i convinced them. but it took some doing. and i do know that we live in a country that buy in large does not have telephone justice. i can't say everything works perfectly, but in my experience we don't and that's worth something. a lot. >> larry: always a delight. thank you. associate justice stephen breyer, "making our democracy work." time now for "ac 360" and time now for "ac 360" and anderson cooper. -- captions by vitac -- www.vitac.com tonight, the explosion, the fire, the death and destruction. new evidence it might have been prevented. we've learned a california utility knew a gas pipeline was aging, planned to upgrade a portion of it, even charged their customers to do the work but that work never got done. we're keeping them honest. also tonight, christine o'donnell's stunning upset in delaware's senate race, the tea party's growing power, and why today so many republican party leaders who lined up against her before the primary are now saying they're embracing her. at least in public.

congressman ron paul joins us live. and later why pennsylvania's governor is so embarrassed it comes down to this question, how would you feel if you found out government was spying on you, reporting you to local police as a potential threat just because you were taking part in a peaceful protest? it happened in pennsylvania. you won't believe some of the groups that got targeted. environment environmentalists, gays, lesbians, how it happened and who got stuck with the bill. as always keeping them honest with an event that didn't have to happen, the huge egs ploegs in san bruno, california, that incinerated a neighborhood and killed at least four people. we've got new evidence tonight suggesting that this nightmare might have been preventible. the lives lost, the homes destroyed, the explosion and fireball so intense that first responders initially thought a jetliner had crashed. >> we've got multiple houses, we're trying to get close. we have extreme heat. we have possibly several blocks on fire at this time.

>> call for fourth alarm for this. looks, it appears we have a plane down in a neighborhood. multiple structures on fire and we have a fireball still coming out. >> of course they didn't know it wasn't a plane, they didn't know at first. it was a gas line. later we would learn a broken section of the line was more than six decades old. and just today we've learned this, that pg&e, the local utility, knew for three years that the pipeline itself was dangerous. so dangerous they committed to repair a portion of it just a couple miles north of the explosion site, but they did not fix it. and to add insult to jury, pg&e was already getting millions of dollars from utility customers, those millions were meant to be spent doing the work they said they'd do but they didn't. millions from rate payers who some of them, the same people whose homes are now gone. dan same did nimon has more. >> reporter: the line that exploded last week was laid down in 1948. it was so old that for safety

reasons, pacific gas and electric made plans to replace a section of it in south san francisco just a couple miles away. in 2007, it got rate increases to do the work. according to a consumer watch dog group, pg&e got $5 million for the project. but the group called t.u.r.n., the utility reform network, says it never happened. >> the money is spent on what they call higher priority work. >> reporter: what was that? >> well, you can't track the dollars one by one, but we do know that they spent $62 million more on management incentive bonuses than they had forecasted in 2009. >> reporter: mike florio is senior attorney for the watchdog. he says pg&e spent the money dedicated for the pipeline. it is seeking rate increases again, another $5 million to replace the same stretch of

pipeline. how do you know this? >> because it's right in the documentation they file with the puce to support their rate cases. you know, if you dig deep enough into these big, thick documents, this is what you find. >> reporter: the california public utilities commission, or puc, is deciding whether to go along with pg&e's question. those documents provided to cnn say that section of pipe ranks in the top 100 for highest risk of failure. the pg&e documents also say if the replacement of the pipe does not occur, risks associated with this segment will not be reduced. high volume natural gas lines snake through the san bruno neighborhood. pg&e has nlts disclosed exactly where the problematic line is, but as we discovered, much of the line runs right through residential areas. this is another large section of pipeline, this one is about a mile away from where the

explosion happened t is also feet away from many homes. the location of pipelines like this are generally kept secret to literally prevent terrorists from coming in and blowing them up, so it's possible people might be living next to them and not even know it. the only way to tell may be from these yellow sidewalk markers, that, for example, are used to alert construction crews of danger. it won't be until 2013 until the section of pipe identified a few years ago will be replaced. >> if they fixed that section they said they wanted to fix, maybe they would have found something. that led them to look a mile or two south of there. we don't know that. what we do know is the project was slated for 2009, it didn't get done, and now they're proposing to do it again in 2013. >> what is pg&e saying about all this tonight, dan? >> reporter: well, anderson, we asked them repeatedly to provide

us with a statement. we finally got one tonight. i'll read it for you in its entirety. it says, quote, pg&e is committed to perform, the work necessary to assure the safety of its gas transmission system. accordingly, pg&e is constantly prioritizing its projects using the most recent up to date information available, in this particular case, we did identify this line section as being a high priority project in the 2008 gas transmission rate case filing. subsequent to that filing, pg&e performed an externsal corrosion direct assessment in 2009 and based on the updated assessment and the assurance it provided us, we rescheduled the project accordingly. pg&e spent more than authorized for 2008 to 2009. so the bottom line here with the statement is they're not defying the basic facts of the story, they're just saying they looked at their priorities and determined they shifted from 2008 to 2009. >> dan, appreciate the reporting.

let's dig deeper now with mark tone of t.u.r.n. you believe if pg&e had done this work this would have been prevented? >> it's hard to say that exactly. what we do know is that pg&e has a pattern of receiving money for gas pipe repairs that they said needed to be done, and then spending the money somewhere else. >> where did they spend the money, though. if they're raising money saying we need to repair these things, what are they actually spending it on? >> well, sometimes they spend the money on executive compensation, bonuses, sometimes they spend it on their bottom line, sometimes they spend it on different areas. our main point is that if they have identified a gas pipeline that is -- needs to be repaired, that is at risk of having a leak, and they get money for it, then we expect them to fix those gas lines. >> and are they allowed to do that? are they allowed to say we'll

fix this gas line, raise money for it and not do it? >> the california public utilities commission we feel needs to exercise stronger oversight and basically require pg&e and all the utility companies that if they say they're going to fix something, they get the money to fix it, then they darn well better fix it. >> how bad are pipes out there? for a lot of people all around the country, not just in california, i mean, we don't think about the pipes underground. how old are a lot of these pipes? >> well, a lot of these pipelines are 56 years old or more. and that is a huge concern that people have. what happened in san bruno is a worst case scenario. and pg and other companies need to be absolutely vigilant in making sure lines are inspected and where they're found to have trouble to actually fix them and not just say they're going to fix it. >> thank you very much. >> absolutely. >> really disturbing story. let us know what you think. the live chat is up and running. up next, congressman ron

paul after last night's primary upsets, what does it mean. and the republican big wigs trashing o'donnell, today they're singing a different tune. we'll have alex castellanos and tea party organizer dana lash. (announcer) everything you need to stay balanced on long trips. residence inn. 20 minutes later, she'll bring one into the world in seattle. later today, she'll help an accident victim in kansas. how can one nurse be in all these places? through the nurses she taught in this place. johnson & johnson knows, behind every nurse who touches a life... there's a nurse educator... who first touched them. ♪ you're a nurse ♪ you make a difference to everyone who wants to go to college

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lot of raw politics to talk about tonight, the republican party's tea party turnabout, it unfolded before our eyes following christine o'donnell's upset in the delaware primary, the establishment of which many members backed, representative mike castle originally offered tepid support but that changed today, saying o'donnell has the full backing of the committee, also chairman john cornyn said he and the committee strongly stand by her. though they issued a tepid congratulations last night, today senator cornyn said the committee is giving o'donnell the maximum donation of $42,000. we'll find out what some republicans are saying behind closed doors in a moment. right now it seems karl rove is the only one criticizing o'donnell, quote, she's made nutty statements in the past, and last night he made it clear he thinks she's the wrong

choice. >> she's now going to answer in the general election that she didn't have to answer in the primary is her own checkered background. i've got to tell you, i wasn't frankly impressed as her abilities as a candidate. it does conservatives little good to support candidates who at the end of the day, while they may be conservative in their public statements, do not advance the characteristics of rectitude and truthfulness. i'm for the republican but i've got to tell you, we were looking at eight to nine seats in the cincinnat senate, we're now looking at seven to eight. >> palin says to, quote, buck up. democrats hope the infighting helps them. with me now is texas representative ron paul whose son, obviously, rand paul is running for senate in kentucky and is a tea party favorite. congressman, thanks very much for being with us. what do you think of christine o'donnell? do you think she can win? >> oh, sure i think she can win. think she's going to have to work very hard. she has the roughest job of all

the tea party candidates because she's in a more liberal state. it's -- she has a much more difficult job that be my son has in kentucky or angle has in nevada. she can win. but there's a lot of unhappiness in this country, and for that reason, the numbers are just coming together. democrats are disillusioned, they're not going to show up, the republicans are, and the tea party people are added on to the republicans because a lot of them haven't been involved before. they're independents and it adds to, it isn't taking away from the republicans, if have you a republican base, tea party people add on to it. that's why she has a very good chance. >> so democrats saying tonight this is great for the democratic party, you think they're mean measuring the drapes too early? >> if i talk to republicans and they sounded a little too kocco, that's what i would tell them. wait and see. i used to run track and i always assumed somebody was going to

step on me if i didn't keep running. so that's the way it is in politics. keep running and not assume you can glide to victory. >> it's not over until it's over. a number of tea party acti viflts who i've talked to in the last couple days and before this primary were saying, look, even if she can't win, it's still important that she won. and we don't really care if she can't win, it's important to make a point, it's important to vote your principles. do you think that's true or do you think it's more important to get a safe republican seat in the senate? >> i think both is true. i think the fact that she won is very important and we should be glad about that. but also you should go for the winning. but i guess you're suggesting that, if you knew she couldn't win, therefore you should cop out and bend your principles, women, i'm not one that would endorse that easily because my goal in life has been to nudge people over to a more principled position, whether it has to do with foreign policy or civil liberties or economic policies so that's always been my goal. so i think winning along with those goals and those principles

of course is the ideal situation. >> is there room in the republican party today for, you know, a mike castle who some would call a moderate republican or what some in the tea party would say is a liberal republican or a democrat who calls themselves a republican. but is there room for a mike castle in the republican party today? >> sure. probably depends on the state but we live in revolutionary times. what we're witnessing today is change coming from the grassroots. i have noticed over the many years that presidential candidates always campaign on change and they never get it. but change, real change only comes philosophically from the grassroots, when the people endorse certain views or condemn certain views. and that's what's happening this time. this only happens once maybe in two or three lifetime. >> and you really believe this is a revolutionary time? >> oh, yeah. but it's economics. i see everything in terms of economic pomss and that's what drives everybody. that's what makes people so angry and upset. you think if there were no

economic problems this would be going on? this is the end of keynesianism. it's failing. even the liberals know it's failing. it's sort of like revolutionary end of an age with the downfall of the soviet system. it finally just didn't work. you didn't have to fight anymore t didn't come from the leaders, it came from the grassroots and that's what's happening right now. the grassroots knows that government fails. even today statistics say hardly anybody trusts the government anymore. and good reason. >> what about -- >> it doesn't function. it doesn't have the right system anymore. >> there are those who say, well, look, what about actually getting things done in washington? i mean, that compromise is essential in politics, that no matter what you need at some point to compromise with someone on the other side of the aisle or someone even within your own party to affect change. do you think that's true? and do you think these new voices, those who have been elected by the tea party and their supporters, do you think they're going to be willing to compromise on things? >> well, i don't think we have

to -- have to compromise, i think you build coalitions. i work a lot with democrats on foreign policy and civil liberties, so i think coalitions are very good. but compromise, yes, if i want to eliminate the income tax and the other side wants to reduce it 50%, i would say, well, you know, if it's reduced 50%, that's not bad. that's a good compromise. but if somebody else wants to double your taxes, and somebody says, it's not doubled, let's just increase it by 25%, i don't deal with those compromise. always compromise with people in your goals which, to me, is perfect being liberty, increasing individual liberty and the free marketplace. when you compromise moving in that direction and working with coalitions, that's quite a bit difference. but if you work coalitions and you know, i've worked with the various ones like barney frank and dennis kucinich and others in trying to promote an agenda. and this is seen as compromise, it's not exactly compromise. but i think the people in the country see this as good,

because you can work together and find out what you agree on. i think the war issue is a great issue that -- and you know, the federal reserve has been something. i had tremendous support from democrats, i had 320 members of congress sign on to that bill. so that is what i think is important. but i didn't have to compromise my principles. >> as a sitting member of congress, given the anger out there, obviously you have a lot of support among and sort of, you know, a lot of credit among tea party activists. but do you think some republican congress people are concerned about being seen as too moderate, as being seen as being too willing to compromise? >> by the tea party people, you mean? >> yeah. >> yeah, i think that's it, but i just think that we're moving in the right direction. i think the most magnificent thing that this revolution is going on and the people have discovered it, and they're not blaming the average citizen, they're blaming washington. that's why republicans and democrats are losing. but the most important thing for

me is having something to say or having some influence on what the message should be. right now the message is, washington has messed up, and we have to do something. they spend too much money, government is too big, we have to reduce the size and scope of government. but then on the finer points is where the discussion is going on, and i don't like the idea of having one kingpin either dictating what everybody believes in. i think it should be grassroots and that is good. but in my modest way, what i'll try to do is get the tea party people to think about, you can't cut back spending if you don't think about foreign policy and bringing troops home and ending endless war, you know, and we should, as conservatives be concerned about civil liberties. those are the kind of things very important to me, and the grassroots in the tea party movements are very open to that, even though i would admit they don't all agree with that, because a lot of other republicans now have gotten involved, and they -- and they want it to be the old republican agenda. >> right. >> and the tea party people

don't like that, and they can see through this. and one thing is, if some of these people get elected and they don't do as expected, if they keep voting for big government and more taxes, they're going to be held actable this go around. >> congressman ron paul, always good to talk to you. >> thank you. the inside story about the turnaround now embracing christine o'donnell, what our sources are telling us about the gop's change of opinion in the tea party candidate. and peaceful protests with big brother watching, how one state's homeland security department was spying on law abiding citizens. america's healthcare reforms change lives for the better. to find out how it can help you, visit us at americasfairhealthcare.org [ tires screech ] [ engine revving ] [ drums playing ] [ male announcer ] 306 horsepower.

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before the break we told but the republican party's flip-flop over early, some members of it, christine o'donnell's win in delaware. now they're embracing her in public at least. why the change of heart in politico, quote, a vivid illustration that the base is in charge and has the leadership running scared. our sources at the capitol have been digging for facts. senior congressional correspondent dana bash and senior political analyst gloria borger joined me earlier. dana, we've seen a lot of back and forth support for o'donnell,

putting out a tepid congratulations to her, what have you heard from your sources? they appear to be now rallying around her. >> reporter: privately, nothing has changed. republicans who want to win that seat are still very unhappy that christine o'donnell won and that mike castle didn't. in the words of one source i talked to today, yesterday their polls showed that castle winning by 11 points and o'donnell losing by 11 and that has not changed today. however, and this is the big however, despite that, they understand that the most critical thing going forward to november is winning, not just in delaware, but across the country. and sources i talked to today said the last thing they realized this morning when they woke up, the last thing they need is to try to tamp down on some of that energy that they're seeing that they need to get out there against democrats in november. >> so the national republican senatorial committee is giving the maximum $42,000. there's a lot more they could do. what should we be looking for in the weeks ahead?

>> i talked with a senior strategist involved in these senate campaigns and he said to me, look. we could give her more money, a couple weeks down the line, they've got another $180,000 they might be able to give her somewhere along the line. they could even give her more money for so-called independent expenditure used for campaign ads. but here's the big thing, anderson. they don't want to waste their money. they're very pragmatic. if it looks like she's a viable candidate and by that he said to me if she's within single digits of the democrat, then they're going to throw some money at her. but if she's not a viable candidate, why do they want to waste their money or waste their time? they were mad about this race, they've accepted that she's won. it sounds like the stages of grief but they're not willing to throw money at something they think could be a lost cost. >> is that the reason karl rove is the only one continuing to say negative things about

o'donnell publicly because he's not in office? >> what he's saying is that she's not a credible candidate. he's saying that in a general election campaign, she has some ethical issues, questions of how she's spent campaign money, why her college degree, questions about whether she got a college degree or not, or when she got it still linger. he thinks all of these questions are going to be raised in a general election campaign and that it could really be trouble for her. so his feeling is, is this the way a conservative movement wants to introduce itself to the american people? you want credible candidates. you didn't hear him say that about rand paul, you didn't hear him say that about miller in alaska. but you're hearing him say it about her because he doesn't think she's a good candidate to represent conservatives or the republican party. it really has very little to do with establishment, not

establishment, it has to do with who she is. >> gloria borger, dana bash, thank you. tim kaine says he's loving the gop turmoil, he told "the new york times," quote, republicans thought they were embracing the tea party and it turns into the donner party. despite democratic hopes of republican cannibalism, however, the enthusiasm of tea party supporters should worry democrats in november. joining me, eliot spitzer, co-host of "parker spitzer," also republican consultant and political contributor alex cal tell yan nose, appreciate all of you being with us, eliot, robert gibbs, quote, this is the first debate going on inside the republican party for the hearts and mindses of republican voters. is he right? >> of course he's right but he's the victim of that debate because the debate has created enthusiasm, energy, the tea party is take over the republican party in many states. in delaware, not so clear.

but democrats are saying we're no longer setting the agenda and the fear democrats have is this enthusiasm, even for candidates who karl rove admits are not credible from many other perspectives, they continue through november, and this could be a tsunami that nobody could possibly have predicted. >> dana, do you think o'donnell is credible? do you think she can win? >> i do think she can win. i think she can win as soon as people like karl rove stop going on television and trying to snatch victory from the jaws of defeat. we haven't even but gun to tegu. karl rove could take notes from how michael steele approached this. but going on camera saying a candidate isn't credible and just talking about how it took her two decades to pay off her college loans, well forgive her for not being rich like you, karl rove, but you want to talk about winning moderates and independents, that's not the way you go about it. it's really bizarre. >> that's not the only measure of credibility. i don't think karl rove is focusing exclusively on can she

win. i think there's a reputational harm he is worried about when the republican party that has a mike castle who has been a serious thoughtful public servant is defeated by somebody whose views on issues seem to be do completely disparate and far afield from normal idea that's are tethered to fact and reason. i think that is what karl rove is scared about. there's a reputational hit the republican party will really suffer from if they embrace candidates like this. >> alex, are you concerned about this? >> no, i think it demonstrates a lot of energy in the republican party. this is an anti-establishment year, anti-washington year. people look at these qualified people we have in washington and working together in a bipartisan way and in a bipartisan way they've spent the country into bankruptcy, they've put us in debt for -- that will take forever to pay, so they want it to stop. and that's what you're seeing, i think, this year is a populist, a revolt against the establishment of both parties and they've just eaten the republican establishment for a

snack. now dinnertime is november and only democrats are going to be on the menu. >> that's a great metaphor and a plaud you for it. the problem is the closest metaphor i think many people can see historically is to the know nothing party which was a populist uprising of anger and venom against the establishment. it burned out quickly when economic times returned to normal n that case it was anti-immigrant fervor. >> there's another historical precedent, governor spitzer, i think there's a much larger historical precedent and that's a country founded by a group of people that didn't want to be told what to do by an elite royalty that thought it had the answer to everything and right now washington is doing that. it's bankrupted the country and right now people are really concerned about it. i think the republican party just got a wake-up call that said, look, we don't want to send a message out that says we're more concerned about keeping our power in washington than listen to republican. >> dana, do you think it's going to burn out? >> i don't, and mr. spitzer said

this isn't tethered in fact or reality. i have to pound out mike castle is a very established beltway candidate for sure but he's also a candidate whose record differed from where the majority of americans polled, where they fall. the majority of people are more identifying with the grassroots movement than they are with people like mike castle. i mean there was a rasmussen poll taken in august something like 75% of -- or thought of the american people thought that the congressional democrat agenda was too extreme. and then you look at all of the tracking that has been taking place, gallup released a poll also in august showing mat joert of independents are favoring the republican party, meaning they're favoring are the grassroots conservative candidates that are really actually providing a difference in parties. >> you're talking. >> mike castle is democrat light. >> you're talking persuasively about poll numbers. i'm not talking now about poll numbers or what might happen in

a moment in one election at one moment in time. what i'm talking about is the seriousness of confronting deficits with policies that will really do something about it. bill clinton who gave us a surplus versus george bush, i think the difference is facts that at the end of the day will emerge that will shed light -- i think ron paul is a fascinating guy but when he says keynesianism is dead, he just is simply fundamentally wrong. >> castle -- >> took us over the cliff in terms of an economic crisis as close to a depression as we've had in 80 years. >> and t.a.r.p. has been supporting policies which tripled our deficits. >> excuse me, there's something out there happening much bigger than the tea party. the tea party is certainly a part of it, but there's a new generation of republican candidates out there. you have independent business women outsiders in california, meg whitman, carly fiorina, kelly ayotte in new hampshire, bob mcdonnell in virginia, chris

christi in new jersey, all these new candidates have one thing in common. they're outsiders. they're fresh faces and they don't want to grow washington's economy, they want to grow america's economy. they want to stop taking money out of the american people's economy and sending it to washington. >> let me make something clear. >> the tea party is the easiest part to focus on because it's got the brightest feathers and most colorful, but it's much bigger than that. that's why republicans are probably going to gain something like 52, 53 seats. >> i could not agree with you more. >> a americans about keynesianism being dead, they're voting on it this election. >> i could not agree with you more about growing private sebl sector job creation, what i'm saying is policiesing coming out of the tea party are disasoes tive. if you sit down with meg whitman, business leader who's have grown business, run

business, they will tell you what the tea party and ron paul are talking about is contrary to good economics and i would suggest to you the nations right now whose growth is outstripping us, whether it's india, vietnam, france and germany, you look at what they're doing, in fact you'd find out your perspective is being proven dead wrong. >> want to give dana the last thought. >> excuse me, with all due respect, you can't say that economic policy which talks about spending billions of dollars, for yet another stimulus after we spent 11 frill yin dollars that contributed to the high unemployment, you can't say that's good economic policy and those are all things which the grassroots movement is vehemently against. that's not good economics, that's irresponsible and that's fact. >> the reason that was necessary is because of the deregulatory policies libertarian policies that were put in place by tea

party-like false regulators like alan greenspan. >> you mean like chris dodd? >> absolutely. yeah, absolutely. >> fannie mae and freddie mac and things like that. >> i agree with that. that was not genuine government smart policy. i agree with that critique. >> spitzer advice, spend more. >> what you're saying simply doesn't work. >> good to have you on, thanks very much. a quick reminder, don't miss "parker spitzer" 8:00 eastern time october 4th every weekday thereafter until the competition cries uncle, i guess. one thing to keep an eye on potential terrorists but another to conduct surveillance on ordinary americans. plus bp back on the hot seat, tony hayward grilled in london, insisting short cuts were not taken to save money. back in a moment. but then autoblog.com calls your interior

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i don't know if you've seen these pictures, that looks like a gravel road. those are fish. it's a major fish kill in plaquemines parish, thousands

and thousands of them. a question is, is there a link to the bp spill? meanwhile, other important stories, isha sesay joins us with the bulletin. >> hi, anderson. president obama is tending up the pressure on congressional republicans over the economy. today he criticized senate republicans for holding up his $42 billion plan to aid small businesses. but he also praised, two gop senators for breaking with leadership for moving with the bill today. meanwhile, appointing elizabeth warren as special adviser, to help to set up a new consumer protection agency under the wall street reform bill. if he officially nominated warren to run the agency, she'd have to be confirmed by the senate in a potentially bruising battle. tony hayward of bp denied today the company installed only one blowout preventer on the broken well in the gulf to save money. he told a parliamentary committee in london the single blowout preventer which failed should have worked and the oil

industry needs to know why it didn't. and, anderson, this was no cat stuck up a tree. firefighters in oregon were called to rescue a 1500-pound camel that fell into a sinkhole. his name is moses. he was said to be calm while pulleded out of the hole. clearly not very happy. clearly moses is okay. >> i read this, the camel is one of several camls owned by a pastor. i'm surprise, camels spit. they can be miserable animals. i love animals but think spit a lot. >> they're miserable, grumpy and they smell. >> those adjectives also describe me. i'm miserable, grumpy and smell. >> i'll leave that there. >> please do. and you're not going to believe this, happening in pennsylvania, a group targeted,

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what if you learned that the government was spying on you? reporting on you as a potential threat simply because you went out and protested something? well, tonight that's exactly what people in the commonwealth of pennsylvania are learning. a private security contractor hired by the state homeland security department paid for by taxpayers, compiled a list of what they seem to believe were potentially threatening groups and reported them to law enforcement. the groups they targeted? as you'll see they weren't exactly al qaeda or even al capone. ed rendell just found out about it and he's furious. >> good lord. and to think that we spent $125,000 on this is, at a time when every penny is dire for us, is a further embarrassment. >> we're going to talk to the governor in just a moment. he's ending the contract with the security firm and he's

apologizing to pennsylvanians. but first, i want to show you a little bit about the contractor that was hired and what groups they apparently considered a threat. the contractor is this group, the institute of terrorism research and response. their website is terrorresponse.org. the guy with the gun looks all official, someone playing chess down here. take a look, here is their mandate from the federal government, from the department of homeland security's own website. the mandate sounds legit. it's to protect this stuff, the food supply, dams, chemical plants, crucial, critical infrastructure that if destroyed in the words of the department of the homeland security would have a debilitating effect on the security of the country. so far, so good. now, this is what some of what the outfit came up with. this is bulletin 131 which they wrote. one of the groups they're warning about are animal rights activists of philadelphia planning to demonstrate peacefully at what they consider the worst of the worst. what is the worst of the worst?

well, it's the lulu shrine rodeo in pennsylvania. this is where they were going to protest. this is what this contractor was so concerned about. now, other bulletins, done by the contractor warned about events like this one. this is the gay pride festival of central pennsylvania. this say picture from last year's event. not sure what this has to do with critical infrastructure they were so concerned about. there were plenty of groups targeted, protesting against gas drilling in the shale deposits, education protesters, even passcy fists. >> you said this is embarrassing. what particularly upset you about this? >> well, because we paid out $125,000 for a yearly contract to get information about rallies that are basically just protest rallies. and our job, pennsylvania homeland security department, is supposed to carry out the federal mandate to report any

credit -- when there's credible evidence of threats to critical infrastructure, we're supposed to report that to local law enforcement and the holders of the infrastructure themselves. but there's no evidence that there was any threat to infrastructure at all, or any critical infrastructure. no credible evidence. to give you an example, anderson, it was disseminated to local law enforcement that there was a gay and lesbian pride festival. now, good lord. what threat to critical infrastructure? >> some have suggested, some have suggested that they were alerting law enforcement for that because there could be counterprotesters who didn't like gays and lesbians and would cause violence. have you heard that or is that just a spin? >> that's a spin. and remember, the task, the mandate to us at pennsylvania homeland security is not to take care of situations like that, but to take care of credible threats to critical infrastructure. >> do you know how far the

security company chose what groups to try to gather intelligence to report on? because like you say, they focus on groups opposing to drilling, they didn't seem to have any concern about groups who, you know, who are in support of drilling. >> that's correct. and again, there was not one shred of credible evidence that any of these groups posed any threat to the wells, et cetera. >> apparently these reports were forwarded not just to police and law enforcement but private companies like these gas companies about the groups who oppose them. i guess the argument for that is, well, there were some vandalism against some of these companies and therefore this was security. but for the gay group, if it was supposedly to, you know, fear of protecting them, nobody seemed to have forwarded these reports to the gay group out of their own -- >> of course not. and even the supposed vandalism, there was no credible evidence that any of the protesters had anything to do with the vandalism. >> you said you just found out about this there. was a column written

"philadelphia inquirer," those out of the loop plight be alarmed to read the bulletin which warns proeducation rallies, anti-gun demonstrations and the coming of the circus and he eye dent identifies the group as the firm collecting the information. did you -- did you see that article? did anyone in your office tell but that article? >> no, and i don't mean to offend mr. rubin but i try to read the major stories in every newspaper in pennsylvania every day. that didn't get -- >> when did you find out about this? >> i woke up yesterday morning and it was on the front page of "the harrisburg patriot." i immediately called my scheduler and said i want to see these folks at 5:00 in the afternoon, that was the earliest i could see them. i found it to be total bs and i told them we're terminating the contract and not disseminating this information again. >> you're standing by your homeland security director. >> i'm not standing by him, he made a -- >> there's some who say he

should be fired. >> well, sure. our reaction to things like this in government is always, let's fire somebody. to show we've taken action. let's fire somebody. well, mr. powers made a mistake. but he's supposed to be supervised by the pennsylvania emergency management agency. they sure as hell made a mistake. the state police knew this was going on. they sure as heck made a mistake. i'd be firing people left and right. >> what is your message to those protesters? >> i said yesterday, i apologize to each and every one of the groups that were listed on that sheet. it shouldn't have been done and it's not going to be done any more. >> governor rendell, appreciate your time. thank you. >> thanks, anderson. up next, a mysterious death at one of the country's busiest airports and a mystery off the louisiana coast. this is not a road, this is tens of thousands of dead fish. what caused it, coming up.

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let's get a quick look at some of the other headlines we're following. isha sesay has another bulletin. >> a body found today at los angeles international airport, it was discovered inside a men's room in one of the terminals. cnn affiliate ktla reports there was a bag over the victim's head and his hands were bound. the l.a. coroner is investigating it as a possible suicide. in boston, plans to release files of markoff, he committed suicide in jail last month before his case could go to trial. and we have this 360 follow up, craigslist has no plans to resume running adult services

ads it pulled off its site two years ago, that word to a house subcommittee. they stopped running ads due to concerns they were contributing to child sex trafficking in the u.s. and anderson, you mentioned this story, it looks like low levels of oxygen during low tide caused a giant fish kill in plaquemines parish in southern, louisiana according to local reports citing officials. >> man, that's so bizarre. never seen anything like that. >> those pictures give me the heebie-jeebies, if you know what i mean. >> yes. stop using those technical medical term. >> yeah. >> so for tonight's shot, i don't know if you've seen this, brought together for our viewing pleasure at the expense of a guy who lost it on a ride at a theme park. we got this clip from lively.com. watch and enjoy that it's not us.

>> mama! mom! mom! >> so sweet for us. >> anderson, i really hope this guy has a special someone in his life because he's going to struggle to get a date after that. >> he's screaming like a 13-year-old girl at an nsync concert. >> i like guys showing emotion, but this is a little offputting. >> his friend is like, enough. enough. >> he's like, stop already. >> aye, yie, yie. >> i know. humiliation. >> yes. >> shown to the world. we love it. >> who knew the guys from "jersey shore" scream so much? >> i could have told you that. >> isha, good to see you. see you tomorrow night. a lot more ahead at the tom

top of the hour. problems with the pipeline, already charging customers for repairs on a part of the pipeline a couple miles from the explosion. we'll be right back.

thanks for watching. tonight, the explosion, the fire, the death and destruction. new evidence it might have been prevented. we've learned a california utility knew a gas pipeline was aging, planned to upgrade a portion of it, even charged their customers to do the work but that work never got done. we're keeping them honest. also tonight, christine o'donnell's stunning upset in delaware's senate race, the tea party's growing power, and why today so many republican party leaders who lined up against her before the primary are now saying they're embracing her. at least in public. congressman ron paul joins us live. and later why pennsylvania's governor is so embarrassed it comes down to this question, how would you feel if you found out government was spying on you, reporting you to local police as a potential threat just because you were taking part in a peaceful protest? it happened in pennsylvania. you won't believe some of the groups that got targeted. environmentalists, gays, lesbians, even animal lovers. we'll tell you where it happened and how taxpayers got stuck with the bill. as always keeping them honest with an event that didn't have to happen, the huge

explosion in san bruno, california, that incinerated a neighborhood and killed at least four people. we've got new evidence tonight suggesting that this nightmare might have been preventible. the lives lost, the homes destroyed, the explosion and fireball so intense that first responders initially thought a jetliner had crashed. >> we've got multiple houses, we're trying to get close. we have extreme heat. we have possibly several blocks on fire at this time. >> call for fourth alarm for this. looks, it appears we have a plane down in a neighborhood. multiple structures on fire and we have a fireball still coming out. >> of course they didn't know it wasn't a plane, they didn't know at first. it was a gas line. later we would learn a broken section of the line was more than six decades old. and just today we've learned this, that pg&e, the local utility, knew for three years that the pipeline itself was dangerous. so dangerous they committed to repair a portion of it just a couple miles north of the

explosion site, but they did not fix it. and to add instult to injury, pg&e was already getting millions of dollars from utility customers, those millions were meant to be spent doing the work they said they'd do but they didn't. millions from rate payers who some of them, the same people whose homes are now gone. dan simon has more. >> reporter: the line that exploded last week was laid down in 1948. it was so old that for safety reasons, pacific gas and electric made plans to replace a section of it in south san francisco just a couple miles away. in 2007, it got rate increases to do the work. according to a consumer watch dog group, pg&e got $5 million for the project. but the group called t.u.r.n., the utility reform network, says it never happened. >> the money is spent on what they call higher priority work. >> reporter: what was that? >> well, you can't track the

dollars one by one, but we do know that they spent $62 million more on management incentive bonuses than they had forecasted in 2009. >> reporter: mike florio is senior attorney for the watchdog. he says pg&e spent the money dedicated to replace the pipeline. so it is now seeking rate increases again, another $5 million to replace the same stretch of pipeline. how do you know this? >> because it's right in the documentation they file with the puc to support their rate cases. you know, if you dig deep enough into these big, thick documents, this is what you find. >> reporter: the california public utilities commission, or puc, is deciding whether to go along with pg&e's request. those documents provided to cnn

by t.u.r.n. say that section of pipe ranks in the top 100 for the highest risk of failure. the pg&e documents also say if the replacement of the pipe does not occur, risks associated with this segment will not be reduced. high volume natural gas lines snake through the san bruno neighborhood. pg&e hasn't disclosed exactly where the problematic line is, but as we discovered, much of the line runs right through residential areas. this is another large section of pipeline, this one is about a mile away from where the explosion happened. it is also feet away from many homes. the location of pipelines like this are generally kept secret to literally prevent terrorists from coming in and blowing them up, so it's possible people might be living next to them and not even know it. the only way to tell may be from these yellow sidewalk markers, that, for example, are used to alert construction crews of danger. it won't be until 2013 until the section of pipe it identified a few years ago will be replaced.

>> if they fixed that section they said they wanted to fix, maybe they would have found something. that led them to look a mile or two south of there. we don't know that. what we do know is the project was slated for 2009, it didn't get done, and now they're proposing to do it again in 2013. >> what is pg&e saying about all this tonight, dan? >> reporter: well, anderson, we asked them repeatedly to provide us with a statement. we finally got one tonight. i'll read it for you in its entirety. it says, quote, pg&e is committed to performing the work necessary to assure the safety of its gas transmission system. accordingly, pg&e is constantly prioritizing its projects using the most recent up to date information available, in this particular case, pg&e did identify this line section as being a high priority project in its 2008 gaz gas transmission

rate case filing. subsequent to that filing, pg&e performed an external corrosion direct assessment in 2009 and based on the updated assessment and the assurance it provided us, we rescheduled the project accordingly. pg&e spent more than authorized for 2008 to 2009. so the bottom line here with the statement is they're not denying the basic facts of the story they're just saying they looked at their priorities and determined they shifted from 2008 to 2009. >> dan, appreciate the reporting. let's dig deeper now with mark toney of t.u.r.n. you believe if pg&e had done this work this would have been prevented? >> it's hard to say that exactly. what we do know is that pg&e has a pattern of receiving money for gas pipe repairs that they said needed to be done, and then spending the money somewhere else. >> where did they spend the money, though. if they're raising money saying we need to repair these things, what are they actually spending it on?

>> well, sometimes they spend the money on executive compensation, bonuses, sometimes they spend it on their bottom line, sometimes they spend it on different areas. our main point is that if they have identified a gas pipeline that is -- needs to be repaired, that is at risk of having a leak, and they get money for it, then we expect them to fix those gas lines. >> and are they allowed to do that? are they allowed to say we'll fix this gas line, raise money for it and not do it? >> the california public utilities commission we feel needs to exercise stronger oversight and basically require pg&e and all the utility companies that if they say they're going to fix something, they get the money to fix it, then they darn well better fix it. >> how bad are pipes out there? for a lot of people all around the country, not just in california, i mean, we don't think about the pipes underground. how old are a lot of these pipes? >> well, a lot of these

pipelines are 50, 60 years old or more. and that is a huge concern that people have. what happened in san bruno is a worst case scenario. and pg&e and other companies need to be absolutely vigilant in making sure lines are inspected and where they're found to have trouble to actually fix them and not just say they're going to fix it. >> thank you very much. >> absolutely. >> really disturbing story. let us know what you think. the live chat is up and running. up next, congressman ron paul on rising tea party power after last night's primary upsets. what does it mean for midterms and governing once the elections are over? and the republican big wigs trashing o'donnell, today they're singing a different tune. we'll talk with eliot spitzer, alex castellanos and dana lash. this kenmore elite multi-motion washer...

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a lot of raw politics to talk about tonight, the republican party's tea party turnabout, it unfolded before our eyes following christine o'donnell's upset in the delaware primary, the establishment of which many members backed mike castle, originally offered tepid support, but that changed today, saying o'donnell has the full backing of the committee, also chairman john cornyn said he and the committee strongly stand by her. though they issued a tepid congratulations last night, today senator cornyn said the committee is giving o'donnell the maximum donation of $42,000. we'll find out what some republicans are saying behind closed doors in a moment. right now it seems karl rove is the only one still publicly criticizing o'donnell, quote, she's made nutty statements in the past, and last night he made it clear he thinks she's the wrong choice for the party.

listen. >> she's now going to answer in the general election that she didn't have to answer in the primary is her own checkered background. i've got to tell you, i wasn't frankly impressed as her abilities as a candidate. it does conservatives little good to support candidates who at the end of the day, while they may be conservative in their public statements, do not advance the characteristics of rectitude and truthfulness. i'm for the republican but i've got to tell you, we were looking at eight to nine seats in the senate, we're now looking at seven to eight. >> sarah palin responded to rove, telling him and ooze who dismiss o'donnell to, quote, buck up. democrats hope the infighting helps them. plenty of democrats are concerned about the energy unleashed by tea party activists. with me now is texas representative ron paul whose son, obviously, rand paul is running for senate in kentucky and is aarty pavorite. o'donnell? do you think she can win? >> oh, sure i think she can win.

i think she's going to have to work very hard. she has the roughest job of all the tea party candidates because she's in a more liberal state. it's -- she has a much more difficult job that be my son has in kentucky or angle has in nevada. so, no, but she can win. there's a lot of unhappiness in this country. and for that reason, the numbers are just coming together. democrats are disillusioned, they're not going to show up, the republicans are, and the tea party people are added on to the republicans because a lot of them haven't been involved before. they're independents and it adds to it. it isn't taking away from the republicans. if you have a republican base, the teat party people add on to it. that's why she has a very good chance. >> so democrats saying tonight this is great for the democratic party, you think they're mean measuring the drapes too early? >> if i talk to republicans and they sounded a little too cocky, that's what i would tell them. i don't think anybody should get -- they should wait and see. i used to run track and i always assumed somebody was going to step on me if i didn't keep

running. so that's the way it is in politics. keep running and not assume you can glide to victory. >> it's not over until it's over. a number of tea party activists who i've talked to in the last couple days and before this primary were saying, look, even if she can't win, it's still important that she won. and we don't really care if she can't win, it's important to make a point, it's important to vote your principles. do you think that's true or do you think it's more important to get a safe republican seat in the senate? >> i think both is true. i think the fact that she won is very important and we should be glad about that. but also you should go for the winning. but i guess you're suggesting that, if you knew she couldn't win, therefore you should cop out and bend your principles, well, i'm not one that would endorse that very easily, because my goal in life has been to nudge people over to a more principled position, whether it has to do with foreign policy or civil liberties or economic policies, so that's always been my goal. so i think winning along with those goals and those principles

of course is the ideal situation. >> is there room in the republican party today for, you know, a mike castle who some would call a moderate republican or what some in the tea party would say is a liberal republican or a democrat who calls themselves a republican. but is there room for a mike castle in the republican party today? >> sure. probably depends on the state but we live in revolutionary times. what we're witnessing today is change coming from the grassroots. i have noticed over the many years that presidential candidates always campaign on change and they never get it. but change, real change only comes philosophically from the grassroots, when the people endorse certain views or condemn certain views. and that's what's happening this time. this only happens once maybe in two or three lifetime. >> and you really believe this is a revolutionary time? >> oh, yeah. but it's economics. i see everything in terms of economic policies, and that's what drives everybody. that's what makes people so angry and upset. you think if there were no

economic problems this would be going on? this is the end of keynesianism. it's been with us 70 years and it's failing. even the liberals know it's failing. it's sort of like revolutionary end of an age with the downfall of the soviet system. it finally just didn't work. you didn't have to fight anymore it didn't come from the leaders it came from the grassroots and that's what's happening right now. the grassroots knows that government fails. even today statistics say hardly anybody trusts the government anymore. and good reason. >> what about -- >> it doesn't function. it doesn't have the right system anymore. >> there are those who say, well, look, what about actually getting things done in washington? i mean, that compromise is essential in politics, that no matter what you need at some point to compromise with someone on the other side of the aisle or someone even within your own party to effect change. do you think that's true? and do you think these new voices, those who have been elected by the tea party and their supporters, do you think they're going to be willing to compromise on things? >> well, i don't think we have

to -- have to compromise, i think you build coalitions. i work a lot with democrats on foreign policy and civil liberties, so i think coalitions are very good. but compromise, yes, if i want to eliminate the income tax and the other side wants to reduce it 50%, i would say, well, you know, if it's reduced 50%, that's not bad. that's a good compromise. but if somebody else wants to double your taxes, and somebody says, it's not doubled, let's just increase it by 25%, i don't deal with those compromise. always compromise with people in your goals which, to me, is perfecting liberty, increasing individual liberty and the free marketplace. when you compromise moving in that direction and working with coalitions, that's quite a bit difference. but if you work coalitions and you know, i've worked with the various ones like barney frank and dennis kucinich and others in trying to promote an agenda. and this is seen as compromise, it's not exactly compromise. but i think the people in the country see this as good,

because you can work together and find out what you agree on. i think the war issue is a great issue that -- and you know, the federal reserve has been something. i had tremendous support from democrats, i had 320 members of congress sign on to that bill. so that is what i think is important. but i didn't have to compromise my principles. >> as a sitting member of congress, given the anger out there, obviously you have a lot of support among and sort of, you know, a lot of credit among tea party activists. but do you think some republican congress people are concerned about being seen as too moderate, as being seen as being too willing to compromise? >> by the tea party people, you mean? >> yeah. >> yeah, i think that's it, but i just think that we're moving in the right direction. i think the most magnificent thing that this revolution is going on and the people have discovered it, and they're not blaming the average citizen, they're blaming washington. that's why republicans and democrats are losing. but the most important thing for

me is having something to say or having some influence on what the message should be. right now the message is, washington has messed up, and we have to do something. they spend too much money, government is too big, we have to reduce the size and scope of government. but then on the finer points is where the discussion is going on, and i don't like the idea of having one kingpin either dictating what everybody believes in. i think it should be grassroots and that is good. but in my modest way, what i'll try to do is get the tea party people to think about, you can't cut back spending if you don't think about foreign policy and bringing troops home and ending endless war, you know, and we should, as conservatives be concerned about civil liberties. those are the kind of things very important to me, and the grassroots in the tea party movements are very open to that, even though i would admit they don't all agree with that, because a lot of other republicans now have gotten involved, and they -- and they want it to be the old republican agenda. >> right.

>> and the tea party people don't like that, and they can see through this. and one thing is, if some of these people get elected and they don't do as expected, if they keep voting for big government and more taxes, they're going to be held actable this go around. >> congressman ron paul, always good to talk to you. thank you, sir. >> thank you. the inside story about the turnaround now embracing christine o'donnell, what our sources are telling us about the gop's change of opinion in the tea party candidate. and peaceful protests with big brother watching, how one state's homeland security department was spying on law abiding citizens. ♪ [ male announcer ] every business day, bank of america lends billions of dollars, to individuals, institutions, schools, organizations and businesses. ♪ working to set opportunity in motion. bank of america.

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it isn't real performance everyone knows a fee is a tax. you raised some taxes during that period, particularly the property tax as well as a lot of fee increases. as you know, there's a big difference between fees and taxes. but...they're the same. it's a tax. it's a tax. it's a tax. it's a tax. there's a big difference between fees and taxes. fees and taxes are one in the same. if it comes out of my pocket, it's a tax. now he says it isn't true. we didn't raise taxes. what? still doing the same thing, paying out more money. typical politician. definitely.

before the break we told but the republican party's flip-flop over early, some members of it, christine o'donnell's win in delaware. they didn't want her to win, now they're embracing her if public at least. why the change of heart? politico, quote, a vivid illustration that the base is in charge and has the leadership running scared. correspondent dana bash and senior political analyst gloria borger joined me earlier. dana, we've seen a lot of back and forth support for o'donnell, republicans clearly not happy at first, even the senatorial committee last night putting out a very tepid congratulations to her. what have you heard from your sources? they appear to be now rallying around her. >> reporter: privately, nothing has changed. republicans who want to win that seat are still very unhappy that

christine o'donnell won and that mike castle didn't. in the words of one source i talked to today, yesterday their polls showed that castle winning by 11 points and o'donnell losing by 11 and that has not changed today. however, and this is the big however, despite that, they understand that the most critical thing going forward to november is winning, not just in delaware, but across the country. and sources i talked to today said the last thing they realized this morning when they woke up, the last thing they need is to try to tamp down on some of that energy that they're seeing that they need to get out there against democrats in november. >> so the national republican senatorial committee is giving the maximum $42,000. there's a lot more they could do. what should we be looking for in the weeks ahead? >> i talked with a senior strategist involved in these senate campaigns and he said to me, look. we could give her more money, a couple weeks down the line, they've got another $180,000 they might be able to give her somewhere along the line. they could even give her more

money for so-called independent expenditure used for campaign ads. but here's the big thing, anderson. they don't want to waste their money. they're very pragmatic. if it looks like she's a viable candidate and by that he said to me if she's within single digits of the democrat, then they're going to throw some money at her. but if she's not a viable candidate, why do they want to waste their money or waste their time? they were mad about this race, they've accepted that she's won. it sounds like the stages of grief but they're not willing to throw money at something they think could be a lost cost. >> is that why karl rove is the only one continuing to say negative things about o'donnell publicly, because he's not in office? >> what he's saying is that she's not a credible candidate. he's saying that in a general election campaign, she has some ethical issues, questions of how

she's spent campaign money, why her college degree, questions about whether she got a college degree or not, or when she got it still linger. he thinks all of these questions are going to be raised in a general election campaign and that it could really be trouble for her. so his feeling is, is this the way a conservative movement wants to introduce itself to the american people? you want credible candidates. you didn't hear him say that about rand paul, you didn't hear him say that about joe miller in alaska. but you're hearing him say it about her because he doesn't think she's a good candidate to represent conservatives or the republican party. it really has very little to do with establishment, not establishment, it has to do with who she is. >> gloria borger, dana bash, thank you. tim kaine says he's loving the gop turmoil, he told "the new york times," quote, republicans thought they were embracing the tea party and it turns into the donner party. despite democratic hopes of

republican cannibalism, however, the enthusiasm of tea party supporters should worry democrats in november. joining me, eliot spitzer, former new york governor and co-host of "parker/spitzer," also republican consultant and political contributor alex castellanos, and dana lash, appreciate all of you being with us. eliot, robert gibbs said, and i goat, this is the first debate going on inside the republican party for the hearts and minds of the republican voters. is he right? >> of course he's right but he's the victim of that debate because the debate has created enthusiasm, energy, the tea party is take over the republican party in many states. in delaware, not so clear. but democrats are saying we're no longer setting the agenda and the fear democrats have is this enthusiasm, even for candidates who karl rove admits are not credible from many other perspectives, they continue through november, and this could be a tsunami that nobody could possibly have predicted. >> dana, do you think o'donnell

is credible? do you think she can win? >> i do think she can win. i think she can win as soon as people like karl rove stop going on television and trying to snatch victory from the jaws of defeat. we haven't even begun to try yet. i like michael steele's approach. i can't believe i'm saying this, but i think karl rove could take notes from how michael steele approached this. but going on camera saying a candidate isn't credible and just talking about how it took her two decades to pay off her college loans, well forgive her for not being rich like you, karl rove, but you want to talk about winning moderates and independents, that's not the way you go about it. it's really bizarre. >> that's not the only measure of credibility. i don't think karl rove is focusing exclusively on can she win. i think there's a reputational harm he is worried about when the republican party that has a mike castle who has been a serious thoughtful public servant is defeated by somebody whose views on issues seem to be do completely disparate and far

afield from normal ideas that are tethered to fact and reason. i think that is what karl rove is scared about. there's a reputational hit the republican party will really suffer from if they embrace candidates like this. >> alex, are you concerned about this? >> no, i think it demonstrates a lot of energy in the republican party. this is an anti-establishment year, anti-washington year. people look at these qualified people we have in washington and working together in a bipartisan way and in a bipartisan way they've spent the country into bankruptcy, they've put us in debt for -- that will take forever to pay, so they want it to stop. and that's what you're seeing, i think, this year is a populist, a revolt against the establishment of both parties and they've just eaten the republican establishment for a snack. now dinnertime is november and only democrats are going to be on the menu. >> that's a great metaphor and i applaud you for it. the problem is the closest metaphor i think many people can see historically is to the know nothing party of the 1840s and

'50s which was a populist uprising of anger and venom against the establishment. it burned out quickly when economic times returned to normal. in that case, it turned to anti-immigrant fervor -- >> there's another historical precedent, governor spitzer, i think there's a much larger historical precedent and that's a country founded by a group of people that didn't want to be told what to do by an elite royalty that thought it had the answer to everything and right now washington is doing that. it's bankrupted the country and right now people are really concerned about it. i think the republican party just got a wake-up call that said, look, we don't want to send a message out that says we're more concerned about keeping our power in washington than listen to republicans. >> dana, do you think it's going to burn out? >> i don't, and mr. spitzer said this isn't tethered in fact or reality. i have to point out that mike castle is a very established beltway candidate for sure but he's also a candidate whose record differed from where the majority of americans polled,

where they fall. the majority of people are more identifying with the grassroots movement than they are with people like mike castle. i mean there was a rasmussen poll taken in august something like 75% of -- or thought of the american people thought that the congressional democrat agenda was too extreme. and then you look at all of the tracking that has been taking place, gallup released a poll also in august showing majority of independents are favoring the republican party, meaning they're favoring the grassroots conservative candidates that are really actually providing a difference in parties. you're talking -- >> mike castle is democrat light. >> you're talking persuasively about poll numbers. i'm not talking now about poll numbers or what might happen in a moment in one election at one moment in time. what i'm talking about is the seriousness of confronting deficits with policies that will really do something about it. bill clinton who gave us a surplus versus george bush whose

tax cuts created this. i think the difference is facts that at the end of the day will emerge that will shed light -- i think ron paul is a fascinating guy, but when he says keynesianism is dead, he just is simply fundamentally wrong. >> castle -- >> took us over the cliff in terms of an economic crisis as close to a depression as we've had in 80 years. >> and t.a.r.p. has been supporting policies which tripled our deficits. >> excuse me, there's something out there happening much bigger than the tea party. the tea party is certainly a part of it, but there's a new generation of republican candidates out there. you have independent business women outsiders in california, meg whitman, carly fiorina, kelly ayotte in new hampshire, bob mcdonnell in virginia, chris christi in new jersey, all these new candidates have one thing in common. they're outsiders. they're fresh faces and they don't want to grow washington's economy, they want to grow america's economy. they want to stop taking money

out of the american people's economy and sending it to washington. >> let me make something clear. >> the tea party is the easiest part to focus on because it's got the brightest feathers and most colorful, but it's much bigger than that. that's why republicans are probably going to gain something like 52, 53 seats. >> i could not agree with you more. >> ask americans about keynesianism being dead, they're voting on it this election. >> i could not agree with you more about growing private sector job creation versus government, that is what smart politics is all about. what i'm saying is the policies coming out of the tea party are so disassociated from reality. if you sit down with meg whitman, business leaders who have grown business, run business, they will tell you what the tea party and ron paul are talking about is contrary to good economics and i would suggest to you the nations right now whose growth is outstripping us by huge margins, whether it's india, vietnam, japan, even france and germany, you look

altogether what they're doing. in fact, i think you'd find out that your perspective is being proven dead wrong by what economics is -- >> want to give dana the last thought. >> excuse me, with all due respect, you can't say that economic policy which talks about spending billions of dollars, for yet another stimulus after we spent 11 frillyin dollars that contributed to that high unemployment, you can't say that's good economic policy and those are all things which the grassroots movement is vehemently against. that's not good economics, that's irresponsible and that's fact. >> the reason that was necessary is because of the deregulatory policies libertarian policies that were put in place by tea party-like false regulators like alan greenspan. >> you mean like chris dodd? >> absolutely. yeah, absolutely. >> fannie mae and freddie mac and things like that. >> i agree with that. that was not genuine government smart policy. i agree with that critique.

>> spitzer advice, spend more. i love it. >> no, no, it's not spending, it's -- what you're saying simply doesn't work. >> i hope that narrative keeps on going. >> good to have you on, thanks very much. a quick reminder, don't miss "parker/spitzer" 8:00 eastern time october 4th every weekday thereafter until the competition cries uncle, i guess. still ahead, revelation that has pennsylvania's governor fuming, one thing to keep an eye on potential terrorists, but another to conduct surveillance on ordinary americans. plus bp back on the hot seat, tony hayward grilled in london, insisting shortcuts were not taken to save money. back in a moment. hold all your phone calls. for the next hour, there will be no agenda. marie callender's invites you back to lunch, with a new line of fresh recipes. like chicken teriyaki with crisp water chestnuts. it steams to perfection in minutes, giving the fresh flavors and textures of a homemade meal.

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i don't know if you've seen these pictures, that looks like a gravel road. those are all fish. dead fish. it's a major fish kill in plaquemines parish, thousands and thousands of them. a question is, is there a link to the bp spill? meanwhile, other important stories, isha sesay joins us for the 360 bulletin. >> hi, anderson. president obama is turning up the pressure on congressional republicans over the economy. today he criticized senate republicans for holding up his $42 billion plan to aid small businesses. but he also praised, two gop senators for breaking with their leadership to move the bill forward today. meanwhile, appointing elizabeth warren as special adviser, to help to set up a new consumer protection agency under the wall street reform bill.

if he officially nominated warren to run the agency, she'd have to be confirmed by the senate in a potentially bruising battle. tony hayward of bp denied today the company installed only one blowout preventer on the broken well in the gulf to save money. he told a parliamentary committee in london the single blowout preventer which failed should have worked and the oil industry needs to know why it didn't. and, anderson, this was no cat stuck up a tree. firefighters in oregon were called to rescue a 1500-pound camel that fell into a sinkhole. his name is moses. he was said to be calm while he was pulled out of the hole. clearly not very happy. thankfully, moses is okay. >> i read this, the camel is one of several camels owned by a pastor or pastors, which i guess thence the hail, moses. but i'm surprised, camels spit.

>> they can be miserable. >> they can be miserable animals. i love animals but think spit a lot. >> they're miserable, grumpy and they smell. you're not going to find an advocate for the camels. >> those adjectives also describe me. i'm miserable, grumpy and smell. >> i'll leave that there. >> please do. the government spying on ordinary americans in the name of homeland security happening in pennsylvania, and the groups targeted certainly don't sound like a threat to national security. wait until you hear who is getting investigated. and a picture of environmental disaster that's got to be seen to be believed. i'm stunned by these images. massive fish kill in louisiana. host: coulswinto geico really save you 15% or more on car insuranc

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what if you learned that the government was spying on you? reporting on you as a potential threat simply because you went out and protested something? well, tonight that's exactly what people in the commonwealth of pennsylvania are learning. a private security contractor hired by the state homeland security department paid for by taxpayers, compiled a list of what they seem to believe were potentially threatening groups and reported them to law enforcement.

the groups they targeted? as you'll see they weren't exactly al qaeda or even al capone. ed rendell says he just found out about it and he's furious. >> good lord. and to think that we spent $125,000 on this is, at a time when every penny is dire for us, is a further embarrassment. >> we're going to talk to the governor in just a moment. he's ending the contract with the security firm and he's apologizing to pennsylvanians. but first, i want to show you a little bit about the contractor that was hired and what groups they apparently considered a threat. i think it's going to surprise you. the contractor is this group, the institute of terrorism research and response. it's an american-israeli nonprofit. their website is terrorresponse.org. the guy with the gun, it looks all official, someone playing chess down here. take a look, here is their mandate from the federal government, from the department of homeland security's own website. the mandate sounds legit. it's to protect this stuff, the food supply, dams, chemical plants, crucial, critical

infrastructure that if destroyed in the words of the department of the homeland security would have a debilitating effect on the security of the country. so far, so good. now, this is what some of what the outfit came up with. this is bulletin 131 which they wrote. one of the groups they're warning about are animal rights activists of philadelphia planning to demonstrate peacefully at what they call the worst of the worst. what is the worst of the worst? well, it's the lulu shrine rodeo in plymouth meeting, pennsylvania. this is where they were going to protest. this is what this contractor was so concerned about. now, other bulletins, done by the contractor warned about events like this one. this is the gay pride festival of central pennsylvania. this is a picture from last year's event. not sure what this has to do with critical infrastructure they were so concerned about. there were plenty of groups targeted, protesting against gas drilling in the shale deposits, education protesters, even pacifists.

governor rendell spoke with us about this earlier tonight. >> governor, you've said this is embarrassing. what particularly upset you about this? >> well, because we paid out $125,000 for a yearly contract to get information about rallies that are basically just protest rallies. and our job, pennsylvania homeland security department, is supposed to carry out the federal mandate to report any credit -- when there's credible evidence of threats to critical infrastructure, we're supposed to report that to local law enforcement and the holders of the infrastructure themselves. but there's no evidence that there was any threat to infrastructure at all, or any critical infrastructure. no credible evidence. to give you an example, anderson, it was disseminated to local law enforcement that there was a gay and lesbian pride festival. now, good lord. what threat to critical infrastructure? >> some have suggested, some have suggested that they were

alerting law enforcement for that because there could be counterprotesters who didn't like gays and lesbians and would cause violence. have you heard that or is that just a spin? >> that's a spin. and remember, the task, the mandate to us at pennsylvania homeland security is not to take care of situations like that, but to take care of credible threats to critical infrastructure. >> do you know how the security company chose what groups to try to gather intelligence to report on? because like you say, they focus on groups opposing to drilling, they didn't seem to have any concern about groups who, you know, who are in support of drilling. >> that's correct. and again, there was not one shred of credible evidence that any of these groups posed any threat to the wells, et cetera. >> apparently these reports re forwarded not just to police and law enforcement but private companies like these gas companies about the groups who oppose them. i guess the argument for that is, well, there were some vandalism against some of these

companies and therefore this was security. but for the gay group, if it was supposedly to, you know, fear of protecting them, nobody seemed to have forwarded these reports to the gay group out of their own -- >> of course not. and even the supposed vandalism, there was no credible evidence that any of the protesters had anything to do with the vandalism. >> you said you just found out about this. was a column written in the "philadelphia inquirer," those out of the loop might be alarmed to read the bulletin which warns trouble spots of pro-education rallies, anti-gun demonstrations and the coming of the circus and he goes on to identify the group as the firnl collecting the information. did you -- did you see that article? did anyone in your office tell but that article? >> no, and i don't mean to offend mr. rubin but i try to read the major stories in every newspaper in pennsylvania every day. that didn't get -- >> when did you find out about this? >> i woke up yesterday morning and it was on the front page of

"the harrisburg patriot." i immediately called my scheduler and said i want to see these folks at 5:00 in the afternoon, that was the earliest i could see them. i listened for a second. i found it to be total bs and i told them we're terminating the contract and not disseminating any of this information again. >> you're standing by your homeland security director. a guy named james powers. >> i'm not standing by him, he made a -- >> there's some who say he should be fired. >> well, sure. our reaction to things like this in government is always, let's fire somebody. to show we've taken action. let's fire somebody. well, mr. powers made a mistake. but he's supposed to be supervised by the pennsylvania emergency management agency. they sure as hell made a mistake. the state police knew this was going on. they sure as heck made a mistake. i'd be firing people left and right. >> what is your message to those protesters? >> i said yesterday, i apologize to each and every one of the groups that were listed on that sheet. it shouldn't have been done and it's not going to be done any

more. >> governor rendell, appreciate your time. thank you. >> thanks, anderson. still ahead, building a better car wash that's both clean and green and profitable. tonight's one simple thing just ahead. wrong move! you. you can save up to half off that sale when you name your own price on priceline. but this one's a deal...trust me. it's only pretending to be a deal. here, bid $79. got it. wow! you win this time good twin! there's no disguising the real deal.

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