudi Arabia or in Pakistan or...

(CROSSTALK)

COOPER: Well, some European countries, Portugal, among others, have now agreed to maybe receive some of them, because of those concerns that some of the countries that they -- the home countries they would be sent to, they can't be sent to, because they would be tortured.

BENNETT: Well, I think it is a trumped-up issue, frankly, and has been for a long time, because I think the conditions at Guantanamo are good.

They have been visited by many U.S. senators. This was a campaign issue. Barack Obama has to cash a few campaign checks. And I understand that. But it's going to be a long time, I think, before you see those guys released elsewhere.

CARVILLE: That's why all these lawyers are resigning, and military lawyers are resigning in an uproar about the procedures at Guantanamo.

But, first, the truth of the matter is, it should have never been opened. Now, of course, this is another mess that a Democratic administration has got to clean up, along with the economy and everything else. It might take a little time, but you got to give the guy credit. He's moving in the right direction. And I suspect that, when you have something -- when you inherit something of this magnitude, it takes a little time to untangle it. And that's what they're going to do. And I think we ought to give them that time. (CROSSTALK)

COOPER: Another issue I have no doubt you will agree on is Sarah Palin. She has basically been on a campaign over the last week attacking the media, blaming the media for a whole host of things, basically, their coverage of her.

Her latest salvo is against "The Anchorage Daily News," which she says is incorrectly saying that her future son-in-law is a high school dropout, which he is. I guess he's taking correspondence courses now.

What is -- what's her plan here? I mean, what is the idea? Is it just that it's -- is it always a good thing, just attack the media, because everyone hates the media?

BENNETT: I don't know what her plan is, but I know the questions -- a lot of the questions she gets are about the media.

I wish, frankly, that she would take a little time off and not do interviews. And I wish the media would leave her alone. I think it's time for a little moratorium on this one. And let's stop at this stuff about Russia and these other questions. This family's going through a period where the family needs to pull together and needs to work out these problems.

There should be a moratorium. She should step out of the limelight, and the media should leave her alone.

COOPER: James, it doesn't seem like, though, she wants to...

(CROSSTALK)

CARVILLE: Mr. Secretary, I didn't think -- I did not -- right -- I never thought I would say this 45 seconds ago, but I agree with the secretary 100 percent.

COOPER: James Carville, Bill Bennett, thanks so much.

(CROSSTALK)

BENNETT: Do we have to end on agreement?

(LAUGHTER)

(CROSSTALK)

COOPER: We have a new inauguration coming. The country needs people all together.

(CROSSTALK)

(LAUGHTER)

BENNETT: Take him to dinner. I will take him to dinner.

COOPER: If Bill Bennett and James Carville can agree, we will end it there.

(CROSSTALK)

COOPER: Gentlemen, thanks.

(END VIDEOTAPE)

COOPER: Bringing people together here on 360, that's what we're all about.

We hope you're with us next Tuesday, when history is going to be made. You can watch the inauguration on CNN.com. You can also share the event with your family and friends on Facebook. Check it out at Facebook.com/CNN to RSVP.

And our coverage, frankly, starts on Saturday early, all day and all weekend long.

Still ahead, we're going to update the breaking news out of Gaza, Israeli forces tightening their grip. Nic Robertson is live on the border. We are also going to talk to a "New York Times" reporter who is inside Gaza City.

And the fugitive pilot who cops say tried to fake his own death -- from his crashed plane, to a motorcycle, to warrants for his arrest, the latest on this bizarre and still unfolding story.

And, later, we know he's got game, Obama's love for basketball -- new word on what is going to happen to the White House basketball court. I bet you didn't even know they had one.

That's coming up.

(COMMERCIAL BREAK)

COOPER: So, have you seen this man?

Tonight, the search to find this missing pilot is stepping up. As we told you yesterday, he allegedly faked his own death by parachuting from his airplane. What happened then is even stranger. Authorities say the pilot is also a wanted fugitive, charged with securities fraud. He's also reportedly been checking out our coverage of this story, and the elusive businessman has a message for you.

In "Crime and Punishment" tonight, here's David Mattingly.

(BEGIN VIDEOTAPE)

DAVID MATTINGLY, CNN CORRESPONDENT (voice-over): Financial manager Marcus Schrenker's apparent plan to disappear was elaborate, to say the least.

Authorities believe he left Indiana, but parachuted out of his plane over central Alabama, and landed remarkably close to a hotel, where he was caught on tape checking in. It was then just a short walk to a rented storage space, where he had a red motorcycle parked and waiting. He was gone before anyone got suspicious.

WANDA BROOKS, OWNER, 280 MINI STORAGE: Well, my husband actually looked in the Dumpster, and there was his clothes, his wet shoes and jeans and shirt and socks. And everything, so it's crazy.

MATTINGLY: But somewhere Schrenker's alleged plan fell apart. His plane flew pilotless for more than 200 miles before crashing in a Florida panhandle swamp. He had to know everyone would think something was up when rescuers found no body.

TOM BRITT, SCHRENKER'S COLLEAGUE: When I heard about this plane crash, my first reaction was this has to be staged.

MATTINGLY: Friend Tom Britt says Schrenker sent him an e-mail, sticking to his story that the crash was an accident, that he was injured and bloodied when his windshield imploded. Authorities in Florida found no evidence of this.

BRITT: At the end of the e-mail, the most disturbing part was he said, "By the time you read this, I'll be gone." And I interpreted that as a suicide note. I think anybody would. That was the disturbing part to me.

MATTINGLY: Long before he disappeared, Marcus Schrenker was leaving behind a trail of legal problems that's now easy to follow. Complaints from customers cost him his license to sell insurance in Kentucky and Georgia. Charles Kinney was a former client.

MIKE KINNEY, INVESTED WITH SCHRENKER: He would tell the most ridiculous stories to explain things and expect people to believe it. And it just defies the imagination.

MATTINGLY: Now, Indiana authorities have filed two felony charges against Schrenker. They want to take away his license there and levy fines for allegedly defrauding investors.

JIM ATTERHOLT, INDIANA DEPARTMENT OF INSURANCE: If these allegations are true, he is clearly a threat (ph). Because anyone who would do this to their friends and neighbors and be so brash about it deserves the full penalty that's coming to them.

MATTINGLY (on camera): But first, they have to catch him. U.S. marshals are taking over the search for the man whose high-flying lifestyle could have given him many familiar places to run.

David Mattingly, CNN, Atlanta.

(END VIDEOTAPE)

COOPER: Well, just literally this moment, we've learned that the fugitive pilot is in custody in Quincy, Florida. That is according to police in Quincy. They report he has marks on his body consistent with a suicide attempt. They're trying to gather more information, but this man apparently is in police custody. We're going to have more details right after this commercial break. Also, we're going to have more breaking news, the latest from the Middle East: hearing explosions in Gaza today, 18 days into the war between Israel and Hamas. More explosions. Israeli tanks rolling into Gaza City, tightening their grips and both sides ignoring calls for a cease-fire.

Also, with just a week to go until Barack Obama's inauguration, a group of young students get a surprise invitation to be part of the historic day. See what got them noticed and what they'll be doing on inauguration day. Singing for the president himself.

Plus, after bagging two Golden Globe awards, Kate Winslet landed on "The Oprah Winfrey Show" today, where the talk turned to Winslet's natural assets. It's "The Shot," tonight.

(COMMERCIAL BREAK)

COOPER: We continue to follow our breaking news. As we told you just moments ago, we have learned the fugitive pilot, Mark Schrenker, is apparently in custody in Quincy, Florida. That is according to police there. They are reporting he has marks on his body consistent with a suicide attempt.

I'm also looking at a wire from the "Northwest Florida Daily News," which says U.S. marshals say they found Mark Schrenker alive at a camp site in Quincy, Florida. Police say that preliminary reports indicated he slit his wrists before he was discovered. They said that -- well, obviously, as we know, as David Mattingly reported just a short time ago, he had sent an e-mail to an Indiana neighbor on Monday, stating, "By the time you read this, I'll be gone." And Schrenker, as we know, has been missing since Sunday.

He had falsely radioed -- I want to bring in Erica Hill on this, too. She's been following this, as well. Basically, he had falsely radioed in to authorities while he was in his small plane. We continue to show pictures there of him, as well as at the plane crash site.

HILL: And what was wild about that were the accounts of what he'd actually radioed in, that he had apparently said, "My windshield has imploded. I'm covered in blood."

And you hear those accounts, and immediately, I have to say, as we were getting these updates on our BlackBerries throughout the day, I kept thinking, how could anybody in that state actually make this call? If you're in a plane in the air and your windshield implodes, I would think, "A," it would be difficult to hear you on that call; and "B," if you're in this state, it's amazing and you have the presence of mind to make that call.

COOPER: Mike Brooks, CNN security analyst, is -- is also with us on the phone. He's been following this story all day.

Mike, the report from the northwest Florida paper, basically saying he had been found at a camp site in Quincy, Florida. They say with his wrists slit. We're trying to get more information. Oftentimes, these early reports can kind of be misleading.

But you've been following this case. If he got to Quincy, Florida -- originally his flight was aiming for Destin, Florida. Do we know where he was hoping to go?

MIKE BROOKS, CNN SECURITY ANALYST: Well, you know -- you know, Anderson, right when everything happened, his plan that he had kind of went awry when he didn't figure, when he called his may-day signal, that he would be intercepted by military jets and they saw the door open in the cockpit and the cockpit dark.

And then they followed it and saw it crash into the swampy area. Then, he wasn't also expecting to meet up with anybody that he told that he had a canoeing accident. And then he ran into a law enforcement officer in Alabama, who took him to the hotel that he was last seen running through the woods.

COOPER: He actually asked a law-enforcement officer for a ride to a hotel. I am not sure he was aware he was a law enforcement officer, but if it was just a mistake, then it was certainly the wrong guy to ask, because this person was able to identify him. And then he took off running. But then he was -- he had a supply shed that was -- that, apparently, had a motorcycle in it.

BROOKS: He did. He did. He had a red motorcycle, a Yamaha, 2008 Yamaha that apparently he had put there -- he towed there, put it in the trailer. And then he took off on that. So I'm going, here's a guy with a red motorcycle. He's not going to be too -- too inconspicuous running around the streets of -- the roads of Alabama.

But we don't know exactly where he was going. And one of my things, too, that I was saying, Anderson. You know, did he have an accomplice in this? We don't know, because his friend, Mr. Britt said that, in the end, he said, "When you get this note, I'll be gone." Yes, I think he meant long gone and maybe his friend was saying that he thought that he might commit suicide.

But if that were the case, he has another plane that he does aerobatics in and, if he wanted to look like a suicide, he would have just -- he would have just flown it into the ground. So no, it doesn't make any sense to me.

COOPER: We're told he's actually been taken to Tallahassee Memorial Hospital. And again, this early report, both from the "Northwest Florida Daily News," also from police on the ground. They say that he was found with his wrists slit. Apparently, before he had been discovered he had attempted suicide. That seems to be the early reports.

The U.S. Marshal Service -- we should point out the U.S. Marshal Service tells CNN they have not made positive identification on this man. That is -- that's what they are telling directly to us. That's the information we have to go with. This "Northwest Florida Daily News" has a conflicting report which says the U.S. marshals say they have found Marcus Schrenker. But again, U.S. marshals now telling CNN they have not confirmed the identity of this man, but apparently, he has been taken to Tallahassee Memorial Hospital. So certainly, some conflicting reports there.

But Mike, he was now facing not just charges for filing a false, you know, report from his plane and abandoning his plane mid-air, allowing it to crash. Who knows where this thing could have crashed. They were lucky that it crashed into these woods.

But he was also facing numerous complaints from business associates, people who invested money with him. And there was going to be a hearing in the state of Indiana next week that could have revoked his license for life.

BROOKS: Right, well, they froze all of his assets today, and then they also filed two Class C felony charges within the state of Indiana.

But, also, Anderson, you know, he now, since he did crash his plane, he also faces federal aviation regulations and violations of FAR. And also, there's going to an investigation by the National Transportation Safety Board. So he could face additional civil charges.

And I was speaking with the FBI earlier today and they said the FBI did not have any charges against him yet, but because of his use of the aircraft and the fraud that they could be getting involved, but there has been no federal charges filed against him as of yet.

COOPER: So, again, at this point, somebody has been found. U.S. marshals telling CNN they cannot confirm that is, in fact, Marc Schrenker who has been missing since Sunday after he falsely radioed for help from -- from his plane, which -- it was a Piper Malibu. I guess it was south of Birmingham, Alabama. The flight plan had said Destin, Florida. Ended up crashing Sunday night, I think, a little bit after 9 p.m. in the evening.

His body was not found there. He was then later then seen numerous times. And apparently, now, somebody has been found with their wrists slit, has been taken to Tallahassee Memorial Hospital.

We're going to continue follow this throughout this hour. We're going to bring you some updates throughout the hour. But we also want to take time to head back to Gaza, talk to reporter on the ground in Gaza City, "New York Times" reporter, and as well as Nic Robertson on the border.

And something fun towards the end of the program. An Internet sensation going on the road.

(BEGIN VIDEO CLIP)

(MUSIC)

(END VIDEO CLIP) COOPER: The kids from the Atlanta school booked the biggest gig in the country. We'll give you all the details.

And one-on-one with Barack Obama. He's bringing his game to the White House. His big plans for the White House basketball court, coming up.

(COMMERCIAL BREAK)

COOPER: Back now with the breaking story. Israeli forces apparently tightening their grip around Gaza City, even as diplomatic moves appear to be underway to try to end the fighting.

Taghreed El-Khodary is a Gaza correspondent for the "New York Times." Her reporting inside Gaza has been a window into the war zone. She joins me now on the phone from Gaza City.

It's a little after 5:40 in the morning there. What are you seeing? What are you hearing? What are the streets like right now?

TAGHREED EL-KHODARY, "NEW YORK TIMES": You can hear it really, which is in the north, and it's very loud. You can hear it even in Gaza City. Explosions, shooting and at the same time just strike a position in Gaza City. It's too early to know which location, which building, but, also, many houses were destroyed by Israeli Apache helicopter and also a 16.

So, it's continuous and what's happening, it's like both the fighters and the Israeli forces are in a way playing hide and seek. Israeli forces are trying to attract the fighters outside Gaza City, while the fighters are trying to attract the soldiers, pull them inside the city. So, this is what's happening.

COOPER: And they want to pull them inside the city, why? Because they have more protection there? They're among civilians, and it's more difficult for Israeli forces then, and it's booby-trapped?

EL-KHODARY: Yes. Of course, it would be very hard for Israelis, you know, to come inside the city where it's really very -- like densely populated. You're talking about very populated areas. And I'm sure Israelis want, you know, to succeed inside the city. So far they've been trying to get inside, but, you know, they pull back like early morning. So, on the ground inside Gaza City so far.

COOPER: I was struck by an article you wrote in "the New York Times" this weekend inside a hospital. And in it, there was both -- there were many civilians there. There was a doctor seeking treatment after his -- members of his family had been killed.

But there was also a fighter from Hamas in the hospital demanding treatment, even though his wounds weren't as great as some of the civilians. And it was interesting hearing what the fighter, the Hamas fighter, had to say. Tell us a little bit about what you saw and the way that fighter viewed the battle.

EL-KHODARY: It was -- for me what pushed me to ask him the question, what -- his smile. You know, there was so much pain around him.

COOPER: The Hamas fighter was smiling?

EL-KHODARY: Yes, the fighter was smiling and it was Islamic Jihad, actually, fighter. And, you know, you could see like someone, his brain out, you know. It was really gruesome. It was brutal. All these scenes, and the children injured, the children, yes. And women in pain, you know.

And then this guy, you know, at the corner waiting, demanding that -- demanding to be treated to go back to the battle. And all of a sudden he was smiling, and he could not see what's happening, the pain around him. He could not even look at it. And then I...

COOPER: Taghreed?

EL-KHODARY: Yes.

COOPER: Sorry, Israel has been very critical of Hamas, blaming him for civilian injuries, accusing them of hiding weapons in mosques and schoolyards, even having a leadership bunker war room in a bunker beneath Gaza's largest hospital. How does Hamas or Islamic Jihad, how do they defend firing rockets from residential areas?

EL-KHODARY: I mean, I spoke yesterday to many fighters on the ground, and then this is what they said. They said, "We have no other option where to go." It's like Gaza is the size, after all, Anderson, is the size of Detroit. I mean, it's really -- like you have 1.5 million living, you know, in this area.

So, for them, it's like no other choice. And with the use of the most sophisticated weapons by Israel, it made it hard for these fighters to go to the border. That's why...

COOPER: And do -- do people there accept that or do they resent it? What do people, civilians, feel about having rockets fired from the room -- you know, the building next door to them or for them even inside their homes?

EL-KHODARY: There are those that try to prevent the fighters from firing, but there are those who are afraid. Afraid that they will be tainted as spies. The others, you know -- and then I talked to the fighters.

Yesterday when I talked to them, you know, "These people are against you firing from next door."

They say, you know, "The most important thing is the goal. And the goal for us is to fire the rocket. Sometimes, if we have another option, we will move away." But most of the time, at this time, there is no other option.

COOPER: Taghreed El-Khodary from Gaza City tonight. You've been risking your life every day to tell this story and we appreciate it. Thank you very much for joining us tonight.

EL-KHODARY: Any time.

COOPER: Stay safe.

Let's catch up now on some of the other stories we're following tonight. Erica Hill joins us with a "360 Bulletin" -- Erica.

HILL: Anderson, President Bush declaring a state of emergency for the nation's capital from Saturday through next Tuesday. It is a move that will allow for extra funding for agencies affected by the presidential inauguration. And with up to two million people expected to flood Washington for the historic event, the logistics and security issues, as you can imagine, are daunting.

A group of Atlanta students who became famous for their political song will witness history first-hand next Tuesday and even be a part of it. The song they wrote about voting, written by the kids at Ron Clark Academy in Atlanta became an Internet hit. It also helped to land them a trip to the inauguration.

Today they learned that they have been invited to sing at several inaugural balls.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: We're going to the inauguration!

(SCREAMING)

(END VIDEO CLIP)

HILL: Fed Chairman Ben Bernanke today cautioning that more bailouts of banks and financial firms will likely be needed to fix the economy, and that will help the banks. President-elect Obama's massive stimulus plan is unlikely to produce a lasting recovery.

Finally, a 34-year-old woman who masqueraded as a high school student last year sentenced to three years in a mental institution. The woman told authorities she stole her daughter's identity to enroll at a Wisconsin high school so she could try out as a cheerleader.

COOPER: Oy. Erica, up next, new details about what the Obama White House is going to look like from who Michelle Obama picked as official decorator, to plans for a full-size basketball court for the president. Erica Hill takes us up close for that.

Plus, you won't believe what Oprah said to Kate Winslet about her breasts. I'm just going to say it out loud. There you go. It's -- it's "The Shot" tonight. We'll be right back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

COOPER: What are you doing? (UNINTELLIGIBLE)

BARACK OBAMA (D), PRESIDENT ELECT: Who do you think, Washington state?

COOPER: You're asking the wrong guy. I know nothing of that sport.

OBAMA: You've got to find a few upsets if you want to win the big money.

COOPER: Everybody back there is thinking you're writing out a big speech, and you're doing an NCAA tournament.

OBAMA: Little higher priority.

(END VIDEO CLIP)

COOPER: Taking a break from politics to focus on his other big passion: basketball. That was on Obama's campaign plane way back in March.

When it comes to hoops, the president-elect has got game. Ask anyone who's played against him. When he moves into the White House next week, a court will be waiting for Obama for fun and possibly for work. Up close tonight, here's Erica Hill.

(BEGIN VIDEOTAPE)

HILL (voice-over): Barack Obama's love of basketball is almost as famous as the president-elect himself. From his high school days as Barry Obama in Hawaii to shooting hoops with soldiers in Kuwait last summer, it's clear the president-elect is at home on the hardwood.

But a game of pick-up at 1600 Pennsylvania Avenue will be a little harder to come by. The only court is outside, and it isn't even half the regulation size. Not that Obama doesn't have plans.

OBAMA: We are going to take the bowling alley out of the White House. We are going to be putting in a basketball court.

HILL: The NBA has offered to help, while the owner of the Washington Wizards said the president-elect is free to use the Verizon Center any time.

There's been much written about the president-elect's style on the court and what it says about his style as a leader. It isn't the first time someone has looked to his game for insight.

CRAIG ROBINSON, MICHELLE OBAMA'S BROTHER: My sister had heard my dad and I talking about how you can tell a guy's true character when you take him out on the basketball court. I told my sister, I was like, "This guy's terrific."

HILL: Pennsylvania Senator Bob Casey played basketball with Barack Obama on the morning of the election. He offers this take on the incoming president's game.

SEN. BOB CASEY (D), PENNSYLVANIA: When he plays, he plays very seriously. He -- he has a sense of command about the way he plays, and he always picks a good team.

HILL: Obama has joked about his new team in Washington, with more than one known for their time on the basketball court with the president-elect, including newly-appointed education secretary Arne Duncan.

OBAMA: I will say that I think we are putting together the best basketball-playing cabinet in American history.

HILL: The only issue, where that cabinet will play.

OBAMA: Clutch. He's clutch.

(END VIDEOTAPE)

HILL: One other White House update for you, while we're trying to find out more about where the basketball court could go in. Could it really be where the bowling alley was?

We're learning from "Domino" magazine that the Obamas have apparently hired a director [SIC], Anderson. It is Michael Smith.

COOPER: Decorator.

HILL: A decorator. Now, this is not just any decorator. He has worked for Rob Reiner, Steven Spielberg, Cindy Crawford, Michelle Pfeiffer. And he apparently uses many old-world influences but looks at them through a California sensibility.

COOPER: I don't know what that means.

HILL: I'm not sure. But this I actually understand. "Every grand room needs something humble," he says, "and something brown."

COOPER: There you go. We shall see.

So, did you hear what Oprah Winfrey and Kate Winslet were talking about?

HILL: How could you not?

COOPER: The office was all abuzz about it. It's "The Shot of the Day" tonight. We'll play it for you.

And at the top of the hour, a new bump in the road for the Obama transition team. Word is, nominee for treasury secretary didn't pay some of his taxes. "Raw Politics" ahead.

(COMMERCIAL BREAK)

COOPER: Kate Winslet was on Oprah Winfrey today after winning two Golden Globe awards this weekend. She played very different roles in "Revolutionary Road" and "The Reader," showing her range as an actor, but it wasn't Winslet technique that Oprah focused on. "The Reader" has a lot of love scenes, apparently, and they showcase Winslet's natural assets, you might say. Oprah couldn't help but gush. Take a look.

(BEGIN VIDEO CLIP)

OPRAH WINFREY, TALK SHOW HOST: I love the fact that you have real breasts.

KATE WINSLET, ACTRESS: Thank you so much!

WINFREY: I love that you have real breasts! I love that you have real breasts.

WINSLET: Thank you so much!

WINFREY: Because in all the breast scenes, your breasts do what breasts do.

WINSLET: You mean that kind of thing?

WINFREY: No, no, no.

WINSLET: And this kind of thing?

WINFREY: No, no. When you...

WINSLET: And then when they run for sanctuary under your armpit when you lie on your back?

WINFREY: That wonderful thing. You're lying on your back.

(END VIDEO CLIP)

COOPER: Very British.

HILL: She really is.

COOPER: There you go. That's "The Shot" tonight. Got anything?

HILL: I don't really have anything to add about the girls, but hey, good for you, Kate. That's all I have to say.

COOPER: Coming up in the next hour, Sarah Palin cannot stop talking about the media to the media. Her latest complaint: we can't stop covering the story that she keeps revisiting.

Also, new developments in Gaza on the war and peace front. We're live on the scene tonight on 360.