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CNN LATE EDITION WITH WOLF BLITZER

Tom Ridge Discusses War on Terror; Levin, Thompson Talk About Wall Street Worries; Interview With Maleeha Lodhi

Aired July 21, 2002 - 12:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
WOLF BLITZER, HOST: It's noon in Washington, 9:00 a.m. in Los Angeles, 5:00 p.m. in Scotland, and 8:00 p.m. in Moscow. Wherever you're watching from around the world, thanks for joining us for LATE EDITION.

We'll talk with the U.S. homeland security director, Tom Ridge, in just a moment, but first, this news alert.

(NEWSBREAK)

BLITZER: The Homeland Security Department in the United States does appear to be one step closer to reality. Just a short while ago, I spoke with the U.S. homeland security director, Tom Ridge, about that future department, the war on terror and much more.

(BEGIN VIDEOTAPE)

BLITZER: Governor Ridge, thanks once again for joining us on LATE EDITION, and let's get right to the issue at hand.

Right now, how vulnerable is the United States, American citizens, U.S. interests around the world to another major terror attack?

TOM RIDGE, HOMELAND SECURITY DIRECTOR: Well, since 9/11, obviously, we have been on a heightened state of alert, because we know that al Qaeda has targeted U.S. interests in this country and abroad.

And it is for that reason that every single day since 9/11, whether it's the intelligence community, the law-enforcement community, the corporate community, Americans and those who protect our interests around the world along with us have been on a heightened state of alert, because we know, if they have the capacity and the capability to strike, they certainly have the will to do so.

So, we remain on an elevated state of alert.

BLITZER: That elevated status is yellow, code yellow, right now. What would it take to change that status, to go to an even higher state of alert? The highest, of course, being red.

RIDGE: Wolf, the threat advisory system is based upon information, and if we had specific, credible information targeting a particular economic sector, targeting a community, targeting a particular venue, it's conceivable that, based on that information, we could go to the next level or two.

But again, you know, the yellow condition, the elevated condition is a recognition in this country that America is the terrorists' number-one target. And as they develop the capacity to attack us, to undermine our way of life, to kill innocents, we need to maintain that elevated awareness for the foreseeable future.

BLITZER: Is there any reason to believe that, as we approach the first anniversary of 9/11, that that threat level should be elevated, that there's a greater threat as the anniversary gets closer?

RIDGE: Wolf, that's a good question. Again, it is predicated upon information. I think there is, obviously, some symbolic concern that, as we move closer to September 11, there might be action.

But bin Laden and the terrorists and the terrorist community generally are strategic actors. I don't think they'll be driven as much by the date as to when they either perceive there's a vulnerability or a weakness, and then match that up with their ability to strike at that time.

So, again, we would look at certain dates with a certain level of anxiety, but, as strategic actors, these terrorists, these people have proven and demonstrated that they'll strike when they're ready to strike, and it's not necessarily calendar-driven.

BLITZER: So you still work under the assumption that al Qaeda, Osama bin Laden and related terror organizations have a capability to inflict very severe damage to the U.S.?

RIDGE: I think it's very important that we operate under that assumption. It's pretty clear, in both the statements of Osama bin Laden and al Qaeda, as well as the documents that we've retrieved from various sources, that this is their goal, this is their intent.

The horror, the tragedy, the suffering that they brought to us on 9/11, which clearly showed the world that these people, who have hijacked a religion to justify their evil, to justify their willingness to kill innocent civilians, is something that we have to accept, unfortunately, as the new threat of the 21st century.

And to the president's -- and the country has responded to the president's call to be on alert, be aware. We have to work together to combat this newest of threats.

And that's at the very heart of the president's proposal before Congress on the creation of the Department of Homeland Security. We need to reorganize ourselves, reorient ourselves to the fact that this is an enduring vulnerability, and that we have to do everything we can that's human and technologically possible, not only just at the federal level, but at the state and local level and across this country, to make sure that we protect ourselves against this evil. BLITZER: There were some eyebrows raised this past week when a top-ranking FBI counterterrorism official, Dale Watson, suggested that he personally believes Osama bin Laden is dead. I want you to listen to what Mr. Watson said.

(BEGIN VIDEO CLIP)

DALE WATSON, FBI COUNTERTERRORISM OFFICIAL: Is UBL alive or is he dead? I'm not real sure of the answer, is he alive or dead. I personally think he's probably not with us anymore, but I have no evidence to support that.

(END VIDEO CLIP)

BLITZER: What did you make of what Mr. Watson said?

RIDGE: Well, I think he, in a very personal way, trying to be honest in response to an inquiry, gave an opinion, but he also mentioned in the same breath, the very same breath that there's no evidence one way or another. So I guess the conjecture can continue through the foreseeable future.

But I think whether or not Osama bin Laden is dead or alive -- and that's important, if he's alive, the president's pledge of "We will get him" -- the bottom line is that his organization is alive and well around the world, and they have targeted the United States as their number-one interest, and they'll do everything they can to undermine us.

So whether he's alive or dead should not, in any way, keep us from the task ahead, and that is making sure that we reorganize the federal government, that we redevelop our strategic relationships with other levels of government, that we work in collaboration with the corporate community and the intelligence community to make sure everything we can to deal with this permanent condition of 21st- century terrorism.

BLITZER: What's your -- you get all the intelligence briefings from the highest levels of the U.S. government. What's your personal assessment?

RIDGE: Wolf, I do get the briefings, but I am surrounded by people who have been in the intelligence community for, not years, but for decades. And when they come up with a firm opinion, that's the one that I will probably embrace. Because I think you could take a look at various components of what we see and interpret it one way or the other.

So I think, again, that is a pure conjecture. What is not conjecture is that there's a strong international organization that is bound and determined to kill innocents, particularly in the United States of America, to advance their cause. That's not open to conjecture. That's a fact.

And that's why the president's calling to Congress to create the Department of Homeland Security right now as the number-one priority for us to enhance our ability to protect ourselves.

BLITZER: A Jordanian-born U.S. resident was arrested in Detroit this past week, a man by the name of Omar Shishani (ph). He's accused of having carried some $12 million in false cashiers checks. Some counterterrorism sources believe he may be associated with al Qaeda. Is he, as far as you know, associated with al Qaeda?

RIDGE: Well, there is some conjecture that, once the apprehension was made, obviously, carrying $12 million of fraudulent checks, as you've pointed out, into this country is something that is an unusual event. And clearly, based on his relationship with others in this community, whether it's al Qaeda or not, it deserves investigation.

And I will tell you that, from the moment he was apprehended, the effort of the intelligence community, but particularly now the FBI, has been enhanced considerably...

BLITZER: Well, is there a...

RIDGE: ... focusing in on this individual and his relationships with others in this country and around the world.

BLITZER: But is there any direct evidence beyond the cashiers checks, places he may have visited, linking him to sleeper al Qaeda cells or to al Qaeda itself?

RIDGE: Wolf, we're in the middle of an investigation because of the unusual event -- somebody that's apprehended with that kind of money. And I think it would be very inappropriate -- although I appreciate the question, and I normally like to respond with candor -- it would be very inappropriate to talk about the direction that the investigation is going.

BLITZER: Let's talk about the president's proposal to create this new Department of Homeland Security. It's winding it's way through the Congress, intensive hearings in the House of Representatives, a leadership committee this past week.

I want you to listen to what the Democratic leader in the House said about all this effort to create this new department. Listen to this.

(BEGIN VIDEO CLIP)

REP. RICHARD GEPHARDT (D-MO), MINORITY LEADER: I don't think it's reasonable for the president or anyone to say "I know the truth. You don't know anything. Pass my bill as it is or you're not for homeland security." It just -- it doesn't make sense to me.

(END VIDEO CLIP)

BLITZER: There are Democrats, as you well know, you have certain concerns. One specific concern is what they say would be a second- class citizenship for some of the members, some of the new employees of the Department of Homeland Security. They wouldn't have the full civil service protections that other federal employees currently have. What do you say about that concern?

RIDGE: I would say that the president seeks to give the new management team of the new Department of Homeland Security the maximum ability to use the men and women in this department, as well as the financial resources committed to homeland security, in as effective way as possible.

The president has requested the freedom to manage for the new secretary and his team. That means the ability to hire people not only from within the public sector, but from the private sector; to reorganize government in the most effective way possible to combat the new threat of terrorism; and to use some of the dollars in a way that doesn't always require a -- requires a congressional appropriation to give the new secretary some ability to move some of those dollars around.

And I would say to that member of Congress that the president had made it very explicit, very clear that the men and women who move into this new department who have collective bargaining rights retain those rights. They retain whistle-blower protection, civil rights protection, veterans preference protection. But there are a couple of things that the president thinks that the new secretary and his team should have. We're combating a nimble, agile, aggressive enemy, and I think it defies common sense not to give the new secretary and his team the ability to move some people around to reorganize and to use some of those dollars if and when a specific need arises.

BLITZER: Is it also your assessment right now that the U.S. military should be allowed to expand its own authorization in the United States to even go ahead and arrest U.S. citizens, which of course has not been allowed in the United States all these years?

RIDGE: No, that approach has not been discussed as a part of the homeland security future. What has been discussed is the civilian support by the military in the event of rather unusual circumstances. Clearly, as governor, I know that calling out the National Guard is something that governors have done on an annual basis. And I've had some very good discussions with Secretary Rumsfeld, who I think has added significant value to the new Department of Homeland Security because he set up a North American Command.

But there's been absolutely no discussion with regard to giving military authorities the ability to arrest in their support of civilian authorities. That is not to say that there may be some time in the future, when the North American Command is completed and the new Department of Homeland Security is constructed, and that the secretary of defense and the secretary of the department of homeland security might sit down together and talk about the future disposition of military assets -- equipment, personnel -- and to discuss theoretically the possibility, under what circumstances that kind of authority might be given.

I've given you so many conditioning statements. The fact that you might discuss it does not mean in any way that you would use it. And I think that generally that goes against our instincts as a country to empower the military with the ability to arrest. But it may come up as a part of a discussion. It does not mean that it will ever be used or that the discussion with conclude that it even should be used.

BLITZER: It's, of course, called the posse comitatus, a very sensitive issue.

But let's move on and talk about another sensitive issue. The House legislation approved by the special committee this past week would give another year before all bags would be required to be screened at airports, instead of the December 31 deadline imposed earlier this year by Congress, it would go to December 31, 2003.

Does the president support waiting another year for that?

RIDGE: Well, I think the president and Secretary Mineta and the Department of Transportation and the Transportation Security Administration accepted the deadlines that Congress imposed several months ago. They'll certainly accept whatever new deadlines they propose. But I will tell you that Secretary Mineta and everyone at TSA is doing everything they possibly can to meet the old deadlines.

There is a question, depending on the particular airport, as to the ability to install some of these massive machines between now and the end of the year, and I think this probably gives the new agency a little more flexibility.

The president and this administration will deal with the deadlines that Congress has set, but there is a certain sense of urgency that Congress has, the president has, and Secretary Mineta has as, as to move this as quickly forward as possible.

BLITZER: As you also know, the House, including many, many Republicans, disagree with the president on the issue of guns in the cockpit as a last line of defense.

Is the president ready now to reconsider his earlier opposition, the Bush administration's opposition to allowing pilots to have guns in the cockpit?

RIDGE: Well, that is a position that I've announced earlier. I think I disagree, frankly, with my former colleagues in the House. I would prefer to see that we consider all the other enhancements that we've made to aviation security and airline security, with the hardening of the cockpit doors, the air marshals and a variety of other things.

But we'll let the Congress work its will through the Senate, see what happens in the conference committee, and the president will make a determination at that time. The process has some way to go, and we'll see what concludes at the completion of that process.

BLITZER: Finally, Governor Ridge, what about you? What about your personal plans? Any change since the last time we spoke about the possibility that you could emerge, once this new department is established, as the first secretary for homeland security? RIDGE: Wolf, I think the answer's the same. I'm grateful the president's given me the opportunity to serve with him in his administration, his extraordinary leadership team that he's put together, in this capacity. But that decision is to be made at a later time by the president. And when that decision is made, maybe depending on that decision, we may or may not have a reason to have another conversation about it.

BLITZER: All right. We'll see what the president decides in the end. It's his call.

Governor Ridge, as usual, thanks so much for joining us.

RIDGE: Good to be with you, Wolf. Thank you very much.

(END VIDEOTAPE)

BLITZER: Up next, the view from Capitol Hill. We'll get congressional reaction to what's being done to fight terrorism. And devastating week on Wall Street. Can investors' rattled nerves be soothed?

We'll discuss those topics and much more with two key members of the United States Senate, Democrat Carl Levin of Michigan and Republican Fred Thompson of Tennessee.

LATE EDITION will be right back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The best homeland security is to hunt the enemy down one by one and bring them to justice.

(END VIDEO CLIP)

BLITZER: President Bush on Wednesday. Welcome back to LATE EDITION.

Joining us now to talk about homeland security, corporate corruption, Wall Street worries, a lot more, are two distinguished members of the United States Senate: Here in Washington, the Democratic Senator Carl Levin of Michigan. He's the chairman of the Armed Services Committee. And at the Greenbrier Resort in White Sulphur Springs, West Virginia, Republican Senator Fred Thompson of Tennessee. He's the ranking member of the Government Affairs Committee. Both senators, by the way, are members of the Select Intelligence Committee.

Senators, welcome back to LATE EDITION.

And, Senator Levin, I'll begin with you. Let's just get to the news that potentially there could be some changes, some consideration given to the long-standing so-called posse comitatus act of 1878 which has prevented the U.S. military from engaging in arrests and other activities normally left to local or state or federal law enforcement authorities.

Is it a good idea to start playing with that right now?

SEN. CARL LEVIN LEVIN (D), MICHIGAN: Well, it's never a problem to study something, but that law served us very well. It has served us well for a long time. It's kept the military out of law enforcement, out of arresting people except in the most unusual emergency situations like a riot or after some kind of a disaster where they have to protect against looting.

But that law, seems to me, is a solid law, and we should not assume that we're going to need to change it.

On the other hand, I don't fear looking at it to see whether or not our military can be more helpful in a very supportive and assisting role even then they have been up to now -- providing equipment, providing training, those kind of things which do not involve arresting people.

BLITZER: It's come into play, Senator Thompson, as you know, because there's a new North American Command, a military command being established and the general -- suggested in the New York Times today that maybe it's time to give it some consideration, take a look at what that law entails. And you heard Governor Ridge, the homeland security director, say, well, they'll be some discussions but they're not going to go as far -- no consideration whatsoever of letting the military even under extreme circumstances arrest American citizens.

Where do you stand on this?

SEN. FRED THOMPSON (R), TENNESSEE: Well, I think we tend to think in terms of worst-case scenarios, and no one is suggesting that the military engaged in that kind of activity, I don't think.

I think what is going to be on the table, and probably what should be, is whether or not the thing such as surveillance along the borders where we now have things such as the Predators, which can help us see what's going on on the borders, which -- thousands of miles, very difficult to deal with, very difficult for law enforcement to deal with. If we could get some help in areas like that, simply on the basis of surveillance, that would be very helpful.

It would go against our traditional posse comitatus principles, but it might be an idea whose time has come.

BLITZER: Senator Levin, you also heard Governor Ridge make the case the president, in this new Homeland Security Department -- there will be about 170,000 employees -- he needs some flexibility for some of those employees that they don't necessarily -- they won't be entitled to the kind of civil service protections that other federal employees, all other federal employees have.

And Tom DeLay, the House majority whip, spoke about the current debate between Democrats and Republicans on this very issue yesterday here on CNN. Listen to what he said.

(BEGIN VIDEO CLIP)

REP. TOM DELAY (R-TX), MAJORITY WHIP: The problem is the Democrats are sitting there wanting to protect their unions, wanting to protect the federal employees to the detriment of homeland security. They're making it a partisan issue -- making a partisan issue out of homeland security.

(END VIDEO CLIP)

BLITZER: Suggesting that the Democrats are basically doing whatever the labor unions tell them to do, that that's a political issue. And the president obviously, he says, needs that kind of flexibility in creating this new department.

LEVIN: The first partisan comment I've heard was from Tom DeLay, just right now. That's the partisanizing of an issue which shouldn't be partisanized.

Civil service has worked well for us, just the way posse comitatus has worked well for us, and before we make adjustments in that kind of protection to make sure that political decisions are not made in terms of personnel decisions, we should be very, very cautious. It's not a matter of unions, it's a matter of a civil service system which has worked well. And this should not be used as some excuse to dismantle it.

Obviously you want flexibility. We have it now where there's some wrongdoing or ineptitude or incompetence. We want to be able to move people. We can do that now.

BLITZER: Should there be two classes of workers at the Department of Homeland Security, Senator Thompson?

THOMPSON: No, nobody's talking about doing away with civil service or anything close to that.

I think it's very important for people to understand, though, that the government in terms of management, the managing of these departments we have now, is not working the way it should. We have agencies that are on the high-risk list. Waste, fraud and abuse. Wasting billions of dollars. We have personnel issues that are with us now in these departments that are much less sensitive than the Homeland Security Department.

So what the president suggesting is that in this new department, where the sensitivities are so great and the mission so important, the new people must have some flexibility in terms of hiring, in terms of moving people around to necessary jobs, in terms of giving people additional pay, in terms of disciplining people, things of that nature that should have been in these other departments for years and years to come.

But because of the same issues that you heard expressed earlier, in terms of civil service versus sound management, which I think is a false dichotomy, but because all this is going on, we haven't seen any reform in any of these areas.

We need to take this department, the most important department in government arguably, as it's up and running, and do some things differently.

It's not a matter of making sure we continue the same old policies in this new department. It's just the contrary. We need to do some things much, much different, in terms of management and in terms of personnel flexibility.

BLITZER: All right, Senators, stand by. We're just getting started. We're going to take a quick break.

We have a lot more to talk about, plus your phone calls, for Senators Levin and Thompson. LATE EDITION will be right back.

(COMMERCIAL BREAK)

BLITZER: Welcome back to LATE EDITION. We're talking with two key members of the United States Senate, Democrat Carl Levin of Michigan and Republican Fred Thompson of Tennessee.

Senator Levin, a lot of people are looking at this new Homeland Security Department, wonder whether the new department will be able to connect the dots, as they say, bringing together the best intelligence information, the best analysis, making sure there are no more 9/11s.

Is the structure there that they can cooperate like this?

LEVIN: The proposal, so far, is very unclear from the administration. And Tom Ridge actually testified very inconsistently within one week -- first in front of the House, then in front of the Senate.

The real issue is whether or not we're going to -- we have to connect the dots. We start with that. There were intelligence failures before 9/11. We don't have the FBI doing what it should be, in terms of sharing information. We didn't get information from the FBI to the CIA. The dots were not connected and have not been adequately connected.

We have a counterterrorism center that receives maybe 10,000 reports of terrorism a month, has 250 analysts, and probably tens of thousands of conversations going back and forth, looking at foreign intelligence. The question is whether we're going to have a counterintelligence center, which really can connect the dots, bolster it up, strengthen it, make it more robust, or whether we're going to try to duplicate it or shift it or have a redundancy.

And in one week, Governor Ridge said we want a redundancy, we want to have two different places doing the same thing. Another week he said, no, we want to make sure that the one counterterrorism center that we have at the CIA really works and provides its product, let it be supplemented at the new homeland security agency.

And of course, they would then assess where our vulnerabilities are and then make sure we give the adequate strengthening to the places which we're vulnerable.

That is a very important issue which our committee, the Governmental Affairs Committee, will be taking up this week. And I really think we need the administration to decide which way they want to go.

BLITZER: All right.

LEVIN: I personally think we should have one place that really works well and have a capability to supplement that...

BLITZER: And then -- but have that...

LEVIN: ... in the Homeland Security.

BLITZER: ... but have that center within the Department of Homeland Security...

LEVIN: Have that...

BLITZER: ... or at the CIA?

LEVIN: ... at the counterterrorism center, which is at the CIA, but make it work a lot better.

BLITZER: What do you say, Senator Thompson? You're studying all these issues as well.

THOMPSON: Yes. Carl and I are both on the committee, and we'll be at work on this Wednesday. It will be one of the more important issues, I think.

We need a strong intelligence component in the new department, in order to help protect the nation's infrastructure. But I'm concerned that we may be trying to do too much. Some would say that we need to solve all of our intelligence deficiencies within this new department. We can't do that.

I've said many times, the CIA, the FBI, the NSA, and others -- intelligence agency components -- need reform. It's so important and I think the problems are so severe, we'd be making a mistake, if we tried to address all of that within this bill.

I think we need to get this department up and running, have an intelligence component there for national infrastructure. But then Congress should come back next year and look at the entire intelligence community.

I mean, after all, the Intelligence Committee right now is at work on an investigation concerning intelligence deficiencies. We'll have that report, presumably, by the end of the year.

So let's just hold our horses and not try to cure all these problems that we have seen, not try to connect all the dots, fill in all the blanks within this new department. It's a separate, large issue that needs to come about, after we finish this work. We're speeding up this work now, as it is. We shouldn't make the mistake of trying to envelop all of the other into this.

BLITZER: And as this, Senator Levin, as this whole creation of this new department unfolds, the fears of more terrorism, there seems to be a growing inclination, on the part of the Bush administration, to get ready to try to take out Saddam Hussein, to overthrow his regime.

The Iraqi foreign minister, Naji Sabri, said this week, "There is no flexibility on the issues of dignity and destiny in handling the vital interests of the country. We will cut the head off anyone who raises a hand to our borders."

How close is the United States to going to war against Iraq?

LEVIN: I don't think we're that close, because I don't think the war plans have been designed or that they've been placed on the president's desk. I think it's important that we continue to carry a big stick, that we continue to make it clear that we would like Saddam out of there.

But when it comes to talking about war plans, those should be kept confidential. It is outrageous that they appear on front pages of newspapers.

But also, it seems to me, our rhetoric has got to be much more complex, our thought processes more complex. There are a lot of real problems here, and the first ones to recognize that, the problems that an invasion would cause, are the uniformed military leaders, who are very cautious, much more cautious than the president's rhetoric about this issue.

We want Saddam to go, obviously, but before there's any kind of an attack, there's got to be a reason for it, which is either that he participated in 9/11 or that he is on the verge of using a weapon of mass destruction.

He might not use a weapon of mass destruction if we don't attack him. As a matter of fact, the intelligence community, I think for the most part, thinks he would not initiate it, because it would lead to his own destruction, and he loves himself more than he hates us. His own survival is first and foremost in his mind.

So we, it seems to me, have got to think through very carefully before there's any kind of a military attack on how long we would be there, who would take his place, what the casualties would be, and so forth.

BLITZER: Senator Thompson, a good idea for the Congress to have an open set of hearings in the House and the Senate and run through all the various contingencies involving Iraq, some of the issues that Senator Levin just discussed? Or would that be a mistake in terms of publicizing for the entire world this debate in the United States?

THOMPSON: Well, I don't know how it could get much more public, when war plans appear on the front page of the New York Times. So I don't object to having those hearings. I think it would be good to have those views fleshed out.

The fact of the matter is that the administration's going to have to have the support of the American people, I think, and the Congress before it moves forward. I can see a scenario that's very likely where they would need to move forward. A lot of people didn't think Saddam would attack Kuwait either.

This is the other aspect of homeland security. When we know that hostile regimes that probably would use weapons of mass destruction now have the capability of developing those weapons of mass destruction, we must take action.

But in order to do that, the American people must understand why we're doing it and what the necessity is. I actually think these congressional hearings can serve that purpose.

BLITZER: All right. Senators, stand by. When we come back, we're going to switch gears, talk about corporate greed, what's happening to the U.S. economy.

Our conversation with Senators Levin and Thompson and your phone calls, when LATE EDITION continues.

(COMMERCIAL BREAK)

BLITZER: Welcome back to LATE EDITION. We're continuing our conversation with two key members of the United States Senate, Democrat Carl Levin of Michigan, Republican Senator Fred Thompson of Tennessee.

Senator Levin, Alan Greenspan, the chairman of the Federal Reserve, was outspoken this week in speaking about some of the economic problems, the Wall Street jitters, the causes of some of these problems, earlier this week, when he testified before Congress. Listen to what he said.

(BEGIN VIDEO CLIP)

ALAN GREENSPAN, CHAIRMAN, FEDERAL RESERVE BOARD: An infectious greed seemed to grip much of our business community. Our historical guardians of financial information were overwhelmed. Too many corporate executives sought ways to harvest some of those stock market gains.

(END VIDEO CLIP)

BLITZER: At the same time, some top economists, business leaders are suggesting the new regulations that you in the Senate want to enact could be worse than -- the cure could be worse than the actual problem, could aggravate the situation, if some of these new regulations go into effect, especially involving accounting procedures. What do you say to those?

LEVIN: That we need reforms, we need government to act, to act wisely, to act thoughtfully, obviously, but we need government to act.

That bill that passed the Senate, the Sarbanes bill, passed on a 97-0 vote. Strong bipartisan support.

We need changes in the way the accounting profession goes about their business. We've got to also have some reforms when it comes to the corporate boardrooms. Too many CEOs have acted as though the corporations are there for their benefit, lining their own pockets at the expense of shareholders and pensioners.

We're going to have a hearing, by the way, this week at my Permanent Subcommittee on Investigations, which is going to look at the role of the financial institutions, including some of the investment banks, in participating in the deceptive practices in some of the books that were cooked and what the role of the banks were in that process.

So we must act wisely, but surely the country is crying for action which makes sense, which changes the culture that's got to be inside the boardrooms, but we need some regulation. I'm glad to hear Alan Greenspan finally supports some regulation.

It'd be good if the president would speak out, by the way, on the Senate bill. He has not yet supported that bill.

BLITZER: Well, what do you say, Senator Thompson? Are you at all concerned that the Congress might be going too far in reimposing some of these new tighter regulations on the business community?

THOMPSON: Well, considering what we could have done, in terms of overreacting, I think we've done pretty well. I think most of the Sarbanes bill was a reasonable approach. And as Carl said, it passed unanimously.

I think, though, that we have to understand that that's not the cure to all of our ills. As he pointed out, you know, board members have to do their job. These large institutional investors, when everybody's making money, seems to ask no questions about anything. They're the ones who, in large respect, sign off on these tremendously high salaries and stock option deals that a lot of these people have gotten. So they have to do their job.

Plus the fact, the American people have to understand, the investor has to understand that stock markets go up, and they go down. And when they're up, you know, it's because we're all smart and when they're down, you know, we look for people to blame, and we look for Congress to solve our problems.

There's a role for Congress. I think we're doing that reasonably well, but the market will have to adjust to these new realities. I think that's happening. Some people probably are going to go to jail. Some companies are suffering that should be suffering because of the manipulations of their books.

And I really think that there's cause for optimism. The stock market's down, but the economy is doing very well. Now, Greenspan pointed that out also. So we may be having a little irrational lack of exuberance right now.

(LAUGHTER)

And I think that that'll correct itself.

BLITZER: Senator Levin, are you among those Democrats who think that there's perhaps something shady going on with President Bush, when he -- 12 years ago, when he ran -- when he was involved in a company called Harken Energy and some of the practices that he was engaged in then, and more recently Vice President Dick Cheney, when he was chairman and CEO of Halliburton Energy? Are you among those Democrats who think that there should be more investigation, and maybe even in the Congress, what was going on?

LEVIN: I'm among those, and I think it's a majority of Americans, who would like to see full disclosure by the president. The SEC has said that he will release documents if the president authorizes the release of all those documents.

I think it'd be healthier for the country, would produce some real confidence for the president to authorize the SEC to release those documents. I think it'd be healthy for the country to have more openness from the vice president, in terms of the documents that he has not yet made public, in terms of his particular situation, both in terms of the corporate situation with Halliburton, but also, frankly, in terms of that energy task force.

Openness is a very important principle.

BLITZER: All right. Senator Thompson, we only have a few seconds. I'll let you have the last word. What do you say?

THOMPSON: Well, I think there's an effort now among many of the Democrats to talk down the president, talk down the vice president right now and, by some, even to talk down the stock market, for political purposes. I think that's a very dangerous game to play.

This comes up about President Bush every time he runs for office. It's 12 years old. It's been looked at by the SEC. I think they're barking up the wrong tree.

BLITZER: All right. That's the last word.

Senator Thompson, Senator Levin, always good to have both of you on LATE EDITION. Thanks for joining us.

LEVIN: Good to be with you, Wolf.

BLITZER: Thank you very much.

And up next, we'll have a farewell interview with a special guest, the Pakistani ambassador to the United States, Maleeha Lodhi. She's heading home. We'll find out why. LATE EDITION will be right back.

(COMMERCIAL BREAK)

BLITZER: Welcome back to LATE EDITION. Joining us now to discuss the hunt for Osama bin Laden and the war on terror is a special guest. Here in Washington, the outgoing Pakistani Ambassador to the United States and a frequent guest on this program, Maleeha Lodhi.

Ambassador Lodhi, thanks for joining us.

We'll get to your decision to return to Pakistan a little bit later, but let's talk about U.S.-Pakistani relations. A dramatic improvement since 9/11, President Musharraf cooperating with President Bush in the war on terrorism. But that's not a very popular stance among all Pakistanis.

How much potential trouble does President Musharraf have from the critics within Pakistan?

MALEEHA LODHI, PAKISTANI AMBASSADOR TO THE U.S.: I think President Musharraf's strategic decisions to join the international coalition against terrorism is something that has drawn widespread majority support in Pakistan.

But people, because we've had ups and downs in our bilateral relationship in the past, do ask the question about whether the U.S., as well as the rest of the international community, will remain engaged in our region on a sustained basis.

Because let's not forget, it was because of the benign neglect of the international community, when the Soviets withdrew from Afghanistan back in the '80s that we were confronted with the kind of blowback that we all had to then deal with.

So this is a very challenging and constructive phase in our bilateral relations, but people in Pakistan do ask this question. And I'm gratified to hear that U.S. officials, including President Bush himself, have said that the U.S. is there for the long haul and that they will be sensitive.

BLITZER: But is President Musharraf there for the long haul, in terms of trying to seek out remnants of al Qaeda, the Taliban, perhaps even Osama bin Laden who, many believe, is on the border someplace between Pakistan and Afghanistan?

LODHI: Well, Wolf, as you know, we've had several assaults on our resolve to continue in this war against terrorism. And these assaults have taken place in the shape of our innocent citizens losing lives and assault of a backlash against the policies that we have followed.

But we will not waver in our resolve, and we will not be deterred in carrying this process forward. But I think I have to say that we must wage this battle with great care, because if we have to win this battle decisively, we must ensure that the root causes of terrorism are also addressed. And ultimately, for this war against terrorism to be sustainable, we must win the hearts and minds of people.

BLITZER: We know about the terrorist attacks in Islamabad, at that church there, in Karachi. We know about the murder of The Wall Street Journal reporter Daniel Pearl. Do you suspect that al Qaeda was responsible for these attacks?

LODHI: Well, you know, we are looking and examining every option. But it would be very premature for me to tell you something, which our authorities are already seized of and are looking at every possible angle to make sure that those who carried this act out, which took the lives of innocent Pakistanis as well as innocent foreigners, should be brought to justice.

BLITZER: How much of a capability do you believe al Qaeda still has?

LODHI: Well, I think there has been a dispersal of al Qaeda elements in various parts of Afghanistan, as well as my country. But I can speak for our capacity to continue the fight, because the people of Pakistan are with us and we have not wavered, as I said before, in this fight because this is a common cause of all nations today.

BLITZER: Your president, President Musharraf, months ago speculated that Osama bin Laden was probably dead. Is that your assessment right now?

LODHI: Well, we -- it's hard for me to say, with any degree of certainty, what his whereabouts are or whether he's dead or alive. It's hard for me to say.

But what I can say is that my country continues to remain on the front lines, and it's important for the international community to continue to support Pakistan and to support Pakistan comprehensively.

BLITZER: How much of a trigger right now, how much of a danger is there, a nuclear confrontation between Pakistan and India over the disputed territory of Kashmir?

LODHI: Well, it would not be responsible for me to engage in any talk about a possible nuclear conflict, because that's unthinkable. War should be unacceptable in the region for obvious reasons, which is why my country has advocated a peaceful and a political approach to resolving the issues that divide Pakistan and India.

We have not seen India respond to that. We've not seen the reciprocal steps that India needs to do in order to reduce violence so that we can deal with the political issue that is the underlying cause of tensions between India and Pakistan.

We hope that when Secretary Powell visits our region later this month, he's able to initiate a process of reciprocal steps between the two countries that leads to real de-escalation and, above all, to put in place a peace process, so that the root cause of the tensions, which is the disputed issue of Kashmir, is resolved in accordance with the wishes of Kashmiri people.

BLITZER: But correct me if I'm wrong, it's not as tense as it was a few -- several weeks ago. It's calmed down considerably right now. LODHI: Well, yes, tensions have eased. And I think it's important that they've eased, because this could have been a huge distraction for my country as it continued the war against terrorism. And it could have compromised the goals of the global coalition in the fight against terror.

But having said that, the troop deployments remain where they were. India continues to make the kind of statements where we're not convinced that they have rejected war as an instrument of state policy.

BLITZER: But India has rejected first use of nuclear weapons. Pakistan has refused to make that declaration.

LODHI: We regard this kind of declaration as having only rhetorical value. Because the important issue is the rejection of the non-use of any kind of force. My country is ready to sign a non- aggression pact with India which outlaws the use of any kind of force. I think we have gone much further than the Indians are prepared to do.

BLITZER: Tell us why you've decided that this is a good time for you to go back to Pakistan after, what, two and a half years in Washington.

LODHI: Well, Wolf, I first feel very satisfied that I have been able to advance my country's cause and case in your country, and thanks to the American media and yourself which gave me an opportunity to take my message to the American people. Having done that...

BLITZER: Nothing left to do. You've done it all already? Is that it?

LODHI: No, I'm not saying that. I think there's a lot of work in progress but it's important for me to be home, because I want to be a voice in the domestic political process and I want to be participating in Pakistan's evolution to a democratic Pakistan.

BLITZER: So, will you be going into politics?

LODHI: Oh, I'm not ruling anything in and I'm not ruling anything out.

BLITZER: You sound like a politician already.

LODHI: Oh, no, I don't wish to and I don't mean to. I'm only a professional, and I'd like very much to make my contribution to the country that I come from.

BLITZER: Well, you'd be living in Islamabad, right?

LODHI: Yes.

BLITZER: We have TV cameras there. We hope you'll continue to be a frequent guest on this program. Good luck to you, Ambassador Lodhi.

LODHI: Thank you for having me.

BLITZER: Thank you so much.

And coming up in the next hour of LATE EDITION, can the U.S. intelligence community prevent a future terrorist attack? We'll ask two key members of the House Select Intelligence Committee.

Then, a five year old girl is kidnapped and brutally murdered in the United States. What's the latest in the case of little Samantha Runnion, and what can parents do to prevent their worst nightmare?

Plus, your phone calls, letters, Bruce Morton's essay, all of that when LATE EDITION returns.

(COMMERCIAL BREAK)

BLITZER: Welcome back to LATE EDITION.

We'll get to our interview with Representatives Jane Harman and Saxby Chambliss in just a moment, but first, here's CNN's Fredricka Whitfield in Atlanta with a news alert.

(NEWSBREAK)

BLITZER: Joining me now to discuss possible improvements within the U.S. intelligence community are two key members of the House Select Intelligence Committee: From the CNN center in Atlanta, Congressman Saxby Chambliss of Georgia, and here in Washington, Congresswoman Jane Harman of California.

Thanks to both of you for joining us.

Congressman Chambliss, let's begin with you. In all of your committee investigations over these past several months, what was the biggest problem that you discovered in the U.S. intelligence community in dealing with the war on terror?

REP. SAXBY CHAMBLISS (R), GEORGIA: Well, I think there were a couple of major problems, Wolf. First of all, from the standpoint of the CIA, they have always done a great job of being able to infiltrate terrorists or other criminal organizations around the world with human assets to gather information. That's our best way to get intelligence information on criminal activity.

But in the case of the al Qaeda operation, they simply weren't able to penetrate the leadership, so that they could find out what was going on with respect to the plans for September 11.

The other major flaw that we found is something that we've talked lot about on this show and other shows, and that's a lack of information sharing, both horizontally between federal agencies, as well as vertically, within each of the intelligence agencies -- CIA, FBI, and NSA.

BLITZER: All right. Let's talk about -- let's bring Congresswoman Harman in, and let's talk about both of those problems. The first problem, getting the CIA to be more aggressive, less gun shy, if you will, in trying to recruit assets, agents, human intelligence sources within al Qaeda, other terrorist networks. Are you confident that problem has been resolved?

REP. JANE HARMAN (D), CALIFORNIA: Well, I hope it has. They've been hiring human sources. They say it's up 50 percent. They formally repealed the guidelines that we claimed inhibited their hiring the day after our report came out, and before that they were disregarding them, so those are good steps.

But as Saxby said, these are very intelligent terrorists. They don't communicate in ways that we can hear them with our satellites. And so, we have to get inside their cells to know what their plans are. And the only way we can do that is if we aggressively recruit people like them to be on our side and help us get the information.

BLITZER: And in effect, Congressman Chambliss, that means that U.S. government employees, U.S. operatives, CIA officials, have to literally get in the mud, get in involved with some very, very sordid characters. Some people have engaged in murder and other heinous crimes.

CHAMBLISS: Well, that's right, Wolf. But that's the nature of their business. These folks are very professional at CIA, as Jane and I have been around the world, and even domestically we have talked to a number of CIA operatives about what they do. They are very dedicated people. They are very professional people. They're ready do their job.

They have been operating under some constraints, some resource constraints, as well as the guidelines that Jane referred to. But let me tell you, I'm very proud of the men and women that we have in the field, and I know they're ready to their job.

BLITZER: In the past, though, they've have been -- some of these CIA officials have been reluctant to do it, Congresswoman Harman, because Congress imposed all these restrictions. They had to notify your committee, the Senate committee, and there was the potential for CIA officials to be prosecuted if they did certain things that were deemed unsavory.

HARMAN: Well, it's a complicated subject, Wolf. No one is saying that any criminal can be recruited to spy on criminals. That wouldn't necessarily give us credible information. There has to be some vetting process. But the vetting process can't create a big bureaucracy that chills the effort to get these spies that will get inside of the cells.

I just wanted to add, as Saxby said, the people at intelligence agencies are wonderful, and our report was not criticizing them. What we came down hard on was the systems in place, pre-9/11, which are not the systems that what will lead us to capture Osama bin Laden.

BLITZER: Congressman Chambliss raised the other issue, the other concern, sharing information between the CIA, the NSA, the FBI, all these various intelligence and law enforcement organizations, making sure that people on the left-hand side of the U.S. government know what right side of the U.S. government is up to.

Have they worked that problem out?

HARMAN: Well, actually, Congress -- the House just passed a bill, 422 to 2, that's a pretty good margin, that Saxby and I co- authored, that requires the federal government to share horizontally, across the government, information about terrorist suspects.

And then the more important part is it requires that information shared vertically with first responders, police and fire so forth, stripping out the sources and methods, so that people without security classification can use the information.

I was disappointed to see that it's not in the current draft of the Homeland Security Department bill. I'm hopeful it will be added, and we'll also try to add it to the intelligence authorization bill to get it to become law very soon.

BLITZER: Is it going to be added, Congressman Chambliss, the legislation that you and Congresswoman Harman have co-authored?

CHAMBLISS: Well, I certainly hope so. It was added in the bill that came in -- the markup that came out of the Government Reform Committee on the House side. And Congressman Chris Shays and folks on that committee were really proud of the work that was done on that bill and want to see it included. We want to see it included, as something that is just absolutely fundamental to winning this war on terrorism.

We've got to have some really tough mandates given to our intelligence agencies to ensure that they share this information. If they don't share the information, we can put all the resources we can come up with into this intelligence community and we won't solve the problem and we won't win this war on terrorism.

BLITZER: But, Congressman...

CHAMBLISS: So it's fundamental.

BLITZER: ... you know, Congressman, that the FBI is -- the rap against the FBI, they've been notoriously bad in willing to share information, for whatever reasons.

Do you believe there's been a cultural change, a change in the attitude of the FBI, that's now willing to go forward and let some information be shared?

CHAMBLISS: Wolf, the change is not complete yet, but under the leadership of Bob Mueller, who I have the highest respect for, I think changes are being made, and the right kinds of changes.

I had a good conversation with Director Mueller on Friday of last week, in which we talked about the changes that were -- the need for changes that were pointed out in our report. He was very complimentary of the report, and saying that, "You know, you folks are right, it's basically what we have told you that is wrong with the system, but we're working on it, and it's not going to happen overnight."

But it's simply got to get better than what it was, because if it doesn't, as I say, all the resources in the world won't correct a bad problem.

BLITZER: Some people have suggested, move the FBI and the CIA into the Department of Homeland Security, this new proposed department. That might be a way of resolving the problem. Is that a good idea?

HARMAN: Bad idea. Too much to do. These agencies have to reform, they have to share.

Something that I think is critical, that was added to this bill in the markup by the committee on Friday, with Dick Armey as the chair, is that the White House will perform a critical coordinating function, to make certain that, across the federal government, even those agencies not in the new department, like the FBI and the CIA, are coordinated.

BLITZER: And you want that White House official, that coordinator to be -- have to get Senate confirmation?

HARMAN: Well, I want the White House function now to look like the National Security Council. We need a Homeland Security Council that's statutory. The reason I don't feel strongly anymore about White House confirmation -- about Senate confirmation is that the secretary of the department will have so much power. If the department starts to shrink, as we consider the bill, then I'd like to reconsider the White House function. But we don't need two Cabinet secretaries doing the same job.

BLITZER: Do you agree with the congresswoman, Congressman?

CHAMBLISS: Yes, I do. Jane's absolutely right. We don't need to increase the bureaucracy. We're combining a number of federal employees under one umbrella, a number of agencies. And if we've got too many chiefs over there, then we're just going to increase the level of bureaucracy, and I don't think that's the right direction.

BLITZER: Another issue, Congressman, that you've discussed in the past, and other experts have discussed, is the lack of linguists, people trained in various dialects and languages. It makes no sense for the National Security Agency to record and intercept all these conversations around the world if no one can translate them into simple English, right?

CHAMBLISS: Not just be able to translate them, Wolf, but be able to do it in real time. That's a fundamental problem, particularly at NSA. The other agencies have a similar problem, but NSA is our intelligence-gathering agency that intercepts the airwaves, and they pick up more conversations than any other intelligence-gatherer. And they need to be able to transcribe the intercepts that they receive in real time, to be sure that information gets in the right hands.

And there is a significant shortage of linguists there. We don't have not just Arabic-speaking, but there are a number of dialects within Arabic that we need professionals who know and understand those dialects to be on board, to be able to interpret them and get that information in the hands of the people that need it.

BLITZER: There was an item, I believe, in the new issue of Time magazine just coming out today, Congresswoman, that at the NSA, the National Security Agency, the supersecret, electronic, intelligence- gathering-operation arm of the U.S. government, before 9/11 and even after 9/11, they were encouraging early retirement of sophisticated, experienced personnel, for whatever reason, at a time when the country probably needed them most.

HARMAN: Well, they're probably doing that because of resource constraints, but it is a dumb strategy. I assume they've reconsidered it.

The linguists problem is huge, and there's been virtually no improvement since 9/11. I think we're most critical of that. It makes absolutely no sense to have new systems that are picking up these foreign dialects -- not just Arabic, we have to learn the languages spoken in Afghanistan and other countries -- and then have no ability to understand what we're hearing.

BLITZER: Well, what about that, Congressman Chambliss, no improvement since 9/11, is that what you're hearing as well?

CHAMBLISS: Certainly it's not of the standard that we are looking for. And they have brought on some additional people, they are making some progress in that area. But again, I talked with General Hayden last week, and he knows and understands that that is one of the fundamental problems that they've got.

They're bringing in more people, but again it's not necessarily easy to find those people who understand Arabic and understand the various dialects that we've got to have. But they are making a genuine effort at this point. But Jane is right, it's not to where we would like to see it, post-9/11.

BLITZER: All right, we're going to take a quick break.

We have a lot more to talk about with Representatives Chambliss and Harman. In addition, they'll be taking your phone calls. Stay with us. LATE EDITION will be right back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BUSH: Anytime anybody wants to affect the freedom of our people, they must pay a price. Not because we seek revenge, but because we seek justice.

(END VIDEO CLIP) BLITZER: President Bush in Michigan, Thursday, speaking about the war on terror.

We're continuing our discussion on that subject right now with Republican Congressman Saxby Chambliss of Georgia; Democratic Congresswoman Jane Harman of California. Both key members of the House Select Intelligence Committee.

Congressman Chambliss, I asked Governor Ridge, the homeland security director, earlier in this program if there's any reason that the American public should be more concerned as we approach the first- year anniversary of the 9/11 terror attacks. Is there anything out there that raises your level of concern as September 11 approaches?

CHAMBLISS: Well, there's nothing particularly that I know of today that points to September 11 as the day of another possible attack.

But certainly, Wolf, as we saw on July 4, there will probably be by September 11 a heightened apprehension that another potential attack may be forthcoming, because the terrorists like to pick special targets -- monuments or some piece of history the United States -- to go after, or some symbol of some greatness in America. And the same is true with particular dates.

So, I expect the closer we get to it, we'll probably have an increase in conversation in the terrorist world about the possibility of that.

BLITZER: Let me get Congresswoman Harman to weigh in on that.

What do you say?

HARMAN: I agree. And we have three events very close to each other: Labor Day, when so many Americans travel. Then the Jewish new year is the weekend between Labor Day and September 11. And then we have September 11. So I'm very concerned.

LAX in my congressional district was the subject of a shooting a few weeks ago at the El Al ticket line.

BLITZER: On July 4.

HARMAN: On July 4. There's no link yet between that shooting and al Qaeda, however, that's under investigation. And I'm concerned that there may be some link and there may be sleeper cells in the L.A. area, and I think we have to watch.

And in addition to that, I'm very pleased to see that the administration has released its strategy on homeland security. That's where we need to be focusing. We've got to get this department up, we've got to get that strategy in place and develop systems that create a watch list across the board so that never again can folks that we suspect of being terrorists get in and out of our country without all the agencies that should know about it knowing about it. BLITZER: Well, you raise issue of the El Al shooting on July 4. The shooter was killed obviously by an Israeli security guard, an El Al security guard on the scene. But have you seen anything to suggest that he was part of any organized conspiracy, or was he just an isolated, deranged individual?

HARMAN: It's under investigation. I met at LAX about six days ago with the head of the FBI, the new head of the Transportation Security Administration -- his first day on the job -- and other local officials. They're investigating it. I mean, there is chatter, as we now say, that he may have been affiliated but there's no proof.

BLITZER: What do you mean, what does that mean, "chatter"? Explain to our viewers.

HARMAN: People talking, you know, people suggesting that he might have been connected, he might have been a trial balloon to see how tight security is, and then there may be other attacks on security lines.

But there's no proof. I want people listening to this show to understand, this all under investigation, but there is no proof at this time that he is linked to any terrorist organization.

BLITZER: You want to fill in blanks on that, Congressman Chambliss, go beyond anything that Congresswoman Harman just said?

CHAMBLISS: Well, one favorite ploy of the terrorist community is to try to throw us off balance or off focus, making sure that we're doing our job and being prepared.

July 4 may have been exactly that. They may have been trying to get us to concentrate and get to a higher level of preparation for July 4, and then be really thinking about coming back with some act of terrorism later on after our guard was down.

We know, as Jane said, these folks are very intelligent. As we go through the interrogation process of them we are picking up bits and pieces. That's part of the chatter that she mentioned. And in that chatter, there will be some intentional statements by these criminals to try to get us off guard and try to get us focused in a different direction. So we just have to be careful about that.

And there may not be anything to this. It may very well have been an isolated incident. But the chatter that we're hearing may just be a ploy to get us off guard. So you really don't know, Wolf.

BLITZER: But would it be premature, Congressman Chambliss, at this point, in advance of 9/11, in advance of Labor Day, for the federal government to go on a higher level of alert from the yellow status right now, elevated status to orange or perhaps even red, which is the highest state of alert?

CHAMBLISS: I think, just as a matter of safety and matter of precaution, you're going to see every law enforcement agency in America on the very highest alert as we approach September 11, whether we're picking up any intercepts to that effect or not.

I mean, I think it's just natural that we've got to be prepared for September 11 once again. It is an important date in everybody's mind now, terrorists or not. And so I think, as we approach that, you're just going to see everybody being a little more cautious, a little better prepared.

BLITZER: Congresswoman Harman, you have access to the most sensitive secrets in the U.S. government, in the intelligence community. You hear a lot of Americans saying, you know, we're overblowing a lot of these threats, and people are just needlessly being made nervous and crazy because of the potential threats, no hard information, chatter, which is an amorphous kind of concept.

What do you say to those people who think that we're being overly alarmed needlessly?

HARMAN: Well, two points. First of all, these warnings, as we get them, are very generalized. If we knew specifically that the Statue of Liberty would be attacked next Tuesday, that's something we would act on. So that's on the one hand.

On the other hand, I don't think our threat-warning system has been effective. Too many messages, too many messengers, it's stuck on yellow, this color system that Governor Ridge devised.

I'm hopeful that the Department of Homeland Security will become a reality by Labor Day, that's the goal. And part of it will be to perfect the threat-warning system, including this bill that Saxby and I co-authored that will share information, effectively, but also an analytical center in the bill that collects all the information so we can make those warnings more specific. And this cry wolf syndrome that's going on, named after you, my friend...

BLITZER: Yes.

HARMAN: ... that the sky is falling, the sky is falling, won't occur anymore, and we'll be much more careful and pointed in the warnings we issue.

BLITZER: Let's take a quick caller.

Go ahead with your question, please. Go ahead, caller.

CALLER: Do you agree that President Bush's first strike...

BLITZER: Go ahead.

CALLER: OK, excuse me, let me start again. I'm a little bit nervous here.

Do you agree that the President Bush's first-strike policy is a deterrent toward terrorism?

BLITZER: I think the caller means, Congressman Chambliss, this preemptive strike, potentially, against Iraq, would that be a good idea or a bad idea, even in advance of any direct Iraqi use of a weapon of mass destruction, for example?

CHAMBLISS: Well, I think it depends. I mean, the president's been very direct in stating that there is no plan on his desk to attack Iraq from a unilateral standpoint that will be triggered by any activity in any part of the world, particularly coming out of Iraq.

But we have great suspicion that Iraq is manufacturing weapons of mass destruction. We know that we are Iraq's number-one enemy. So if they are manufacturing weapons of mass destruction, they're going to be used with the intent of killing Americans. We can't let that happen. And we've got to take whatever precautions are necessary to ensure that it doesn't happen.

I would hope that Iraq will eventually let us have weapons inspectors back in their country. They may or they may not. But there may come a point in time when the president does have to make that hard and tough decision to make that unilateral strike. But certainly nobody hopes that we have to get to that point. But we cannot allow Iraq or any other nation in the world to manufacture weapons of mass destruction that may be headed to America.

BLITZER: We only have a few seconds left, Congresswoman Harman, but I very briefly want to ask you, any progress at all being made in the anthrax investigations, the anthrax letters that were sent last fall?

HARMAN: Not enough. We still don't know who the perpetrator is. We now suspect it's somebody in America with very sophisticated knowledge.

What's worrisome -- and it relates to the comment Saxby just made -- is that we're not absolutely sure that all of this material is secure. Something like this might happen again. And preventing attacks, both domestically and internationally, from terrorists that could hurt Americans has to be our first priority. And fortunately now we have a strategy proposed by the administration, which, if implemented, I think will take us a long way down the road to preventing those.

BLITZER: Congresswoman Harman, Congressman Chambliss, thanks to both of you for joining us on LATE EDITION. As usual, appreciate it very much.

CHAMBLISS: Always a pleasure.

BLITZER: Thank you.

HARMAN: Thank you, Wolf.

BLITZER: And up next, a brutal murder case that has shocked the American public. Police have arrested a man in the case of a murdered 5-year-old child. We'll speak to the California sheriff who says he's sure he's found the killer of little Samantha Runnion. And later, a panel of experts tells you how you can protect your children and grandchildren.

LATE EDITION will be right back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SHERIFF MIKE CARONA, ORANGE COUNTY, CALIFORNIA: When I told you that we would hunt you down, wherever you were, arrest you and bring you to justice, if you thought for one minute that I was joking, that we were joking, tonight you know we were deadly serious.

(END VIDEO CLIP)

BLITZER: Orange County, California Sheriff Michael Carona on Friday, after arresting a suspect in the kidnapping, sexual assault and killing of 5-year-old Samantha Runnion in California.

It's a case that has shocked the United States. Little Samantha was snatched in broad daylight from outside her home last Monday. Her body was found more than 50 miles away, less than 24 hours later.

27-year-old Alejandro Avila was taken into custody Friday morning. The Orange County district attorney will file formal charges against Avila on Monday.

Sheriff Carona joins us now from California with the latest.

And I want to bring our viewers up to date. First of all, you said, Sheriff, that you're a hundred percent convinced that you have the man who committed this murder. Tell our viewers in the United States and around the world why.

CARONA: Well, it's a combination of things, Wolf. We have been working this case, obviously, for the four days that we were on it. As part of that, we picked up a tremendous amount of investigative evidence. In addition, once we examined the crime scenes, both here in Stanton as well as the crime scenes in Riverside County, there was a tremendous amount of physical evidence. That is being analyzed, has been analyzed in a preliminary fashion, and is being analyzed.

The combination of the investigative evidence and the physical evidence leads me to conclude that, at a 100 percent confidence level, the man that kidnapped and murdered Samantha Runnion is Mr. Avila.

BLITZER: And, when you say "physical evidence," does that mean specifically DNA evidence?

CARONA: It doesn't mean specifically DNA evidence. DNA evidence is included in that, but there were other pieces of physical evidence that were left behind.

I will tell you that this man acted impulsively. It was a very rapidly developing crime, and he made a lot of mistakes. We capitalized on those mistakes. We had a great team put together. The FBI partnered with us magnificently, and the physical evidence that we were able to gather rapidly at the crime scenes helped us out.

BLITZER: Well, tell us about the mistakes that he allegedly made.

CARONA: Well, Wolf, there are a number of mistakes that he made. One, that he committed a crime in Orange County, because, if you commit a crime in Orange County, we're going to track you down and bring you to justice.

A second mistake that he made is grabbing this young lady and left a trail behind.

Getting into the details of what were actually found at the scenes, I can't do, and that's the unfortunate part about my role right now. I was the man who had the opportunity to coordinate the manhunt, but I don't get the luxury of prosecuting him. So I have to stand down now and keep my mouth shut.

BLITZER: There is a history that Alejandro Avila apparently has. He was tried for sexual molestation of two other young girls years ago. He was acquitted. Did the system fail the public out there?

CARONA: Well, I know, because we were -- that was part of the examination of Mr. Avila, when we were moving through the culling process of trying to figure out what suspects we had, that in fact he had a prior arrest for and he was acquitted on a sexual charge.

I don't know whether the public failed -- the system failed us and we didn't get him off the streets. I have not had an opportunity to look at the court documents, but I know they exist.

BLITZER: Are there any other cases out there that you're looking at involving Mr. Avila and unresolved cases in Orange County or perhaps even elsewhere?

CARONA: Yes, sir. One of the things that we were doing throughout this investigation is trying to match up of investigative evidence, as well as physical evidence that we had, against any known or unknown suspects that may have existed, cases that are unsolved, cases that are solved. Now that we have an individual in custody for this kidnap and murder, the FBI and the Orange County Sheriff's Department will start trying to match up what we know with unsolved cases.

BLITZER: Sheriff Carona, I know you're very, very busy, but you're being generous enough with your time to stick a little bit longer with us. Please stand by.

I want to bring in a panel of experts to join in on this conversation. Joining us in Salinas, California, Marc Klaas. He's the founder of the Klaas Kids Foundation. He's also the father of Polly Klaas, who was tragically kidnapped and murdered by a convicted felon. In our New York bureau, Dr. Casey Jordan, a criminologist. And also in New York, Dr. Michael Baden, a famed forensic pathologist, coauthor of "Dead Reckoning: The New Science of Catching Killers."

Welcome to all of you to our program.

And let me begin with Marc Klaas. You've studied this so closely over the years. Why was the sheriff in Orange County so quickly successful in finding this suspect, yet in so many other highly publicized cases over the years the suspects remain at large?

MARC KLAAS, KLAAS KIDS FOUNDATION: Well, Wolf, first of all, I'd like to again congratulate Sheriff Carona for the wonderful work he did. He understood the importance of a immediate response. He also, maybe inherently or maybe through study, understands the importance of using the power of law enforcement, of bringing in the FBI so that they can utilize those enormous resources and the protocols that they have in place. Of making sure that media has an opportunity to get the word out to the public, and then utilizing the investigative resource of the public. That would be the eyes and ears of people who might be able to bring or shed some light on this kind of a situation.

That's exactly what he did, and he did it in a -- he did it very proactively, he did it without ego. And the result is that this little girl's killer was brought to justice.

The only thing that could have been done better would have been if she had been brought home alive. And certainly he had absolutely no control over that whatsoever.

BLITZER: Dr. Baden, we heard from the suspect's mother, and she insists that her son is not guilty, not involved in this murder of this sweet little girl. I want you to listen to what she said the other day.

(BEGIN VIDEO CLIP)

ABILENA AVILA, MOTHER OF ALEJANDRO AVILA: Every since his ex- girlfriend accused him doing wrong with the girl that she has -- he was found not guilty, and every since then when he's around little kids, he tries to be with somebody else. And I asked him one time I go, "Why, Alex," and he says, "Mom, I rather be safe. I want to have someone with me in case they want to accuse me of doing something that I didn't do."

(END VIDEO CLIP)

BLITZER: Dr. Baden, the sheriff is a hundred percent convinced he's got the right man. Are you?

DR. MICHAEL BADEN, FORENSIC PATHOLOGIST: I think that the sheriff did a great job in identifying a suspect. I think it's the crime lab information that's going to determine whether or not he's connected to the suspect.

And it sounds like, from what the sheriff said, that he's got the evidence that shows that the suspect was there with the young girl in a number of places, in a number of crime scenes -- the crime scene where the kidnapping occurred, the crime scene where the body was dropped off, the crime scene in the car and around the car.

So it sounds like the sheriff has been moved quickly with the crime lab and forensic scientists to make sure that the suspect is the right suspect. And it sounds like he's got DNA evidence on that. BLITZER: And Casey Jordan, I'd like you before we go to a commercial break, I'd like you to weigh in on that specific point as well. Is it early enough in this investigation to conclusively determine that this suspect is the murderer?

CASEY JORDAN, CRIMINOLOGIST: I would avoid the word "conclusively," but I have to tell you that this sheriff gets an A- plus in media savvy and a textbook example of how to run an investigation.

And he says that the evidence is there. I trust him, and I think he's very smart to then leave it up to the prosecutors to make sure they get their conviction, because cases can be lost on too much publicity and too much leakage from the beginning.

BLITZER: All right, Sheriff Carona and the rest of the panel, stand by. We're going to take a quick break. We have a lot more to talk about.

Plus, your phone calls and specifically questions, how you can make sure your children and grandchildren will be protected. Stay with us.

(COMMERCIAL BREAK)

BLITZER: We're continuing our discussion on missing children with the Orange County, California, Sheriff Carona, who's joining us now live. Also, Mark Klaas of the Klaas Kids Foundation, criminologist Dr. Casey Jordan, and forensic pathologist and former New York City medical examiner Dr. Michael Baden.

Sheriff Carona, as we show our viewers a picture of the South Lawn of the White House, where President Bush has just returned from a weekend at Camp David, Marine One on the South Lawn of the White House, I understand that the White House has gotten in touch with you for the excellent work that you've done. Tell us about the nature of that conversation.

CARONA: Well, I have not spoken with the president, and frankly, I haven't spoken personally with the White House. They called me, and I was involved at the command center, and they offered whatever support that we needed from not only the Federal Bureau of Investigation but from the federal government to move this crime -- move the prosecution -- move the arrest of this individual forward.

And I will tell you, I'm very thankful to the president for passing on those good wishes, (UNINTELLIGIBLE) giving us the help.

BLITZER: Do you have enough help, normally, from the federal government, Sheriff Carona, in these kind of cases? Is there anything else that you, on the front lines of these kinds of wars, is there anything else you need from Washington?

CARONA: Well, I can tell you, at least from the Orange County Sheriffs Department perspective, we have a great working relationship with the Federal Bureau of Investigation, have had at least since I've been in office. And every time we've asked, they have respond, like they did in this case, magnificently. They've gotten us the resources.

So I don't have any complaints. I'm thankful that they're here, and again, I'm very appreciate to the FBI and to the White House and the president for making sure those resources are available to us.

BLITZER: All right. Let's take a caller from California.

Please go ahead with your question.

CALLER: Yes. Hi, can you hear me?

BLITZER: Yes, go ahead.

CALLER: OK. I was just curious, as a public, I'm really shaken by the case of this one and also of that of Elizabeth Smart, and both being taken right in broad daylight or in the midst of home. And so, what can we do as a public?

This man went through a prior trial with a jury system that obviously and somehow failed. And is it that it we need tougher penalties as part of the...

BLITZER: All right, well, that's a good question. Let's bring in Dr. Jordan. What's the answer to the caller's question?

JORDAN: It's a little bit of a complex answer, because the fact of the matter is that you cannot protect your children 100 percent of the time. It's not reality based. And I'm more of a proponent for a deterrence, instead of all the energy going into prevention.

And prevention is extremely important. When these sorts of cases happen, you have to be prepared. However, I do think that if you can strike fear in the hearts of potential perpetrators, and if they do fear that they will be caught and apprehended and put to justice, I mean, stopping the crime before it even goes from idea to an act is really, in my mind, the key.

But the fact of the matter is that when you have these abductions, they're so rare and they're so off the chart, in terms of how many variables could be involved in terms of recovering the child, that I think we really need to -- and Mark is a much better expert on this than me -- make sure that the media, the police, the FBI, all work together to get that child back immediately.

BLITZER: Mark Klaas, pick up that point, because the caller mentioned another case, the heart-wrenching case involving Elizabeth Smart in Salt Lake City in Utah. What the American public that's been alarmed by all of these highly publicized kidnappings -- what the American public needs to know right now?

KLAAS: Well, first of all, they need to know that Sheriff Carona implicitly trusted the evidence provided by the 5-year-old eyewitness in the Samantha case, whereas, they seem to have, for whatever reason, discounted the information that has been made available by the little sister of Elizabeth Smart.

But I think you look at the lessons of these two cases. The fundamental lesson of Elizabeth's case and Danielle's and Polly's before that is that, if these little girls are vulnerable in their bedrooms, when they're doing nothing wrong, then every child is vulnerable.

I think that the fundamental lesson of Samantha's case, regardless of how well trained a child is -- and she was very well trained to not only avoid but to resist this type of a crime -- she is no match for a determined predator.

So Casey is correct. You have to get these guys and you have to deal with them in a way that they're going to be able to get their hands on the children.

And you have to really take an approach, Wolf, that begins at the kitchen table and extends all the way to the cabinet table, and everything in between, many of the things which we have already talked about.

Dispel the idea of stranger danger. Instead, substitute that with some other ideas. Number one, kids should always check with parents. They should always be with another person. They should always be with another person. They should always trust their feelings. They should put distance between themselves and whatever it is that makes them feel bad. And they should understand that certain kinds of strangers can help them: women, mothers with children, police officers in uniform. Give your children a cell phone.

But you know what? None of that would have helped any of the young girls that we're talking about right now. So it has to go -- we take the burden off of their shoulders, put it on our shoulders.

I think the federal government can do something. I think the federal government can put the hammer down on these sexual predators and not allow them to continue doing this.

BLITZER: Dr. Baden, you heard from law enforcement in Orange County, people associated with the sheriff out there and the FBI, suggest that the killer of little Samantha Runnion virtually left a calling card when he dumped the body out there in the middle of nowhere, basically saying "Come and get me." What does that mean? What is that all about?

BADEN: That means there was a lot of trace evidence there, and that means there was DNA evidence there, and there may have been tire, shoe print, saliva, hair also there.

And I must agree with the prior comments, that the federal government can do a great deal in preventing this by getting potential sexual abusers out, by analyzing the 100,000 or so rape kits that were collected in criminal cases that are sitting in labs all over the country without the funds to analyze them, because these are often repetitive crimes.

BLITZER: All right, everybody, stand by.

We're going to take another quick break, but more of your phone calls, more of our conversation, more of what you need to know to protect your children, when LATE EDITION returns.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

ERIN RUNNION, SAMANTHA RUNNION'S MOTHER: I cannot tell you all how much all of this has meant to us. You are truly -- you're wonderful to us and our family. Then we come out here every night, and we were working to read everything that you've written, but it takes a long time. And I thank you so much.

(END VIDEO CLIP)

BLITZER: Erin Runnion, the mother of 5-year-old Samantha Runnion, thanking the public for their support.

Welcome back to LATE EDITION. We're continuing our conversation now on missing children.

Sheriff Carona, what specific advice do you have for parents, grandparents, the public at large out there in dealing with this horrendous, horrendous issue that so many of us simply can't comprehend?

CARONA: Well, I'm not a psychiatrist or a psychologist, so I'm not so sure that I'm the one to weigh in on the healing process. I'm struggling with it myself, but it probably is a good heads-up for us as a society, we need to watch over our kids, and, as a society, we need to watch over each other.

Clearly law enforcement isn't going to solve all of our problems that -- because of people out there that would do us harm, and, if we band together, whether it's September 11 or in the situation of Samantha Runnion, working together, we usually do a pretty good job as Americans.

BLITZER: Dr. Jordan, what makes someone go ahead and abduct and sexually molest and then murder a little 5-year-old girl?

JORDAN: Oh, if we knew that, I think we might be able to prevent it, but unfortunately we don't know that.

Very often you're talking about people who could have biological or chemical imbalances, and often coming from abusive families themselves. But then there's what we call the "X factor," the unknown, where there really is no explanation whatsoever, people who don't fit into the average profile of the predatory child-abductor are the hardest ones to catch, and, to a certain extent, this case was fortunate, because the predator did match a typical profile of such an offender.

But there are thousands of children out there who are missing and unaccounted for that we must not forget, because we might be missing them because we are putting the predators into this little pigeonhole of what they might look like or act like, and you should never be that specific, because the predator could be anyone, and is far more often a family member or a neighbor or someone known to the child.

BLITZER: Is she right, Marc Klaas, Dr. Jordan? Is she on track with that assessment?

KLAAS: Yes, she's absolutely correct. We keep putting this emphasis on stranger-abduction, but remember, Danielle van Dam was abducted by a neighbor. There's no indication at all that it was a stranger up in Salt Lake City. The possibility exists that this man had even made previous contact with little Samantha Runnion, having been in and around the community. The Megan Kanka (ph) case, another one where a child was lured by a puppy, there was no stranger involvement there.

But that doesn't make these situations any less predatory at all. Wolf, you didn't do this, but a lot of people have replayed the 911 call of the individual who found Samantha, and that's one of the most excruciating things I've ever heard in my life.

But I think people have to remember that, as difficult as it was for that man, as difficult as it is for Samantha's family and the rest of us in America to listen to that, that doesn't come within a country mile of what that little girl and all of these other little children that we're talking about were experiencing during the last couple of hours of their lives. There is some real evil in this country, and we have to do something about it, and we have to put our foot down and take a stand.

BLITZER: Dr. Baden, I see that you've now been brought into another highly publicized case involving a missing person, Chandra Levy. Her family, her attorneys bringing you in, together with some other experts, to take a closer look at some of the evidence out there. Tell us what that's all about.

BADEN: Well, that has to do with giving a second opinion in a forensic pathology case, just as one does in a surgery situation, and there, contrary to the way this sheriff acted, there, if that body had been found quickly, there'd be all kinds of trace evidence, potentially, that could have led very quickly to how she died, the cause of death, which is still unknown, and who might have done it. So I think rapid action and doing a great search, as was done by the sheriff here, might have had a different kind of outcome if it had been done with Chandra Levy, and is a good model for future missing people.

BLITZER: Sheriff Carona, we began with you. We'll wind up with you as well. Wrap this up. Where is this case now heading, this Samantha Runnion awful murder, and what is going to be expected in the next few days?

CARONA: Well, the case now has been turned over to the district attorney. He will have to file charges based upon his analysis of the investigative information that we've given him. We expect -- we've heard through the grapevine that he'll do that tomorrow somewhere between the hours of 9 and 12 on the West Coast, and now the public's going to get a chance to watch an amazing story of cooperation, great work by trained law-enforcement professionals working together to bring this man to justice. They're going to hear the story as this case unfolds. Unfortunately, I'm not going to be the man that gets to tell the story.

BLITZER: But as far as you know right now, Sheriff, the suspect in this particular case acted alone?

CARONA: At this point in time, we believe that he acted alone, Wolf, but I will also tell you that we still have investigative teams, a significant number of investigative teams out there, looking at the crime scenes, analyzing the evidence, to determine whether or not there were additional individuals involved with this crime.

BLITZER: Sheriff Carona, good work out there, thanks so much for joining us, Marc Klaas, Casey Jordan, Dr. Michael Baden, thanks to all of you as well, appreciate it very much.

Coming up next, your letters to LATE EDITION, plus Bruce Morton's essay.

(BEGIN VIDEO CLIP)

BRUCE MORTON, CNN CORRESPONDENT: It all sounds like a president who has discovered that the world is more complicated than he thought it was. Other countries don't always do what he wants.

(END VIDEO CLIP)

BLITZER: Has President Bush lost his way among the pitfalls of government? We'll take a look. Bruce will have his thoughts. Stay with us.

(COMMERCIAL BREAK)

BLITZER: And now Bruce Morton on President Bush. Has he lost his way?

(BEGIN VIDEOTAPE)

MORTON (voice-over): President Bush is a Yale man, of course, and so he's bound to have heard a song Yalies sing. It's called the Wiffenpoof (ph) Song, and one line goes, "We're poor little lambs who have lost our way." That could, these last couple of weeks, be the theme song for the Bush administration.

The president who once called on Israel and the Palestinians to change their ways in search of peace, now is one with Prime Minister Sharon. Israeli attacks in the West Bank are legitimate anti-terror moves; it's the Palestinians alone who must change.

The United States first said it would boycott U.N. peace-making initiatives unless it were guaranteed immunity from an international court, but later it blinked. The president who wanted Osama bin Laden dead or alive now says:

BUSH: The war on terrorists is a lot bigger than one person.

MORTON: The president tells reporters asking about his dealings with Harken Energy Corporation.

BUSH: You need to look back on the directors' minutes.

MORTON: But staffers say those are corporate documents the White House doesn't have and can't release.

It all sounds like a president who has discovered that the world is more complicated than he thought it was. Other countries don't always do what he wants. He makes speeches about the market, but it doesn't listen. Like his father, he's had a big military success, but that old devil economy is nipping at his heels.

Polls show this. A CBS News-New York Times poll shows 48 percent of the sample think the country is headed in the wrong direction; 42 percent in the right direction. That's within the poll's margin of error, but it's the first time wrong direction has won since before the September 11 attacks.

Another poll has wrong direction winning too, for the first time since they started asking the question in January. A Zogby America poll shows the president's approval rating at 62 percent. Many past presidents would have killed for that, but again, it's Mr. Bush's lowest since before September 11.

And that CBS-New York Times poll shows two-thirds think big business has too much influence on his administration.

It's wrong to make too much of this. Most presidents have bad patches. This president may have been overdue for one. He can certainly recover.

He is not condemned to live out the last lines of the Wiffenpoof (ph) Song, which go, "Doomed from here to eternity. Lord have mercy on such as we. Baah, baah, baah".

I'm Bruce Morton.

(END VIDEOTAPE)

BLITZER: Thank you very much, Bruce.

Now for your letters to LATE EDITION.

David from Pittsburgh writes this: "Why can't schools, private or public, operate programs that teach children what to do in a kidnapping situation? I know there are programs out there, but don't you think it's time to make it part of the daily curriculum?"

Jeannette from Santa Rosa, California, says, "Ultimately no amount of training can keep children safe. Self-defense training may even put the child at greater risk and make them feel all the more invincible. The best protection is supervision. That is the job of parents and teachers."

As always, we welcome your comments. The e-mail address, lateedition@cnn.com.

It's time now to say goodbye to our international viewers. Thanks very much watching.

Coming up for our North American audience the next hour of LATE EDITION. We'll hear from the attorney of the so-called American Taliban, John Walker Lindh. And later, we'll hear from an attorney from one of the police officers charged with making a false statement in the beating of an African-American teenager in Inglewood, California.

Then the Final Round, the week's hottest political debates. LATE EDITION continues right after this.

(COMMERCIAL BREAK)

BLITZER: Welcome back to LATE EDITION. We'll get some legal insight into the unexpected twists and turns in two suspected terrorist cases in a moment. But first, here's CNN's Fredricka Whitfield in Atlanta with a news alert.

(NEWSBREAK)

BLITZER: In a surprise deal earlier this week, the so-called American Taliban John Walker Lindh agreed to plead guilty to two charges and avoid a possible life sentence.

Separately, the suspected 9/11 terrorist Zacarias Moussaoui tried to plead guilty to avoid a death sentence, but instead, the judge ordered him to think about his decision for one week.

Joining us now to discuss these cases are three special guests. In our San Francisco bureau, the Walker Lindh attorney, James Brosnahan. In our Miami bureau, the former U.S. Attorney Kendall Coffey. And here in Washington, the former federal prosecutor, Cynthia Alksne.

Welcome, all of you, to LATE EDITION.

John Walker Lindh, James Brosnahan, everyone thought that you would go the route and have a major jury trial involving your client, but in the end you decided to accept this plea agreement. Very briefly, did you think you would lose the full-scale case?

JAMES BROSNAHAN, JOHN WALKER LINDH'S ATTORNEY: Well, I was one of the people that thought it would go all the way. But on Friday night, the government said they had an offer for us. And as the weekend progressed, it became apparent that they were willing to dismiss all of the charges of terrorism, the conspiracy to kill Americans and the conspiracy that had the overt act concerning Michael Spann's death. What that happened, it was something we had to seriously consider, and we did.

There were 10 counts. A conviction on any one could have led to either life imprisonment or 40 years. I think you have to seriously think about what, when you're the attorney for a young man like John Lindh.

BLITZER: The 20 years that he will get, there's a little confusion. Will he be eligible for some sort of patrol earlier?

BROSNAHAN: He'll be eligible for good time off, which would result in 17 years, if he builds that credit. You get 15 percent in the federal penal system. And he'll be sentenced on October the 4th by Judge Ellis in Virginia.

BLITZER: There's a story in one of the news magazines out today suggesting that one of the conditions, one of the reason he accepted this plea agreement was that he would be able to travel overseas after he serves his sentence and, perhaps, go to Mecca for the Hajj, the Islamic pilgrimage. Is that part of the deal?

BROSNAHAN: It is. And every Muslim, as I understand it, should do their Hajj once in their lifetime. And John wished to do that. The government understood that, and we entered into terms which would allow him to do that. It's purely a religious matter.

BLITZER: Does he have useful information about al Qaeda, Osama bin Laden, that the U.S. government will want to have, based on everything you know?

BROSNAHAN: Well, we don't know, because we did not know what they'll will be interested in. What we do know is John has already helped them as much as he could. The fact is, he doesn't know a whole lot.

But he will cooperate with them fully. If he can save American lives, he will do it. As you know, early in the case, he did a lot of talking to people, and it was on the basis that they said, "Can you help us."

But the truth is, being a soldier in the Taliban army, up in the district of Takhar, doesn't let you in on much really valuable information, but he will certainly try to help.

BLITZER: Kendall Coffey, let me bring you into this conversation. I want you to listen to what the U.S. attorney in Northern Virginia, Paul McNulty, said in explaining why he decided to go forward with his plea agreement. Listen to this.

(BEGIN VIDEO CLIP)

PAUL MCNULTY, U.S. ATTORNEY, NORTHERN VIRGINIA: We stand strongly behind the original indictment. And again, if we were to have gone to trial, we are confident that we would have prevailed on all counts.

This plea agreement represents an opportunity for the government to get a very tough sentence, to get cooperation, and to conserve precious resources for the future challenges we face in the war against terrorism.

(END VIDEO CLIP)

BLITZER: As you know, Kendall Coffey, a lot of Americans were disappointed that the government accepted a 20-year sentence for someone that they despise.

KENDALL COFFEY, FORMER U.S. ATTORNEY: Well, it's always attractive to hang them high and for prosecutors to seek the most aggressive charges and the toughest conceivable prison sentences. But this was a very fair result for both sides.

And let's face it, no matter what you think of John Walker Lindh, at the end of the day, he was a bit player. Smallest fish they can get in the sea, and now he's looking at 20 years.

So when you look at things from the government standpoint, a tough, fair sentence under the circumstances. They don't have to worry about bringing up prisoners from Guantanamo, having special forces, medics or other Army personnel questioned aggressively. And in fact there may be although probably not a lot, some benefit from cooperation in the other things. A tough sentence sends a strong message and a very, very good and fair deal for both sides.

BLITZER: Cynthia, a win-win situation in this particular case?

CYNTHIA ALKSNE, FORMER FEDERAL PROSECUTOR: Well, I think we all need to be honest about the fact that the government did not think -- this is not what the government was looking for. I mean, they went from a life sentence to this, the lowest possible counts. So clearly, no matter what the government says, they had a problem with the case and that's why they took this plea.

But it's a win-win in this respect, and that is that I don't think it was in the interests of our criminal justice system to have decisions about Miranda and all kinds of others based on this case. So, I think it's a win-win for those of us who are involved in the criminal justice community.

BLITZER: Mr. Brosnahan, as you know, there are prisons in the United States and there are other prisons in the United States. Any part of this deal suggest what kind of prison John Walker Lindh will serve in? You know, there are country club prisons and there are hardcore prisons, as you and our viewers well know.

BROSNAHAN: Well, this morning in the newspaper the spokesperson for the Bureau of Prisons said that they have a policy of trying to have their prisoners within 500 miles of their home destination. That would be California. That would be Northern California, and there are two prisons out here.

The government will not oppose him being out here, and we want to get him here. He has family, a mother and father, a brother and a sister. But that will be up to the Bureau of Prisons, and we're going to meet with them and talk with them. We hope that he'll be out here in California.

BLITZER: Are you at all concerned, Mr. Brosnahan, about his physical safety inside a prison, given the passion of the crime that he committed?

BROSNAHAN: Having been in the middle of this for seven months, we're aware of the security issues that attach here. I think it will helped somewhat by the dismissal of all terrorism counts; anybody that knows that.

But it is definitely an issue. It is one the government discussed with us and we with them. It's certainly one that the Bureau of Prisons will have in mind. And steps will be taken, I'm strongly hopeful, that will secure John in the years ahead.

BLITZER: Let's take a caller from California. Please go ahead with your question.

CALLER: Wolf Blitzer, pleasure to speak with you. Is it a fact that if release this top secret information, we'd have to release the information about Don and Mike not being on in New York? Is that a...

BLITZER: I think we have a weird caller, but that's all right.

Let's talk a little bit about Zacarias Moussaoui and bring in Kendall Coffey. We see a plea agreement involving John Walker Lindh. Now we hear that Zacarias Moussaoui, the so-called the 20th hijacker, is now saying he's ready to plead guilty himself. The judge said, think about it another week. That may not necessarily be the best course.

Kendall Coffey, is there a potential plea agreement at stake in this particular case as well?

COFFEY: I don't think so. I don't think Zacarias Moussaoui has any intention of giving information to the United States government or making a sincere plea deal. Everything he has done in this case is not calculated to a credible U.S. legal defense, but rather, since he didn't get to crash himself into the World Trade Center he seems bent on crashing himself into the U.S. justice system, doing everything he can to create disruption and, he thinks, an ability to embarrass and discredit the U.S. system of justice.

I don't think this is legitimate. I think his basic mission is to say, look, they gave an American John Walker Lindh some kind of deal. They won't give me a deal when I try to plead guilty, and even though I had nothing to do with 9/11, they're going to try to execute me.

COFFEY: It may not play in the United States, but remember, his pitch is to score propaganda cheap thrills in Third World communities where they don't like the U.S. too much.

BLITZER: Cynthia?

ALKSNE: Well, the judge still did the right thing here. She had to let him have the week. Otherwise what would have happened is, he would have pled guilty in this rambling "yes, I did it, no, I didn't," back-and-forth manner in which he does. Then, a week from then, he would have said, "oh, I changed my mind, I really wasn't sure, I really hadn't had a chance to think about it," and the appellate courts would have said, you have to let him withdraw that guilty plea, that's what our law requires. If somebody really doesn't understand what they're doing, he would have been able to withdraw it, and it would have been even a bigger stunt.

So the judge did the right thing here, although the end result may never be a guilty plea.

BLITZER: And, Mr. Brosnahan, as you well know, and the case of Zacarias Moussaoui, a very different case than the case that you represented involving John Walker Lindh...

BROSNAHAN: Right.

BLITZER: He refuses even to have a criminal defense attorney help him. He says he's going to represent himself.

Give us your take on this notion now that he's ready to plead guilty.

BROSNAHAN: Well, for years I've believed, and I think many judges believe, that the right to represent yourself is no right at all, and it's one of the things in our legal system that should be perhaps reformed.

But he had a terrific lawyer, he had Frank Dunham. He's had other people who were available to him if he would talk to them, some of them among the very best death-penalty lawyers in this country. And he will not talk to them, is my understanding. He's lost in our system.

And definitely he -- quite different from John. It's funny how the two of them are linked. It's the first time I knew of guilt of association because you're in the same jail. But otherwise, John and Moussaoui couldn't be more different.

BLITZER: And is that your assessment as well, Kendall Coffey?

COFFEY: Couldn't be more different, in every way. Ironically, if Moussaoui had someone like a Jim Brosnahan representing him and had taken his advice, this would be a very different case. Instead, it's something that really puts the judge in a difficult box, because, on the one hand, she doesn't want to let this guy keep making ranting, raving statements and trying to disrupt the court. On the other hand, unless she finds him incompetent, she's stuck with it, because of the right of self-representation.

And don't forget, the standard for competency isn't whether you can represent yourself well, it's a very basic ability to know what's going on, and it's about the same standard as being competent to stand trial. So she's in a very difficult position of denying this guy a right to self-representation, while at the same time recognizing this is not the right thing for the justice system or anyone else.

BLITZER: All right. We're going to have to leave it right there. Thanks to all of you. Stand by, though, for a moment.

James Brosnahan, I want to thank you for joining us for this discussion.

Kendall Coffey and Cynthia Alksne are going to stay with us for our next discussion. Just ahead, two police officers plead not guilty to charges stemming from a beating controversy in California. We'll get the inside story from the attorney for one of the officers.

Stay with us.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

JOHNNY COCHRAN, ATTORNEY: Nothing is going to clear his client of what took place here, because John Barnett's a great lawyer, he's an excellent lawyer, but he would never be able to explain a 16-year- old, or any person, in custody slammed on the police car, punched in the face, when he's helpless. There is no explanation for that.

(END VIDEO CLIP)

BLITZER: Johnny Cochran, the attorney for Donovan Jackson, the African-American teenager who was handcuffed and slammed onto the hood of police car two weeks ago.

Welcome back to LATE EDITION. We're continuing our conversation with a former U.S. attorney Kendall Coffey. He's in Miami. The former federal prosecutor Cynthia Aksne. He's here -- she's here, excuse me, in Washington. And joining us from Anaheim, California, Ronald Brower. He's the attorney for one of the police officers charged in this incident, Bijan Darvish.

Mr. Brower, welcome to LATE EDITION. And as we roll the videotape that all of our viewers in the United States have, by now, probably seen, first of all, tell us your client, which one was your client, and what is he specifically charged with doing?

RONALD BROWER, ATTORNEY FOR BIJAN DARVISH: My client is the individual on the right. He does not have a hold of Donovan Jackson. He is the one with the shaved head. And he's charged with writing a false police report, only.

BLITZER: But did he acknowledge that he also took a hit or beat the suspect in this particular case?

BROWER: Well, I wouldn't classify it as a beating. He did say in his police report, very forthrightly, that during the struggle that's on the gas station surveillance tape, that he had to hit Donovan Jackson in the face twice.

I think it's important to note, when the grand jury saw that and was aware of that and the district attorney's office that they did not feel that was a crime nor excessive force in that situation.

BLITZER: Why did he think that he had to hit Mr. Jackson, the 16-year-old suspect, twice in the face? What happened?

BROWER: What happened that was there was a struggle, and you can see it on the gas station surveillance tape, and Donovan Jackson struggles mightily against four police officers. He grabbed my client, he pulled him down toward him. He broke his hand free, and he wouldn't let go of my client. And he was flailing around, striking the other police officers. And so, my client in order -- could not break loose, and he punched him twice in order to get himself free so he wouldn't be injured.

BLITZER: Your client, though, is charged with making a false statement. What did he say, allegedly, that was false?

BROWER: Well, that's open to some speculation. The charges, as they came from the grand jury, do not specify the part of the report which is false.

And indeed, I've been compared his report to the reports of the deputy sheriff who initially had charge of Donovan Jackson, and to the -- another police officer, you can see on the video there, the black gentlemen, and my client's police reports coincide exactly with how those officers describe it.

So we're a little bit of a loss right now to know which is the false part of the police report.

BLITZER: Kendall Coffey, I want you to listen to what Johnny Cochran, the criminal defense attorney now representing Donovan Jackson, said about this entire incident, and we'll pick up this conversation where Mr. Brower just left off. Listen to Johnny Cochran.

(BEGIN VIDEO CLIP)

COCHRAN: This is a 16-year-old child who had done nothing to warrant this. So you can hear all the talk you want to about breaking down the film, frame by frame. But when you break down that film, frame by frame, you're still going to see a 16-year-old youngster who is handcuffed and helpless when his face is slammed into a car and he's punched while he's (UNINTELLIGIBLE).

(END VIDEO CLIP)

BLITZER: Is this a slamdunk -- you'll forgive the expression -- case against these police officers?

COFFEY: Well, no case against police officers is a slamdunk. I mean, they are going to get every benefit of reasonable doubt and probably the benefit of every doubt. And many times, that's most appropriate.

But what happened here, and the difficult, unanswerable question is after someone is handcuffed, their hands are basically behind their back, they are immobilized, they are subdued. What on earth justifies beating them further?

That's what happened here. That is what is not acceptable to the law enforcement community. It does a disservice to our men and women who risk their lives on the streets protecting us to say that they beat suspects who are already handcuffed and in custody.

BLITZER: Mr. Brower, what do you say about that?

BROWER: Mr. Cochran's description of the 16-year-old youngster -- keep in mind in the struggle on the gas station surveillance tape that four -- excuse me, five police officers were substantially injured. Three had to be treated by paramedics. One went to the hospital for treatment. So this is not a 16-year-old youngster who was just out there minding his own business.

And secondly, despite the comments of Mr. Cochran that you can break down the film, frame by frame, all you want, indeed, if you do that, you will see Donovan Jackson raise himself up off the hood a little bit.

You'll watch his right arm drop back. You'll see Officer Morse grimace, it's clearly visible on the tape, as if he's in pain, as any male would be if your testicles are grabbed and squeezed. He drops his hand -- he being Officer Morse -- takes it off the neck of Donovan Jackson, drops it down to his own crotch area, trying to push Donovan Jackson's hand away. When he's unsuccessful at that, that's when he hits him.

Anybody in that situation, whether he's a police officer or an individual on the street, if you're gripped that way by another individual and that individual cannot be made to let go, he gets punched. Whether your a police officer or a citizen, you get punched.

BLITZER: All right, Cynthia, you've done these-- when you were a federal prosecutor, you were involved in several cases involving alleged police brutality.

ALKSNE: Lots of these cases, yes.

BLITZER: Is this an open and shut case, or is there some gray area here?

ALKSNE: Well, police cases are never open and shut. But there are two things which will be critical. The first is the moment of handcuffing. If you can have a bright line. It doesn't matter what's happened before, once he's handcuffed, you can't hit him. However...

BLITZER: Even if he grabs you in the groin?

ALKSNE: If he grabs you in the groin, you could hit him if he was injuring you. But, you know, that's an explanation that sort of comes all the time from cops, and you don't know whether or not it's true in this case.

And that's where the second thing comes into play here, and that is what is exactly in those police reports? At the moment these officers were first being debriefed, when they were first filling out police reports, did they have this testicle explanation, or is this something that was cooked up later? And are there any other -- are there any inconsistent statements?

BLITZER: Mr. Brower, in that police report, did it stipulate that he was grabbed in the groin, in the testicles, as you and Mr. Barnett, the lawyer for Officer Jeremy Morse, have suggested?

BROWER: Yes, it was. It was stated in the police report forthrightly, and it was also stated in their subsequent statements and interviews with the internal affairs department of their police department.

ALKSNE: And here's why that's a gray area because these officers, somebody was videotaping them and there were people around. And they know they have to come up for the reason on why they're slamming this kid's face after he's been handcuffed, because every officer knows once the handcuffs are on you can't hit.

And so the goal of the investigation here will be to figure out whether or not they have created this or whether or not that's actually what happened. And we just don't know the answer to that because it's too soon.

BROWER: Well, excuse me, on that note, if I might add, that these officers didn't know that they were being videotaped, and they wrote their reports not knowing that they were videotaped.

And the grabbing of the testicles was experienced by Officer Morse who wrote it in his report and put it in his statements, and my client also put it in his reports. It's not a made-up thing. It's not something that was developed because they knew they were being filmed. It actually happened out there.

And when a suspect is cuffed, there are situations where police officers are allowed to hit him, and that's one of them.

ALKSNE: That's one of them, which is why it's conveniently the excuse.

BLITZER: Let me bring Kendall Coffey in. Kendall Coffey, you hear Mr. Brower make the case that even though this 16-year-old was handcuffed, his hands behind his back, that there was a justification for Officer Morse smashing him in the face after he grabbed him allegedly in the groin.

Is that -- does that make common -- is that common sense, as far as you're concerned?

COFFEY: It's up to the jury to decide. That's not how I saw the videotape, but the jury will decide that. But another thing that's apparently not in the report, and this is something I'd appreciate hearing from the lawyer about, is the very incident that all of America is troubled by. That is to say, the police report doesn't apparently say that after he was handcuffed he was slammed face down against a car and punched with a closed fist by an officer who, at that point, was dealing with a suspect that was entirely controlled and subdued by the police. Apparently that somehow got omitted from the police report, and that's why his client is being charged with a crime.

BLITZER: Well, let's ask Mr. Brower. Go ahead, we only have a few seconds, wrap that up.

BROWER: In this state to be charged with making a false police report you have to make an affirmative false statement. An omission from a police report is not a false police report under California law.

And secondly, when the officers were debriefed subsequently, it was readily admitted and readily disclosed that he was slammed on the trunk of the car. And there are other police officers out at the scene who also did not put that in their report, and they're not charged with making a false report. This is not being handled evenhandedly.

BLITZER: All right. Ronald Brower, we have to leave it there. Thanks for joining us.

BROWER: You're welcome.

BLITZER: Cynthia Alksne, as usual, thank you very much.

Kendall Coffey, always good to have you join us from Miami as well.

Coming up next, our Final Round. We'll discuss the stock market plunge; Janet Reno doing some salsa dancing. And do you know what posse comitatus means? You'll find out. The Final Round, right after a news alert.

(COMMERCIAL BREAK)

(NEWSBREAK)

(COMMERCIAL BREAK)

BLITZER: Welcome back.

Time now for our Final Round. Joining me, Donna Brazile, the Democratic political strategist, Michelle Cottle of the "New Republic," Jonah Goldberg of the "National Review Online," and Robert George of the "New York Post."

We begin with my interview earlier in this program with the homeland security director, Tom Ridge. When I spoke with him, he told me the government will do everything it can to safeguard the United States, including the possibility that not all the workers at the new Department of Homeland Security would have civil service protection.

(BEGIN VIDEO CLIP)

RIDGE: ... of the new Department of Homeland Security the maximum ability to use the men and women in this department, as well as the financial resources committed to homeland security, in as effective a way as possible.

(END VIDEO CLIP)

BLITZER: It was approved, as you know, Jonah, by the Select Committee in the House, 5 to 4, strictly along party lines. Is that what it's going to be, a partisan debate involving homeland security?

JONAH GOLDBERG, NATIONAL REVIEW ONLINE: It probably will end up being a partisan debate, although I think there are going to be some Democrats, since, especially in the Senate, there are a lot of Democrats who consider this consolidation their idea to begin with, and it's not like they're going to abandon it.

But I'll tell you, there is actually a growing amount of dissent on the right. There are a lot of conservatives who are growing increasingly concerned about -- that maybe the DHS that we'll finally get isn't worth all of the trouble.

BLITZER: Because?

GOLDBERG: Well, for a whole bunch of reasons. Because of aspects of the legislation that are going to be gutted by Democrats who don't like certain things. The Coast Guard stuff is very iffy to a lot of people.

BLITZER: Moving the Coast Guard into the Department of Homeland Security?

GOLDBERG: Right. Because the Coast Guard does a lot of important things other than security.

BLITZER: Donna, you're very political. Is this becoming a political issue? It's not supposed to be. It's supposed to be an issue of national security.

DONNA BRAZILE, DEMOCRATIC STRATEGIST: Well, I flew on a plane yesterday with Dick Armey, and I felt very safe.

(LAUGHTER)

But that aside -- on my way to Dallas -- but that aside, there is no reason why we should create a second-class citizenship for federal workers. These workers will by and large be doing the same job, having the same important role that they have now. And just because we're shuffling a few boxes, we should not take away their protection.

ROBERT GEORGE, NEW YORK POST: I think, whereas two months ago I think the passage of the Homeland Security as a department would have been probably 80 percent likely, I think it now may be just barely above 50-50. Because I think the entire environment has changed, especially, obviously, with the economy and the stock market.

And I think the Democrats are feeling emboldened, and I think they feel that they need to protect their labor base. So as a result, they're going to, I think, hold on to that particular issue, and I think that's going to cause the rest of the department to -- there'll be a slowing in the tracks of passage.

BLITZER: But is that going to be the big issue, the issue of union workers...

GEORGE: I think it's going to be a major issue, unfortunately, but it will be a major issue.

BLITZER: Where is it all heading, Michelle?

MICHELLE COTTLE, NEW REPUBLIC: I'm not sure that having a political debate about this is a bad thing, though. Look, this plan was crafted very quickly, and there was a big push to get it through by September 11. This is a huge deal, and it's a monumentally bad idea to try and get this through without a great deal of debate.

And, you know, among other things, they have to discuss how they're going to do this without adding a lot more money to the budget, which I just think is unrealistic on Bush's part.

BLITZER: So the September 11 target date is...

COTTLE: Oh, that's absurd. They should just throw that out the window.

GOLDBERG: Yes. I mean, they're also talking about adding -- basically making the head of homeland security in charge of NIH entirely, which is a very strange, you know, thing to do.

And this is a huge reorganization of government. Why rush it?

BRAZILE: And the Senate plan also includes some discussion about intelligence, and how to improve the coordination and analysis of intelligence.

GEORGE: And they're not even addressing that aspect of it until next year, in terms of the whole CIA-FBI talking to one another. So again, you know, why bother?

BLITZER: All right, let's move on to another subject. The plunging stock market, a subject a lot of us have been thinking about. Investors and forecasters are indeed very worried about the future state of the markets and perhaps even the economy.

Earlier today, the chairman of the New York Stock Exchange urged investor to think long-term.

(BEGIN VIDEO CLIPS)

RICHARD GRASSO, CHAIRMAN, NEW YORK STOCK EXCHANGE: Let us never forget, it's always darkest before the dawn. Please be patient. Please don't do something that emotionally feels good, but in the long term will be a mistake.

(END VIDEO CLIPS)

BLITZER: Are the American investors patient in this current environment, Robert?

GEORGE: I don't know. Is it possible for there to be any more platitudes coming from Richard Grasso's mouth? You know, be patient, darkest before the dawn, you know, light at the end of the tunnel, et cetera.

Look, I think there is a certain aspect of, if we can coin a phrase, irrational anti-exuberance that's going right now. But at the same time, given the fact that there are all of these companies out there where there's serious question as to the issue of the veracity of their accounting, I don't think it's completely an emotional response for a lot of investors to basically pull back for a little bit, possibly until, say, mid-August. That's when Harvey Pitt has called for all these corporations to show, you know, their full sheets and so forth.

BLITZER: The public is very nervous out there.

BRAZILE: And they should be, absolutely.

BLITZER: Their 401(k)s and their investments are on the line.

BRAZILE: And their life savings. And they should be. And there's a great deal of volatility.

And now we see that the Republicans on Capitol Hill in the House would like to have a conference report on the Sarbanes bill, when the president should step up to the plate tomorrow and say, "Pass the Sarbanes bill in the House so that we can restore that part of the strategy," and maybe investors will come back to the market.

BLITZER: Many Republicans like that Sarbanes bill.

GOLDBERG: Well, and that's a big problem. The Sarbanes bill, or what's become the Sarbanes bill, in many ways is a Frankenstein's monster. And there was a lot of hope out there that there would be a note of maturity and grown-up second-guessing on this stuff in the conference.

But now, since the House has basically said we're going to have a Sarbanes bill too, there's no -- the conference committee essentially was the last place where they thought they could pull out some of the crazy stuff that's ended up in this stuff -- in this thing. And there is a lot of crazy stuff in this.

I agree with Robert entirely that one way we could, you know, restore confidence for investors is if Mr. Grasso stopped talking.

(LAUGHTER)

BLITZER: Is this new legislation, if it's signed into law, going to help the situation or make it worse?

COTTLE: It's possible, but in the long run it will help because certain new rules will be in place that kind of prevent this kind of shenanigans that have been going on.

But as far as investor confidence, you know, people jumped into the market when they thought it was a new economy and we'll never have a down cycle, and we were told this a lot. And now they're finding out it's not a sure thing, and of course they're going to be a little skittish before they jump back in there.

BLITZER: I think that there's good reason to be skittish right now.

BRAZILE: Absolutely.

BLITZER: Let's talk about some other factors right now. In the wake of the accusations regarding Harken Oil and Halliburton, the Bush administration came under fire today from the Democratic Senator John Edwards, who called into question the president and the vice president's corporate past.

(BEGIN VIDEO CLIP)

SEN. JOHN EDWARDS (D), NORTH CAROLINA: The president, as you know, ran on the theory of bringing integrity to the White House, and there are issues about Harken and Halliburton with him and the vice president. They ought to be open about that. He's got an opportunity, I think, here to prove that he meant what he said about integrity and openness and sunshine.

(END VIDEO CLIP)

BLITZER: Michelle, a decade ago, the SEC investigated then George W. Bush's private dealings at Harken and found nothing to complain about.

COTTLE: Well, sure, but we still haven't seen a lot of these documents. And have they learned nothing from the Clinton years? If you don't want people to think you've done something wrong, don't act like you have something to hide.

BLITZER: That would seem to be a basic lesson. If Harvey Pitt of the SEC said, "I'll release all these documents if the White House tells me to release them" -- the president is not telling him to release it.

GEORGE: Yes, now, with the caveat obviously that there's lots of hypocrisy going on around here, because you've got Terry McAuliffe and Global Crossing and all this other kind of stuff.

I actually do think that Edwards is basically right here. I mean, especially in the press conference that the president gave, week before last, when he said, "Well, look at the directors minutes. Look at the directors minutes of the Harken issue." And then when reporters wanted to, you know, see the minutes, the White House aide said, "Oh, we can't release them" and then "Harken can't release them," when the president could probably say, you know, just release them.

I do think right now the underlying issue in the context of the stock market is an issue of trust. And I think if the president steps forward and says, you know, release the full SEC report from 10 years ago, I think that's going to put more trust within the administration and their capability of sending a signal to corporate America.

BRAZILE: First of all, Robert, Terry McAuliffe invested his own money into Global Crossing, and he was able to...

BLITZER: He made a ton.

(CROSSTALK)

GEORGE: Better than Hillary did, actually.

BRAZILE: And you know what? He got lucky. OK? Now, that -- and look...

(CROSSTALK)

BRAZILE: ... former President Clinton -- former President Bush also received stock options from Global Crossing, and he got richer.

So I don't think there is no, you know, you know, similarities between President Bush who wants to be corporate crime busting in chief, and he is out there busting everyone else's you know what. He should come clean, release the documents. If there is nothing there, then, you know what, people will say, oh, what's the big deal.

BLITZER: Why don't they just release the documents?

GOLDBERG: Personally, I don't know, and I hope -- I actually hope they don't have a good reason, because if they have a good reason for not releasing them, that means there is something bad in there. I mean, that's the logic of these things. And, look, so I do think the Bush guys should release some of this, but it's clear that the Democrats are trying to commit -- perform CPR on a dead horse here. I mean, this is not a major issue. It is a lot of character assassination, and the idea that somehow this has not been raised before or anything revealing...

(CROSSTALK)

GEORGE: I don't think it's just character assassination, because, I mean, you know, as soon as the president says, you know, look at the (UNINTELLIGIBLE) -- as I said, look at the director's minutes, and then refuse -- and then refuses to give permission...

GOLDBERG: It's not just character assassination, but there is a...

(CROSSTALK) BLITZER: Let me ask Michelle before we go to break, is there a basic difference between the Harken/Bush allegations and the Halliburton/Cheney allegations?

COTTLE: Well, sure. I mean, the Halliburton investigation is still going on. And it's not so much Cheney stock sales that is troubling the conflict -- what he knew and when he knew it while he was there. And I think it was a bad move for the president, though, to come out and say I am confident that the SEC is going to find nothing wrong. I mean, you don't want any kind of implication that there is pressure being brought to bear on the SEC until they have announced their findings.

BLITZER: But you don't believe that Dick Cheney possibly did anything wrong, do you?

BRAZILE: I don't know. And that's what this investigation will prove. I have no idea. But I know one thing: 18,000 people have lost their job down in Texas and -- because of some of the cooking of the books that they did down there, and someone needs to explain that, Robert.

GEORGE: Well, I think that's true. But in the same time, I think if you actually want to have a criticism of Cheney, it may be that he shouldn't have -- he shouldn't have acquired this company that had this huge asbestos liability, which is one of the main reasons why Halliburton has gone down the tubes.

BLITZER: All right. Let's take a quick break, but we have a lot more to talk about, including this: The House Majority Whip Tom DeLay says it's in the bag. Find out what he's talking about when our Final Round continues.

(COMMERCIAL BREAK)

BLITZER: Welcome back to our Final Round on Capitol Hill.

Members of both parties are making predictions about who will be the majority after the November election. The House minority leader, Richard Gephardt, declares his party will win the necessary seats to take control, but the Republican Whip Tom DeLay brushed aside concerns this weekend on CNN's SATURDAY EDITION.

(BEGIN VIDEO CLIP)

REP. TOM DELAY (R-TX), MAJORITY WHIP: We feel very confident that we already have the majority in the bag, and we're working hard to grow our majority. We think we're going to pick up seats, not very many, but we can pick up anywhere from five to 10 seats.

(END VIDEO CLIP)

BLITZER: Donna, is that confidence well founded?

BRAZILE: No, I think Mr. DeLay is talking trash. Look, the Republicans lost seats every election cycle since 1994. And in 1998, when they had the entire Democratic Party and the president, President Clinton on trial, the Democrats picked up six seats. So I think the Democrats will pick up seats, and I do believe the Democrats will retain control of the House.

BLITZER: Will take control of the House and retain control of the Senate?

BRAZILE: Take control of the House and retain control of the Senate.

GOLDBERG: It sounds like wishful thinking on everybody's part. On Dick Gephardt's part saying -- or maybe saying that they are going to get up to 40 seats. I think it's way too soon to tell.

Right now the climate is looking good for Democrats, but we should expect it to look good for Democrats. They have not had an issue for a very long time, and all of a sudden, like manna from heaven, this corporate corruption scandal comes out out of nowhere, and you know, that's good for them. But you know, one stock -- one good stock market rally can change the entire environment.

GEORGE: You know, you know, that's -- that's exactly right. And I have to note, the entire Democratic Party was not on trial in 1998. Quite possibly they should have been, but that's another -- that's another -- that's completely another issue -- that's another...

(CROSSTALK)

GEORGE: But the fact is that what -- right now we're in a very uncertain climate, completely, on all sides. There is one right track, one wrong track poll. Not the CNN one, but another one that says that it's 37 percent-52. If that holds through through November, then, yes, definitely the Democrats would have -- would have a good year. But right now, as I said, you've got the August 14 corporate report coming out, the September 11 anniversary. Nobody knows what that's going to do in the context of the mood of the country, so a lot can happen.

BLITZER: But, Michelle, as you know, there are 435 seats up for grabs in the House of Representatives, but most experts believe only 40 of them are really competitive.

COTTLE: Well, that's right, and what these guys do, what DeLay and Gephardt are paid to do, essentially, i9s whip up the volume on these kinds of things, rally the troops, get people thinking about this so they can turn voters out. Now, whether or not this will work in getting the base out, who knows. But of course it's too early to tell. But they have to start this kind of trash talk early on to get people noticing things.

BLITZER: I don't know if anybody's noticing yet, but they will be pretty soon.

Let's move on and talk about this: On Thursday, the hearing for the suspected terrorist Zacarias Moussaoui will convene. Last week, he tried to plead guilty to avoid the death penalty; the judge wouldn't let him do it, at least not yet.

Jonah, should he be allowed to enter his plea this week?

GOLDBERG: I think he should be. Look, this guy is getting the trial he deserves -- actually, he's getting more -- a better trial than he deserves, and you can only go so far in trying to offer a fair trial to somebody. If you generate nothing but chaos, you cannot then claim that chaos gave you an unfair trial. The guys knows he is guilty, he's claimed he's guilty, he's given evidence that he's guilty. We should take him at his word.

BLITZER: But he has made so many weird statements that he's refused to even have a criminal defense attorney represent him. He wants to represent himself. Isn't this a prescription for a circus in this...

BRAZILE: Well, it is a circus, and the judge should overturn her earlier ruling and declare that he is incompetent to represent himself. Otherwise, Mr. Moussaoui is going to talk himself into the death chamber.

BLITZER: This was a case that a lot of expert think, Robert, should have been handled by a military tribunal.

GEORGE: That's exactly -- that's exactly right. I mean, that was mistake number one, because with a military tribunal, especially since Moussaoui is obviously not an American citizen, with a military tribunal, you have got a lot of -- you have got a lot of control there, and a lot of this would not be playing out -- playing out in public.

I sort of agree with Donna that I think that the judge may very well reverse her decision, because right now it's even money as to whether Moussaoui is evil, crazy, or both, and the judge may decide he's too crazy to really be able to defend himself.

BLITZER: The fact that he is a French citizen, Michelle, does that have any impact on this case at all, given the nature of U.S./French relations, attitudes in France about someone who is a citizen of that country?

COTTLE: Well, I would hope not. I mean, sure, there is a lot of anti-Americanism in France. We've got the whole Francophobia thing going on here, but at this point I am with Jonah. Let him put his plea in and end this circus. I mean, the Islamists have been sneering about how Americans love their life too much and how they're all willing to die for their cause. Instead of turning him into some kind of martyr, let him be some pathetic guy who's sold out his cause and goes to jail for the rest of his life.

GEORGE: Yes, but the thing is, though, he said he wants to plea bargain so he gets out of the death penalty. It's kind of funny that a guy who wanted to die for Allah now...

COTTLE: But that's my point. There is no honor to this guy. I mean, this blows up their whole theory about how honorable they are and willing to die for their cause.

GOLDBERG: And stupidity is not a defense. I mean, he was given every opportunity...

GEORGE: Not even for the French.

(LAUGHTER)

GOLDBERG: He's given every opportunity -- I am trying to hold off on the French bashing for a little while. And he's given every opportunity to have lawyers, to have everything he needed, a civilian trial, which he didn't deserve, and he's decided to blow all these opportunities for cheap propaganda points. He should get whatever he has coming.

BLITZER: You think that justice will be served in this particular case, given all the publicity, all the emotions? There are some in the Justice Department who are not even convinced they necessarily have a slam-dunk case against Moussaoui.

BRAZILE: You know, he has -- you know, Mr. Moussaoui has gotten a lot from this country, a lot from our criminal justice system. And I think he deserves a fair trial, but he should not create a circus atmosphere. And he should be sentenced to life in prison.

BLITZER: All right. Let's move on to the next segment. We have to take another quick break, first find out about posse comitatus in our lightning round. It's just ahead. Stay with us.

(COMMERCIAL BREAK)

BLITZER: Time now for our Lightning Round. The House Ethics Committee unanimously voted to expel Congressman James Traficant of Ohio. Traficant, who has been convicted on federal corruption charges, had his say before the Ethics Committee.

(BEGIN VIDEO CLIP)

REP. JAMES TRAFICANT (D), OHIO: I think they should be handcuffed to a chain-link fence, flogged, and all of their hearsay evidence should be thrown the hell out. And if they lie again, I am going to go over and kick them in the crotch.

(END VIDEO CLIP)

BLITZER: I guess he tells it as he sees it, Michelle. This has been a spectacle all week for those of us who've been watching parts of it, but it's a serious business, to be expelled from the U.S. House of Representatives.

COTTLE: That's right. He'll only be the second since the Civil War. Look, the man is as mad as a hatter, and ordinarily, I would say this man is perfect for the House. But at some point, you have to say enough is enough, and he's just gone so far beyond the pale this time that they have to let him go. GEORGE: He adds a certain sense of eloquence, I guess, to the House in a way. Yes, I mean, you know, he's always been -- he's always been fun to laugh at and he's had these great little one-minute speeches on the floor over the years and so forth.

I mean, as far as I can tell, the trial he had was completely fair and so forth, and now he's trying to go out in a blaze of glory, and it looks like the full House will expel him in the next week or so.

BLITZER: Will this fellow Democrat of yours be expelled?

BRAZILE: Well, first of all, he is a Democrat in name only. He's been voting with the Republicans lately to try to suck up and gain a little points.

He should be expelled, and I also think that he should be given some nice -- a nice wardrobe, perhaps a linen suit -- linen suits so he can get rid of the denim suits, and a free House haircut.

GEORGE: A Traficant makeover.

GOLDBERG: Well, look, there is a serious argument out there on the left, which says that people who go to prison are being disenfranchised, they should get their voting rights back...

(LAUGHTER)

I think that we could use -- that these people, the corrupt, the criminal and the insane deserve representation in Congress too, and he should serve from Congress, and that would be -- it would be hilarious. He'd get C-Span in the prison cell.

GEORGE: Zacarias Moussaoui would probably vote for him.

BLITZER: All right, let's move on and ask this question. It is a crime right now to use the Army or the Air Force as a domestic police force under the so-called posse comitatus act of 1878.

Should the military have greater domestic powers to protect the country, Robert, as some are now suggesting?

GEORGE: I am a little bit skeptical of this, frankly. I still don't understand why, you know, even given the horrors of what happened in terms of 9/11, why we suddenly need to basically overhaul a law that has been fine for, you know, 130 -- nearly 130 years. I just -- I don't see a case for it to be made right now.

BLITZER: During some times -- during the riots in L.A., I think, there were some decisions at the time -- I was the Pentagon correspondent -- to ease some of those posse comitatus laws so the National Guard could go in and deal with these kinds of threats.

BRAZILE: And, you know, just recently, the president had to call on governors to release the National Guard to protect our airports. I think we should rethink everything after 9/11, but we should, you know, try to avoid extreme solutions, and by the way, I think the entire nation is a posse when it comes to protecting our homeland right now.

GOLDBERG: It actually goes back to Roman law. It was why Roman legions were not allowed to be stationed in Rome, because they could not trust the power of the military, they thought it would turn into a dictatorship.

GEORGE: Thus the Latin phrase comitatus.

GOLDBERG: Indeed. No more Latin on this show. And so, I think it betrays a certain skepticism that we've had in Western civilization for a very long time. It's a very American skepticism to say that the military shouldn't be involved on our own soil. I can see places for reforms -- in an immediate emergency, I can see reasons for having the military involved, but generally I think we should leave it alone.

BLITZER: What do you think?

COTTLE: Yes, I think it has been done over the years. They are allowed to do drug interdiction, they can protect national parks. So if we look at if very carefully and on an individual basis, there might be some role for them since the homeland is now what we see as our, you know, major place to protect.

BLITZER: All right, let's go to our final Final Round issue. Picture a trendy club in Miami Beech. Now picture the former United States Attorney General Janet Reno. On Friday, she threw a nightclub dance party to raise funds for the gubernatorial campaign in Florida. Will Janet Reno salsa her way into the hearts of Florida voters?

Janet Reno's dance party. What do you think?

BRAZILE: Go Janet. Go Janet. Go.

(UNINTELLIGIBLE), but look, she proved that she can get down on the dance floor. Now it's time for her to prove that she can get up and beat Jeb Bush in the fall.

BLITZER: Can she?

GOLDBERG: I don't think so. And I think that's the problem. I think Janet Reno could conceivably win the primary, but the Florida professional Democrats, they don't want her for precisely that reason, that they don't think that she could beat Jeb.

COTTLE: Yes, I have to agree with this. I mean, she can put on this great dance show and go shake their funky chicken or whatever, but I don't think she's going to be able to do away with Jeb.

GEORGE: What this dance party fund-raiser obscured is the fact that she is nearly completely and totally out of money. So you are going to have this awkward situation where Florida Democrats may nominate somebody who has no money for the general -- for the general election and will get swamped.

The other candidate there, Bill McBride, actually polls better in general election match-ups against Jeb Bush, but whether he can overcome Reno's name recognition...

(CROSSTALK)

BLITZER: But we all remember Janet Reno's dance party on "Saturday Night Live." But that's another matter.

That's your LATE EDITION for Sunday, July 21st. Tune in again next Sunday and every Sunday at noon Eastern for the last word in Sunday talk.

Please be sure to join me Monday through Friday, my day job, 5:00 p.m. Eastern, on Wolf Blitzer Reports.

For now, thanks very much for watching. Enjoy the rest of your weekend. I'm Wolf Blitzer in Washington.

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