i'm wolf blitzer. you're in "the situation room." -- captions by vitac -- www.vitac.com he's plunging in the polls and in need of a boost. will a new plan help rick perry climb back to the top of the republican race? his rival, herman cain, is leading the pack according to a brand new poll and perry is a distant fifth with cain apparently benefitting from his 9-9-9 tax plan, perry today unveiled his own new tax plan and 20 is the magic number. he proposes a flat tax of 20% for individuals and corporations, but in a twist, perry would let people choose to pay his flat tax rate or file under the current system, which he derived. >> the size of the current code is more than 72,000 pages. that's represented by this palate right over here and the reams of paper. that's what the current tax code looks like. the best representation of my plan is this postcard. this is is size of what we're talking about right here. taxpayers will be able to fill this out and file their taxes on that. each individual taxpayer will have a choice. you can continue to pay your taxes. as well as the accountants and lawyers under the current tax system we got or file your taxes on this postcard. with the deductions on there for interest on your mortgage or charitable give, state and local taxes. >> tom foreman is working the story for us. tom, what are you finding? >> what we're finding is as controversial as it is now, it will be probably be more in the next few days. the fundamental claim of this plan today is that this will be better for everyone. that everyone is going to benefit from a tax standpoint if the perry plan is adopted. he's saying there are advantages for all. what's wrong with that, wolf? part of it has to do with the sheer numbers here. we talked to folks at the tax policy center. they're chopping up these numbers right now. they're hoping to have a full analysis by the end of the week, but let's look at what this might mean. he's talking about a standard exception for everyone $12,500. that's attractive to a lot of people. right now, if you make about $9,500 a year, you have enough exceptions so you don't pay any income tax. if you go over that amount now, over $9500, you start paying a 10% tax rate. if you go over this amount, you immediately start paying a 20% tax rate. that's one of the details in here that people have to sort through. 51% of the people this this country are paying no income taxes. in 2009, so a lot of people potentially affected by this, wolf. beyond that, there is a question of what's happening on the higher end of the scale. he wants to lower corporate tax rates. no capital gains. no inheritance tax. here's where we read between the lines. this is largely about people in the country doing better. not touching any values whether it should be targeting them or anybody else, but the simple truth is these are people doing better off. if you're making 20 or $25,000 a year, there's no inheritance to worry about because nobody's going to get anything when you pass on because that's basically hand to mouth living. it looks like when you add up the numbers he has here, the idea this will not somehow represent a significant decrease in revenue to the federal government seems a real stretch. the only way he gets to a balanced budget with this plan is by really substantial cuts to all sorts of programs in the country. you can decide if you like that, but the bottom line, we're going to have to say that this appears to be true, but incomplete. huge emphasis on the incomplete. i think we'll be filling in a lot of holes for the rest of the week and it will tell us a lot more of what this tax plan will really do as opposed to just giving advantages to all. >> the only way it would deal with shrinking that deficit, the national debt, is if it were to so spur the economy is economy would grow and tax revenues would come in because of enormous growth. >> massive run away growth. >> all right. stand by, tom. we're checking this. i want to bring in our chief political analyst, gloria borger. she's working this story for us as well. i don't think there's any doubt that herman cain's 9-9-9 tax plan helped spur that dramatic boost. he's number one right now if you believe this new "new york times" poll. >> lower taxes is sort of the holy grail of the republican party and clearly, rick perry is trying to get back up in that top tier by proposing a flat tax. a flat tax has a lot of resonance out there, particularly with republican primary voters. 20% sounds great. if it can get the economy moving again, that's terrific. i spoke with somebody who's a senior mitt romney adviser. actually, we were e-mailing and he said, it's a gimmick, the flat tax responding to a gimmick. 9-9-9. so, they say you need a more complete plan such as mitt romney has offered and rick perry's plan will in fact help the wealthy and when you take a second look at it, they're saying you know what? you might have to do your taxes twice to try and figure out which plan would work best for you. >> if you're going to be able to save money because the old way might save you more than the new way. >> right. there's another point you were making with tom, which is there is no claim here this is revenue neutral. it might spur the economy as you say, but actually, it's probably a revenue loser for the economy because wealthy people would be paying much less in taxes. >> he's saying himself, rick perry, that he wouldn't be able to balance the budget until 2020. it would take eight years. >> he does. $100 billion in nondefense discretionary spending, getting to a balanced budget by 2020. and when he talks about entitlement rer form, which is kind of vague, he does sound a lot like paul ryan. here are his guidelines for example. on social security. he says let's raise the retirement age, private accounts for younger workers. very, very continue versal. allow state and local governments to opt out of social security. on medicare, the same thing. gradually raise the eligibility age. have a voucher program and means test benefits, which means that the wealthy might have to pay more for their benefits. so, again, this is quite controversial. was controversial in congress. you can be sure that barack obama is going to pick up on this and run with it because again, they have an opportunity here to get senior voters back, which they lost in the 2010 midterm, so i think this gives the president another opportunity and again, balancing the budget by 2020 may be very optimistic. even the deficit commission, which proposed sweeping tax reform said it could only balance the budget by 2035. >> that's a long time. thanks very much. let's dig a little deeper with erin burnett. he this is different than steve forbes' flat tax proposals we heard so much about when he was running for the republican presidential nomination. 17% flat tax. if you wanted to go back to the current way of paying, that was not part of steve forbes' plan. >> it's funny, talking to some people who have spent their career, there are people out there who love the flat tax. flat tax purists, they call themselves. this just isn't a pure flat tax. never mind the fact you can stick to the system or go to the new one, which is practical and prag pragmatic. to exekt pekt the country to throw out 70 million pages is not possible, right? but it's not really a pure tax because you've got these deductions. i'm looking at the postcard right now. mortgage interest, charitable contributions, pure flat tax would not allow for any of those deductions. >> it's more complicated because he says, rick perry, that if you make more than $500,000 a year, forget about all those deductions for home mortgages or charitable contributions, you're not going to be eligible. when i heard that, read his article today, i said to myself, isn't that a little bit of what the republicans deride the democrats and president obama for class warfare when you've got different tiers of rich as opposed to not so rich? >> yes, in a sense, that's trying to say, to nod towards progressivity and then also to hit that issue, wolf, if you look in within this plan, there are lots of areas where we need more detail. but if you look at social security benefits, perry would take us back to where we were before 1983, so people would not be taxed on their benefits for social security, which would disportion atly readjust. so, there is a lot of nods here to try to make this not regre regressi regressive, which is maybe part of the reason it's more complicated that quote unquote flat. >> on my blog today, i pointed out herman cain's got a 9-9-9 plan that we know a lot about. i say, i called rick perry's plan 20-20-0. what do you think about that? as opposed to 9-9-9. >> i think that's a great way of putting it and it hits on the political point perry's trying to make. don't go the direction of a sales tax. you know, once you start at 9, it only goes higher. there are few countries in the world that have started out with a national sales tax that have not seen it rise over time. one other thing, because people can choose and most people will choose the rate that's lowest, some will just go ahead with what they've got, but most will pick the rate that's lowest. so you're going to get less revenue under this plan, but if you're going to cap spending at 8% of gdp, i just looked at our numbers for the most recent year we had a budget, which was last year. we would have had to cut $882 billion out of our budget in that year. so to hit that cap is going to require substantial cuts and to your point, you can make some up if you get great economic growth and don't have to pay off unemployment benefits and food stamps and the economy improves. >> we're going to be spending this a lot in the coming days and weeks. please be sure to join erin tonight, "outfront," 7:00 p.m. thanks very much. jack cafferty is back. he'll join us on the other side of this break, plus, more on rick perry. why is he trying to reignite the controversy over whether president obama was born in the united states. and the new campaign ad and right now, there are new details emerging about the secret burial of gadhafi. we now know he wasn't buried alone. sun life financialrating should be famous.d bad, we're working on it. so you're seriously proposing we change our name to sun life valley. do we still get to go skiing? sooner or later, you'll know our name. sun life financial. your life if full of responsibilities. so if you're thinking of going back to school we created the phoenix prep center, a personalized academic planning resource. and when you're ready to take that next step you can attend our orientation workshop, either on campus...or online to see if our university is right for you. our commitment to you begins before you even enroll. explore these resources and more at phoenix.edu. our commitment to you begins before you even enroll. ♪ ♪ ♪ when the things that you need ♪ ♪ come at just the right speed, that's logistics. ♪ ♪ medicine that can't wait legal briefs there by eight, ♪ ♪ that's logistics. ♪ ♪ freight for you, box for me box that keeps you healthy, ♪ ♪ that's logistics. ♪ ♪ saving time, cutting stress, when you use ups ♪ ♪ that's logistics. ♪ welcome back, jack. >> thank you, wolf. it's a time honored political tradition, you know. ducking a presidential candidate who has lousy poll numbers and the year out from next year's election, it looks like some democrats cannot get far enough away from president obama. a lot of democratic lawmakers including nancy pelosi insist that president obama is not a political liability. but as political reports, there are growing signs he may be just that. take for example recent trips the president made to michigan, north carolina and pennsylvania. all states he won in 2008. in north carolina, six democratic house members did not join the president. only two lawmakers showed up. another congressman who represented a majority black district. when the president when to pittsburgh, zero members attended, although -- at the airport probably as he was leaving. in michigan, none of the 15 members of the state's congressional delegation showed up with president obama in detroit. none. this is a city he won with 74% of the vote in 2008. part of the issue in michigan might be the president's push for free trade. take a few days off, it's not easy to get back in the groove. a state with strong unions. some think these efforts to dodge the president would only backfire. ed rendell says it's political idiotsy and calls these members who duck the president complete wuosses. if unemployment stays stuck about 9%, don't be surprised if the democrats cover their political backsides and simply disappearing when the president comes to town. what message does it send when some democrats are ducking president obama? go to cnn.com/kafrcaffertynn.coo to our post on "the situation room's" facebook page and write your little wisdoms there. >> we want to make you look good. >> need all the help i can get. >> thank you. meanwhile, other news, he was captured and killed in a global spotlight, but gadhafi was buried in secret. libya's national transitional counsel says the former dictator's body was inturred along with a son and adviser in an undisclosed location. dan rivers is joining us from libya with details. dan, gadhafi got buried. now, questions about human rights abuses. what is the new government in tripoli saying about this? >> reporter: well, giving all of the kind of rights that -- they're talking about the need for investigation. their desire to uphold human rights. the problem is, implementing any of that on the ground here. for example, the problem with gadhafi's capture, killing, the way his body was treated. it seemed pretty clear the ntc had little control over what those militia were doing on the ground right through yesterday when they had ordered that the public should not be allowed in to see the body, yet the public carried on and were admitted into the late evening in misrata. i think it underlines just what a difficult job the ntc has got and how little control it has over those militia who basically are running the country on the ground. yesterday at this time when we were speaking, an official said that gadhafi's other son was trying to escape libya using a fake passport. any updates on his where abouts? >> reporter: well, today, they are saying they don't know where he is. that they think he's still on the run. we have no suggestion at all that he is near the border. we have no confirmation about this fake passport, no proof. it's -- it is increasingly difficult, wolf, to take what some of these sources are saying seriously, frankly, without the benefit of conclusive proof and at the moment, they have produced nothing to back up their assertion that he is heading for the border. frankly, i don't think they have a clue where he is. >> dan rivers on the scene for us in libya. thank you. meanwhile, president obama is sidestepping what he calls a dysfunctional congress. with the economy lagging, why did he wait until now? president obama's press secretary, jay carney standing by. at first, some didn't think it was legitimate, but the new campaign video is going viral. >> we need you to get involved because together, we can do this. we can take this country back. when you have diabetes... your doctor will say get smart about your weight. i tried weight loss plans... but their shakes aren't always made for people with diabetes. that's why there's new glucerna hunger smart shakes. they have carb steady, with carbs that digest slowly to help minimize blood sugar spikes. and they have 6 grams of sugars. with 15 grams of protein to help manage hunger... look who's getting smart about her weight. 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[ male announcer ] it's endless shrimp today at red lobster. as much as you like any way you like, like new sweet and spicy shrimp, all for $15.99. my name is angela trapp, and i sea food differently. okay... uhh. the bad news, it's probably totaled. the good news is, you don't have to pay your deductible. with vanishing deductible from nationwide insurance, you got $100 off for every year of safe driving, so now your deductible is zero. the other good news ? i held on to your coffee. wow. ♪ nationwide is on your side ( laughing ) it's actually a pretty good day when you consider. that's great. here are some of the stories we're working on for our next hour. libya's new prime minister says shah ria law should form the bas of the libyan law system. we're taking a much closer look. also, an american student behind bars in egypt accused of spying for israel. we'll have details of the deal to release him and the vatican proposes reforms for the world's economy. does the pope side with protesters on wall street? stand by. you're in "the situation room." rick perry isn't backing away from questioning the legitimacy of president obama's birth certificate. he had a chance to do that in an interview today, but guess what? he didn't. >> it's a good issue to keep alive. just you know, donald's got to have some fun. so, and the issue is -- >> sounds like you have some doubt. >> look, i haven't seen his -- i've seen his grades. my grades ended up on the front page of the newspaper. so if we're going to show stuff, let's show stuff. but look, that's all a distraction. i mean, i get it. i'm really not worried about the president's birth certificate. it's fun to poke at him a little bit and say, let's see your grades and your birth certificate. >> let's discuss with our democratic strategist, donna brazile, and david frum. why can't he just end this and say i believe the president was born in hawaii. let's move on. >> two hypothesis. one, the guy isn't quick on his feet. he's flustered. not very mentally nimble and doesn't see a clear way out. but the second is more disturbing, which is combined today with the announcement of this new tax plan that doesn't really add up, but that is going to excite a lot of the republican base, perry wants to get back to being the nonromney. the preferred place where people find romney not conservative enough and the combination of the flat tax and this dog whistle on the president, on the president and his place of or gin, which is a way of suggesting i don't think the person of this name and skin color can be a real american. that's an ugly way to play politics and it may be a plan and not just a glitch. >> because he's had several opportunities to say, we got really important issues we got to deal with. we don't have to deal with a long form birth certificate anymore. he sort of sticking by that and i'm not sure why. you have any explanation why he wants to leave this hanging out there? >> because he's not really running for the presidency of the united states. he's running to be president of the tea party caucus. and we already know there's a president of the tea party caucus and that's michele bachmann. i agree. i also believe that karl rove gave him some really good advice yesterday and said stay away from these nutty issues and don't marginalize the stuff. the truth of the matter is rick perry has one problem. that is, he really doesn't know why he's running for the president of the united states. on a day he's announcing his own economic plan. he stepped on his own story. he's not a serious candidate cht he needs to re-group. he has new advisers coming in to help him out. i suggest they take him off for a couple of days and get him focused. >> look at these poll numbers. two numbers. back on september 16th, perry was number one among republican voters, 23%. now, he's number five with only 6%. he's gone from 23% to 6% and a l little bit more