memorial day is the unofficial start of the summer. the presidential race is just entering its second stage. it's the time when campaigns try to hammer home negative attacks, now reinforced by super pac ads. we're living in a time when spin outweighs substance. when narratives can unfortunately matter much more than facts. and summer is the time when we see the campaigns try to make these attacks stick. now, on this show we try to play it straight, criticizing, for example, the democrats' claims that republicans are conducting a war on women. while at the same time calling out conservatives for saying that president obama is waging a war on religion. the problem is when we demonize people we disagree with, using fear and hate instead of reason. well, tonight we want to tell you exactly what doesn't add up. the biggest three myths of the political season as we head into the summer campaign stretch. outfront tonight, errol lewis and cnn contributor, and my bride, margaret hoover. now, we'll get to your myths in just a second, but the one i think is the biggest so far this cycle is the idea that president obama's economic philosophy essentially amounts to an attack on free enterprise. it's a charge we've heard as rival mitt romney raise repeatedly on the campaign trail. >> we're only inches away from no longer being a free economy, and our democrat friends want us to just keep raising taxes just a little more. >> now, this, of course, rips off that old idea that president obama is somehow a socialist. it's an extension of the anxiety that says a debate about whether the top tax rate should be 35% or 39% is the difference between freedom and the slippery road to socialism. now, the president has tried to clarify that, criticizing, saying that criticizing bain is not an all-out attack on private equitiy, let alone free enterprise. >> my view of private equity is that it is -- it is set up to maximize profits. and that's a healthy part of the free market. >> so, margaret, i think this constant drum beat about an attack on free enterprise, confusing private equity with private industry is a total myth, a total distortion, but i know you've got a very different take. >> well, it is a bit of a myth. i don't think anybody is arguing that the difference between 39% rate and a 35% rate is the difference between socialism and free enterprise, but what you do see is somebody who has been part of the economy, who has been part of the very specific part of growing the economy, private equity, investing, which brings about new jobs, brings about innovation, saying this is going to dampen the economy. >> so what do you think from the republican perspective is the biggest political myth we need to bust? >> one of the things you see in these bain ads, president obama hasn't been hammering mitt romney that long, romney has had a lot more opportunity, what you're seeing is a rift from the democrats that somehow rich republicans have made their wealth on the backs of the working poor and that rich republicans don't have any ability to have any sort of compassion for people who have been hit hard during this economic downturn. >> now, we've got a clip that el straits just that. >> they weren't concerned about your health. it was like working in the sweatshops of the '30s. >> private equity is not, per se, bad. but what bain capital did was not capitalism, it was bad management. >> what he does is he goes on to say just after that, they go on to paint this illustration of mitt romney as a guy who simply can't be president because he doesn't care about people who have lost their jobs. and this notion that conservatives can't have compassion for people who are hurting is a rift that we've seep since the great depression when herbert hoover was tagged for not carriage about people that were hit by the economic downturn of the 1929-1930s. >> so that myth needs to go. >> not only does it need to know, we know about mitt romney's personal charity. he gives $4 million in charitable contributions. we know there are plenty of examples, we know he's a man of compassion. >> now errol, your myth is the classic thing we hear over and over that the president is constantly apologizing for america. it's something we've heard a lot on the campaign trail. let's take a listen. >> the president went about this all wrong. he went around the world and apologized for america. >> we will stop the days of apologizing for success at home and never again apologize for america abroad. there's no reason to apologize for the united states of america, and i will not do so if i'm president. >> errol? >> amazing, amazing. look, it's the name of his book, "no apology." he's made it a centerpiece of his campaign and it just didn't happen. politifact gave mitt romney a pants on fire rating because the reality is the president went to cairo and made major speeches, he went to the united nations, he spoke at the cia headquarters. he said over and over again the same things over and over again, which is based on shared values, common interests and mutual respect, he wants to inaugurate a new relationship between america and the world. it was something he campaigned on. it was something he promised. it's something he's begun to deliver on. never does he say i'm sorry. i'm sorry for what the united states has done. what he has said is that there's going to be a new policy. there's going to be a new approach. that he wants to have a new diplomatic relationship. he uses the words of diplomacy. >> do you think these stereotypes are rooted in a hangover from the late '60s when the anti-war against vietnam came to be seen as anti-american when the president was 8 years old? >> it's a very easy thing to sort of fall into. i think where mitt romney is coming from, he's haurking back to the days when the united states wouldn't apologize for anything. as obama has put it, the days when fdr and churchill could sit over a glass of brandy and divide up the world. we're long past those days. >> let's do a lightning round because we're outfront on this show. dust off your chris crystal bal take a look at what dangers lie ahead for the campaigns. >> on the romney campaign, he's got to develop some stances on foreign policy, in response to errol, because this election may not be about economics. everybody thinks it's going to be about jobs. but in 2008 we thought this was going to be a national security election. it was two weeks before the stock market blew up on september 14th. you never know what the election will be about. >> and obama? >> for president obama, i think he's got to be very careful when he's talking about the economy so as not to wage class warfare. it is often a frequent problem the democrats find themselves in. >> i think the obama campaign has to worry it might in fact be a case where people say he got us out of iraq, he got us out of afghanistan. thank you very much. as they said to the first president bush, we don't need you anymore. we want to deal with the economy now and he could be perhaps another first term president. >> we'll seechlt it. it's going to be a wild election ride ahead. thank you both very much. a new report gives terrifying details about a plot by iranian-backed terrorists to kill americans. and did the butler do it? that's a question everybody is asking in a scandal that has rocked the vatican. and this sounds like a story we've heard before. a female foreign exchange student found dead with americans being detained as part of the investigation. no, this isn't amanda knocks all over again. it's the latest murder mystery in tokyo. 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>> they don't surprise me in that, look, iran doesn't want a full-on military to military conflict with the greatest military power in the world, that is the u.s. and so it makes more sense to me that they're willing to engage in this sort of tit for tat. we've seen attacks in india, thailand, georgia, all of which are these low-level assassination attempts using magnetized bombs. it's deniable, it's limited in terms of its effect and so that they think they can get away with is a push back to western and american governments without precipitating a full-on military conflict. >> so this is out of the iranian sponsor playbook. >> right. >> but is there a precedent for targeting american diplomats abroad? that does seem to be new. >> it is new. we know going back to the '70s and '80s, the targeting of american diplomats, particularly in lebanon, was not -- did happen. but we haven't seen that now for more than 30 years. so the notion of targeting american diplomat overseas or in the case of the saudi ambassador here in the united states, doing a targeting on u.s. soil, both push the red lines that have traditionally been observed by iranian american officials. >> the biggest red line of all is the biggest question of all. is this -- could it be construed as an act of war for a foreign power to target for assassination an american ambassador? >> absolutely. and remember, john, we heard that argument debated in congress after the targeting of a saudi official. imagine absolutely, if there is hard proof, hard intelligence, credible intelligence that they were actually targeting and undertook steps to assassinate an american official in a foreign country, absolutely it should be considered an act of war. >> and all this is happening at a very pivotal, very rocky time in negotiations with iran over its nuclear program. does this give the west a little more leverage to use at the negotiating table? >> absolutely. look, when you read the article in the "washington post" what he makes clear is that the iranians appear to have pulled back on this plan as they got closer to negotiations. not wanting to upset the apple cart, understanding that if this became revealed, it could very well derail negotiations. and so it will be interesting to see how the united states will use this as leverage, as a bargaining tool, if you will, in the ongoing negotiations. >> how would you advise they use it? >> listen, i have to tell you this is one of those where it's absolutely so far beyond the pail, it's more than a bargaining chip. i actually think that the americans ought to threaten to pull back from the negotiations. you can't have a negotiation where your adversary on the other side of the table is threatening you with violence. >> thank you, fran townsend. >> sure. next, leaked documents, cardinals accused, and a high-powered official out of a job. no, this isn't the latest dan brown novel, it's a real story that has roiled the vatican. later, he knows how to rock 'n' roll all night, but now we want to know who's going to rock gene simmons' vote this fall. 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what were their contents and why would he want to leak them to the press? >> let's start with the contents first. the documents that have been rolling out of the vatican really since january that collectively constitute what is known as the vati-leaks scandal cover a wide range of ground, including some things that are almost sort of comically surreal, such as an anonymous memorandum about a plot to kill the pope that most people don't take seriously. so we go from that extreme to very damaging revelations about the inner workings of vatican finances, alleging corruption and cronyism and also raising questions about the effectiveness of the new measures, the new transparency measures pope benedict xvi has created to try to get the vatican on the white list of countries that meet international standards in the fight against money laundering. the motives for releasing all of -- >> john, is this evidence of a power struggle going on inside the vatican? >> well, that gets us to the question of motives, doesn't it, and that's really the $64,000 question to which we don't have a hard answer. gabriele's lawyers have indicated he's cooperating fully with the investigation so hopefully at the end of this we will know more. but the two most popular theories at the moment would range from this guy is a whistle-blower in the classic sense. the italian journalist who tomorrow this was leaked has described his source as someone who believed in transparency, that is that too many secrets had accumulated that needed to see the light of day. that's one theory. the other would be that gabriele is an instrument in an internal power struggle between currents that are favorable and unfavorable to the current prime minister of the vatican, that would be the pope's secretary of state, cardinal bertoni. >> that's a lot of intrigue in a very small state. paul callan, let's talk about the legal process that occurs in the vatican. the butler is charged with aggravated theft. what is the process that exists inside the vatican state? >> like everything else in the vatican, it's shrouded in mystery and they are an independent sovereign state that exists within italy, within rome itself. and although the pope is an absolute monarch, there is a judicial system in place. now of course they're used to dealing with sort of minor types of crimes, not anything of a major sort, but they have an entire court system with an appellate system built in. but because the pope is the absolute monarch, he can intervene at any time and pretty much handle the case the way he wants to or forgive somebody for having committed a crime. so if somebody is founding guilty, they then get sent off to the italians to be put in jail. they don't have jails in the vatican. >> no jails in the holy city. >> that's right. >> they would go to rome. john allen, i wonder what this says about the system in place. the vatican denying strenuously that any cardinals are being investigated. are you hearing about others being charged? >> yeah, i would say from the announcement early this week that paolo gabriele had been arrested, there has been real skepticism among many vatican watchers about how culpable he may be. that is whether or not there may be an innocent explanation for the secret documents that were allegedly found in his apartment or if he was in fact purloining documents, photocopying them and leaking them to someone. was he doing that as someone else's behest. everyone around the vatican knows this gouy. he's known to be a simple, very devout guy. i think many people are skeptical that ultimately he could be the mastermind of this affair. >> paul, will the italian government take this on? do they want this fight in their courts and their jails? >> i'm sure they probably don't, but this is always the subject of negotiation between the vatican and the italian government. i mean they have to basically get the italians to exercise jurisdiction and take the case, and they can then send the case on. there was a case a few years ago where the pope was shot, you remember that case. that got sent over to the italians and they took it over. so it's happened in the past. >> john allen, final question. is there any connection to these documents being leaked and the dismissal of the head of the vatican bank? >>