jenna: a fox news alert out in california again where three hikers, well, went on a hike yesterday morning and then were not heard from. the search and rescue team out in california just reached them, and we actually were able to watch part of the rescue. this is video of it as these hikers get rescued off this mountain. gregg: yeah. apparently, they found one or two of the vehicles, and that's how they located the men. no word on their condition, but they are being rescued. jenna: we're woking on this story. thanks for joining us, everybody. gregg: "america live" begins now. megyn: fox news alert, new threats of record-level flooding as rising rivers in the northeast begin to burst out of their banks. welcome to "america live," everyone, i'm megyn kelly. today's struggle being felt by millions caught in the aftermath of hurricane irene. at least 40 people have died now in 11 states. 2.5 million people are still without power, and we're getting word that emergency helicopters

are airlifting food, water and supplies to towns in vermont that are cut off by flooding at this hour. small communities in new york's cat skill mountains are now seeing some of the worst of irene's aftermath. take a look at this video from the town of fleischmann, new york. look at this. folks left with very little. entire communities have literally been washed out. main bridges and roads have been wiped out as well, and further south in little falls, new jersey, not much better. look at this. hold on. thousands of homes and businesses -- look at this -- underwater and completely destroyed. rescue crews are still looking for people who are trapped in their homes. survivors now trying to figure out their next steps. >> this is crazy. >> yeah. >> i ain't never seen it in all my years live anything trenton, i ain't never seen anything like this. >> this is, it's as bad as i've ever seen it, i've been around here for 25 years.

>> we didn't have time to get anything. this is my only outfit i got. >> it was that quick? >> it was that quick. >> people can't get to work, can't get back from where they're at. >> it's too much for me. i can't believe it. my house for 22 years is gone. megyn: can you imagine? rick leventhal is live in little falls, new jersey. rick, your heart goes out to those folks. it's easy, you know, to just talk about it in the abstract, but when you actually see the people who are suffering, it's far from easy. >> reporter: yeah. and conditions have deteriorated rapidly over the last 24 hours, megyn. we're on a bridge over the river between little falls and wayne giving new meaning to waterfront property. i mean, there are so many homes here that have been inundated by this flooding. now, this is an area -- come back this way, hollywood. you can see the van that's now

underwater, there's a home right there. and right here on the corner there's a car wash that's now underwater. this is an area that is prone to flooding, but not like this. it's flooded several times over the last few years, but again, they haven't seen this kind of water here, most residents say ever. there are a number of businesses that are underwater, office building, homes as well and, obviously, roads too. they had to shut down the roads here. the power's off. there are many, many people here who have been deeply affected by this storm. i want you to listen to the mayor of this town who says that there are at least 500 homes underwater and about 2,000 people put out of their homes. >> t just really, really devastating. >> reporter: what can you do? >> we really can't do anything. we have to wait until this water recedes. we believe it crested somewhere around 6:00 this morning at 14 feet, 2 inches. our normal flood stage is seven,

major flood at nine. this is unprecedented. and the damage that it's causing is unfathomable. >> reporter: he says there are some people here, megyn, who may not go home again because this will just put them over the edge. look at the intersection here of route 23 and hobson avenue, and look over there to the train tracks, almost underwater. and, obviously, there's been a lot of train service affected by this. clearly, homes beyond it that are underwater as well. megyn: unbelievable pictures, rick. i mean, you can see the truck behind you -- >> reporter: yeah. megyn: -- up to the windows covered which you were looking at earlier. you're telling me 500 homes are underwater there, 2,000 people essentially homeless right now? >> reporter: right. yeah, and you hear the stories from these people, again, who are used to flooding whenever there's heavy rains. they're used to the road flooding, but that's it. maybe this road, this intersection would be under some water. there are businesses with appliances that are completely

ruined, an appliance store on the other side of this bridge, a number of businesses that -- i mean, this car wash is completely underwater, the restaurant on the corner there and, yeah, 500 homes, 2,000 residents. and, again, while they may be used to flooding, they've never seen anything like this. megyn: right. well, how could they have been? rick, thank you. well, the images we are seeing not just in new jersey where rick was and the images we saw in vermont as well may not compare to what we're see anything the catskill mountains in upstate new york. this is video of fleischmann, new york. the town cut off by flood waters. many people standed because the roads are completely gone. some of the hardest-hit towns, fleischmanns, prattville, windham, lexington and jewett. joining us now is the administrator of green county, new york. sean, my heart goes out to you as i look at the pictures of

green county. describe the devastation that you are seeing fisthand. >> good afternoon, megyn. it's, actually, i'm not sure words can be used to describe it. the village of prattsville pretty much doesn't exist anymore. and i was will listening to the earlier commentary about we're used to flooding, and as a ski community we're used to snow runoff in the spring and that kind of stuff, but the devastation this has caused not only in its severity, but it happened so quickly. the rain came and, you know, in buckets within a 5-10 hour window of time, and there was just no, there was no ability to collect it in the normal stream system. it just came down main street. megyn: and now you've had massive flooding, some of which we're seeing here. and i understand it's to the point now where food and water has become a critical issue. >> yeah. we're using the national guard to hump up both bottled water and potable water for people who are continuing to shelter in place. we're bringing gasoline up for

use for home generators, even something as basic as diesel fuel for all of the emergency vehicles and heavy equipment vehicles that are moving away debris is running on short supply for us. so the storm may be over, the sun may be out, but we'll be dealing with this for weeks. megyn: how do you start? they're talking about the water levels were measured at 20 feet which is eight feet above food stage. how do you start to get the water out and clean up and rebuild? >> well, you start with life safety. you make sure your people are safe, and then you work down from that almost from a triage standpoint. we've been delivering prescription medicines to senior citizens, i've delivered oxygen to folks, um, and then once you get past crisis one, you move to crisis two which is basic food and essentials to live. then we're going to be doing a clothing drive, and you take it in stages, and you just pick yourself up, and you keep going.

megyn: before i let you go, is there something our viewers can do to help you there? >> thank you very much. megyn: we'll follow up with shaun to find that out. sometimes they have a web site, so we'll have our producers do that with him, and we'll mention it to you at the end of the show. unbelievable. well, folks, we are eyeing the weather radar as a new storm begins to take shape. tropical storm katya right now strengthening in the eastern atlantic and expecting to become a hurricane. we will check in with meteorologist janice dean on this one. plus a follow up on one of the most memorable pictures from yesterday, you saw it here first on "america live." why did these national guard troops drive these trucks until they were literally underwater? well, the answer may surprise you. stay tuned. now, to libya where the u.s. is asking rebel leaders to review their refusal to extradite convicted terrorist

abdel ma sed al-megrahi. he's the only person ever convicted in connection with the 1988 bombing of pan-am flight 103 which killed 270 people, mostly americans. scotland released el me gras hi from prison on compassionate grounds when he was supposedly on his death bed. that was two years ago. now the u.s. is asking politely for the rebels to review the case, and in the meantime, the west is holding millions of dollars in frozen assets. dominic, it would seem that, you know, financially the u.s. has some leverage to bargain with here, and yet so far the rebels don't seem inclined to hand this guy over. >> reporter: it's going to be interesting just how much the united states can convince the u.n. to use this as a bargaining chip. you're right there. but they seem to be pretty firm in the fact that it isn't going

to hand ma gras hi to anybody in the west. i caught up with the justice minister from the -- sorry the interior minister earlier on today, and he was saying to me, look, he's been tried once already by a scottish court where the crime took place, that's the only place that he can actually be tried. we don't believe he should be tried again, there's no such thing as double jeopardy here in libya, so he should be allowed to die in peace. but if he actually dose to the with the secrets of what truly happened behind flight 103, we will never know precisely what exactly happened, megyn. there are still nagging questions. was he really the mastermind behind it? did gadhafi give him the potential order to conduct -- personal order to conduct the bombing of the pan-am flight? and many other questions remain. that's why you seeing the two senators from new york saying he must be held all fully accountable. they want to see as much details come forth before he dies so we

really do though the truth. but by the looks of it, the new government isn't going to allow that truth to come out. megyn: dominic, thank you. new fallout over dick cheney's just- released memoir as he takes on colleagues from his years in the white house. he sat down with our own sean hannity to talk about the book. >> is it fair to say that president obama has a pre-9/11 mentality? is that a fair statement? megyn: in three minutes, michael reagan talks about mr. cheney's book and why this story could be bad news for republicans. plus, new details in the case of a missing american woman in aruba. the sole suspect reportedly telling police, quote, she might be dead, as he looked at his watch. what does that mean for the search for this woman and his fate? and an incredible rescue caught on tape. a pilot whose plane crashed into a backyard just hours after takeoff. how did he manage to survive? with diabetes, it's tough to keep life balanced.

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megyn: incredible new video of a rescue in california. a pilot pulled alive from a small plane after crashing it in the yard of a house. the says that went down shortly after takeoff. a group of painters working in the yard rushed to the pilot's aid as jet fuel spilled on him, one of them recording the rescue on his cell phone. the pilot's feet were stuck, he suffered a broken leg in the crash -- amazingly, that that ws it -- and no one on the ground was severely injured. is it fair to say that president obama has a pre-9/11 mentality? is that a fair statement? >> that's what i thought at the time. i don't know whether or not it's been changed. um, i would think that having gone through what he did with bin laden and the capturing and killing of bin laden and what

seal team six was able to do and the price that our, you know, our special ops forces paid a few weeks later when we lost that helicopter with 38 of our men onboard, that's got to have an impact on the commander this chief, on the guy who's responsible for making those decisions and setting up an environment in which they can operate. megyn: well, that was fox news' own sean hannity sitting down with former vice president dick cheney to discuss his new memoir. the book touched off controversy earlier this week with the passage where the vice president create sided -- criticized the former secretary of state colin powell for not aligning with president bush. my next guest says this is not a good time for this kind of back and forthment michael reagan joins me now, chairman of the reagan group and a political consultant. michael, thanks for being back

here. it's been very fascinating because, apparently, mr. cheney said heads are going to explode in washington when people get a look at this book, and in particular he has harsh words for colin powell as well as condoleezza rice of whom he is critical in dealing with north korea. you say he's violating one of your dad's cardinal rules. >> yeah, don't speak ill of another republican. you know, it's interesting to watch this because, you know, i've been reading the excerpts and what have you. it's like somebody's writing about how the sausage is being made. the state department and the white house, the state department and defense department have always been at odds. listen, they were at odds with my father when he gave the speech at the branden burg gate, they were at odds with my father when he was in reykjavik, you know, this is just the way things happen in washington, d.c. and to take it as anything else is, i think, a little bit absurd. to go after now obama and say, listen, i wish he would carry on through the policies of george bush to keep america safe, not a

problem. but you've got two great americans, colin powell and dick cheney, two great americans. the last thing we need are those two great americans who have served their country so wonderfully to be at odds with each other on television shows. megyn: it's interesting you should mention that. i mean, to put it in be perspective historically, you're saying it's not unusual for the secretary of state and the chief executive or his vice president to have this sort of consternation when it comes to certain issues because one mission is all about diplomacy, and one may not have that as his primary mission. and you mentioned your dad's use of the term tear down this wall, right? which he was told by the state department to take out. let's just watch the clip, and then you tell us the story. >> general secretary gorbachev, if you seek peace, if you seek prosperity for the soviet union and eastern europe, if you seek liberalization, come here to this gate.

mr. gorbachev, open this gate. [cheers and applause] mr. gorbachev, tear down this wall. [cheers and applause] megyn: i mean, it really evokes such emotion just watching it now, but you say your own dad was at war with the state department when it came to those comments. >> june 2, 1987. memo: national security council to colin powell at the time saying, listen, we've read the speech. at best, it is mediocre. please see attached for changes. and the whole next page, that paragraph you just played on the air was crossed out and initialed by everybody at the nsc. there would be eight more memos between june 2nd and june 12th when my father gave that speech. ronald reagan stood up and did the right thing for the people of the world. he went against those in his own administration and said, listen, don't rock the boat here, don't

make gorbachev upset. there was another time when he went into grenada, he brought seven of his people in -- i'm sorry, nine of his people into the oval office, and they had a vote. ten of them voted should they go to grenada or not. seven of the ten voted not to. my father was part of the three, not part of the seven. as you know, they went into grenada. one of the seven called my father and said, minute, i thought we voted on this, it was 7-3, why did we go into grenada? my father said because my one vote was bigger than your seven. megyn: why didn't vice president cheney, you know, he obviously wasn't happy about the way colin powell behaved. he had some criticism for condoleezza rice, recalled her discussion of what was happening in north korea as, quote, utterly misleading. do you think it's just the vice president, you know, telling it like it is, this is what happened, or do you think there's an element of complaining that he shouldn't be

doing? >> i think there's an element of complaining he shouldn't be doing. he knows as well as anybody this is the way things happen in washington. he knows about leaks. there's leakers in every administration. i think david was the designated leaker in the ronald reagan administration. you have designated leakers in every administration, that's what happens. he's mad because there's a leak, and he finds out the leak was put forth by the president of the united states. he's the one that said, please, leak this. this is what goes on. and to make some big deal out of it, i think, was absolutely wrong to try and disparage colin powell, condi rice who, by the way, were appointed by the president of the united states, i think is wrong. the president of the united states looks at the vice president and says, what day are we going to have lunch? please go over to the senate, and when you can, go to a funeral. megyn: well, i don't know that that was vice president cheney's role -- >> oh, no. that wasn't his role at all. but that's the normal role. megyn: michael reagan, always interesting talking to you. thank you, sir.

>> thank you. megyn: catch sean hannity's interview with the former vice president tonight, 9 p.m. eastern right here on the fox news channel in a cable news exclusive. well, an illinois mother dragged into court by her two grown children for being, quote, a bad mom. we'll report in three minutes, and you'll decide whether they have a case. plus, there is alarming polling data for president obama in some key battleground states. with slipping support in ohio, virginia and oh states he won in '08, can the president find a path to victory? we investigate. [inaudible conversations] hey, the new guy is loaded with protein!

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megyn: the traps are set, and the hunt is on in montana. a hiker in this yellowstone national park killed by a

grizzly bear. this is the second fatal bear attack there this summer. the man died friday after a run-in along a back country hiking trail. he was apparently alone, and rangers do not know of any witnesses to the incident. now they're hoping evidence from the scene will lead them to the bear. >> we do know it was a grizzly. the hair samples and the scat and the injuries were consistent with that of a grizzly bear. we have traps set in the area. if we capture a bear and we can positively identify that bear as the bear who attacked the individual, then that bear will be with euthanized. megyn: how can they do that? a fatal mauling last month was the first such attack in yellowstone in 25 years. well, imagine dragging your mother into court to tell the world she's a bad mother. that's what happened to kim garrity. her two grown children sued her for being a bad mother in their view, and wait until you hear what they were complaining about.

trace gallagher has more from our west coast newsroom. trace? >> reporter: hey, megyn. this was a two-year legal battle where the kids were seeking $50,000 in damages because of emotional distress, because their mom was a bad mom. as you said, she's 55-year-old kim garrity. the kids are now 23-year-old stephen minor and his 20-year-old sister kathy minor, right? they brought this thing, and it was thrown out of two courts, okay? they were raised in a $1.5 million house, and put these on the screen, if you will. this was what their lawsuit was based on. she was a bad mom because, one, she called her daughter home from a homecoming dance early. the nerve. two, she threatened to call the cops on her 7-year-old son when he was 7, right? was he wouldn't -- because he wouldn't buckle his seat belt. and three, stephen says that his mom once smacked him in the head when he was a kid and that he still has headaches. but i submit to you the big piece of evidence, your honor, this: it is the birthday card.

not this birthday card, but a birthday card that steven said was inappropriate because it was empty. didn't have any cash. megyn: oh, the horror! >> reporter: didn't have any money in it. all it said was have a great day, love and hugs, mom, kisses and hugs. so the court finally ruled again, and i'm quoting here, such alleged actions are unpleasant and perhaps insensitive, and some would arguably fall outside the realm of good mothering, but they are not so shocking as to form a basis for a claim for intentional infliction of emotional distress. and finally, i submit to you, your honor, the lawyer in this case was the father. megyn: yeah. >> reporter: of the kids. the ex-husband. he says he wasn't seeking vengeance in this case, he just wanted to support his kids. megyn: shocker. you know, my mom loves it when i tell stories about her on the air -- not. one time we had an argument, trace, and she said, megyn, you are my daughter, and i will

always love you, but i do not like you very much right now. maybe i could sue for intentional infliction, what do you think? i feel like my case is stronger than those kids'. >> reporter: it is stronger. look, it's a birthday card and a homecoming dance. you've got legitimate complaints. megyn: those scars don't heel, gallagher. >> reporter: let's try it in kelly's court. megyn: my mom did spank the three of us, although now she denies it, but trust me, there was spanking. [laughter] i've told that story many times on the air. and another time we were having some anti-obesity person on, and i come from a long line of heavy people. and my mom says, so now not only am i an abuser, but i'm a fat abuser? this. [laughter] when you have, you abuse your lovely daughter who then grows up to have a very big microphone. [laughter] >> reporter: that's exactly right. don't mess with those who buy ink by the barrels and big words -- megyn: just kidding.

i love my mom. she's awesome. thanks, trace. [laughter] >> reporter: you bet. megyn: it's actually a pretty good line. i love you, but i don't like you very much right now. we are tracking a new tropical storm moving quickly true the atlantic -- through the atlantic ocean, and it is expected to become a hurricane before long. meteorologist janice dean joins us next with the latest forecast on what is now tropical storm katya. and there is a growing challenge for president obama in some key battleground states n. three minutes, some of the most critical polls in the race for the white house. disturbing new details emerging in the disappearance of a woman in aruba. chilling words from robin gardener's travel companion to police, and now gary giordano's father is also speaking out. wait until you hear what he's also telling police officers in aruba. [ oswald ] there's a lot of discussion going on about the development of natural gas, whether it can be done safely and responsibly. at exxonmobil we know the answer is yes.

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are new to medicare, or simply want to know the difference between parts a, b, c, and d, call this number now, or visit us online at medicaremadeclear.com. you can also get this free answer guide. it's full of useful information to help you understand your medicare options. and it's only from unitedhealthcare medicare solutions. call right now or visit us online. megyn: this is a fox extreme weather alert. irene may be gone, but hurricane season is far from over. tropical storm katya is strengthening over the atlantic ocean and expected to reach hurricane strength in the coming days. meteorologist janice dean live in the fox weather center on this one. >> reporter: too early to really tell what this storm is going to do, but i'll show you what we can see a few days out. we do think this is going to become a hurricane within the next 24-48 hours and then coming very close or north of the lesser antilles. so, again, this is two weeks out

if and when it comes close to the u.s. this is one of our long-range models, the gfs. and, again, the closest brush with the u.s. would be really ten days from now, and as you can see, that's one of the computer models, the reliable computer models that makes it east of bermuda. lots of time to watch to see what she does. the more iminnocent, perhaps, threat is we are dealing with the caribbean. and a couple of our reliable computer models definitely develops this and makes it a depression this weekend. and look at the gulf of mexico, temperatures certainly ripe enough to see a tropical storm, perhaps even a hurricane so, obviously, we need to monitor this. we are into peak season or heading into peak season where things can come out of nowhere so to speak. we'll keep you posted. megyn: all right, j. da., thank you. >> reporter: okay. megyn: well, new challenges emerging for president obama on the road to re-election. the latest approval numbers show

the president losing ground with voters in several key battleground states. specifically, ohio, florida and virginia. political analysts are now starting to crunch the numbers on what happens if mr. obama cannot carry these states among ores on election day -- others on election day. joining me now, simon rosenberg, a former clinton campaign advisers and radio talk show host ben ferguson. thanks for being here. so this is sort of brass tax analysis, right? >> you can cothe national approval ratings, but what's more interesting and what's more real is when you do state to state because at the end of the day he's got to work the electoral map to get to 270 votes. and now the results come out, for now, that he's lost ground in several key states including just take a look at the numbers. ohio, his approval drop in the past two years has gone down 17%. in the florida, another key state, it has gone down 14%. and in virginia which he won

which was unusual because usually that goes red, he's down 17%. what do you make of it, ben? >> well, i mean, you look at this and look at the unemployment numbers. florida, for example, is at 10.7%. look at, for example, nevada, a place where he's had success. they've got unemployment rates the highest by a state in the country right now, above 12.7%. so you look at this map and where he's having problems. it's in states where he has unemployment issues as well. and, remember, it was a year ago today that barack obama walked out in front of a microphone and said i've got my economic team on top of this, and i'm going to give you a plan on how we're going to fix it, quote-unquote, in the days and weeks ahead. well, guess what? he's got his days and weeks ahead speech coming up again. it's a rerun of last year. and the american people are realizing, i'm unemployed, i'm having a hard time finding a job. we have got five americans applying for every one job

listed on average in this country. he's got to fix that problem, or he's not going to win these states. megyn: simon, when you see these numbers, virginia, 17 percentage points, florida, 14 percentage points, all states that he won pretty handily in the last presidential election, what does it tell you? >> this is going to be a very competitive presidential election, i don't think there's any doubt about that. look, i think everything's up for grabs, the senate, the house, the presidency are all going to be up in 2012. we've seen three consecutive elections where the party in pour has been voted out of power because of the underperformance of the economy, and i think if economy a year from now feels like it's getting better, people feel like progress is being made, barack should get reelected. if things feel like they're getting worse or we're stuck in mud, you know, it's going to be a very tough election for him. megyn: ben, would you concede that president obama has, in part, stopped the bleeding, that, you know, he has arrested the shedding of jobs that we saw

when he first took office? >> i don't know if i can go that far. and what i mean by that is he spent so much money to stop the bleeding. remember, he said last summer was going to be the summer of recovery, give him a trillion dollars. it didn't work, the numbers went higher. this is the same guy with the first stimulus that said give me a trillion dollars, and i promise you unemployment won't go above 8.6%. i think the private sector's creating jobs. he's trying to say the government's saving jobs. we've never had a president walk out and say i may not be creating jobs, but i'm saving jobs. average americans don't feel like the president quote-unquote saved their jobs. and, again, he gave the same speech a year ago today that he's going to give in a couple days. he said we're going to have recovery, my team's going to fix it, you're going to hear more about it after labor day. megyn: what i'm trying to get at, simon, we were losing more

jobs shortly after he took office than we are now, and he's been trying to make that point. but it doesn't seem to be resonating, convincing people that he is improving the economic situation. >> well, because things are better, but they're not a hot better. and i think the american people have a fair take on what's going on. i mean, barack obama, there's clearly some significant economic success in his first couple years. things could have gotten a whole lot worse, but they're not where they need to be for him to feel comfortable -- megyn: how on earth does he turn that around, simon? it's such a huge problem we have in this country economically right now. can he do anything about it now? >> look, we've had 11 years of no wage and income growth, the problems began long before barack obama's presidency and go all the way back to the beginning of the previous decade. the american people feel these are big economic challenges, they're looking for big solutions. i think the president's going to come out with another speech next week, i think it's going to begin another very intense

period of debate between the two parties about what the proper economic course is -- >> but megyn -- >> let me finish. i think it's going to be an ambitious speech. megyn: you do? >> and i think, all i'm saying is -- >> and this is just -- megyn: i'll give you the last word, ben. just let him finish. >> an economic debate that is necessary to forge the right policies for the country. megyn: go ahead, ben. >> simon proved my point by saying the last 11 years were terrible when, in fact, they weren't terrible, and the american people know that. if you continue to blame past administrations instead of coming up with new ideas, it tells you the idea bank is empty right now. when you have simon and other guys saying it was still those other guys, it was bad for 11 years, the american people hear there's nothing new coming to the table. the president can be ambitious as he wants next week, but he did the same speech a year ago. it didn't work, and the american people are feeling the pain while they're on vacation.

megyn: it's interesting to see these key states, they're sort of a harbinger of the election, all presidential candidates pay attention to what's going on there, and you can bet the white house is looking at these numbers as well courtesy of gallup. guys, thank you. >> thanks, megyn. >> thanks. megyn: chilling new details on the disappearance of an american woman in aruba. up next, the disturbing words the suspect told police when she first disappeared and what his father is now saying about the case. and have you seen this? one of the most amazing flooding videos that surfaced yesterday. why did these national guard troops drive military trucks until they were almost underwater? the answer at the top of our next hour. [ jon ] up in alaska, we find the best sweetest crab

for red lobster we can find. [ male announcer ] hurry into cbfest for 3 crab entrees under $20 likour crab and seafood bake... orur snow crab and crabutter shrimp. offer ends soon. my name's jon forsythe and i sea food differently. megyn: new numbers on the u.s. economy. consumer confidence plunging, dropping this month almost 15 points. the index now at 44.5 tracking how people feel about their economic future. that's the lowest level we have

seen since april of '09 when the economy was losing hundreds of thousands of jobs a month. the news is now fueling even more worries about economic growth since consumer spending accounts for about two-thirds of hur economy. -- of our economy. in minutes, we will speak with scott as us men on this -- rasmussen on this one. chilling new twist on the woman missing in aruba. gary giordano told them, quote, she's probably dead now in the early hours after robyn gardner's disappearance. this morning his own father spoke out about the case called his son a devoted family man and saying he is not the monster he is being portrayed as on television. rod wheeler, fox news contributor and former d.c. homicide detective. rod, you can understand the father of this man saying he's a good person, his children love him, you know, don't believe what you're hearing about him, and he may well be right.

we don't know what happened on that island that day. but the leaks continue, and the latest is this comment that he said she might be dead now hours after he reported her disappearing and that witnesses are now saying they saw a cut on his throat and that there was blood on the beach nearby where they saw him. and he, apparently, said, no, that's my girlfriend. i wouldn't kill her. what would that tell you as a merchandise detective? >> you know, here's the thing, megyn. there's an old saying where there's smoke, there's fire. and i can tell you with this story there's a whole lot of smoke, and somewhere there's a fire, that fire being robyn gardner's body, probably out in the water. it just didn't stop with the fact that he made the statement minutes -- not hours after this woman went missing, he made that statement to the police that she may be dead now. but in addition to that let's not forget this is the same guy, megyn, that had taken out an insurance policy. so it's very interesting as well as very telling to a homicide investigator that a person would

not only make that statement, corroborate that with the fact that he took out this insurance policy, and there are so many other inconsistencies as we all know, megyn, with this guy's statement. all of these things, of course, are circumstantial in nature, but they could, in fact, add up to an actual crime. megyn: now robyn gardner's mother is speaking out as well, and she's saying one of the things she finds suspicious here -- our viewers may know, his story was that she got lost snorkeling, she was swept out to sea and never to be seen again. >> right. megyn: well, why wasn't he seen in bathing suit gear, why wasn't he covered in the water when he got out of the alleged water from his snorkeling trip? witnesses now saying that he was there, he had shorts on, and his shoes and socks were wet, and he apparently said to robyn gardner's mother, i just got my socks and shoes wet looking for your daughter. how is that consistent with somebody who's supposed to be in the water snorkeling? >> it's not at all. there's one other interesting thing, and that is the fact that

there's two witnesses now that have come forth that have told authorities that this guy was so intoxicated hours, minutes after this woman went missing. now, are you telling me this guy was so intoxicated, so drunk that he went out there snorkeling, and he didn't even -- his shorts didn't even get wet? again, these are a lot of the inconsistencies in this guy's story. when the police did confront this guy, guess where he was at? the he was at the airport trying to catch a flight to get out of town. again, megyn, all of these things considered together could, in fact, add up to a crime, and that's what i think the aruban authorities believe. megyn: how can you get there, rod, you know, without a body? i know it can be done, of course it can be done, but it's very hard. and look at the -- well, there's so many cases to look at. i mean, even when you have a body, look at the casey anthony case, you know, she was found not guilty. >> you're exactly right, and we all remember the natalee holloway case that occurred over there in aruba. it's not easy, and as we all

know, the aruban authorities haven't had the greaters track record as far as solving these types of crimes. how do you get there? real quickly, they're going to have to find something a little more direct, a little bit more direct evidence, and this guy, gary giordano, he could actually walk as soon as today. the judge could, in fact, let him walk today if they don't come up with something new to hold this guy. megyn: yeah. you talk about the insurance policy, 1.5 million. apparently, there are reports he was in serious financial trouble, that he had sued a company for $5 million but was accused of forging documents and later had to drop that case. on and on the story goes. rod wheeler, thank you. >> thank you, megyn. megyn: we've got some disturbing news out of illinois. reports that the state is paying convicted sex offenders to baby sit the children of parents who are on government assistance. we're talking about rapists, child molesters getting paid by the state to babysit?

trace gallagher has the details in three minutes. and right now she is secretary of state, but could hillary clinton become a primary challenger to president obama in 2012? why a stunning new poll and some discussions at the white house daily press briefing are suddenly making that a serious question. >> why is the president threatened that hillary won't run against him? [laughter] >> you win the award for originality today. really? 25 grams of protein. what do we have? all four of us, together? 24. he's low fat, too, and has 5 grams of sugars. i'll believe it when i--- [ both ] oooooh... what's shakin'? [ female announcer ] as you get older, protein is an important part of staying active and strong. new ensure high protein... fifty percent of your daily value of protein. low fat and five grams of sugars. see? he's a good egg. [ major nutrition ] new ensure hh protein.

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megyn: we're investigating some troubling reports out of illinois today. they suggest the state hired sex offenders and paid them with tax dollars to babysit the children of poor families.

trace gallagher did some digging on this story. trace, is this true? and if it is, how and why? >> reporter: yeah, it's sad but very true, megyn. the state of illinois spends about $750 million a year providing child care for about 150,000 poor families in illinois. unfortunately, some of those families are getting convicted child molesters as babysitters, and these criminals can make thousands of dollars a month and watch the same kids year after year. the question is, how is this possible? well, instead of doing the background checks that you mentioned, the state relies on -- you ready? the honor system, relying on sex offenders and criminals to be honest about their background. well, cornelius osborn didn't exactly follow that honor system. he'd been repeatedly sent to prison for raping women, but on his application he only mentioned a drug offense. he left out the rape, the robbery and the kidnapping because, of course, that would have disqualified him as a

babysitter. now, the state says this program is essential if you want to keep people working, you have to keep on funding this. now, keep in mind they acknowledge, yeah, some did slip through the cracks, and some people are, in fact, criminals, but they also say that most people are not criminals. so unlucky people who got a child molesters, just the luck of the draw. they also are going to start following a new law that says you have to do background checks on all of your babysitters before you hire them. megyn: good move. president obama is just days away from announcing his job creation plan. in three minutes, why there are new concerns this effort may fall short. and people mocked the national guard for driving through floodwaters like this, vehicles nearly submerged, but the soldiers had a reason, and you'll hear it next. susan powell went missing two years ago. her husband is a person of interest, her father-in-law now says that he was having an

affair with her, and the truth about what really happened to her may be in the diaries that are now at the center of a family war. in this today's kelly's court. >> but the fact that they have the journals now, they can confirm that she initiated the relationship that we had, um, that it was, you know, very sexually charged. [ male announcer ] sitting. waiting. hoping. that's a recipe for failed investing. open an e-trade account and open doors, seize opportunities, take action with some of the most powerful yet easy-to-use trading tools on the planet all built to help you maximize the potential of every dollar you invest. successful investing isn't done by throwing ideas against the wall and hoping. it's done by lowering your costs and raising your expectations by using unbiased research and powerful screeners to build a diversified portfolio with stocks, bonds, mutual funds, and every etf sold.

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sure, i'll try it, but-- [beep] wow. yep, that's the patented freestyle zipwik™ design. it's like it-- [both] targets the blood. yeah, draws it right in. the test starts fast. you need just a third the blood of one touch.® okay. freestyle test strips. i'll take 'em. sure. call or click-- we'll send you strips and a meter, free. can't i just have these? freestyle lite test strips. call or ick today. megyn: fox news alert, president obama facing a gauntlet of obstacles on the road to fixing our jobs crisis, brand new hour of "america live", welcome everybody, i'll megyn kelly, days away from the president 's announcement on a way to create jobs, a plan to call for extending the payroll tax cuts and jobless benefits, while asking congress to spend money on construction projects and hiring incentives as well. but with new budget cuts and a razor thin margin under the new debt ceiling, there are new suggestions that he won't have enough to work with.

and may not get the job done. chris stao*eurt walt is our fox news digital politics editor and host of "power play" on foxnews.com. all right, chris. so there's a report out today talking -- from politico talking about how bold should he go that liberals are pressing him to shoot big, whereas he's more inclined to go reasonable, you know, come up with something that the republicans could sign on to. my question is how much is being put out by the white house so that he can look like he's rejecting the left wing of his base and be sort of the moderate, when the reality is there's no chance of him getting anything passed that's not at least moderate? >> oh, you're good! that is good. and you're probably, to some degree, right. the truth here is that for the president, he needs to be seen as healing a very anxious nation. when you have 14 million people out of work, when you have consumer confidence falling to its lowest level since the panic of 2008, when you have home prices

continuing to fall, this litany of bad economic news, people are very nervous. so the idea that has been put forward on liberal editorial pages and outlets that the president needs to go for a very big swing, some large stimulus idea, probably is a nonstarter because if he does, it's going to rattle people more, it's not going to work. so he has to do something to try to get a little confidence back in washington, and get people believing that things could work. megyn: now he can come out and say this is my plan, which does involve some more spending, not the kind, you know, that some would like but some more spending and say look, this is the moderate version because the left wants me to go ten times this amount, the right doesn't want me to go any amount, i'm going middle of the road and if republicans say no so that, they're the fringe people, they're the right wing lunatics. >> and we see this a lot with the president. i've written about him as president god i locks, that whether it's the surge in afghanistan or economic plan, what he likes to do is

lay out two extremes, frame the argument, even if he has to construct straw men, but to lay out two extremes but say i'm choosing the middle way. there are some, and you'll hear in the speech, i promise you, when he gives it, there are some who say we should do nothing, others say we should a large scale intervention but what i propose is this moderate thing in the middle and that's how he's going to put it. but ther issue, if the economy remains on this trajectory, no matter how carefully and politically crafted this message is, if it's not efficacious and put people back to work it doesn't matter. megyn: that's the bottom line. however he wants to style it, whatever the plan is, what he needs is, what the country really needs, is results. >> that's right. megyn: we'll see, chris stierwalt, thank you stkpwhraoeur you bet. megyn: why are economists raising worries about this effort? we've got a team of experts joining us for a fair and balanced debate on this plan as we now expect it coming up. by the way, you get to vote,

too, what should the president say about jobs next week? that's our you decide question, you can log on to foxnews.com and tell us what you think. an alert coming in, as the president gets ready for his big jobs speech, polls showing that american companies are still not hiring, rasmussen reports today, releasing a survey, showing only 18 percent of working americans say their firms are hiring, 24 percent say their firms are laying people off. those numbers are significantly worse than just last month. scott rasmussen is president of rasmussen reports. scott, thank you for being here. how does that work? you go to sort of any random person that's -- random person who's employed or go to employers themselves? >> we go to about about 9000 workers each month and ask them a whole series of questions about their employment situation and one is whether the. is laying people off or hiring them and we also ask workers if they're worried about losing their own job, and 29 with respect are

worried. that number is rising as well. the long term trend we've seen is that last fall, there was rising optimism, people thought things were getting a little better, the number who said their firms were hiring off or laying off peaked last november and it was pretty much even between the two options, and it's been getting steadily worse in the last several months. megyn: you also did a poll on sort of how people feel on the economy in general, the misery index, whatever you want to call it. what did you find? >> we measure consumer confidence every single night and as of this moment 15 percent say the economy is getting better, 63 percent say it's getting worse and this trend is declining as this year is unfolding. at the beginning of january, 30 percent said the economy was getting better, down to 15 percent now. among investors at the beginning of the year, they were evenly divided between whether the economy was getting better or worse and now they're saying by a 4-1 margin, it's in the wrong direction. megyn: are these folks from across party lines? >>y.

democrats are a little more enthusiastic about the prospects for the economy than the republican or unaffiliated voters but when it comes to their own situation on a day-to-day -- on a day-to-day basis, not a whole lot of difference. this is the consume every confidence response to what they've seen around them, part of it is what they see happening in the workplace, what they see happening with concerns with inflation and part of the political arena, during the debt debacle, two out of three voters say they don't think anything is going to be done to improve the decifit between now and election 2012. megyn: speaking of politics, i want to talk about this, because i thought it was an interesting poll, you asked what if a candidate was described as being a member of the tea party, would you describe it as positive, negative or in between. 43 percent say negative, 23 -- 29 percent say it's positive, 23 percent, somewhere in between. but that doesn't necessarily bode well for some of the

presidential candidates like, for example, michele bachmann, does it? >> no, the tea party label is clearly declining in popularity. it was better a few months ago. the ideas that some of the tea party promotes, the interested kwr*des of fiscal conservatism and that washington should listen have a bigger appeal. but the tea party itself is clearly becoming a little bit of an unpopular fringe, it's considered like being considered a liberal on the other side of the divide. megyn: it would be interesting to find out what's behind those numbers because obviously some democrats have been on a campaign to demonize the tea party and one wonders whether that's been successful or whether they fully understand what the tea party stands for and have rejected it on its merits. >> 70 percent of democrats say the tea party is a negative label, and only half of republicans say it's good. there are concerns in the gop side, too, about the impact on the party. megyn: scott, thank you. >> thank you, megyn. megyn: got a fox weather alert for you now, new video

coming from vermont, where national guard helicopters are delivering food and water to towns cut off by the flooding from hurricane irene. there are about a dozen towns where roads and bridges have been completely washed out. the state also appointed special vehicles to get supplies into other towns where roads may be passable for -- impassable for national guard vehicles. which brings us to this follow up from new jersey. "america live p-fs was the first to bring you video of national guardsmen in the town of manville driving vehicles completely underwater, what a sight that is, trying to save flood victims. instead they became victims themselves. so why did they do that? trace gallagher knows. he's live in our breaking news desk. >> reporter: manville is about 30 miles south of newark and they were out, as you said, trying to rescue flood victims, go through the floods there, and if you look at this video from manville, it looks almost as if they just don't quite realize how deep the water is in that area.

now i want you to listen to the person who videotaped this on a cell phone. play this: >> going under! the guy is floating! are you guys that stupid? are you guys that stupid? >> well, they're not that stupid. because these are specially designed vehicles for flood zones. they can operate almost fully submerged, almost, of course, being the key word there, because you can see the trucks soon thoupbd themselves in deep water, and, therefore, in deep trouble, and you can see the guardsmen were able to get out because these are specially designed vehicles with hatches on the top so they can get out the top, but they're used in flood zones, they used them in iraq and afghanistan, and here in the floods and they're supposed to go in deep water. that's apparently a little too deep. everybody is fine, but no, they're not dumb, they just didn't realize how deep the trucks could go. megyn: in other words, they might be brave. trace, thanks. >> reporter: that's right,

yeah. megyn: well, we've got breaking news now on one of the biggest scandals to rock washington in recent weeks, operation fast and furious, the botched gun running sting that may have led to the death of border agent brian terry, today, two new shoes dropping at the agency responsible for the failure. and, it is almost unheard of for a sitting president to face a challenger from his own party in the race for reelection to a second term. but could hillary make history? a democratic strategist on that, after the break. plus, she's been missing for two years. today, an album of music recorded by her father in law revealing what he says is a twisted love triangle. but did this father in law just provide motive for his son? that's in kelly's court. >> but the fact that they have the journals now, they can confirm that she initiate dollars the

relationship that we had, that it was, you know, very sexually charged.

megyn: new developments concerning convicted polygamist sex leader warren jeffs, texas prison officials say he is sedated, responsive and should recover from complications from malnutrition. look at that pakistan, extraordinary. jeffs has apparently been fasting since his life sentence after being convicted on child sexual assault charges earlier this month. growing speculation now that president obama could possibly, maybe, perhaps, face a democratic challenger in 2012. whom -- whomever could it be! take a look at this bit from yesterday's white house press briefing. >> for months, senator

bernie sanders said, and this is a quote, one of the reasons the president has moved so far to the right is there is no primary opposition to him, and my question, why is the president certain that hillary won't run against him? >> [laughter] >> you win the award for originality today! >> thank you very much! >> the president is focused not on any election. he's focused now on the economy, creating jobs. to be sure that americans in the path of this hurricane are taken care of. >> i understand, but -- turning to this question, can you guarantee that -- i mean, are you sure hillary is not going to run? >> we're fairly confident -- >> that she won't? >> -- that we need to focus on the tasks at hand. megyn: well, that exchange

happens as one new poll suggests that one out of four democrats wants to see a democratic presidential candidate other than president obama. doug schoen is a former clinton pollster and fox news contributor. doug, is this republican wishful thinking? >> well, it may be. but megyn, as the president's ratings drop, and as the left gets more and more angry, the possibility of a primary challenge, however slight, grows more likely and more possible. megyn: in the last 60 years, every time there has been a serious primary challenge to a sitting president, that president has lost the general election. which is why it occurs to me that it's people on the right who are encouraging a primary challenge to president obama, who want to see it most. >> well, i think there are people on the right who want to encourage it, but there are also frankly people on the left like bernie sanders, when he made that

comment, what he's really saying is if there was some pressure from someone like himself or dennis kucinich to pull the president back towards the left, where they think he belongs, that they would have a better agenda for america and maybe shake things up. so i think it's something where the left and the right probably agree, -- megyn. megyn: might anybody take that clear? al alan coomes is on this program, saying how president obama has disappointed the left when it comes to health care, afghanistan, homeland security, polices, so on. >> you just artake lated what the agenda would be and the gallup poll cited 25, 30 percent of the electorate would be responsive to that and in these kind of unsettled times where people are very angry with washington, congress and the white house, it's never impossible that someone will take up the mantle. megyn: but you know -- let me put it this way. you know hillary clinton,

you know her well, you worked for the kilnions. >> i did. megyn: and she's said no every way she knows how to say no, she also says she's not going to be secretary of state in the second term for president obama. is there any way she wants to job and will likely run for it in 2016. >> i don't think so. i think hillary said she was going to finance out her term, for the full years, i know her, i know what she thinks and the chance that she would run is almost unimaginable. megyn: there would be many factions of the democratic party that would be outraged if she did it. >> well, that's it. i mean, i think she was stunned by the degree of criticism she got in the 2008 presidential race, where she was frontrunner, she took a lot of heat, and i think it's unlikely she would challenge any sitting president, ever, especially one she's serving as a loyal secretary of state. megyn: and do you think that if she thinks -- if she tossed her hat in the ring

now, do you believe she wants it in 2016? >> she said no, she's never going to run again. you never say never can politicians. i think she came very close, and while she may all but rule it out, i think it's at the very least something that won't be ruled out until we get to 2015 or 2016, and she has to make a final irrevocable bold decision. megyn: doug, it can't be a good sign for president obama that people are even discussing this, that you got the new cnn poll saying 27 percent of democrats want to see somebody -- they basically want to see a primary challenger to president obama. >> well, that's absolutely right, it isn't good news, and if you look at the comments from the congressional black caucus, maxine waters, and the like, you can see that someone from that wing of the party could, as a protest, launch a challenge. it's just not out of question with his numbers weakening by the day. megyn: and yet, even the left, alan coomes, for example, who's unhappy with the president on those

issues we discussed, they are not going to vote for perry, romney, bachmann, or anybody else who's emerged so far on the gop field. >> that's absolutely right, but you know what, if their enthusiasm is down and they don't turn out in the numbers they did in 2008 it could be very difficult for the president to win, as you cited, any president in the last 60 years who's faced a primary loses, and that could be a reason why turnout would be depressed ultimately in the fall of 2012. megyn: doug, always interesting talking to you, thank you my friend. >> thank you megyn. megyn: we spent a lot of time talking about how to fix our jobs crisis, but here's a new question: should unattractive people be eligible for affirmative action? our guest, joining me live today, says yes. and we're not joking. wait until you see that interview. and on the heels of hurricane irene, we have got tropical storm tatia churning in the atlantic, the latest on tatia, just ahead.

megyn: fox news alert, new resignations at this hour, in the wake of the failed gun trafficking scheme known as operation fast and furious, william la jeunesse live in our west coast newsroom with the very latest. >> reporter: heads rolled this morning at the department of justice as those responsible for this embarrassing scandal were let go or reassigned. for critics that blasted the administration not only for approving and running this operation, but for lack of accountable, once whistleblowers made public the federal government was knowingly sending guns to mexico, nothing happened until today, so the acting amount tf director kenneth nelson was reassigned to a lesser post at the justice department. he claimed he didn't know what was going on, went back and read the memo and said

he got sick, documents show that nelson followed this closely, and watched illegal gun sales on web cams. also, nelson was replaced by todd jones, he is u.s. attorney for minnesota, he has served under that job, under both president clinton and obama. also today, in phoenix, big changes there, where fast & furious was borne, dennis brook is out, he allegedly resigned, but i can tell you he was interviewed last week by congressional investigators, and he got so upset, he, too, was sick, and could not continue. now, atf was -- managed fast & furious but the u.s. attorney's office actually ran the operation, that means burke is now gone, and his assistant, emory hurley, he also was reassigned to a lesser post in the civil division. i can tell you that the four original whistleblowers, three of those have been reassigned, two going to florida, one to south carolina. what does all this mean, megyn? many will look at it as

nelson and also, burke, being thrown under the bus. the question is, will congressional investigators stop there, or will they continue to look for people higher up the chain who may have approved who knew about the program. megyn: william la jeunesse, thank you. a growing number of economists are now suggesting president obama may not have enough firepower in next week's jobs plan to fix our employment crisis. in three minutes, you'll see why they are worried. plus, a california councilman stumbles upon an illegal marijuana field, and winds up dead. what he was doing there, and who police think may have gunned him down. and, should affirmative action be extended to protect the ugly? just ahead, a noted researcher says yes, and he joins us live.

megyn: a california councilman out on a hike stumbles upon an illegal marijuana field and winds up dead. jerry nalo was gunned down saturday just outside the city of fort bragg, now a major man hunt is underway to track down his killer and we're learning police may already know who's responsible. trace gallagher with more from l.a. trace. >> reporter: they think they know what he is because

he is well known to police, he's had a number of run ins with law enforcement in the past several year, they're looking for a transient, aaron vasler, he may be caught up in those woods and knows what that area is all about. they said last time he was seen, he was armed, he's considered unstable, and very dangerous. fort bragg, about 200 miles north of san francisco. jerry mello was a forest land manager, he was out, working with with a coworker, kind of patrolling, looking for a large marijuana operation. they came upon the suspect. he was gunned down immediately. his partner also was fired upon, but his partner managed to escape and called for help. jerry neiler was a 2-term mayor, he sat on the city council for 15 years -- 15 years, helped raise money for a fire department, a football stadium. the locals there are devastated. listen. >> everybody is angry. they're very angry. >> he was well loved by

everybody. he was kind. not a mean bone in his body. >> reporter: yeah, by all accounts a great guy, jerry mello was not armed when he came in contact with the suspect who remains on the run, megyn. megyn: trace, thank you. president obama is unveiling his new jobs plan next week and several economists are already raising new questions about it. and whether it has enough firepower to fix our unemployment crisis. reporters yesterday were raising some jobs questions of their own. >> on the president's jobs speech, he shaeufrd with us that it will be next week, what day is it going to be? >> we don't have a date to announce. i will repeat what the president said, that you can expect it next week, but i don't have a date or location to give to you today. >> what is the reason for not telling us when it's going to be? >> it could be because we haven't finally decided. [laughter] >> and when we have an announcement, we'll make it.

megyn: no matter what the speech holds or when it is delivered, it will be a critical moment in this president's first term. hank sheincock is democratic strategist and former member of the clintior-gore campaign, susan is cofounder of it's your biz.com and simon constable is the author of the "wall street journal" guide to the 50 economic indicators that really matter. of course, wsj, also owned by the same parent as the fox news channel. and so because of that, then i'll start with you simon. >> i like that! megyn: so i found it interesting that they won't tell us when he's going to offer the speech, then there's a report out saying the package isn't done yet, he's still working on it, but behind the scenes, they're telling us there's all this pressure on the white house to go big, go what -- move on.org is calling shock and awe when it comes to spending and the president doesn't appear ready to do that. >> i hope not.

that would be good. not to shock and awe would be good in terms of spending. there are a couple of things that i think we need. we need stability. we don't need to extend payroll tax cuts, they need to be what they are. megyn: he's going to do it. >> extending it -- it's wrong, it's a big mistake. the other thing is, with government sort of humming and hawing about whether -- what it's going to do on the debt ceiling, which is what we have this summer, about what's going to happen for the future, all this instability, all this uncertainty is really, really bad for businesses. businesses will not make big decisions, they will not build $100 million plants unless they've got some certainty about what the regime will be in terms of taxes and -- >> megyn: hank, you're a democrat, what are you hoping to see? because we are hearing move on.org and other left wing groups want him to produce another stimulus bill with hundreds of billions of dollars in new spending on various programs and we're hearing there's no way the president is prepared to do that. >> it's not what i want to see. it's what will get him

ehr-bgt dollars. what will get him elected is shock and awe. megyn: really? what about the independent? >> the course of the discussion will force the republicans to say no, so he becomes the president that breaks with the congress. megyn: why isn't he going to do it? reports are he's not doing to do it. >> he's always played it safer. in order to win he needs to force his base to turn out and to reduce some level of the negatives in this popularity ratings. this won't do it. megyn: politically -- it's a political decision -- discussion, but susan, as a matter of reality, as a matter of helping americans, what do we need to see here? there's a growing belief, that no president, republican or democrat, is going to be able to fix the mess we're in. >> here's what i've got to say. first of all the president has never been criticized for being creative or innovative. it's going to be the sail old same old. he's not listening to the right people. i was appalled when the last job numbers cam out. that afternoon, he invited

ceos from some of the top companies to come to the white house, to talk about creating jobs. he should be talking about creating jobs with small businesses. megyn: how does he do that? >> he's got to open up a dialogue. all he does is rhetoric. actions speak louder than words. megyn: one of the things he's reportedly going to suggest is a job training program for the long term unemployed, not good? or tax credits perhaps for employers who hire. >> i tell you, none of that is going to get a small business owner to make a major move, like simon said, because we see consumer confidence dropping, right now, intuit did a payroll survey and showed that wages are dropping slightly, so even people who have jobs aren't making as much money because it's a supply and demand theory. you've got a lot of good people out there, you don't have to pay them as much. megyn: what would cause the employers to hire? you say they need -- >> stability. >> megyn: how do you give them that? >> you give them that by congress look like it's knowing what it's going to do. that is the key. a part of what's happening in our country is that people are looking at

congress and saying okay, those guys are not in control, we're not sure what's going to happen this week or next week or whatever, the whole thing with the debt stuff, i disagree with this thing on the shock and awe stimulus, i think there's very little, if you believe the misery index, that it could get this president elected for a second term. it's gone up so much. unemployment plus inflation has gone up too much. >> i don't have a cristical ball, but i'm talking about tack tigs and how you get elected. the misery index may be pretty high but unless he proves there's an enemy that's causing the misery index to be that way he may have trouble being reie elected. megyn: we've already seen him laying the foundation for the republicans in the house. if you were president obama, do you say that's the winning strategy? >> if i advise president obama, he's got to people that elected him back to the polls are the intentsty. the intensity is not there. the common enemy creates intensity. that's american politics. >> the misery elect -- index where it is, unemployment plus inflation, it would be

remarkable for this president to get a second term, it would be noteworthy, a feature story. it would be huge. >> if anything is going to change, the politicians, number one, have got to put their egos aside and quit pointing fingers and placing blame and try to fix this problem. megyn: you're in the land of uni corners and rainbows. >> i'm sorry, i'm not. at the end of the day those people have been on the public payrolls most of their lice, they don't know what it takes for someone like me to keep the lights turned on and make payroll. >> do the ones have business experience appeal to people? mitt romney has run business, herman ka*eub as well, but not small business. >> absolutely, but they do understand what it takes to spur private enterprise. did you know that in 1994, startup businesses created 4.5 million jobs? in 2010, startup businesses created just 2.5 million jobs. that's a significant drop in job creation. we have got to have a government that understands

how to create environment for private enterprise. >> you know why we have profile necessary courage, because they're profiles in courage and they don't happen that often. megyn: we'll leave it at that, that sad little thought. panel, thank you very much, thank you for all for -- thank you all for being here. on the jobs front, should unattractive people get a leg up in the workplace? how would you like it if they had an affirmative action program for unattractive person? believe it or not, someone is for that and is here today. >> susan powell vanished two years ago. police are focused on her father in law, why an album of music he recorded may hold critical clues in kelly's court. listen to this creepy thing. >> susan is a very flirtatious person, and she's also a very sexual person, she likes to talk about sex, she likes to, you know, validate her own self-esteem.

megyn: kelly's court is back in session, on the docket today, a bizarre possible love triangle emerging from the case of a missing mother of two, susan powell vanished into thin air seemingly nearly two years ago, we're husband, josh, a person of interest from day one. telling police he took his two young boys on a camping trip during a blizzard in the middle of the night on the night susan disappeared. now josh's father, steve, has come forward, he is apparently a singer-songwriter as well, and he is claiming that he had a sexual relationship with his own daughter-in-law. and saying that at least one of the songs on his album about forbidden love was written for susan. >> but the fact that he has the judges now, they can confirm that she initiated the relationship that we had, that it was, you know, very sexually charged.

megyn: what are we to make of this? joining me now, criminal defense attorney joey jackson and legal analyst mercedes cohen. we have to break this down because this case is getting more and more bizarre. basically, the husband is named a person of interest because his excuse was i wasn't anywhere around when she disappeared, i took my two kids out for a camping trip in the middle of a blizzard overnight, my two young toddlers. fine. joey, the father in law comes forward and what exactly is he claim something. >> it's kind of bizarre, the father in law for whatever reason -- meanwhile his daughter-in-law is missing and all eyes turned on to where she is after two years and he's talking about a sexual relationship they had, talking about how she initiated the sexual relationship, she was all at fault, now it's important to understand, though, megyn, his own, that is steve's, own daughter has denied that, and said that he pretty much is delusional, that they did -- did did not have such a relationship but the question is why do it

now, that they're trying to locate her is bizarre in and of itself. megyn: part of his proof that he had an affair with her, it's so strange, because it's the father saying he had an affair with his son's wife and she's the missing party, so part of the proof is this crazy song, and by the way, before the break i referred to the guy's song as creepy, not to the sound bite as creepy, but here comes the excerpt of the song he says he wrote for susan. listen: >> ♪ >> ♪ >> ♪ >> megyn: my goodness. it's a stomach -- >> she's the pweupl bo, she's missing because she ran off with some guy. look, my son should not be a person of interest, he's absolutely innocent because susan is a pweupl bo, she came on to me, she was very flirtatious, very sexual, so of course she's going to run off with someone else. megyn: that's what his son is saying, the son, susan's husband, the one who

allegedly went camping in the middle of the night, comes out on the heels of the father's revelation of their alleged affair and says this about his missing wife. listen to this. >> susan is a very flirtatious person, and she's also very sexual person, she liked to talk about sex, she likes to, you know, validate her own self-esteem. megyn: what are they doing, joey, are they trying to set up a she ran off with another man defense? >> it would seem to me they are doing that megyn. that would be borne out by the fact that apparently there was another individual, man, who went missing around the same time that she did back in december, so as a result of it looks like they're trying to deflect blame. what's problematic, there are a number of things, not only what you mentioned at the beginning, it's the dead of night, he says he left, he took his toddlers, he had a four-year-old and two-year-old. now mind you megyn, they were out sledding owl day, he goes out in sub degree temperatures, takes them

out, does not go in to work the next day, shows up at 5:00 with the police around his home saying what can possibly have happened to my wife. so it seems to me that all indications are that he's trying to deflect blame and trying to indicate that she was sexual, but she had ult ear other motives, and they had nothing to do with it. mig mercedes, it sounds like it may be a bunch of bull and the sister-in-law, the -- the sister of sister of susan powell's husband, daughter of the now father in law who's making all these claims, she doesn't believe this and she says her own dad is creepy and that susan powell had complained to her that he was trying to look at her and so on and so forth, and yet, the father in law comes out, mercedes, and says that he and his son has susan powell's skr-t dries and that the extract shows she led a double life from the time she was one # or possibly 12 and now, mercedes, they want to publish these on the internet, and susan powell's family is -- they want to

stop it. can they stop it? >> they can stop it. they can say wait a minute, where are the diaries and challenge the authenticity of it. and it's not legal vant. these are diaries from 1996, this is a 15-year-old writing those diaries, not the 28-year-old that disappeared in 2009. what relevance does it have? this is a teenager in angst writing about her daily existence, the father is saying you know what, she actually tried to commit suicide. there is no such entry like that in those diaries, in fact, she says she took six ibuprofen and her father says look, these diaries had nothing to do with it, this is my daughter, she look six ibuprofen. so all of this mounting garbage is a front. megyn: and joey, the family, you know, the husband and his father, they are suggesting she is still alive. what right do they have to publish her diaries if she is the one who wrote them and they don't have the k0*e7 right over -- copyright?

>> the point that mercedes is making, it's a very good point, the problem is, that goes to weight and not admissibility. ultimately the diaries should be exposed and for investigatory purposes to see what the claims are, what kind of life she led, could it be helpful in the investigation. >> but not publishing it. megyn: let me get to this quickly, i want to ask you this on a different note, could the father's alleged admission provide motive for murder, could he actually be hurting his son? >> see, and that's the problem here. i think absolutely he could be, because now what you're doing is it could be a conspiracy, who knows, maybe it was stephen the father, in addition to the son, josh, who ultimately dispose of her. now, they haven't found a body, hopefully she is missing and she'll come back safe and soundly but at this point the fact that he's out there talking about sexuality seems to suggest he's guilty. megyn: it's tough to believe, mercedes, that a mother of two would leave her children in the middle of the night and never contact them again if she was fine. >> without her cell phone, her purse, her passport, all the critical belongings, all

remain in the house. it's unbelievable that she simply disappeared and vanished. megamegyn: yet, they haven't made any arrests in the case and the investigation continues. we'll leave it at that. thank you very much. that was just a discussion, not a debate, but i don't know about you, my head continues to spin. well, coming up next, does it pay to be pretty? and if you are not, should you be eligible for an extra break from the boss? my next guest wants affirmative action for unattractive people. right after this break.

megyn: does it pay to be pretty? and if you're not, should you be eligible for an extra break from the boss? my next guest says the answer is yes. danual hemmernesh is

professor of economics at theup of texas at austin and author of "beauty pays". all right daniel, affirmative action for unattractive people? seriously? >> a lot of people think so, and a couple of places in the u.s. already do it. the question is should we be doing it, and it's a tough call. megyn: it is? no it isn't. >> it is, because i don't view beauty really as inherently any different or ugliness as any different from a disability or perhaps even race. it's something you can't change very much, some people are born ugly, there's not much they can do about it. >> megyn: if you get yourselves into the hands of the right makeup artist and wardrobe consultant you'd be amazed what they can do! >> they're trying to make a silk purse out of me without too much success and there's evidence now that in fact people will look at you and say hasn't made such of -- much of a difference, you're pretty much stuck with your

looks. megyn: so when we protect a class, for example, african-americans or women or people over the age of 40, it's because they have immutable characteristics they cannot change. if you're black, you're black, you're not going to be able to change it and people discriminate against you because of it, it's unfair. you're telling me, if you're born unattractive, it's unchangeable, you cannot change yourself. >> it's not unchangeable but it's very hard to change and most people don't. there's a wonderful study which looked at ten-year-olds and the same people 40 years later, called ugly ducklings become ugly duck, compare it to a disability. that's something that's changeable, we protect the disabled in a whole variety of ways under the ada, why not if -- to protect the truly ugly. megyn: how far can you take it? some people aren't as smart as others, you could protect the stupid, all those people get jobs, being smart, having a sense of humor.

>> intelligence or being funny is productive, intelligent people create things. there's nothing inherently productive about beauty. we have this pred hreubgs for favoring the pretty and being against the ugly. it's not inherently productive. that's the difference. megyn: if you apply to policy and say you're discriminating if you don't hire an ugly person, how far can you take it, does it apply at modeling agency, film studios, strip joints? >> those are tough ones. i mean, i would if i were running a strip joint, which is not something i intend to do next week, i would argue this should be exempted, but that's a tough call. as you know, it depends upon how the case law would developful megyn: who decides who's pretty and ugly? isn't beauty in the eye of the beholder? >> sure it's in the eye of the beholder but we tend to behold things similarly. if you say somebody is one of the liest person you've ever seen, the bottom 2 percent, others tend to agree. we tend to agree on beauty

in this society. megyn: you're creating an entirely new class of victims to enclosing up our court system. >> if it were costless, i would. if on the other hand it takes away from our increases to protect african-americans in particular, i'd say no. politically i care more about that group. megyn: daniel, you are an interesting man, this is an interesting interview. thank you for being here. we'll be right back. guaranteede on the carpet... the pad, and installation. let's get peace of mind for a lifetime. it all adds up to the lowest total price on our carpet project. guaranteed. and a room that looks better than we ever imagined. more saving. more doing. that's the power of the home depot. get 12 months special financing on carpet purchases

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