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More New Bank Failures; Pulling out Troops in Iraq; Obamanomics; The Economics of Infidelity

Aired February 27, 2009 - 23:00   ET


ANDERSON COOPER, CNN ANCHOR: Breaking news on bank failures starts us off tonight.

Just a short time ago, two more became casualties of the economic crisis: Heritage Community Bank in Glenwood, Illinois and Securities Savings Bank in Henderson, Nevada. Since the year began 16 banks have failed -- 16.

There's also new information out tonight about just how fast the economy is shrinking, the jobless rate growing in California to 10 percent and a grim day -- grim month, we should also say on Wall Street. That's all coming up. We'll have the latest on the banks and the bailouts.

But we begin with another major story, a major milestone in the war in Iraq: President Obama giving a date, ending America's combat presence in Iraq. Candidate Obama promised to do it in 16 months, today President Obama said 18 months.

Some Democrats don't like it, some Republicans, including his former campaign rival do. Here's an extra long excerpt of the President at North Carolina's Camp LeJeune briefing marines today on his plan.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: We will not let the pursuit of the perfect stand in the way of achievable goals. We cannot rid Iraq of every single individual who opposes America or who sympathizes with our adversaries. We cannot police Iraqi's streets indefinitely until they are completely safe, nor can we stay until Iraq's union is perfect.

We cannot sustain indefinitely a commitment that has put a strain on our military and will cost the America people nearly a trillion dollars.

America's men and women in uniform, so many of you, have fought block by block, province by province, year after year, to give the Iraqis this chance to choose a better future.

Now we must ask the Iraqi people to seize it.

The first part of this strategy is therefore the responsible removal of our combat brigades from Iraq. As a candidate for President, I made clear my support for a timeline of 16 months to carry out this drawdown while pledging to consult closely with our military commanders upon taking office to ensure that we preserve the gains we've made and to protect our troops.

These consultations are now complete and I have chosen a timeline that will remove our combat brigades over the next 18 months.

So let me say this as plainly as I can. By August 31st, 2010, our combat mission in Iraq will end.


COOPER: Well, the President went on to say he will keep as many as 50,000 troops in Iraq in what he called the support role until the 31st of December, 2011 at which point all U.S. forces will be out of the country.

The question is will his plan work? We're going to talk about that with Michael Ware and Ed Henry in a moment.

But first Tom Foreman is "Keeping them Honest."


TOM FOREMAN, CNN CORRESPONDENT: Pulling most troops out of Iraq by August 2010 and all the rest in the next year would fulfill the plans of two Presidents. Barack Obama made a promise during his campaign.

OBAMA: The first thing we have to do is end this war.

FOREMAN: But "Keeping them Honest," George Bush struck a deal with the Iraqis before leaving office for the same thing, a phased withdrawal. The timetable is a little slower than Mr. Obama promised, a little faster than Mr. Bush wanted.

Still military analysts say it will give new clarity to the U.S. mission as tons of equipment and thousands of troops prepare to move out.

MICHAEL O'HANLON, BROOKINGS INSTITUTION: We can focus on the stability of Iraq during the crucial period of transition in Iraq and then focus on the logistics of redeployment after that.

What it really boils down to of course, at some level is a reverse invasion.

FOREMAN: The President says any remaining troops will advice and support the Iraqis; they won't be there for combat. But CNN Pentagon Correspondent, Barbara Starr says that's more political talk than practical truth.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Call them what you will. These young men and women are in combat, troops will die, they will die in combat.

UNIDENTIFIED MALE: The Senator from Arizona --

FOREMAN: Nevertheless on Capitol Hill, some Republicans who once criticized Mr. Obama's war plan are pleased. SEN. JOHN MCCAIN, (R) ARIZONA: I believe the President's withdrawal is a reasonable one.

FOREMAN: And some Democrats are grousing over how many will remain in harm's way.

In Iraq right now, there are about 146,000 troops. And even after the initial pullout, 50,000 could remain. And at the same time the President is moving the troops down there, he wants to build up the forces in Afghanistan. Right now we have about 38,000 troops there; he would like to raise that number up to 55,000.

He has promised to continue pursuing terrorists on the Afghan- Pakistani border. How long? His budget may give a hint.

STARR: It included a 10-year plan for so-called contingency operations overseas being conducted by the U.S. military. Right now, that's Afghanistan and Iraq.

FOREMAN: And that could start a whole new battle with anti-war campaigners back home.

Tom Foreman, CNN, Washington.


COOPER: Well, like so many things these days and not the end, only the beginning of the end, it seems. Where all these could lead, in a moment.

But first, before we start the conversation a bit more from the President who sat down this afternoon with Republic Broadcasting's Jim Lehrer. Take a look.

JIM LEHRER, "NEWSHOUR" ANCHOR: You're not the least bit uneasy over the fact that John McCain, and John Boehner, the Republican Leader of the House have praised your plan while the Democrats are criticizing it?

OBAMA: You know, I don't make these decisions based on polls or popularity. I make these decisions based on what I think is best. This is consistent to what I said during the campaign.

The fact -- if anything, I think people should be interested in the fact that there has been a movement in the direction of what I thought was going to be the right plan in the first place.


COOPER: President Obama earlier today. Let's "Dig Deeper" now with senior White House correspondent Ed Henry and Michael Ware, who spent more time in Iraq than just about any other correspondent alive.

So Michael, August 31st, 2010, our combat mission in Iraq will end. That's what the President said today. If we still have 50,000 troops which I assume are combat ready living in a combat zone and working in a combat zone what's really different?

I mean, how can you say it's really done?

MICHAEL WARE, CNN INTERNATIONAL CORRESPONDENT: Well, it isn't, quite simply. To a degree, this is a political shell game. 50,000 troops in one sense is not enough to deter anyone from posing a significant threat to the Iraqi state or the fragile peace that America has put together.

But those 50,000 troops will nonetheless be in a war zone. Now we say they're going to be training Iraqis. You can get shot at doing that. They're going to advising Iraqis in the field, you can definitely get shot at doing that.

And going on counter terrorism raids, well that's big but still --

COOPER: So they could still be conducting raids --

WARE: Absolutely.

COOPER: And they probably will be?

WARE: In conjunction with the Iraqis.

Now, let's remember, the Bush administration that started this war, actually ended it. It wasn't President Obama. The status of forces agreement that was signed at the end of last year and came into effect on New Year's Day, says that within three years of that time, 36 months, American troops will be out of Iraq, no negotiation, no discussion.

COOPER: That's not what the (AUDIO GAP) much choice. That's what the Iraqis wanted.

WARE: That's it, I mean, essentially they surrendered their war fighting capability. And the Iraqis had the whip hand. America didn't have any leverage to force anything different. So while, today announcement by President Obama is enormously significant symbolically, in effect it was already done.

COOPER: And Ed, I want to play something that Defense Secretary Robert Gates told CNN's Dan Lothian today. Let's play that.


ROBERT GATES, SECRETARY OF DEFENSE: The President has been very explicit and was very explicit I think in his speech that this remaining force will engage in counter-terrorism operations.




COOPER: And saying, yes, combat. So I mean, are they all on the same page on this, the administration? How does Gates and all of the others feel?

ED HENRY, CNN SENIOR WHITE HOUSE CORRESPONDENT: I think they're mostly in the same page, I think it essentially comes down to the language and how you define it. When you look very closely at what the President said just a moment ago, he said our combat mission in Iraq will end.

He didn't say our combat operations will end. He was very careful to say the combat mission, the broader mission. And so what I think the White House is banking on from talking senior officials is that it's not pretty, it's not perfect, it's not exactly the 16-month timeline that he laid out.

But the bottom line is that because of what he did today, following on what former President Bush did, the war in Iraq is going to end. It's going to last a little longer, and, again, it's not going to perfect.

But if you think -- if you want to go to perfection, look at where Republicans were just six months ago where they were insisting no timeline at all. And all of a sudden John Boehner and John McCain and other top Republicans were saying, we can pretty much embrace this plan.

So nobody is perfect in their language and nobody is perfect in their approach. At the end of the day, Barack Obama promised as a candidate to end this war. Today he moved a step closer, it's going to take longer than liberals want but he moved to much big step -- bigger much step closer to getting that done.

COOPER: Michael, has he left himself any wiggle room in case events start to unravel on the ground?

WARE: Well, certainly, I mean, is any of this set in stone? Are there tablets where these commandments are written, no. And what we're going to see is during this year, the withdrawal doesn't really happen.

COOPER: Right, it doesn't really start until next year.

WARE: No, we've got 14 brigades there, I mean, two are coming home this year. They were anyway. The rest, probably 130,000 or thereabouts will remain in Iraq for the elections at the end of the year and for what may happen after.

It's only then that he intends to start bringing them home. Let's see what the playing field is like --


WARE: -- in the beginning of next year. I mean, he doesn't want to be the President who oversees American defeat.

COOPER: Let's hope for the best and no doubt about that. Michael Ware, thank you, Ed Henry as well for the reporting. I appreciate it Ed. What do you think of the new Iraq plan? Let us know join the live chat happening at and you can also check out Erica Hill's live web cast during the breaks tonight.

We're going to have more on our breaking news: another two banks failing tonight, bringing the number to 16 this year. Ali Velshi is next on how to keep your money safe and also what may be a silver lining in otherwise grim economic news today. That's next.

Also, remember Bobby Jindal's heroic Katrina story? He played it up in a speech to the nation this week. But was he telling the truth? Would the governor actually tell a tall tale? Tonight we're "Keeping them Honest."

Jindal of course, a rising star for the GOP, but a new CNN Poll, and guess who takes the top spot among Republicans of Presidential picks? Sarah Palin and just how far ahead of the other Republicans is she? We'll find out tonight.

And Michelle Obama's official White House portrait unveiled today. Already a lot of folks are talking about it. We'll unveil the photo for you back in a moment.


COOPER: A recap here on our breaking news: two more banks have failed tonight; one in Nevada, the other in Illinois. Deposits of both federally insured no doubt about that. 16 banks have now failed -- that's the list right there and most of them small. The list is scrolling for you.

Also today, the federal government taking a larger share in one of the biggest banks, Citigroup.

As we've mentioned at the top, the markets keep falling and the economy is shrinking faster than expected. We learned that today as well.

A reminder that we're taking your questions on the blog,, Ali and Gerri Willis are going to be answering them shortly.

But first, a quick rundown on what happened today from Ali Velshi. Ali, regulators closed two more banks today.


COOPER: Making a grand total of 16 banks closed, so far this year closed. What are costumers of these banks and others need to know?

VELSHI: Well first of all, typically these banks are shut down on a Friday night. That's almost always the case. Most of these are not huge banks. But they are -- when they get closed down by the FDIC or by the Office of Thrift Supervision, what tends to happen is you may not be able to doing anything over the course of the weekend but you maybe able to use your ATM, by Monday morning, you'll have all your money accessible. Now, the trick here for everybody is to understand that the FDIC ensures accounts up to $250,000 per account, there are some exceptions to that which would allow you and your spouse to have more than one account, maybe up to three at the same bank.

But generally speaking, split you're money up. If the bank closes you'll have your money within 48 hours.

COOPER: All right, some pretty alarming economic news out today even when alarming economic news is the norm.


COOPER: Break it down for us.

VELSHI: All right, so we have the fourth quarter GDP, what that means that's the Gross Domestic Product. It's the largest measure of economic activity. And we had it for the fourth quarter, that means the last three months of 2008.

You can see that over on the right side of your screen -- minus 6.2 percent. What that means is that the economy became smaller by 6.2 percent. Our economy is supposed to grow. And it was supposed to drop. We knew of course, that was where the recession really started to take hold. But we didn't expect it to be that bad.

I want to take you back all the way to 1982. We've been doing a lot of measurements from about 1980 onwards. And if you can see from then, you've only had one occasion worse than that in the last 27 years, it was 1982 itself when it was down 6.4 percent.

So were almost right there, then you saw a recovery. All those green bars are years where GDP or economic growth is positive. So you see 1991, we had a negative year, but it's been positive all along and then in 2008 we see negativity again.

It could be -- it's the past, that's the one thing to remember, Anderson. The GDP is a measure of something that has already happened. It's not the future.

COOPER: When do we find out, I guess not until next year for what it was this year?

VELSHI: Yes, well what we do is every three months they release a number but it gets revised, and it gets revised. The estimates for how this quarter that we're in, the first three months of 2009, the estimate for this is not as bad as the estimate was for that last quarter.

So the hope is --

COOPER: Right.

VELSHI: -- that even though it was worse than we expected, and maybe -- maybe that's the bottom of it. You heard Ben Bernanke say earlier this week that they thinks -- he thinks if things go well, we could see this recession end this year -- Anderson.

COOPER: So that's the silver lining?

VELSHI: That's the silver lining, that's exactly right.

COOPER: I guess you've got to grab on to something.

VELSHI: You grab whatever you can. It's a big dark cloud, grab the lining if you can.

COOPER: Ali Velshi thanks, we'll see you in a moment.

And President Obama spoke today to PBS's Jim Lehrer. We showed to you him talking about Iraq. He also spoke about his new $3.6 trillion budget. Take a look.


OBAMA: Not every decision we're going to make is going to be perfect. Not every plan that we lay out is going to work out exactly as we intended. But if we get the big stuff right, then the ship of state is a big tanker and, you know, you can't simply reverse direction on the economy or any of these things overnight.

But you can start moving in a better trajectory so that five years, ten years down the road, you can say you know what because of good decisions now, our kids are safer, more secure, more prosperous, more unified than they were before.


COOPER: Well, that's certainly the hope. But make no mistake, though, the budget Mr. Obama announcement yesterday is a big change of direction. If not just the Bush years but some are saying from the past 30 years.

The Obama budget piles up big tax increases for some and brings a relief for others.

Candy Crowley tonight, breaks down the winners and the losers.


CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: This is not a book of numbers, it's a sea change.

ROBERT REICH, FORMER LABOR SECRETARY: This is a transformational budget. This is the first budget I have seen since the Reagan era, since Reagan's first budget that really made a fundamental statement, we're going in a different direction, folks.

CROWLEY: A leading Republican voice actually agrees with the analysis, with considerably less enthusiasm.

NEWT GINGRICH, FORMER HOUSE SPEAKER: I think it is the boldest effort to create a European socialist model we have seen. I think it's quite clear what his values and his attitude is.

CROWLEY: Losers include upper income seniors who will pay more for prescription drugs, farmers with sales over $500,000 who will lose their subsidies, households making over $250,000 who will get a tax increase.

One person with taxable income of $200,000 will pay on average $6,000 more. A family of four with a $500,000 income will see their taxes go up on average $11,300.

Also hitting the upper bracket, a tax increase on capital gains and limits on deductions, including mortgage interest and charitable contributions.

KEN BERGER, PRESIDENT, CEO CHARITY NAVIGATOR: Well, I think it's a horrible idea. Really a horrible idea.

CROWLEY: The Obama administration says people will give anyway, but charitable organizations squeezed by higher demand and fewer contributions worry they can't take another hit.

BERGER: Discouraging the wealthiest from giving in this way could be devastating for some charities. We've already gotten estimates that a couple hundred thousand charities may close their doors as it is because of the economy. Then you add stuff like this and it becomes all the more frightening.

CROWLEY: Winners, middle and lower class taxpayers and the poor.

According to the Office of Management and Budget, on average, a family of four making $76,000 would see their taxes lowered by $800. The same family making $35,000 would see taxes reduced by $1,200.

They will also benefit from huge spending increases in education, energy and most of all new health care plans as yet unspecified.

REICH: This country is no longer taking this road, call it for want of a better term, the right road, and we're taking more of a left of center road but it's a road that we have to take because of the big problems in front of us.

CROWLEY: It is the end of Reaganomics and the beginning of Obamanomics.

Candy Crowley, CNN, Washington.


COOPER: Obamanomics.

Just ahead, more of our breaking news a lot of banks going under this year, two more today, we're going to tell you how much it cost you and what it means to your bottom line. We've been flooded with your Emails and iReports about the economy. Ali Velshi and personal finance correspondent, Gerri Willis are here with some answers for you. Also tonight, finance and infidelity, we'll take a look at that.

And the White House unveiling the official portrait for the First Lady, Michelle Obama. We'll show you it to you and talk about what some don't actually like about the official portrait.

And not the best week for Governor Bobby Jindal, first he took a beating for his performance following the President's speech before Congress. That was the speech right there, well, now questions are flying about the truth about Hurricane Katrina story he told during the speech.

Tonight we're "Keeping Them Honest."

Also a murder mystery in New Mexico: 13 bodies found in an Albuquerque construction site. That's the construction site right there. The question is a serial killer at work? Gary Tuchman investigates.


COOPER: All right, updating our breaking news tonight: two more failing banks today, one in Nevada the other in Illinois. And now so far a total of 16 banks have failed in just the first two months of this year.

Combined, the two failures today will cost the Federal Deposit Insurance Corporation, the FDIC, about $100 million. Ali Velshi is here and Gerri Willis answering your questions about "Your Money and Your Future."

Thanks for being with us. We've got a lot of IReport questions. Let's go right to them. We have an investing question from Ashley in Atlanta, Georgia. Let's listen.


ASHLEY IN ATLANTA, GEORGIA: I have made some poor decisions by buying a house when I still own a condo and that's kind of sucking things dry including my savings which I have none of.

So I'm hoping this isn't going to take a turn for the worst. So I'd like to know how, when money is so tight, to continue to save, I've got a stock market account that I don't -- I don't even know what stocks I have.

If I need to be more involved with that or if I should leave that to the pros.


COOPER: Gerri, I mean, this woman obviously has a myriad of problems, but do you trust any of the so-called pros anymore?

GERRI WILLIS, PERSONAL FINANCE CORRESPONDENT: Yes, well, I do. But I'll tell you, an easy thing for this woman. Look, we forgot about what you were supposed to spend. She's talking about I have all this mortgage debt.

A, right, she's supposed to be spending a third of her income on mortgages and that's it. And then when it comes to stocks, why is she investing in individual stocks? Why doesn't this woman buy an S&P indexed, bond and leave it at that so she doesn't have to study up on stocks. She can just ride the wave with everybody else.

COOPER: Ali, I want to show our viewers something in the wall about investing. The market hit an all-time high we know, in October of 2007.


COOPER: Today we closed at 50 percent below that. You hear a lot of people saying that we're hitting a bottom and now is the time to get in.


COOPER: But, I mean, is it?

VELSHI: You and I have had many conversations about this. Back in November, we hit levels around 7,000. And then what happened again is we started going back up into the 9,000 range. And people thought the bottom was around 8,500 or 9,000 on the DOW.

Then we came back to that November bottom. So now we're back down around 7,000 again, we're down 50 percent as you said on the DOW, about 52 percent on the S&P-500.

What often happens with forming a bottom is it takes several months to do so and you have here what could be a double bottom. So it's the second time you hit the same point, you could hit it in another time or a few. It sometimes takes many, many months to walk a bottom.

And a lot of people say that walking a lot of bottoms -- along a market bottom and you can break a lot of bones. And that's kind of where we are. And a lot of people will think we're kind of done with this, but it could be a long time before we see an increase.

WILLIS: And I was going say, it's about your time horizons. If you have enough time to wait this out --

VELSHI: Yes, if you're 30 or 40, this isn't a concern.

COOPER: We're going to have another IReport from Dave in Mesquite, Nevada. Let's play that.


DAVE IN MESQUITE, NEVADA: I got a letter in the mail today from Capital One about my credit card. I've had a fixed rate of about 10 percent and today they say they're bumping it up to almost 18.

There's a note in there that says I can decline the changes and close the account and pay it off in the original terms but I'm wondering is that going to affect my credit score?


COOPER: This is a sign of the times. First of all, credit card companies used be giving just about anybody credit cards, now we're hearing stories like this.

WILLIS: And this is common. I'm getting emails from all over the country with exactly this problem. I'm paying my bill on time and they're making my terms harder to meet. They're raising my interest rate and they're lowering my credit limit.

So all of a sudden my credit score goes down because it looks like I'm charging more money when in fact I'm charging the same amount I always did. There's not a lot you can do about this. Except to remember, it is a privilege to have a credit card. They set the terms, they set the rules you've got to live inside of them.

COOPER: We've got another iReport from Dave in right here in New York City.


DAVE IN NEW YORK CITY: I was overwhelmed earlier today with a sense of joy and excitement when I came across this penny on the sidewalk. It's actually the only money I have made today was that penny.

When I was at lunch, I had to put a bottle of water on my credit card because I was thirsty and I had to pay for it somehow. I think a lot of people my age, I'm 23, I think a lot of people my age are in a similar situation.

I know a lot of my friends are a lot more talented than I am and they're putting all of their expenses on their credit cards and they're not able to find work.


COOPER: I mean it's the worst possible situation --


COOPER: -- to be putting stuff on your credit card when you can't afford it.

VELSHI: When you don't have an income. And by the way --

COOPER: Well, of course I mean, people have no choice in some cases.

VELSHI: We have a 7.6 percent unemployment rate, it's been going up. There's nobody who doesn't thinks it's going to go up, including the White House.

And here is the problem, there are certain segments of society that are affected much more than that average. African-Americans have a much higher unemployment rate. Young people have a much higher unemployment rate.

Now, this gentleman is out of a job, and what he needs to do is he needs to think about what he's doing, where he's living. It's not a likelihood that a lot of these jobs are coming back any time soon.

Is he trained to do something else? And is he living in one of the most expensive places in the world to be unemployed?

WILLIS: Well, precisely, so he's in New York City --


WILLIS: He probably doesn't own a house here or an apartment here, right my guess because it's so expensive. Why not move somewhere where jobs are actually growing and the credit card, you got to put away the credit card?

COOPER: Where would that be besides North Dakota? Well we did a story the other night and North Dakota seems to be doing ok.

VELSHI: Fargo has got a growth rate.

COOPER: Right.

VELSHI: Down the middle states, the mountain states actually have some -- they're ok.

COOPER: He's also at 23, I mean, maybe you don't want to think about having a career, maybe you just need a job.

WILLIS: You know, Kaplan testing, the people who test people for the GREs, the SATs, right now, they're hiring 2,000 to 3,000 people, part- time work. They're paying 25 bucks an hour. Why not pick that up right now, do it for a while, until the economy improves?

COOPER: Right, well, we've got to leave it there. Gerri, I appreciate we've been on and Ali as well thanks.

And who is ahead in the Republican race for 2012? Sarah Palin leading the pack, according to our new poll; we're going to bring you the details, and tell you who's on her trail?

And Michelle Obama's official portrait, what does it look like and why are some people saying, it's shocking or surprising? Well, we'll show you.

And later you know times are tough when cheaters can't even afford a room. It's the economics of infidelity. What we found may surprise you.


UNIDENTIFIED MALE: A woman was cheating on her husband and she was meeting her boyfriend and going to a public parking area and jumping in the back seat of a pick-up truck. You didn't see that years ago. Things were a lot more upscale and now it's like, it has to be the economy.



COOPER: More trouble for Louisiana governor, Bobby Jindal and a big question for his political party, namely who are we? Big name Republicans this week, gathering in Washington trying to rediscover their identity pump up a leader to take on President Obama and the Democrats.

We have a new poll tonight to bring you -- registered Republicans telling us who they are looking to for leadership. Republican Bobby Jindal is on it but his star is fading fast and now he's on the defensive for his performance in the Republican response to the President Obama's speech to Congress.

And for our story he told about Hurricane Katrina. Tonight, we're "Keeping Him Honest" on it. He says he was visiting a local sheriff named Harry Lee during Katrina. He walked into the office and the sheriff he said was yelling into a phone, listen.


GOV. BOBBY JINDAL, (R) LOUISIANA: I asked him, "Sheriff, what's got you so mad?" He told me that he put out a call for volunteers to come with their boats to rescue people who were trapped on their rooftops by floodwaters. The boats were lined up and ready to go and some bureaucrat showed up and told them they couldn't go out in the water unless they had proof of insurance and registration.

I told him, "Sheriff, that's ridiculous." Before I knew he was yelling into the phone and he said, "Congressman Jindal is here and he said you can come arrest him too." He just told those boaters ignore the bureaucrats and go start rescuing people.


COOPER: Today after bloggers at Talking Points Memo in the Politico began raising questions about the timeline. Governor Jindal's chief of staff told Politico it wasn't actually during the storm, it was a few days later.

The Jindal spokesperson said the governor wasn't trying to imply that the incident took place in the heat of the crisis. We would ask Sheriff Lee, but sadly, he's no longer with us.

More now on the poll that we mentioned, the raw politics with senior political analyst, David Gergen and Candy Crowley.

David, I want to take a look at these numbers. Sarah Palin, in this poll, is at the top of the list in terms of who people would support in 2012. She's followed by Mike Huckabee, Mitt Romney, Bobby Jindal. We should point out the survey was done before Bobby Jindal gave the Republican response to Obama's Tuesday night.

Does it surprise you that Sarah Palin is still considered at least by some people the best bet for the Republican Party?

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: No, I think Anderson, we have got to remember that she lit some fires in the base of the Republican Party and especially in this poll, women are strongly for Sarah Palin. She is bunched with Mike Huckabee and Mitt Romney for 2012.

But I think we have to remember and I'm sure Candy will bring this up. These polls at this stage have no predictive value. If we had asked this same question four years ago on the Democratic side, Barack Obama would have been an asterisk at best.

It's way too early, but I think it does illustrate Sarah Palin's staying power with the base of the party.

COOPER: It's interesting Candy. If you put up the numbers to show the gender gap among Republicans, Sarah Palin does best among women, Mike Huckabee does slightly better among men. Do we know what at this point the Republican Party is looking for?

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Well, I think you have to remember that the Republican Party membership has shrunk. The self-identifying Republicans right now is a pretty small group and that group is conservative. Those are the core -- these are people that are at the core of the party.

It doesn't surprise me that more women favor the woman and more men favor Mike Huckabee. But I think if you look at those numbers, they're pretty much tied. If you look at the margin of error, they're pretty much tied. I agree with David, they're fun to talk about but it doesn't tell us anything about 2012.

COOPER: David, Bobby Jindal -- has his star really been affected by this speech earlier this week and now by this story which he basically made up parts of?

GERGEN: There's no question that he was badly hurt by the speech. We saw this happen to Bill Clinton some years ago, and he did recover. Remember when he came on and played his musical instrument on Arsenio Hall and got everybody going again and it worked.

Bobby Jindal has been hurt by this. If this story is inaccurate, he's been hurt a lot worse.

Let me just add one thing though -- quickly, though, Anderson. And that is, while the Republicans are still flailing, in many ways, I think that they will rally based on what the president's budget proposes and what the president has now put forward this week.

President Obama threw down the gauntlet and he rally said we're no longer going down the conservative path, we're going to go down a much more progressive or liberal path. And he's rallying people behind him. He's got a lot of the country behind him. But for the first time, the Republicans have something really serious, because it's such a deep philosophical rift with what President Obama is trying to do. COOPER: That sounds, Candy, if David's right, that talk of bipartisanship may just end up being talk if the Republicans are kind of sharpening their swords and getting ready to pounce on this budget.

CROWLEY: They're getting ready to pounce because it is a huge philosophical difference. I mean it is no longer the aftermath of Ronald Reagan. It is now a whole new era in the way that people look at government.

And I think what's really interesting, of course, is that all the Democrats who are angry with President Obama for all the outreach he did to Republicans, there is vindication for him in this budget. This is a left of center budget and Republicans -- David is absolutely right are going to oppose this.

COOPER: We're going to have to leave it there. David Gergen and Candy Crowley, thanks very much. Appreciate it. Good evening.

GERGEN: Thank you.

COOPER: We have a "360 Follow" in the story of a small town mayor generating big-time outrage. He mailed around a picture of the White House with a watermelon patch out back, he said he didn't know it was racist. Find out what he's saying now and what's happened to him.

In New Mexico, police find more and more body parts in a grave of horrors. Is a masked killer at work there? What is going on?

And peeling away at the truth, what's the best way to cut an onion? A lot of people are talking about that after they saw me try on Regis and Kelly. Let's just say I'm not very good in the kitchen.

We'll be right back.


COOPER: Still ahead tonight on "360," the biggest crime ever in New Mexico. Police find more and more body parts. They suspect a serial killer may be on the loose.

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

ERICA HILL, CNN CO-ANCHOR: Anderson, in the days after Hurricane Katrina, the people of New Orleans welcomed them almost as saviors, but on Sunday, the last 100 National Guardsmen will board their trucks and leave the Crescent City. At one point, the guard numbered 15,000 providing ice, food and security for a battered city. Budget reasons though have prompted the pullout.

And a "360 Follow" for you. The mayor of Los Alamitos, California stepping down and saying he's sorry for sending this picture in an e- mail. It shows a White House lawn planted with watermelons and it was sent with the subject "No Easter Egg hunt This Year."

Prime seats for the president: the visiting team in Washington tonight, none other than Mr. Obama's hometown Chicago Bulls. And he is there for all the action. For anybody else in attendance, though, they were advised to come a little earlier than usual because as you can imagine there was a little bit of security at the game.

The days of free food and drinks and checked baggage on planes, long gone, you probably figured it can't get any worse, right? That's where you're wrong. The low cost no-frills European carrier RyanAir apparently thinking about charging passengers to use the bathroom. Good news, it's not a done deal yet and I would hope that there would be a lot of backlash by people who would say no.

COOPER: That's going to get unpleasant very quickly.

HILL: Yes. Good times.

Wait, before we move on, I wanted to talk a little more about your culinary skills if we could because for anybody who did miss Regis and Kelly this morning when you were filling, it was a cooking segment which I have never seen you do before.

People think that they're easy. They're not. Take a look at Anderson's onion chopping skills.


HOSEA ROSENBERG, CHEF: I was going to get you to chop some onions. Do you know how to dice up an onion?

COOPER: Absolutely not.

ROSENBERG: Cut off the two little ends there and cut the whole thing in half. I'm going to get some butter going.

I don't want you to -- I need you to just --


HILL: Honestly, I'm surprised you have fingers left.


ROSENBERG: Ok. That's enough, that's enough.


HILL: In fact you were kind of violent with the onion and I think for the people in the audience and even the ones at home, it felt a little bit more like this.

And because of that, Anderson Cooper, I thought, you know what? I'm here to help you, right? So I brought in a special guest. One of my colleagues from the Early Show, Iron chef Bobby Flay is here with us. So Bobby is here and actually he's here to give you a lesson, Anderson cooper.

If you'll turn behind you, we're going to need you to come off the stage and learn how to chop an onion properly. I'll get out of the way to let you boys work your magic.

BOBBY FLAY, IRON CHEF: I have to admit, cutting an onion is not really the easiest thing in the world. It's got all this kind of weird veins running through it, you know.

However, after watching you display your skills over there with a knife, I see we're going to have to give you a lesson. The first thing you want -- let's cut this off.

COOPER: I had trouble with that, yes.

FLAY: So the first thing you want to do, you want to cut this straight down like this. All right, and then you have half the onion, well, you can hold on.

COOPER: I don't really want to hold the onion because then you smell like onions.

FLAY: Right, but that's part of cooking.

HILL: There is something called water, Anderson, you'll be fine.

FLAY: Put this down like this. You're not very comfortable with that, are you?


FLAY: So here's what I'm going to do. One of the key things, you've got to get used to, because these TV chefs are everywhere these days. They're invading your set. So you want to tuck your fingernails in a little bit like that and see if you do that then you can never cut yourself.

The idea here is we're going to make some cuts, not going all the way to the end but just like leaving maybe like half an inch of the onion so it actually stays intact. Just straight down. Just concentrate on the knife.

Slowly, you don't have to go quickly. You use a knife like I shave, I can't slow down.

COOPER: I did it.

FLAY: Perfect. Now then you want to go like this, then you want to hold the onion down like this, and you want to make slices into the onion. It's not easy. Onions are not easy. I have to give you credit for even trying.

COOPER: I have no choice because you came on the set.

FLAY: That looks pretty good, Anderson. One more. Oh, please don't cut yourself right here. That would be terrible.

So then, again, you're going to tuck your fingernails in, and then just straight down and you're going to have a diced onion.

COOPER: Oh, yes. Look at that.

FLAY: That's a huge improvement from this morning. Beautiful job. Now he can cook.

HILL: Thank you.

COOPER: Bobby Flay.

All right, we'll be right back. More news ahead.


COOPER: A developing story tonight, a very disturbing one. It is unfolding in New Mexico where forensic teams continue to unearth bodies one after another. They were all found in the same location -- the largest crime scene in the history of the state. Crews are working around the clock. Tonight it only got worse.

Gary Tuchman has the latest in tonight's "Crime & Punishment" report.


GARY TUCHMAN, CNN CORRESPONDENT: At a construction site west of Albuquerque, New Mexico, police are making horrifying discoveries, and today only got worse.

RAY SCHULTZ, CHIEF OF POLICE, ALBUQUERQUE: Over the course of the past couple hours, we have identified the remains of the 13th victim.

TUCHMAN: The remains of 12 other people were found here this week and earlier this month. But who exactly are these victims?

SCHULTZ: Several years ago as we noticed an increasing number of young women missing --

TUCHMAN: Two of the bodies have been identified and indeed they have been missing for years. One of them is Victoria Chavez who was last seen in 2003. Another is Regina Valdez, last seen in 2004, she was three months pregnant.

Her father is Daniel Valdez.

DANIEL VALDEZ, FATHER OF REGINA VALDEZ: It's hard to remember back the last time that I hugged her; and as always, wishing that I had been able to hug her more.

TUCHMAN: Police say both victims had prior histories that included prostitution. He knew his daughter had issues but Gina Valdez's father is heart broken.

VALDEZ: I knew that the more bones that they found, there more chance that my daughter would be in that group.

TUCHMAN: Authorities are still investigating the scene, where the first remains were found by a woman walking her dog in an area where a developer was digging culverts to divert floodwater. SCHULTZ: We have scrapers and heavy equipment out there as dirt is being taken off inches at a time. We have detectives and criminalistics personnel that are out there with rakes and shovel.

TUCHMAN: Pat Brown is a criminal profiler.

PAT BROWN, CRIMINAL PROFILER: If you have got 13 bodies that are pretty close by, you absolutely know you have a serial killer. It's not going to be likely that you're going to have three different serial killers and they just run into each other and throw the bodies in the same place.

TUCHMAN: Police haven't been able to identify the other victims but say it's likely they were all women. They don't know if all or some of them were prostitutes.

UNIDENTIFIED MALE: Is your true name, Gary Leon Ridgway?


TUCHMAN: But it certainly wouldn't be the first time a serial killer has targeted prostitutes. One of the most notorious, Gary Ridgway, the so called Green River Killer in Washington state who pleaded guilty to killing 48 women who were mostly prostitutes or runaways.

Gina Valdez's father now has a wish.

VALDEZ: I would like for them to find out who it is, number one for the streets to be safe and everybody else's daughters to be safe.

TUCHMAN: Meanwhile, investigators will continue looking for other people's daughters.


COOPER: Coming up, marriage and the market meltdown. What the economy is doing to the family, to couples, and to cheaters. See how the stats add up.

And will she be sleeveless or won't she? Michelle Obama, the first lady's official portrait. We have it. We'll unveil it for you, in a moment.


COOPER: The economy is forcing fundamental changes at home. We all know that. But you may not know that some couples are putting off marriage, some parents are thinking twice about having a second child.

The recession is also cutting deep into the divorce rate. Husbands and wives who want to split up are finding it just too expensive, so they're actually sticking together.

As for cheating spouses, the tough times may not stop infidelity, but it is sure slowing down work for private eyes.

Randi Kaye has tonight's "Uncovering America" report.


RANDI KAYE, CNN CORRESPONDENT: This private investigator from Massachusetts has been tailing cheating spouses since he was 16 when his father first taught him the business. But today, John Dinitale says business ain't what it used to be.

JOHN DINITALE, PRIVATE INVESTIGATOR: Surveillance cases, especially domestic surveillance cases you could see just falling off the chart.

KAYE: In the last year, Dinitale has seen a 75 percent drop in infidelity cases.

DINITALE: We've seen some -- what we would consider good-sized surveillances that would keep us busy for a week at a time just kind of go by the wayside. And I don't think there's any question that that was the result of people not being able to afford it.

KAYE: In a slumping economy, even hanky panky takes a hit. A full day of surveillance work will set you back about $2,500; a full week, $15,000. So some spouses are doing their own snooping.

DINITALE: It's not unusual now where a client will call and say, "Look, I've already done all the legwork. I've been checking his BlackBerry. I'm looking at his text messages. I've been downloading his cell phone bills."

I think I've got about three or four witnesses down there.

KAYE: Dinitale still gets some surveillance work but this new recession-style cheating looks different. With corporate America tightening its belt, gone are the fancy dinners out billed to the expense account. Now cheating couples cook at home.

DINITALE: It has to be the economy. People are just not spending money the way they used to.

KAYE: John Dinitale says cheating spouses are cheating with a little less style these days. Instead of booking rooms at high-end hotels like the Ritz or the Four Seasons, he says they're choosing what he calls the no-tell motels like this one.

Or in some cases, they're skipping the hotel expense completely and just using the car.

Dinitale trailed one couple with his partner and will never forget how it ended.

DINITALE: There were no heads in the front seat anymore. I'm working with a guy and I said, "Mark, did you miss that? Did they leave?" No, no, no. "Let's just sit here for a second." And the next thing, two feet come right up onto the windshield. Mark looks at me and says, "Now I know what they're doing."

KAYE: Not all couples are doing that. Some are just hanging out at the park. It's free.

DINITALE: We'd be scrambling around, trying to pick up a good spot where we can set up the video, and this would be a typical spot.

KAYE: The economic slump has put a damper on divorce, too. The American Academy of Matrimonial Lawyers says 37 percent of attorneys polled reported fewer divorces during an economic downturn. Divorce lawyers say more couples are sticking it out, not because they want to, but because they have to.

DINITALE: They're staying together because they can't afford to get their own place.

KAYE: As the saying goes in this business, it is cheaper to keep her.

Randi Kaye, CNN, Boston, Massachusetts.


COOPER: Not a very nice thing, that.

More news tonight: Michelle Obama revealed. We've got her official White House portrait. A lot of people asking, is she going to be sleeveless or not? The big question that all of America wants to know. We'll have the answer in a moment.


HILL: Good times had by all.


HILL: So are you going to make salsa this weekend or what? All these things you could do with a chopped onion. My goodness.

COOPER: And his wife was lovely and she came by.

HILL: She's stunning.

COOPER: And I didn't realize she is from -- the actress from "Law & Order: SVU." I love her.

HILL: Yes. She's pretty great. And we just learned she's coming back this evening.

COOPER: How exciting is that? All right. I'm a big fan of that show.

Time for "The Shot." It's Michelle Obama's official White House portrait. Check it out. A nice unveiling, great picture there.

We're told it was taken earlier this month in the blue room of the White House. Michelle Obama, we're told, is wearing a sleeveless black dress by Michael Kors. Around her neck, a double strand pearl necklace. The White House posted the photo on its Web site today. It's already getting an awful lot of attention, Erica. HILL: Indeed it is, and I suppose we shouldn't be surprised that one of the main reasons it's getting attention: those arms. She loves the sleeveless look. And who can blame her. Honestly, if I had those arms, I wouldn't wear sleeves either.

The latest issue of "People," of course, there she is, gracing the cover in a pink lace number, this one designed by Tracy Reese. Turning plenty of heads at President Obama's address to Congress on Tuesday night where she donned a plum dress.

COOPER: So what's the big deal about sleeveless? Why are people even talking about this? I don't understand.

HILL: I think people are just not used to seeing the first lady...

COOPER: Do not a lot of people wear sleeveless?

HILL: No. Traditionally they don't.

COOPER: She looks great in them.

HILL: That and I'll be honest. I was having a conversation with one of our producers, Diana, earlier today about how frankly, she makes us all feel bad, but hopefully, she's going to motivate us to lift some weights.

Anyway, if you look back at past first ladies, too they don't tend to wear sleeveless. Laura Bush, there's her official picture; Jacqueline Kennedy, also known for her style; going back a little further, Eleanor Roosevelt, definitely sleeves in that day and age.

And when you're talking first lady Martha Washington, Anderson, I think we have come a long way.

COOPER: We don't even know what she was wearing.

HILL: I'm not going to lie.


HILL: It's a lovely sketch.

COOPER: It's a great photo. Can we show the picture one more time of Michelle Obama?

You can see all the most recent first lady portraits at We'll try to put it on the Web site if you haven't seen it.

HILL: A lot going on tonight.

COOPER: The White House Web site. You know, they're all eating onions up there.

There it is. There's the official portrait.

That does it for "360." Thanks for watching. "Larry King" starts right now.