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Iowa Caucus; Gingrich and Romney; Sandusky's Wife Scrutinized; 2012 Economic Forecast

Aired December 27, 2011 - 19:00   ET



Millions of people in America log on to social media sites like Twitter at work every day. What happens when they leave their job? Do you take your followers with you? One company says no and it is suing a former employee.

Last night on this program we showed you a video of a little girl ranting about big business and gender roles, 4-year-old Riley joins us OUTFRONT tonight.

And with the Iowa caucus just a week away no candidate has broken out from the pack. It looks like it's going to come down to the wire.

Let's go OUTFRONT.

Good evening. I'm Ali Velshi sitting in for Erin Burnett.

OUTFRONT tonight, countdown to Iowa caucuses, we're just a week away. Campaigning is kicking into high gear. Candidates are crisscrossing the state, trying to pick up last-minute support for the first contest in the race for the GOP nomination. Let's go straight to our political correspondent, Jim Acosta. He is on the ground in Iowa.

Jim good to see you; lots of campaign events today, everybody is back in the game. A recent poll showed that 12 percent of voters in Iowa still undecided. You spoke with the Iowa GOP chair about the race. What did he have to say?

JIM ACOSTA, CNN POLITICAL CORRESPONDENT: Ali, basically he said this is a caucus race in Iowa that he has never seen before. Basically, this is the most unsettled field of candidates that a lot of Republican operatives have seen in this state in a long time. If you just look at the polling you basically have three candidates at the top right now.

Mitt Romney, Newt Gingrich and Ron Paul and then below them is sort of a medium tier, the other three candidates who are campaigning in this state, Rick Santorum, Michele Bachmann and Rick Perry and basically according to the chairman of the Republican Party here in Iowa, Matt Strong (ph), any of those candidates could rise or fall over the next seven days. So it's a wide open race. It could go, as you just said, down to the wire. VELSHI: Jim, let's talk about the evangelicals. Exit polls from 2008 show that 60 percent of Republican caucusers (ph) in Iowa describe themselves as evangelical. You know my colleague, Christine Romans who is from Iowa, likes to point out that she thinks the rest of us don't -- we sort of use this word and don't really fully understand what it means. We almost use it interchangeably with religious fundamentalists. And she says in Iowa, it is substantially broader than that, so how do these candidates court this evangelical vote?

ACOSTA: Well, they're doing it tonight, there's a prominent social conservative who hosts a radio talk show. His name is Steve Diest (ph) and that talk show host is hosting a town hall today that will feature four of the Republican candidates, Gingrich, Santorum, Bachmann and Rick Perry. They'll all be calling in and it's going to be interesting to listen to that talk show because basically they're all going to be appealing to this voting bloc.

The social conservatives that figure so prominently here in the Iowa caucuses, folks like you know Pat Robertson, the Christian broadcaster has done well in the past. He ran for president, as you know and did well here in Iowa because of that segment of this Republican voting population here. So it's going to be interesting to watch Rick Perry is -- he's playing harder for this vote maybe more than anybody else in this field right now and it's a smart play.

VELSHI: All right, Jim Acosta thanks for your reporting. We'll talk to you soon, Jim Acosta in Des Moines, Iowa.

There's a new national poll just out and it shows that Newt Gingrich's popularity has faded; the former speaker still at the top of the list. He's at 25 percent, down from a high of 37 percent earlier this month. Mitt Romney who sort of regrouped his forces now has 24 percent support, putting the two in an essential dead heat. Newt Gingrich might be feeling the heat. He just sat down for a one- on-one interview with Wolf Blitzer and he slammed his main rival, Mitt Romney.


NEWT GINGRICH (R), PRESIDENTIAL CANDIDATE: Mitt Romney is the guy running the most ads attacking me and he's doing it through this disingenuous, oh gee I don't control all of my former staff and all of my millionaire friends. It's baloney. If he wants to defend his negativity, show up in Iowa, 90 minutes face-to-face, let the people decide whether or not in fact he'll back up what he's been saying and let him back up his moderate record, not conservative record as governor, and I don't think he'll do it.


VELSHI: Making moderate a bad word and saying that thing that he likes to say. Newt Gingrich does well with the whole come and debate me. Let's bring in Nancy Pfotenhauer, a former McCain adviser and Will Cain, columnist for Welcome to both of you. Hey, Nancy, this is -- you know this is in this weird space where Perry doesn't like to debate. Gingrich likes nothing more. He said it again to Mitt Romney. Come and talk to me 90 minutes, no moderator one-on-one. Is this a good strategy for him?

NANCY PFOTENHAUER, FORMER MCCAIN ADVISER: Well it's his sweet spot. His sweet spot is not organization, but I would argue that the longer you run the mike on the former speaker, the more you are apt to get a potential problem. This is an individual who is almost like a Shakespearian character. He's got profound strengths, but he's got the potential for oops moments that we almost cannot wrap our arms around.

I think it is very dangerous for him to be throwing a moderate rock at Mitt Romney when he criticized Paul Ryan's budget as right wing social engineering. He was in favor of cap and trade. This is Newt Gingrich. He was championed in individual mandate which is the pillar upon which Obamacare rests. This man is not just throwing a rock at a glass house. He has a glass castle (INAUDIBLE) --

VELSHI: It's a tricky rock, Will Cain, because it's the rock that could help you win the nomination that may not help you win the election.


UNIDENTIFIED MALE: It's not a bad word to be everybody.

WILL CAIN, CNN CONTRIBUTOR: But (INAUDIBLE) Nancy. He's standing on shaky ground here.


CAIN: Let me talk about why that poll might be coming down and why Newt Gingrich's poll numbers are dropping. We talk a lot about the role of money in politics and that being a massive negative.


CAIN: Well among conservatives, Newt Gingrich's rise specifically with fundamental conservatives for Tea Parties has been a completely confusing event. How could a man that embraces big government principles be the choice of small government enthusiasts?


CAIN: So what I'm telling you is the role of money and politics, these ads that are being run my Mitt Romney and Ron Paul about Newt Gingrich are having its effect on his poll numbers.

VELSHI: Right.

CAIN: And in fact we're seeing the role of money and politics inform the voters about Newt Gingrich. We're seeing the positive effect of money and politics.

VELSHI: Let's play a little of this conversation that Newt Gingrich had with Wolf Blitzer. Listen to this.


GINGRICH: A person who thinks the United States was responsible for 9/11, a person who believes, who wrote in his newsletter that the World Trade Center bombing in '93 might have been a CIA plot, a person who believes it doesn't matter if the Iranians have a nuclear weapon. I'd rather just say you look at Ron Paul's total record of systemic avoidance of reality and you look at his newsletters and then you look at his ads. His ads are about as accurate as his newsletters.

WOLF BLITZER, HOST, "THE SITUATION ROOM": Now if he were to get the Republican nomination.

GINGRICH: He won't.

BLITZER: Let's say he were. Could you vote for him?



VELSHI: All right and that's the headline there. He says he won't vote for Ron Paul. He said his views are so outside the mainstream, not only just Republicans, but about Americans. Will, I have to say we've all heard Ron Paul talking about Israel. We know that he doesn't share the views of most of the Republican candidates on Israel, so I thought that Newt was pandering a little bit on that particular thing. What he didn't take issue was the remarkable racist and homophobic stuff that was in those newsletters that Ron Paul has still refused to fully come clean about. He will not tell us who wrote those newsletters, but he made money off of them. This is going -- again, in mainstream America this is going to cost him.

CAIN: All right, give me a second on this, Ali. Listen, the role of these newsletter, first of all, did Ron Paul write them? It's plausible that he did not. Did he read them? We're stretching plausibility, but still there. Did he know about them? You're starting to stretch plausibility even more, but we're begging the question that we all want to know, is Ron Paul a racist? By most accounts, his former aides, he's not a racist. And as a policy matter, calling a libertarian a racist is like pointing out that an impotent man is an nymphomaniac. It doesn't matter. The two facts cancel each other out. No one is going to get screwed --

VELSHI: Because a libertarian doesn't think government should be involved in anything anyway.

CAIN: A philosophy of individuals and small government --

VELSHI: Right.

CAIN: -- doesn't embrace that, but let me say but, Ron Paul's letters reflect on his character. They reflect on a man who possibly is a poor manager, a poor leader and aligns himself with people of fringe thoughts and that's important. VELSHI: Nancy, final comment from you. First of all, does it pay Gingrich to go after Ron Paul because as we see national poll after national poll, he may have organization in Iowa, but he's still standing around 11 percent nationally?

PFOTENHAUER: You know but, but Paul has struck a cord with the essential anti-government crowd, and I would caution Gingrich not to be so scathing in his attacks, and this is, unfortunately, I think, one of the potential downfalls for him is he can't resist that arrogance, that disdainful tone and frankly, after listening to President Obama for the last several years, I think Americans have had enough of arrogance.

VELSHI: All right, Nancy, good to talk to you. Will Cain, thanks for that. We could go on for a lot longer. We'll have you back on. We'll continue the conversation.

A reminder, of course, live coverage of the Iowa caucus begins next Tuesday here on CNN at 7:0 p.m. Eastern.

All right, what if your employer owned all of your Twitter followers? A new lawsuit is just about that. The latest developments in the Penn State rape -- child rape scandal as well. A reporter who has been covering the story comes OUTFRONT with new information about the wife of Jerry Sandusky and the Christmas Day house fire that killed a family of five. What the fire chief had to say about the tragedy in Connecticut.


VELSHI: Dottie Sandusky, the wife of accused child rapist Jerry Sandusky, has been coming under increased scrutiny lately. Critics are asking how can someone be married to a man for 45 years and not know what he was doing. Well it turns out that Dottie Sandusky did tell her husband that she was worried he might one day be falsely accused.

Joining us now is a reporter who broke the story, CNN contributor Sara Ganim, also a reporter for "The Patriot News" (ph). She joins us tonight from Plantation, Florida -- Sara good to see you. Dottie Sandusky was worried that someone would accuse her husband of molestation. She told somebody this. Who did she tell and what did he say about it?

SARA GANIM, CNN CONTRIBUTOR: Ali, I talked to a man who is now a radio host in State College (ph), Pennsylvania, where Jerry and Dottie Sandusky lived. He grew up as a child playing with the Sandusky's five adopted children. They were neighbors. And he told me he's kept in touch with them over the years. He's now in his 30's, he's a grown man. He told me that over the years he's had conversations with Dottie, particularly this one.

He can't remember when it was, but he says that it was some time in the last decade, probably some time after one of the initial investigations by police in 1998 into Jerry Sandusky's conduct, but definitely before this grand jury investigation began that led to these charges that we're now talking about. He says that Dottie had a conversation with Jerry and said, look, you know I think that you might have a boundary issue, and I think that that could lead to a false accusation. Now we're not talking about child rape which is what's outlined --

VELSHI: Right. This issue here is what boundary issues means.

GANIM: Right. Exactly, not rape. Not anything sexual, but more of you know when they're wrestling, when they're playing football, when they're horsing around. These are all things that Jerry has admitted to. He's admitted to touching with the key being that it wasn't sexual.

VELSHI: Right.

GANIM: And apparently, she had a conversation with him about this.

VELSHI: There was another thing that you wrote about. One of the alleged victims who said that he was -- Jerry Sandusky assaulted him in the family's basement and that he screamed for help knowing that Dottie was upstairs. She claimed she heard nothing. No hope -- no help came for him. What do you get out of that?

GANIM: Well we know that Dottie has categorically denied that. She says that she's very upset that accusations like that have been made, that accusations have been made that assaults happened in her home that she might not have done something about them. She's denied all of that. In a statement through Jerry's attorney she says these children were part of our family. They ate meals with our family. They went on trips with our family. We took care of them like they were our own children. This man who I talked to, this neighbor said you know it was very clear growing up that Jerry was busy -- he was a busy man with recruiting, with football season, with coaching.

He was in the spotlight. He had a busy life and Dottie was very content being behind the scenes and being at home. However, you know in addition to what he told me about that conversation that she had with her husband, he said she was the kind of person that even though she was content behind the scenes she wasn't afraid to say if she saw something that she believed was wrong. She was very strict with her kids and he said it wasn't -- doesn't fit into the personality that he knows of Dottie for her to be silent and do what these children have alleged which is to ignore.

VELSHI: Sara Ganim thanks for your great reporting on this. Sara Ganim is a CNN contributor and a reporter with "The Patriot News".

All right, it was a tough year economically. We take a look at what you can expect from 2012. It's probably going to be pretty different from 2011. And one company doing very well, Google, we get an exclusive look inside the company's New York headquarters.

(COMMERCIAL BREAK) VELSHI: After reporting a sharp decline in holiday sales, Sears Holdings announced it will close 100 to 120 of its Sears and Kmart stores. Sears Holdings reported that sales for the eight weeks leading up to Christmas fell by 5.2 percent. Now that's not good when you consider that overall retail sales are higher this Christmas season compared to last year.

Now despite Sears' disappointing news, a new report today showed that consumer confidence is up for the sixth month in a row. The index rose by 9.3 points. Home prices, however. They fell at a slower rate. As we near the close of 2011, really, I think what we need to talk about is what the economy is going to look like in 2012.

Joining me is Nigel Gault. He's chief U.S. economist at IHS Global Insight and Michael Gapen. He's a senior U.S. economist at Barclays Capital. Gentlemen thank you to both of you for joining us.

Nigel, let's start with you. What's your general outlook for both the U.S. and the global economy in 2012?

NIGEL GAULT, CHIEF U.S. ECONOMIST, IHS GLOBAL INSIGHT: I think for the U.S. economy we see a continuation of (INAUDIBLE) modest growth in 2012. The key drivers are the consumer and housing. Housing maybe activity has hit bottom and we're going to see some small improvement in 2012, but we're still working off previous excess supply from the boom. The consumer is seeing some improvement in employment. That's helping consumer confidence to pick up, but again the consumer has got a heavy burden of debt.


GAULT: So I think modest growth is most likely on the U.S. front. Globally the picture is rather more worrying than in the U.S. We've seen some slowdown in growth in emerging markets and in the euro zone, we think the picture is for recession. We think the euro zone has already dipped into recession. It's just a question of whether they can contain the consequences of that recession in the financial markets. That's the biggest threat to the U.S.--


GAULT: -- 2012.

VELSHI: Two distinct threats. We know there's no growth in Europe, no economic growth, but whether or not it becomes a credit and a banking crisis is the bigger issue. Michael Gapen, where are the opportunities for our viewers in 2012? Is the stock market something they should be staying away from? Is real estate something they should still sit on the sidelines about?

MICHAEL GAPEN, SENIOR U.S. ECONOMIST, BARCLAYS CAPITAL: We think equity prices may actually suffer a bit in the first half of the year. Some of these uncertainties that Nigel mentioned and you mentioned bear little fruit. Until we see how that shakes out, real estate you mentioned and home prices actually does look a bit better. There's some cleansing that's taking place in the housing market in the U.S., areas that have lower concentrations of foreclosures have been faring much better. Some of those regions like California, Nevada, Las Vegas, Florida, they're still suffering, but there's some improvement in the housing market out there and over the longer term certainly reflect some better opportunity.

VELSHI: All right, similar views both of you. It's going to be a little different in 2012, but you're still very cautious about what's going to happen. Nigel Gault is a chief U.S. economist at IHS GLOBAL Insight. Michael Gapen, senior economist, a senior U.S. economist at Barclays Capital, gentlemen thanks to both of you and Happy New Year.


VELSHI: When we think back to the top song of 2011, you probably think it was one by Adele Pitbull (ph) or maybe even Justin Bieber, but the most popular song of the year could be one you've never head of. The official video for why this (INAUDIBLE) very die (ph), "D" (ph) -- I didn't even say it right -- a song written for the upcoming Tamil Language Film 3 (ph) was posted to YouTube on November 16th. Get this, since then it has taken the Internet and the world by storm. Listen.





VELSHI: The song which roughly translates to why this murderous rage tells the story of a boy rejected by his girlfriend. It was recorded in Tamil and English, which has made it popular among speakers of both languages. Now you're asking how popular? Since last month it was posted the original video has racked up over 28 million views and the song title is actually the first thing that pops up when you search for just the word "why" on YouTube. It's also spawned hundreds of imitations and parodies including those performed by fans, animated salesmen, and of course, the chipmunks.

And YouTube videos that include why this (INAUDIBLE) account for almost 40 million of YouTube's total views, the song's popularity doesn't seem to be waning. Last week a flash mob danced to the song at a mall in Elkland (ph), New Zealand and just this week police in India started using versions of the song title to both combat road rage and encourage bike riders to wear helmets. If only police campaigns were as catchy in this country.

A man faces a lawsuit from his former employer. They claim that the company owns his Twitter followers and disturbing details about the Christmas Day house fire that killed a family of five. What the fire chief told us at today's press conference and a tragic end to the case of a missing child we told you about last night OUTFRONT next. (COMMERCIAL BREAK)

VELSHI: A Stamford, Connecticut fire marshal investigating the Christmas Day fire that killed five family members said in a press conference today that the cause of the blaze was discarded fireplace embers.


BARRY CALLAHAN, STAMFORD CHIEF FIRE MARSHAL: Our preliminary findings have led this office to believe that the fire was accidental in nature. The fire appears to have been caused by hot fireplace ash and embers which had been discarded in this area.


VELSHI: The three children and the parents of the New York City ad executive Madonna Badger (ph) all died in the fire after. Firefighters were turned back by the heat and flames. Several neighbors said they were awakened by screams around 5:00 a.m. on Saturday and called 911.


OPERATOR: Stamford, 911. What's the address (INAUDIBLE) --

CALLER: There is a huge fire at the house next door to us. The whole house is on fire.


OPERATOR: What is the address, ma'am?

CALLER: We're at 2241 Shippan Avenue. It's the house next door. Major fire and there are three kids and a woman.


VELSHI: The house which was being renovated had no working smoke detectors and had not received a certificate of residence or approval needed for occupancy. Authorities razed (ph) the house yesterday after the fire department determined it was unsafe.

Police in Waterville (ph), Maine are hoping a new $30,000 reward will help them find 20-month-old Ayla Reynolds (ph). The toddler was last seen when her father put her to bed 11 days ago. Ayla's (ph) grandfather is now begging for her safe return.



RONALD REYNOLDS, AYLA'S GRANDFATHER: Just bring her home to us. Just bring her home.

(END VIDEO CLIP) VELSHI: They say they believe the little girl was abducted but still have no suspects. Ayla was wearing green polka dot pajamas at the time she disappeared.

Well, it's a horrible and gruesome ending in the search for a missing 9-year-old Indiana girl. It turns out that the family friend who had been trusted to watch Aliahna Lemmon because her mother was sick has confessed to murdering the young girl. Thirty-nine-year-old Michael Plumadore was in court today. And according to court documents his confession about how he killed her is chilling.

Joining me now on the phone from our affiliate WANE TV is Drew Blair.

Drew, what can you tell us about this confession?

DREW BLAIR, REPORTER, WANE TV: Oh, Ali, this was the most devastating confession that could have happened out of this whole story. After three interviews with the Allen County sheriff's department, Michael Plumadore admitted to killing Aliahna Lemmon by striking her over the head many times with a brick. This happened outside of his home and then from there the gruesome details just unfolded for what he ended up doing with her body.

VELSHI: And it is very gruesome to have to listen to, but he admits to dismembering her body.

BLAIR: That's correct. This again happened in stages. At first he took the little girl's body, put it in plastic trash bags, put her in the freezer of his home. Many hours later, he then dismembered her with a hacksaw into several small pieces. Many of those -- many of the pieces of the body ended up in a dumpster in a nearby business. Other pieces, the child's head, feet and hands still in the freezer.


Drew, any word on a possible motive? Did he say anything about that?

BLAIR: I have asked the Allen County sheriff that very question. He said he couldn't tell anything about a motive at the time. I said, do you have one? He said no.

VELSHI: This man was trusted by the family. He was a family friend, a neighbor. What has the family said about this?

BLAIR: The family actually has been instructed by the FBI to not address the media. So we have not heard anything from that.

As far as the Allen County sheriff can tell me, they, of course, are devastated. They trusted a man enough to leave their children with him. And any family, you have to have that trust in somebody, and this is more than horrific.

VELSHI: Drew, this is in Fort Wayne? Is it a suburb of Fort Wayne? Tell me a bit about the community. BLAIR: We are in northern Allen County, which is just outside of Fort Wayne. But Fort Wayne takes up most of Allen County.

The community itself is very small. It's off the beaten path and you wouldn't know it's really there unless you lived here or you had to cover a story, unfortunately. It's about 30 mobile home units and otherwise quiet until something like this happens.

VELSHI: Wow! All right. Drew Blair, thanks for joining us.

It's a sad ending to the story. We spoke to the family members yesterday. We were hoping that it would have a better ending, but it didn't.

Drew Blair joining us from our affiliate joining us from Fort Wayne, Indiana.

All right. Do you tweet at work? Who do you think owns your Twitter followers? You or your company? We'll talk about that.

And a 4-year-old girl named Riley with some big ideas about business. She comes OUTFRONT, coming up next.


VELSHI: Those of you who tweet, you know, you can follow this show at @OutFrontCNN. You can follow me at @AliVelshi.

Who owns those accounts? Who owns the followers of those accounts?

There's a case in federal court right now that could affect you, especially if you tweet at work or for work.

The big question is who owns a Twitter account? Is it the person tweeting or their employer?

The case we're talking about is PhoneDog versus Noah Kravitz. And here's the background. PhoneDog is a mobile news and review company. Noah Kravitz used to work for them. As an employee, Noah tweeted under the name @phonedog_Noah and he accumulated 17,00 followers.

When he decided to leave the company, he says PhoneDog told him he could keep his Twitter followers as long as he tweeted on their behalf every once in a while. Noah claims he agreed. He changed his Twitter name, by the way, to @noahkravitz and he kept on tweeting.

But eight months later, PhoneDog sued Noah, claiming not only did they ask him to completely give up the Twitter account when he left and not just the name, the account, but that those 17,000 follows are actually belonged to them and they are seeking damages of about $340,000.

Noah Kravitz is now editor-at-large for a company called Techno Buffalo and he joins me now. Noah, good to see you. Thank you for being with us.


Ali, let me ask you before I get started, would you like to buy a Twitter account?

VELSHI: Good question. Well, let's -- do you have one to sell? Here's the question.

KRAVITZ: No. My followers are their own property, and I love all of them.

VELSHI: OK. Well, this is what it comes down to. The followers you say are their own property. Your former employer claims they're theirs. And they're suing you.

They come up with a number. Where does this number come from, $340,000?

KRAVITZ: That's a terrific question. I think if you took their valuation and applied it to the Twitter accounts of somebody like Lady Gaga or Shaq, you would have the gross domestic product of the more than one nation on earth per month.

So you would have to ask PhoneDog and their counsel.

VELSHI: All right. They in their complaint say that when you resigned, they told you to relinquish use, that's their word, of your PhoneDog account. Is there a miscommunication here? is that what they asked you? Did you remember that? And did you do so?

KRAVITZ: No, this is all -- it's unfortunate because I had such a great run working with them. We, you know, we cover the mobile industry, like you said and sort of hit the timing right when mobile was exploding in the U.S.

If you go to their site, it's still up there on their site and their YouTube channel. My last day at work was Friday, October 15th, 2010. I submitted my final post. They chose to run it the following Monday, the 18th, I believe was the date, when I was no longer an official employee.

And both my written post and the video on the YouTube channel both direct people, you know, hey, I don't know what I'm up to next, but if you want to keep tabs on me, go to @noahkravitz.

So, they knew about the account change. You know, like I said, they brought it up and said, yes, it's your account. Would you tweet for us from time to time and perhaps naively I said, of course, because we had such a great working relationship and I was a fan of what they're doing, and --

VELSHI: I'm going to play -- I won't do it right now because I'm going to talk to a lawyer after this and I'm going to play that YouTube thing just to see whether that's relevant to the case.

But you did tweet just a short time ago. You said, "Social media users be careful when using your company's name with your online handles, you never know how/when your employers might react."

When I joined PhoneDog and I'm you this because when I joined CNN, when I started tweeting, it was before we had established policies on this and over time, we've established policies and I am now bound by those policies as we went along.

What was your situation at PhoneDog? Did you have policies about who owns the name and what you can do with it?

KRAVITZ: I don't think any of us knew what a Twitter was when I first joined.

VELSHI: Right.

KRAVITZ: So, there was nothing --

VELSHI: As it evolved, did you -- did you develop policies and did you have conversations with them?

KRAVITZ: We had conversations and, you know, I started this account linked to my personal e-mail address, of course, because I was using the company name, you know? We agreed that was a good idea. I mean, frankly, this was all born out of sort of, you know -- in retrospect, kind of naive, misguided, sort of small business excitement, you know?

You know, we'd stumbled upon something when I joined. There was no blog. There was no YouTube channel, you know, at PhoneDog. And we created this together. And we made a little foothold in our corner of the world. You know, the YouTube channel took off relative to videos about phones and it was a great, great time.

VELSHI: We reached out to PhoneDog and we haven't heard back from them. The company recently gave a statement to "The New York Times." Here's what they say: "The cost and resources invested by PhoneDog media into growing its followers and fans and general brand awareness through social media are substantial and considered property of PhoneDog Media LLC. We intend to aggressively protect our customer list and confidential information, intellectual property, trademarks and brands."

Noah, do you care that much about your 17,000 followers. I mean, I don't mean do you care about them? I'm sure you do.

What's -- is this fight worth it to you?

KRAVITZ: You know, I care about each and every one of them. It's -- you know, the ironic thing is I picked up a couple thousand followers in the past few days. I mean, this whole spat actually started over something else, and, you know, my personal situation, I don't think is what the viewers are interested in and their Twitter -- you know, this whole claim about the Twitter thing was delivered to me, you know, I start with papers on a Sunday night in July entirely out of the blue.

VELSHI: Right.

KRAVITZ: I -- there was nothing in any work contract specifically about Twitter. They never had nor never asked me for the password to the account. The confidential -- the confidential customer list they're talking about, these are publicly available. You go to

VELSHI: Right. All your followers are public.

KRAVITZ: They're all there.

VELSHI: All right.

KRAVITZ: So I'm not really sure what this is found in.

VELSHI: All right. Noah, thanks for doing this. We're going to pick this up a little. We're going to continue this discussion. Thank you for joining us, Noah Kravitz.

I want to bring in our legal contributor Paul Callan, to talk about the broader implications of a case like this.

Paul, let me just play -- I just want to know if this is relevant. He posted this. He recorded this YouTube statement and they posted it on their Web site. So, everybody agrees that this was done. Let's play this.


KRAVITZ: For me, it's time to move on. So, you can follow me online on Twitter. My new Twitter handle is just my name, Noah Kravitz.


VELSHI: OK. So he said if you want to follow -- this is my new Twitter name. It was actually the same account because you can change your handle, and that seems to be where this derives from, because I don't think they care that he tweets under the name @noahkravitz. It's that this is their account.

PAUL CALLAN, CNN LEGAL CONTRIBUTOR: Well, and they want the 17,000 followers. So, I think what people who don't live in the Twitter world --

VELSHI: Right, I just have this discussion for them, by the way.

CALLAN: OK. First of all, it's very hard to accumulate followers on Twitter. You get a Twitter handle, which is your name, and then you try to get people to follow you. Seventeen thousand is a substantial number of people. This company, PhoneDog is looking at the 17,000 like it's a secret customer list, and that they put their resources in to the accumulation of the customer list. Now, traditionally, customer lists are considered to be trade secrets. Now, why are they trade secrets? You don't reveal them to your competitors.

VELSH: Right.

CALLAN: They are secret.

VELSHI: Because they would market to those customers.

CALLAN: Exactly.

VELSHI: It's different because you can see who follows everyone.

CALLAN: Yes, it's totally different. So, where -- so this is a trade secrets lawsuit? Where is the secret? If you go into Twitter, you click on your name.

VELSHI: Right. You'll see every one of my follower.

CALLAN: We know who you're following.

VELSHI: Right.

CALLAN: So, the company is very angry, though. They want the followers back. They want the account back. So, they come up with this very novel theory which is buried deep in their complaint. They needed a secret, you know, like the coca-cola secret.

VELSHI: Right.

CALLAN: Well, here's the secret they found, paragraph 12 of the complaint. They say the password to the account is the secret and that he was the only one who knew the password. And I guess, presumably the company and he used that secret to then change the account into his own name, thereby stealing the 17,000 customers.

Now, will a federal court buy this ultimately when all of the discovery is complete? I have my doubts.

VELSHI: But I guarantee you, they and everyone else in the social media world and everybody with a Twitter account is going to be watching it very carefully.

CALLAN: You bet they will.

VELSHI: Thank you for shedding some light on this.

Anderson Cooper, we are going to do things a little differently tonight. Rather than me ask you what is coming up on the show, I've got a special guest for it.


UNIDENTIFIED GIRL: Anderson, what do you have coming up?



VELSHI: She's a guest coming up later on this show, but we thought we'd mix it up a little for you.

COOPER: Who is that?

VELSHI: She's little Riley. She had that rant about why stores --

COOPER: Oh, my gosh, yes.

VELSHI: -- force girls buy pink and princesses and yet boys can buy any color they want superheroes.

COOPER: Right. Yes, I saw the rant. It's gone viral. It's great. I look forward to that.

Yes, Ali. We're keeping them honest tonight on "360." Newt Gingrich in Iowa on the attack, taking shots at Mitt Romney. But in 2006, Gingrich praised Romney for the same things he's now attacking him for -- health care reform. In a newsletter called "Newt Notes," Gingrich's explanation in his own words, ahead tonight.

Also tonight, selective breeding. This is just an extraordinary story. People operated on against their will right here in the United States, forcibly sterilized. It happened in the United States as recently as the early 1970s.

Victims were promised compensation. Years later, they're still waiting. It's a shocking story and an important story.

And something to make you smile at the end of the night, the "Ridiculist" -- all at the top of the hour, Ali.

VELSHI: Very good. We look forward to it, Anderson. See you later on tonight.

COOPER: Thanks.

VELSHI: OUTFRONT next, an exclusive look at the New York H.Q. of the web's most popular and powerful search engine, Google.


VELSHI: Google. It's a verb, it's a word. Everyone on earth knows.

Erin took an exclusive tour of Google's New York headquarters with the executive chairman Eric Schmidt.


ERIC SCHMIDT, EXECUTIVE CHAIRMAN, GOOGLE: America is the best innovator in the world today, and that's going to continue. America has 18 of the top world's research universities. It's still a place of the best innovation. America is the world's innovation center.

It's still possible for two people, three people, with a graduate student and so forth to create a brand new company that will change everything in the world today. There's every reason to believe that America can grow very, very successfully with the focus on innovation.

ERIN BURNETT, HOST, ERIN BURNETT OUTFRONT (voice-over): There is a reason Eric Schmidt is so confident about the future of America. Even in hard economic times, Google is thriving, revenue surged more than 30 percent last quarter, putting Schmidt in a good enough mood to give us a rare glimpse behind the scenes.

(on camera): So, this is inside Google, second biggest office for Google in the world?

SCHMIDT: That's right.

BURNETT: In Manhattan?

SCHMIDT: Yes, right in downtown Manhattan, about 3,000 people, one large building and an adjacent building. What's interesting is about half and half, high quality engineering and sales and marketing.

Nobody thought you could build the world's best engineering center right in the downtown of Manhattan but you can.

BURNETT (voice-over): Situated in the heart of the meat-packing district of New York, Google's unique office space spans two buildings and entire city block.

SCHMIDT: The old model was you'd have your office and the door would be closed and so forth.

BURNETT (on camera): Yes.

SCHMIDT: But, in fact, this is much better and people are used to it, if they want privacy, they put on their headphones and listen to music while programming.


SCHMIDT: But they literally stare at screens all day.

BURNETT: I can tell these are engineered designed desks.

(voice-over): There are cafeterias and snack stations with free food every 150 feet, an incentive to keep people close to their desk.

SCHMIDT: The only asset that matters is people in a company like this. And so, keeping them here, keeping them motivated. Frankly, they work incredibly hard. We give them connections at home, of course.

BURNETT (on camera): Right.

SCHMIDT: And they work pretty much all the time. And after all, they're trying to change the world, so they really care. I don't need to know they're at work. I know what they're doing.

We can also measure by the way what they're doing, because we can see the productivity and know whether they're making progress or not.

BURNETT: You can literally watch it in real time.

SCHMIDT: And we do.

BURNETT: People get worried. They say China and India are churning out engineers.

Are they churning out better ones?

SCHMIDT: They certainly have some of the best in the world, and we try to hire them. We would much rather have those Chinese engineers working here in America for us producing great products and benefits for America.

BURNETT (voice-over): Google is doing everything it can to hire the best and the brightest, all over the world, with 60 offices in 30 countries.

(on camera): What countries would you say right now are the least open to what you do?

SCHMIDT: The most shocking country of all is North Korea. North Korea is very difficult to operate in, but it's a country where there's so little conversation and so few people peering into it, that people really do believe that their dear leader really is God-like, even as people are starving in the streets.

And sometime in the next few years, North Korea will open up to, it's the last one.

BURNETT: And then a country like China, do you feel that you have the opportunities you need in China? Because it's amazing when you look there, it's not YouTube, it's Youku, right? Or it's not necessarily Google. It's Baidu.

I mean, they've really encouraged and built their own companies, now the biggest market, or the biggest growing market in the world.

SCHMIDT: In the Chinese model, there's an -- there's a Chinese equivalent of every American firm. There's a Facebook equivalent, there's a Twitter equivalent, there's a Google equivalent, which are doing well.

The Chinese laws make it very difficult for American companies to enter China and operate. You have to operate through joint venture and you're subject to these horrendous censorship laws.

After five years of trying to make this work, we decided to move to the other China, you know, they love to say one country, two systems. Well, we prefer the open system of Hong Kong.

There is a firewall literally called the Great Firewall, which blocks content that they don't like between Hong Kong and the mainland, forcing them to do the censorship. We just could not abide by their rules.

BURNETT: So, is this really going to be the century for China, China's century prize?

SCHMIDT: China is the world's manufacturer. They do it very well.

They do not yet have all of the advanced society functions that they need -- an independent judiciary, the kind of political dynamic and creativity, the kind of advanced universities that are needed to do what we've been able to do in the United States. There's an open question as to how long it will take them to get there.

BURNETT: I met a little boy in China this summer, and his name was Bill. They named him after Bill Gates. We had sort of done this question as to whether the next Bill Gates or Steve Jobs would be born in China, or in the United States.

Part of that's luck but part of that really isn't luck. Where do you think the next one of those people will be born?

SCHMIDT: I think that the next one of those people will be born in America, and will be a successful American entrepreneur, because it's not just the person. It's the system that they're part of.

Innovators create millions of jobs in America. We need to create them and we also need to welcome them from other countries when they want to come and relocate to America.

BURNETT: And we're still not doing that to the level we need to be, are we?

SCHMIDT: Of all the crazy rules in our government, the craziest of all, bar none, is that we take the smartest people in the world, we bring them to America, we give them PhDs in technical sciences and we kick them out to go found great companies outside of America. This is madness.

BURNETT (voice-over): More than 31,000 people work for Google, and New York is the company's second largest office, after its sprawling headquarters in Mountain View, California.

Here the motif is classic New York City, hallways with fake subway grades, conference rooms that look like a meat locker and razor scooters to get from one end to the other.

Video conference rooms lie in the big city streets, and huddle rooms designed after city apartments are there to make people feel at home.

(on camera): Woman's apartment. SCHMIDT: Yes.

BURNETT: Bra hanging from the bed and a cat, really? And a cat?

(voice-over): While privacy is always an option, Schmidt says the best ideas come from people working together in extremely close proximity.

(on camera): What's the future for Google? I'm just -- I mean, you've got the Google TV, you've got the phones, you've got the search. But you also have wind farms, cancer diagnostics, clean power, all sorts of things.

Your finger is in a lot of pies, which could be a sign of strength or a sign of a lack of direction? Which is it?

SCHMIDT: It's, of course, both. One of our strengths is our lack of direction. We actually let people invent new things and see how far they go. And if they work wonderfully, then we will continue them, and if they don't work so well, we'll try something new.

Google is the largest systematic innovator at scale I know of. What we try to bring out new things and see if they work. We've done particularly well in information technology and information search. It's essentially a math problem and we do that I think better than anybody else.


VELSHI: Now, in last night's broadcast we played this clip of a 3-year-old girl named Riley carefully laying out her problems with business. At the end of last night's segment, I mentioned that I'd love to talk to Riley. Unlike some of the people actually running for office, she didn't duck my interview request.

Riley joined us OUTFRONT earlier.


VELSHI: I think you're carrying an elephant with you. Who is this?


VELSHI: Can you show us Mr. Elephant? Can you hold him up to the camera?

Mr. Elephant -- all right. Mr. Elephant is your toy, but when we saw you in the video, you were complaining that sometimes they make some kind of toys for girls and sometimes toys for boys and you didn't like that. Tell me what you think about it.

RILEY: The girls can buy superheroes and the boys can buy superheroes.

VELSHI: Do you think it should be fair for everybody? RILEY: Yes.

VELSHI: And do you like superheroes, is that what you -- that was your point?

RILEY: Plus, I have a closet full of superheroes.

VELSHI: You have a closet full of superheroes.

RILEY: And I have all the houses like bat caves and I have a box of action figures.

VELSHI: So do you think it's fair now? Do you think things are getting more fair that boys and girls can buy anything they want?


VELSHI: Now, in the video, you were complaining that they were tricking girls into buying things that are pink. But I see you wearing pink pants. You like pink.

RILEY: Blue, purple and pink.

VELSHI: You like blue, purple and pink? So, you don't mind that girls buy pink stuff. You just think that girls should have a choice.


VELSHI: Tell us a little bit about you. We all watched this video about you, but we don't know anything about you. Where are you from?

RILEY: Newburgh, New York.

VELSHI: That's Upstate New York. And you go to school.

RILEY: Yes, nursery school.

VELSHI: Nursery school. And what do you do at school?

RILEY: They have like little groups like our table, play room, play tables.

VELSHI: What did you get for Christmas?

RILEY: A fruit stand and car thing.

VELSHI: What do you do with a fruit stand?

RILEY: Just sell fruit and vegetables.

VELSHI: You sell fruit and vegetables. So you're like a little businessperson. Have you done that yet?

RILEY: I think so.

VELSHI: So, you go out there. Where do you get the fruit and vegetables from?

RILEY: My fruit stand.

VELSHI: But do you buy them or do you grow them?

RILEY: They're plastic.

VELSHI: Oh, they're plastic. I see. And then you put them out there and you sell them to people?


VELSHI: Pretend. All right. Well, you made a great video. Now you're going to go back to school. When does school start, next week?


VELSHI: All right. So, you're going to have fun. Thank you for coming and talking to us about this.


VELSHI: That's all the time we have for little Riley. Good on her though for showing up and having a full conversation about her thoughts about business.

"A.C. 360" starts right now.