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CNN LATE EDITION WITH WOLF BLITZER

Interview With John Snow; Boxer, Hagel Talk About Rebuilding Iraq; Allred, Bloom Discuss Scott Peterson's Trial

Aired May 11, 2003 - 12:00   ET

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 and here in Atlanta, 9:00 a.m. in Los Angeles, 7:00 p.m. in Jerusalem and 8:00 p.m. in Baghdad. Wherever you're watching from around the world, thanks for joining us for LATE EDITION.
Just ahead, the U.S. treasury secretary, John Snow, talks to me about President Bush's plans for reviving Iraq, as well as the sluggish U.S. economy. But first, let's check in with some CNN reporters covering important stories developing right now.

And for that, we begin in Iraq, where there was a big shakeup today in who will run the country during a transition. Also today, U.S.-led coalition forces declared the official end of Saddam Hussein's Baath Party that controlled Iraq for more than 30 years. CNN's John Vause is standing by in Baghdad. He joins us now live with details.

(NEWSBREAK)

BLITZER: Let's move elsewhere now in the Middle East, where the United States secretary of state, Colin Powell, met today with both the Israeli and the Palestinian prime ministers. It's his first trip to Israel and the West Bank in a year and is part of a new U.S.-led effort to try to revive the Israeli-Palestinian peace process. Some call that mission impossible.

CNN's Jerrold Kessel, though, is following the story. He's joining us now live from Jericho on the West Bank. That's where the secretary of state met with the new Palestinian prime minister.

(NEWSBREAK)

BLITZER: This important note: Later here on LATE EDITION, I'll be speaking with the Palestinian foreign minister, Nabil Shaath, as well as the Israeli deputy prime minister, Ehud Olmert, to get their respective views on these latest developments in an effort to revive the peace process. That's still coming up.

In the meantime, since declaring an end to major combat operations in Iraq, President Bush has been spending a lot of time, of course, talking about the U.S. economy, which right now is ailing.

Earlier today I spoke with the U.S. treasury secretary, John Snow, about the economy, the costs of rebuilding Iraq and much more.

(BEGIN VIDEOTAPE)

BLITZER: Secretary Snow, thanks for joining us on LATE EDITION. Welcome to Washington, if you will. First time I've had a chance to speak with you since you've become the secretary of the treasury.

Let's first of all talk about the cost of war. With major combat in Iraq now over, how much did the war effectively cost U.S. taxpayers?

JOHN SNOW, TREASURY SECRETARY: Well, I think the major effect of the war was the effect on the economy, and the uncertainty. Resolving that I think will be very beneficial for the economy. We already see it in the lower energy prices.

In terms of the taxpayers, the administration sent up a supplemental. I think it was for $80 billion, some number in that range.

BLITZER: So is that going to be it, as far as you can tell? Will there be additional costs that will be coming down the road?

SNOW: Well, certainly there will be additional costs for rebuilding in Iraq. What we're dealing with in Iraq is not two and a half weeks of conflict, but two and a half decades of misrule and mismanagement, and there is a major reconstruction project that has to go on there, a major rebuilding of Iraq. Iraqi oil revenues, I think, will play a big role in that, but so will -- so will the donor conferences and humanitarian aid.

BLITZER: You're looking to get international donors, international financial institutions to help pick up some of the tab?

SNOW: Well, absolutely, yes. I think, just as in Afghanistan, the world came together to provide substantial assistance. I think there will be substantial assistance provided by other countries in the world.

BLITZER: As you say, Iraq has potentially huge oil revenues out there. Why not let the Iraqis themselves pick up the tab for rebuilding their own country?

SNOW: Well, the oil revenues will undoubtedly be the centerpiece of the funding for the rebuilding, but just as in Afghanistan, donor countries will want to be involved as well, and of course, there is the issue with the debt, and we suggested that some debt forgiveness as well would make sense.

BLITZER: One of the huge issues is the uncertainty how long U.S. troops will have to remain in huge numbers in Iraq. I want you to listen to what the secretary of defense and the commander of Operation Iraqi Freedom said only within the past few days.

(BEGIN VIDEO CLIPS)

DONALD RUMSFELD, SECRETARY OF DEFENSE: And I suspect that if someone is mentioning a year, it will probably just be a review period, because anyone who things they know how long it's going to take is full of himself.

TOMMY FRANKS, COMMANDER, U.S. CENTRAL COMMAND: There are a lot of variables associated with all of this, and I think right now of what the future will hold, a year, two, three, you know, ahead of us, is not exactly knowable.

(END VIDEO CLIPS)

BLITZER: As the secretary of treasury, you have to deal with these unknowable issues. How do you deal with that kind of uncertainty a year, two, three, five or a decade, as has been the case with Japan and Germany. How do you deal with that?

SNOW: Of course, one of the points made there is unknowability ,and the nature of being unknowable is that it's unknowable. I think we'll have to deal with it as we -- as the facts unfold, and the situations clarify themselves.

BLITZER: Let's talk briefly about what's happening in terms of Iraq right now. The banking system, we saw huge looting going on, obviously, at the bank, lots of money stolen. The Iraqi currency virtually worthless right now. How are we going to rebuild that financial structure of Iraq?

SNOW: Treasury has a team of people over in Baghdad right now, led by Peter McPherson, the president of Michigan State University, and a former deputy secretary of the Treasury and heads of the USAID. A lot of competent people are over there, people who know about financial institutions, who know about currency issues, and we'll also have -- Mr. McPherson will have Iraqi advisers.

One of the first things we have to do is assess the situation. The IMF heads a team that's assisting in doing that, but there is a lot of rebuilding to do of the financial institutions of the country, you're absolutely right. The Central Bank of Iraq did not function as a normal central bank. It was a funding mechanism for the Saddam regime, and they did not have a private financial set of institutions. They had a command and control set of institutions.

So we're really starting from the ground up. Iraq didn't even have a set of national accounts, or a budget. So there is an awful lot of financial work that has to be done to lay the foundation for future prosperity.

BLITZER: Have you confirmed, Mr. Secretary, that that $600 million or so, amount of money that was found by U.S. troops in Iraq was, in fact, real money, not counterfeit?

SNOW: We have not yet included the assessment of that, but that is currently under way.

BLITZER: And have you also confirmed that $1 billion was stolen from the Iraqi Federal Reserve Bank, if you will, only a few days before the war started, by one of Saddam Hussein's sons?

SNOW: Well, again, that's a suspicious set of circumstances, and we are continuing to be on the trail of that money, to determine exactly what did transpire.

BLITZER: Do you believe that money is still in Iraq, or has been sent outside of the country?

SNOW: Well, I better not comment on that, but I will say this, that we are very heavily engaged in tracing and tracking and apprehending that money.

BLITZER: If you take a look at the uncertainty of the cost of Iraq and the rebuilding of Iraq, there are some other uncertainty out there, namely the cost of homeland security, the war on terror, which is open ended as well. How much do you estimate that 9/11 has already cost the United States, in terms of dollars and cents?

SNOW: Frankly, Wolf, I really don't have any good -- good assessment of that. I think we're still living with some of the uncertainties that grew out of 9/11 that are a factor in people's behavior, and help to explain why the economy isn't performing better. There is an element of risk or uncertainty that affects people's behavior. Some of that's been dealt with, but I think there is still an element of that that hangs over this economy.

BLITZER: All right, let's move on, talk about the economy, which is, of course, in a rough state, relatively speaking, of course, right now. Let's put some numbers up on the screen. Unemployment numbers, though, look at this, 5.8 percent in the United States in March up to 6 percent in April. That's a total of about 8.8 million Americans out of work. People are actually looking for work. Another half a million jobs lost; more than two million jobs lost since President Bush took office. This is about as bad as it gets right now.

SNOW: Well, the unemployment numbers are not what they should be. The economy isn't growing as fast as it should.

And that's precisely the reason, Wolf, that's precisely the reason that the president is pressing for his jobs and growth plan, because if enacted by the Congress, and we're getting closer, it will create an enormous number of new jobs, and -- 400,000 by the end of this year, a million and a half by the fourth quarter of next year, over two million in 2005. So it's a real priority for the president to get this jobs and growth plan enacted.

BLITZER: But you know what the critics say. They say that that was exactly the promise that President Bush made after his initial tax cut went through in 2001, $1.3 trillion, and it hasn't resulted in creation of new jobs; it's resulted, at least in part over the past two years, in more lost jobs. Listen, for example, to what the Senate Democratic leader, Tom Daschle, says.

(BEGIN VIDEO CLIP)

SEN. TOM DASCHLE (D-SD), MINORITY LEADER: We are now in the longest period of job loss since the Great Depression. Economists call this a jobless recovery. One economists I read called it a "recovery-less recovery." It doesn't have to be this way.

(END VIDEO CLIP)

BLITZER: Why didn't the initial tax cut, the $1.3 trillion passed in 2001, stimulate the economy and create jobs?

SNOW: It did, Wolf. It did. We would have had a much deeper, much longer, and much harsher recession, unless -- without that proposal. It clearly had a major effect in making the recession one of the shallowest and shortest in modern economic history, but since then, the American economy has been faced with a number of serious challenges. We had 9/11, we had the homeland security, the war on terror, we had the Iraqi war, the effect on oil prices, we had the corporate scandals, we had the collapse of the -- continuing collapse of the equity markets, and so, in the face of all that, this economy is doing reasonably well, but not as well as it can, not as well as it should. Growth rates for the first quarter came in at about 1.6.

The president wants the biggest job creation plan to come through the Congress we can get, so those people who are looking for work and can't find work will have a job.

BLITZER: Well, let's review this proposal right now, where it stands. Originally, the president wanted another round of tax cuts that would total about $726 billion. The -- it went down to $550 billion in the House of Representatives. The Senate wants to go, including a lot of moderate Republicans, with about $350 billion. Where is it going to wind up, according to your latest assessment right now?

SNOW: Well, my hope is, it will land as close to 550 as possible. It's clearly going to land somewhere between the 350, which, really, with the offsets that are in the legislation, is about 425 to 450; it's going to land somewhere in between the 425/450 number and the 550 number. But we're pressing for the biggest package possible, the package that creates the most jobs.

BLITZER: If it gets close to 550, 450, 500 or whatever, how long will that tax cut proposal take to create thousands, tens of thousands, maybe hundreds of thousands of new jobs in the short term?

SNOW: Immediately. If the president's tax plan, the plan you're talking about there, is adopted, it will have an immediate impact. One reason is that the...

(CROSSTALK)

BLITZER: Let me interrupt for a second, Mr. Secretary. When you say an immediate impact, what does that mean, weeks, months?

SNOW: Well, if the president's plan is adopted, first of all, it'll have a direct impact on the stock market, and the stock market is sort of a barometer of how people feel about the economy.

BLITZER: But that -- excuse me one second for interrupting, but you're talking about eliminating the so-called double taxation on dividends that stockholders would get, but it seems like that element of the package is in deep trouble, and there might be a very dramatically scaled-back version of what the president originally had in mind.

SNOW: Well, we're still pressing for it, and I'm confident we're going to get a very good reduction in dividends. And that'll help the economy, it'll help the stock market, it'll encourage capital investment.

But let me follow your question further. Twenty-three million small businesses pay their taxes through the individual tax returns. Those 23 million businesses will immediately become more profitable. As they become more profitable, they'll expand. They'll -- the value of that business goes up. They will have more cash flow. And more profitable businesses expand and grow.

So, I think the president's plan, if adopted, will immediately begin to affect business behaviors. Small business particularly, as the engine of job creation, will have a real -- a real incentive here to expand and grow, put up "help wanted" signs. And that's what we need in the American economy today, more help-wanted signs going up.

BLITZER: The Senate version, at least as it is right now, will not necessarily result in tax cuts for all Americans. But for some Americans, tax increases -- specifically, Americans living abroad, and there are many of them watching this program on CNN International right now.

Right now, as you know, the first $80,000 of their income is tax- exempt. But the Senate version, at least, that emerged from the Senate Finance Committee, would start taxing that $80,000.

Does the Bush administration recommend a tax increase for Americans living abroad?

SNOW: Of course, none of those proposals were included in the president's initial plan. They are the result of an effort on the part of the Senate Finance Committee to take the package up from $350 billion to -- into the $400 billion range -- the $425 billion, $450 billion range I talked about earlier.

We are reviewing those offsets. But, as I say, they are not part of our package, and I'm not yet in a position to really offer a view on them.

BLITZER: So at this point, you're holding out the possibility the president would sign into law a tax increase for certain Americans?

SNOW: Well, what I've said is we have not yet reviewed those proposals. Those proposals, I'm told, are in the nature, in most cases, of either spending increases or closing tax loopholes. I'm not yet in a position to really give you a firm view on what is in the offsets, or how we would come down on them.

BLITZER: One final question, Mr. Secretary, before I let you go. You're going to be heading over to France for a meeting with finance ministers pretty soon. Is this an opportunity for the Bush administration to improve relations, restore relations, repair relations, if you will, with the government of French President Jacques Chirac?

SNOW: Well, I must say, I have personally very good relations with Francis Mer, the finance minister. He and I are going to be going off on a trip to Normandy together. I intend to talk to him about the rebuilding of Iraq and the role France can play. So yes, certainly, I think this will be a helpful opportunity for us.

BLITZER: Mr. Secretary, good luck in France, good luck on your mission. You've got a tough road ahead on multiple fronts. Appreciate your joining us on LATE EDITION.

SNOW: Thanks, Wolf, great to be with you.

BLITZER: Thank you.

(END VIDEOTAPE)

BLITZER: And up next: rebuilding Iraq. Is it time for the United States to include some of the old allies who have turned out to be adversaries, critics? We'll talk with two key members of the U.S. Senate Foreign Relations Committee: the Republican, Chuck Hagel of Nebraska, and the Democrat, Barbara Boxer of California.

LATE EDITION, we'll be right back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: We've got a deficit because we -- we're at war. And one thing is for certain about this commander in chief: We will spend whatever is necessary to win the war.

(APPLAUSE)

(END VIDEO CLIP)

BLITZER: President Bush making it clear this week that winning the war on terrorism remains, of course, his top priority.

Welcome back to LATE EDITION. We're joined now by two key members of the United States Senate Foreign Relations Committee: in Washington, Nebraska Republican Chuck Hagel, and in San Francisco, California, Democrat Barbara Boxer.

Senators, welcome back to LATE EDITION.

Let me pick up, Senator Boxer, with you first, reacting to what we just heard from the secretary of the treasury.

And I want to put some numbers up on the screen to show our viewers our latest CNN-USA Today Gallup poll that shows that more Americans have confidence in the way the president is handling the economy than the way the Democrats would handle the economy if they were in charge. Look at this, 51 to 39 percent. That suggests that the president seems to have the confidence of a majority.

SEN. BARBARA BOXER (D), CALIFORNIA: Well, let me just say this. I think when the people take a look at this plan and they see that the people in our country, the elite few who earn over a million dollars get back $100,000 a year, and the average family gets back a few hundred dollars a year, they'll realize that this plan isn't fair.

But even more important is, which plan is going to really revive this economy? And I would just say, since the president took over, he has started this whole plan of tax cuts to the elite few, and he's already done it, and we've lost 2.5 million jobs. And the Democrats really want to see this economy move forward, and we have a plan to do that by giving the tax relief to the middle class and the working people of this country, not to those at the very top. It doesn't work.

BLITZER: Well, but the president's message appears to be having at least some impact with the American public. Another number from the most recent CNN-USA Today Gallup poll shows that in April, at the end of April, 42 percent of the public thought his tax cut proposal was a good idea. That's gone up to 52 percent.

How do you explain that seemingly significant increase?

BOXER: Well, listen, polls change from day to day. You know, I've got to do what's right. And my people are telling me here in California, please jumpstart this economy.

We've lost 2.5 million jobs. There is no unemployment extension, unemployment-compensation extension in the president's plan. The Democrats, we have it in ours. There's immediate help of about $1,200 per family -- per working family in the Democratic plan. There's really very little help for those working people in the president's plan.

So the polls are one thing. It's my job to do the right thing. And I think the people will, as they look at this, realize that we've got the right plan. And our economy is the worst it's been in 50 years. Why would we do more of the same that George Bush has already tried and it's failed?

BLITZER: Well, let's ask Senator Hagel. He's a moderate Republican from Nebraska.

What's the answer to that, Senator Hagel?

SEN. CHUCK HAGEL (R), NEBRASKA: Wolf, the issue here is, how do we stimulate our economy and sustain that economic growth? That's the issue.

Tax cuts, I think, are part of that. Tax cuts are not the only thing that economic growth is about.

However, let's not forget what the engine of growth is in this economy, and that's the private sector. And when you can free up more capital to put that in the private sector, in the hands of the people, rate reductions across the board, that's significant.

Stability and continuity and flexibility in an economy is key to the confidence that people need to have in an economy.

The other...

BLITZER: Well, but this economy, Senator Hagel -- sorry for interrupting, but Senator Boxer made a specific point. She said -- and I assume her numbers are correct -- that someone making a million dollars a year is going to get back $100,000. Someone making a much more modest income is only going to get back a few hundred dollars. How do you explain that rationale to a confused public out there?

HAGEL: Well, I'm not so sure how confused the public is. If you believe the numbers that you just showed, I think the public is starting to understand what the president is about.

But as far as your question, when you look at the different pieces of this package -- child credit for families go from $600 to $1,000, that's across the board. The marriage penalty is addressed. Small business expensing is dealt with in a very significant way. Rate reductions go down. This is a comprehensive package here that we're talking about.

What the end product is, Wolf, we won't know.

BLITZER: All right.

HAGEL: We essentially know what the House is. But let's not get off the focus here, and that's sustained economic growth. And it is the private sector that's the engine of that growth.

BLITZER: Senator Boxer, are you going to support legislation that would increase taxes on Americans living abroad?

BOXER: I don't know which proposal you're talking about. That may be the one that came out of the House, but let me tell you...

BLITZER: It came out of the Senate Finance Committee. To offset some of the tax cuts, they are proposing eliminating some of the -- the first $80,000 in taxes for Americans living abroad. They would start to have to pay taxes on that.

BOXER: Well, I think they're looking at closing tax loopholes, because Olympia Snowe, as you know, said she needed to make sure there were some offsets before she jumped on any type of dividend proposal.

Let me just say this, and I think Senator Hagel's right on point when he says it's about which plan can bring back this economy, the worst economy since the Great Depression. We see job losses, we see people very worried.

And I'll tell you, I met someone last night at an event who said she has a son and a daughter-in-law, both with masters in business, they live in Colorado, they can't find a job. They don't know what to do, they're trying to now start their own business.

BLITZER: All right.

BOXER: And if you look at the president's plan, Wolf, it's the exact same plan he had when he got in...

BLITZER: All right.

BOXER: Remember, he blamed Clinton? Then he puts this plan forward, and we got deficits as far as the eye can see. No one's mentioned that. That's bad for growth, because that will put the squeeze on the expansion of business because interest rates will go up.

BLITZER: Well, those deficits...

BOXER: So this is a failed plan.

BLITZER: Senator Hagel, those deficits are sky-rocketing, with no end in sight any time soon. How concerned are you about those huge deficits in the aftermath of huge surpluses only a few years ago that were projected?

HAGEL: Well, we are all concerned about deficits. Any responsible public official must be.

But there is a focus and always has to be a focus on the complete picture, and that is, we have a $10 trillion economy, we have a $2.2 trillion federal budget. And again, I go back to the point I made earlier, it's how do we get the economy back on track and sustain that? It's the private sector that does that.

Let's also look at something here Secretary Snow talked about. What's happened in the world in the last two years? September 11, 2001. This president inherited this recession, Wolf. He didn't start it. He inherited it.

And then we had to deal with all the other complexities that we are now dealing with. Stability in the world is connected to all of this. And so that confidence that is the bigger picture here, not just tax cuts and economic consequences, are part of the wider lens that we have to address, and that's American leadership.

BLITZER: All right, Senators, stand by. We have to take a quick break.

We have a lot more to talk about, including the latest shakeup in Iraq. That, much more, coming up with Senators Hagel and Boxer. We'll also be looking for your phone calls.

LATE EDITION will continue right after this.

(COMMERCIAL BREAK)

BLITZER: Welcome back to LATE EDITION. We're talking with two key members of the United States Senate Foreign Relations Committee, Republican Senator Chuck Hagel of Nebraska and Democratic Senator Barbara Boxer of California.

Senator Hagel, there's been a shake-up in some of the personalities, some of the U.S. officials involved in trying to change Iraq, create a new Iraq. As you know, Lieutenant General Jay Garner now out; Paul Bremer, the former State Department counterterrorism adviser, in.

I want you to hear what The Washington Post wrote today in describing this shake-up: "Several people involved in the process have said Garner and his staff, as well as his superiors at the Pentagon, did not properly plan for the task, from repairing damage suffered during the war to restarting government ministries and forming an Iraqi-led interim administration."

You, Senator Hagel, were among those calling for looking ahead and -- going into the war. It looks like they didn't look ahead, at least far enough, on some of these issues that are now coming to the forefront.

HAGEL: Wolf, first, the appointment of Jerry Bremer to lead our effort in Iraq now is a very solid appointment and makes sense.

Second, to your question and comment about some of us calling months and months ago for more focus on planning,that's correct. If you recall, and Barbara was part of this, back in August, September, months and months ago, Senate Foreign Relations Committee held a series of hearings under Joe Biden, under Dick Lugar, about planning, bringing the administration up, saying the most complicated, dangerous part of all of this was going to come after Saddam was gone.

I don't think the administration did plan well enough. They didn't put enough focus.

Now, the fact is, this is complicated. This is imprecise. This is imperfect. We know that. But we are seeing now, I think, the results of some of the same focus on planning that we did see on the military side, and it's going to be difficult. It's going to take a long time, but -- to get this done.

But I think the administration needs to be very direct and open and clear with the American public, work closely with the Congress and our allies here, as we work our way through this. Because we have a long way to go. It's going to take remarkable commitment and leadership in the United States of America to get us out to where we want to be.

BLITZER: How concerned, Senator Boxer, are you about the possibility of a Shiite type of theocracy and Iran-like theocracy emerging now inside Iraq?

BOXER: I think it's a matter of concern. And I would join with Chuck in this: Members of the Foreign Relations Committee on both sides of the aisle were very concerned that not enough thought was giving to the post-Saddam era.

We still haven't found the weapons of mass destruction. Let's not forget about that. Yesterday I read in the L.A. Times quotes from military -- young troops saying they were more fearful now than they were actually during the war itself.

We see some hanky-panky. In my opinion -- I don't speak for anyone else -- with the Halliburton contract, this big, long contract, expensive, billions of dollars without going out to bid -- there's lots of problems.

BLITZER: Well, let me press you on that point, Senator Boxer, on the Halliburton. This is a company that, of course, used to be run by the vice president, Dick Cheney, before he came back into government. He severed all of his ties with Halliburton.

When you say hanky-panky, that's a serious allegation.

BOXER: You bet.

BLITZER: Specifically, are you suggesting that the vice president may have had a role in creating these billion-dollar contracts for his former company?

BOXER: Wolf, you mentioned the vice president. I did not. I don't believe it is right to have a sole-source contract that goes on and on and on. I think it ought to be -- for emergencies, it's fine. After 90 days, you bid it out. When I say hanky-panky, I mean it, because the bottom line is the taxpayers here have a lot at stake.

But your question was about post-Saddam Iraq...

BLITZER: Well, let's just button this up.

BOXER: Sure.

BLITZER: Who, specifically, may have been involved in hanky- panky in getting those contracts for Halliburton?

BOXER: Well, we don't know, and that's why Henry Waxman and others have called for investigations. And I've got an amendment to end this contract in 90 days and go out and bid out. These companies, such as Halliburton, are very powerful special interests. And, therefore, we need to find out what's behind a sole- source contract.

When I was in the House many years ago, I took the lead with a number of my colleagues on making sure that procurement was fair, that the taxpayers got the best bang for their buck.

Now, we're looking at this post-Saddam Iraq. It is very important that we do the job right.

BLITZER: All right.

BOXER: And I believe it's very important that our taxpayers are fairly served. And, frankly, that other countries come in and share the burden, both in terms of troops and dollars. BLITZER: I want Senator Hagel, very quickly, to respond to the Halliburton hanky-panky charge. Then we're going to take a quick break.

HAGEL: All right. Well, I don't know anything about hanky- panky. But I would say this is a clear example of what I was referring to earlier, one of many, that the administration has to be very clear, transparent, with all of these things, can defend it all, come before the Congress, work with the Congress. And this is just but one example. And I suspect there will be more.

BLITZER: All right. Let's take a quick break. We have much more ground to cover with Senators Boxer and Hagel. Stand by. They'll also be taking phone calls, so call us now.

LATE EDITION will continue right after this.

(COMMERCIAL BREAK)

BLITZER: Welcome back to LATE EDITION. We're continuing our conversation with the Republican senator, Chuck Hagel, of Nebraska, and Democratic Senator Barbara Boxer of California, both members of the Foreign Relations Committee.

Senators, listen to what Senator Bob Graham, the former chairman of the Intelligence Committee, now a Democratic presidential hopeful, wants to run for president, is running for president, he came out earlier today and made a very serious allegation in the war on terror against the Bush administration. Listen to this.

(BEGIN VIDEO CLIP)

SEN. BOB GRAHAM (D), FLORIDA: The American people have been denied important information for their own protection, for the protection of the communities. Local agencies have been denied information which would help them be more effective first responders. And the American people do not have the information upon which they can hold the administration and responsible agencies accountable. I call that a cover-up.

(END VIDEO CLIP)

BLITZER: All right. You might have missed that, Senator Hagel. He says, he calls that a cover-up. What do you make of what Senator Graham is saying?

HAGEL: Wolf, I have the highest regard for Bob Graham. I know him to be a man of great trust and honor.

I'm on the Senate Select Committee on Intelligence. I am not aware of what he is talking about. Obviously, with this very serious charge, someone is going to pay attention to that, and I suspect we will be accepting that challenge and finding out what he is talking about here shortly. But I do not know what he's referring to.

BLITZER: Well, what about that, Senator Boxer? Has the administration been straight with the people of California, the people of the United States about the threats out there?

BOXER: I think that this administration has really been shorting the whole area of homeland defense. And this is not news. You just call your first responders. You know, when you dial 911 and ask them, they will tell you they have the burdens and they're not getting the attention that they deserve.

And I think Senator Graham is an honorable, honorable man, who was the chair of the Intelligence Committee, and when he says something it carries a lot of weight, I think, with all Americans. So I think we need to look into this.

But clearly it gets back to our other conversation. When you give away the resources of this country in the form of a tax cut to people who earn over a million dollars a year because you say it's going to create jobs, which it never has, it's been disproven, you are shorting homeland defense. And that's where we have a problem.

We need to do a lot more. I've talked about the threat from shoulder-fired missiles. I'm hoping the administration is moving in our direction, but these are things we have to do yesterday, because we have to stay a step ahead of the terrorists.

BLITZER: Unfortunately, Senators, we have to leave it right there. Senator Boxer, happy Mother's Day to you.

BOXER: Thank you.

BLITZER: Senator Hagel, thanks for joining us, as usual.

We'll have both of you back. Appreciate it very much.

Up next, 80 days that changed the world, the battle half a century ago that changed the way we live today. We'll tell you all about it. Stay with us.

(COMMERCIAL BREAK)

BLITZER: Coming up in the next hour of LATE EDITION, an exclusive interview with the foreign minister of Qatar, Sheikh Hamad bin Jasim bin Jaber al-Thani, on U.S.-Arab relations, much more, after the war in Iraq.

Also, we'll get the Israeli and Palestinian views on the new so- called road map to Middle East peace.

But first, let's take a look at that battle more than half a century ago that altered the course of history, from CNN Presents: 80 Days That Changed the World.

(BEGIN VIDEOTAPE)

ANNOUNCER: The world at war. Pearl Harbor, the Holocaust. Throughout the first years of the 1940s, the outcome of the battle for freedom hung in the balance.

The turning point, June 6, 1944.

UNIDENTIFIED MALE: D-Day changed the world critically. The best way to look at is to contemplate what would have happened if that had failed. We probably would not have had another chance during the war to organize another such expedition.

ANNOUNCER: That invasion led to victory in Europe. But in the Pacific victory came with the bomb.

UNIDENTIFIED MALE: August 6, 1945 was the day that the Enola Gay dropped an atomic bomb on Hiroshima.

The city was obliterated. 150,000 died instantly, incinerated in the blast.

ANNOUNCER: The end of World War II signaled the start of the atomic age.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

BLITZER: Welcome back to LATE EDITION. I'm Wolf Blitzer reporting today from the CNN Center here in Atlanta.

This week, President Bush gave some very public thank-yous to those governments that supported the U.S.-led military campaign in Iraq, including Qatar.

Earlier, I spoke with the country's foreign minister, Sheikh Hamad bin Jasim bin Jaber al-Thani, about the aftermath of the war with Iraq.

(BEGIN VIDEOTAPE)

BLITZER: Foreign Minister, welcome back to Washington. Thanks for joining us on LATE EDITION once again.

Let's get right to the key issue in the region. Is the region better off now that Saddam Hussein is gone?

SHEIKH HAMAD BIN JASIM BIN JABER AL-THANI, QATAR'S FOREIGN MINISTER: I think mainly the Iraqi people are better off after Saddam goes. All of us in the region know that Saddam, he bring the suffer for his people, not because of the invasion of Kuwait or the lately events, but also to start a war against Iran and to invade Kuwait.

And I think Iraq is a very rich country -- agriculture, historically, with oil, with water -- and the people of Iraq could live the rich -- one of the richest people in the world...

BLITZER: And they're educated, they're talented.

AL-THANI: And they are deserving this. And I hope now that peace will come to Iraq, and the Iraqi people will run their country in a sufficient way to let their people forget the suffer which they have before.

BLITZER: When we met the last time in December, in your home in Doha, you were concerned about a war, and you were hoping it could be avoided.

But did President Bush and Prime Minister Blair do the right thing, when all is said and done? Looking back now on hindsight and deciding, even without a second U.N. resolution, to go to war?

AL-THANI: Well, let me tell you one thing. Even when I was saying I hope it be solved without war, because we always -- we always dreamt about a minute that Saddam would say, "OK, I'm the problem. I'm leaving." And then there would be no war, because I know the problem is Saddam Hussein with the two governments which you mentioned -- with the United States and with the Britain.

Decision if it's been -- it is right or not -- it's too early, premature to say this now. It will be right if they bring democracy, peace to Iraq, and to show Iraq as a good example in the Middle East. Then we can say they did the right decision.

BLITZER: But no matter what, you have to admit that the Iraqi people are better off without Saddam...

AL-THANI: Of course. At least, they can demonstrate in the street now, which was not happening before.

BLITZER: So you're at least happy about that, even if the outcome, the final outcome remains...

AL-THANI: Yes, we are sorry for the suffer of the victims and the innocent people in Iraq, which they always pay a high price. I hope this is the last price they pay in term of children, women, all people which they died as a civilian with nothing to do. I hope this is the last price that people of Iraq pay.

BLITZER: You were one of the last foreign ministers from the region to meet with Saddam Hussein. You went to Baghdad, met with him. You can now tell us what you couldn't tell us in December. What was the real purpose of your visit to Baghdad?

AL-THANI: Well, His Highness, when he instructed me to go there for two purpose. First one is to tell him, "Saddam, we think that you are -- you are wanted from this war. So you have to make your mind how to let your people avoid this war. It means that you have to take an action against yourself by step down or something."

The media at that time, they say that I told him, and he throw me outside the palace, you remember. I did not say it straight. I say it in exactly in the sentence which I say it now. And he -- it was a good meeting for two hours. I was very frank.

He asked me question: Are you going to allow the American to use Al Udeid base against me? I said, they did not ask us up until now but when they ask us, we'll consider it seriously, and probably yes.

BLITZER: Al Udeid being the air base...

AL-THANI: Yeah, yeah. And I -- and he said about a center command in (UNINTELLIGIBLE), and I said probably yes.

And I said this in Baghdad International Airport before I leave, because I don't want to mislead them.

BLITZER: But was the thrust of your message to Saddam Hussein that he should leave Iraq?

AL-THANI: I did not say, "You should leave Iraq," but I told him, "You are the guy which wanted from this, so you have to make your mind if you want to solve this peacefully or you want to go war."

BLITZER: Were you ever personally scared in delivering a blunt message like that to Saddam Hussein, that he would take action directly against you in Baghdad?

AL-THANI: I've been through many things in my career. But I don't think, I was not scared. I was not scared from this. He was kind when I met him, with me. He was nice. And he took me out. He showed me his palace after the meeting. And he showed me how he reconstruct the palace after the American bombed it in '94, and where is the building. And he was showing me how he restore everything. This was after. So he was kind with me.

BLITZER: Do you believe, based on everything you know right now, and you know a lot, that he's alive or dead?

AL-THANI: I don't know. But I cannot say he's dead because there is no enough evidence that he dead. And I think he's alive. I think he's inside Iraq.

BLITZER: He's still inside Iraq? Because there have been reports he may have gone to another country. You think he's hiding someplace in Iraq?

AL-THANI: This secret cannot be hide for long even if he is in Iraq. We will know it one day.

BLITZER: So you think that the U.S. and its partners will find him?

AL-THANI: Yes. Because I don't think he have sympathy among his people. I don't think somebody will hide him.

BLITZER: So that's the basic difference between him and Osama bin Laden, is that nobody likes Saddam Hussein, although Osama still has some supporters?

AL-THANI: Well, Osama he have some supporters, but Osama, I think, to talk, it's always allowed to talk and to be a position to act as the act which it happened on 11th of September. That's not accepted, even if he is popular or not, we don't care about that. But I think this not accepted by us as human being. And we have to protect all civilized -- any civilian anywhere else. And what happened in United States was terrible, and there is no justification under any circumstances to take kind of act like this.

BLITZER: If the U.S. or Iraqis capture Saddam Hussein alive, what do you believe should be done with him?

AL-THANI: I think it should be, there is international law. And I think it should be done legally through a legal system.

BLITZER: Does he, should he be tried in Iraq by the Iraqi people, or should he go to the International War Crimes Tribunal?

AL-THANI: If you have a case for international war crime case, yes. If not, the people of Iraq, the new government have to decide how they will trial -- make the trial.

BLITZER: As you know, Qatar was a very valuable ally to the United States in this war. The Central Command had its temporary headquarters. General Franks was at Camp As Sayliyah.

And now, with Saudi Arabia effectively shutting down the U.S. presence, the military presence, some of those troops are going to be moving to Qatar.

What is going to be the long-term military relationship between Qatar and the United States?

AL-THANI: I think we have an military agreement been signed in '91 between us and the Americans, and there is another one been signed I think last year between me and Rumsfeld, in Doha. And this regulates the relationship between us.

And there is a serious discussion always in a friendly basis how we can help each other and how the new relation will be between us and the United States.

And I want to emphasize one thing. This relation is not against anybody. We are not trying to have enemy or to try to take a role of any other countries. It's just a policy which we decide to make it. We are convinced about it. And we are grateful for our friendship with the United States, so we are doing so.

BLITZER: Will there be a permanent headquarters of the U.S. Central Command? There's been a temporary headquarters during the war. But will it remain on a permanent basis at Camp As Sayliyah?

AL-THANI: I think there will be some present there, in Qatar, according to our discussion with the American, it will not be in the same quantity. When there is a war, of course, it will be minimized, but there will be kind of a center which they use it...

(CROSSTALK)

BLITZER: But should the U.S. commander of the Central Command have a permanent base in Qatar? AL-THANI: Well, I think it's almost a permanent, but, as I told you, it take different levels if there is a threat or there is no threat.

BLITZER: Is there a threat now to Qatar, as far as you can see, from the region? Occasionally there's been some strains, as you well know, with Saudi Arabia.

AL-THANI: We consider Saudi Arabia as a brotherly country. Yes, we have some difference with the Saudi Arabia, but we think this difference could be solved if we can sit face by face in a brotherly way, and I think this is the only solution to sort this out between us, and, if we did any mistakes, we are ready to consider it.

But I think this is -- could be solved during a dialogue, a serious dialogue between us and our brother in Saudi Arabia. But we are not in competition with them or with anybody. This is our policy. We do it for our people. And His Highness focus on how he develop his country, and have great the level of the knowledge of his people.

BLITZER: As you know, Secretary of State Powell this weekend has been meeting with the Israelis, with the Palestinians, the new Palestinian prime minister, Mahmoud Abbas, with the Israeli prime minister. Is there a role that Qatar can play to help that road map towards peace. For example, Qatar has had some openings toward the Israelis.

AL-THANI: Well, we are working in this, and we working with Mahmoud Abbas, we are working with the administration here for many months now, and what you are seeing is a result of friends who try to help the Palestinian to get out of their dilemma. And I think we will participate, as we participate before, after Madrid, in the peace process in our capacity, and what we can do, we will not hesitate to do it and to say it loudly.

BLITZER: One final question on this issue: Egypt has a peace treaty with Israel, Jordan has a peace treaty with Israel. Is Qatar next?

AL-THANI: Well, we are not having a direct border with the Israelis, and we have to ask ourself why we need the treaty with the Israeli. If we think it will serve our purpose and our country, we can study this. But right now we have a relation with Israel, and they have their trade office in Doha. Yes, the relation is minimal, but there is a relation, and there is a dialogue, continuing dialogue with us and with them, and we are talking with other parties also, to try to take the problem from the hard way of killing and the civilian pay the price to the table and to discuss it in civilized way, and to give the Palestinian their right and their state.

BLITZER: U.S. officials have been very impressed by actions taken by His Highness the Emir, your government, to give rights to women, have a woman in the cabinet, let women participate in the government. Is this going to happen more robustly in Qatar, the democracy movement, and is it an example for others in the Arab world? AL-THANI: Well, example, I hope it's a good example, and that they can take it. It will happen. It happens. So now it will be normal, if it happens again, if we have another woman, for example, in the cabinet, this will be normal, and the womans, they are everywhere working in the government.

So I don't see that -- it was a big issue for us in Qatar. Now I think it's more a normal situation.

BLITZER: Mr. Foreign Minister, as usual, thank you very much.

AL-THANI: My pleasure, sir.

BLITZER: And welcome to Washington.

AL-THANI: Thank you, sir.

(END VIDEOTAPE)

BLITZER: My conversation earlier in Washington with Qatar's foreign minister.

Just ahead, the United States restarts its push for Israeli- Palestinian peace, but is the new road map one that both sides can follow? We'll talk with the Palestinian foreign minister Nabil Shaath and the Israeli deputy prime minister Ehud Olmert, when LATE EDITION returns.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BUSH: America will work without tiring to achieve two states, Israel and Palestine living side-by-side in security and prosperity and in peace.

(END VIDEO CLIP)

BLITZER: President Bush talking about the new road map for Middle East peace during graduation ceremonies earlier in the week at the University of South Carolina.

Welcome back to LATE EDITION. Joining us now from the West Bank city of Ramallah is the Palestinian foreign minister, Nabil Shaath.

Mr. Shaath, welcome back to LATE EDITION.

Let me begin with an Israel radio report just coming out right now that Prime Minister Mahmoud Abbas has accepted an invitation from Prime Minister Sharon for a meeting in the coming days before Prime Minister Sharon comes to Washington on May 20th for his own meeting with President Bush. Is that true?

NABIL SHAATH, PALESTINIAN FOREIGN MINISTER: Yes. It is true. I don't know exactly what is the time shape, when are they going to meet. But Mr. Abbas was ready to meet Mr. Sharon whenever Mr. Sharon was ready to meet with him.

BLITZER: So this sounds encouraging that not only will there be a revived U.S. role in trying to get this road map going, but there's now going to be direct dialogue, direct negotiations, if you will, between the Israeli prime minister and the Palestinian prime minister.

Are you encouraged now that there could be an opening, a breakthrough, if you will, to get these road map negotiations off the ground?

SHAATH: Well, that's precisely why Mr. Abbas is going to meet with Mr. Sharon. He's going to urge him to adopt and to approve publicly the road map the way we did, and to start together to implement this road map, each of us implementing his share of these obligations and responsibilities.

We see no other game in town. This is the only way available now for peace.

BLITZER: What about the demand that the road map negotiators, the U.S. in particular, is putting on the Palestinian Authority, the Palestinian leadership, to crack down on terrorist incidents, suicide attacks, if you will, against Israeli civilians, both inside Israel as well as in the West Bank and Gaza?

Are you, your new government, of prime minister Mahmoud Abbas, going to crack down on some of these groups like Hamas, Islamic Jihad, the so-called Martyrs Brigade, the al-Aqsa Martyrs Brigade of the Fatah Movement? Is that happening?

SHAATH: This road map contains two sets of commitments and responsibilities. Ours includes stopping all violence against Israel. Israel's include ending occupation of our territories, stopping incursions, assassinations and demolitions, and once this road map is approved by the two parties, we shall implement our share side-by-side with their implementing theirs.

The very fact that there will be an agreement of this nature containing all the elements, this is the best way we can go to our people and tell it peace is at hand, let us stop all violence together in order to build our future.

BLITZER: Mr. Minister, are you, therefore, suggesting that until the Israelis roll back some of those so-called illegal settlements that were built after 2001, or freeze settlements, lift some of the restrictions on Palestinian movement, you're not going to crack down on some of these organizations branded by the State Department as terror organizations?

SHAATH: We are committed to every bit of our obligations in that agreement. The end result is what is required, to end all violence against Israel as Israel ends all its violence against us.

Settlement is but one of 10 requirements that Israel has to do in the first phase. We are only saying that this is an agreement that takes the two sides. When we do our bit that helps the Israelis do theirs, when the Israelis do their requirements, that help us with our people do ours. You cannot separate the two. You cannot say that the Palestinian must first do everything that is required, and then the Israelis will decide.

That is what killed every peace agreement so far. We need a real commitment from the two sides to work together in order to stop all violence between the Israelis and Palestinians, regardless of its nature.

BLITZER: Let me rephrase the question this way. Can you tell the Israeli public that may be watching this program right now that if their government, the government of Prime Minister Sharon lives up to the commitments sought from it in this road map, the Palestinian Authority will do whatever it can, 100-percent effort, to end the terrorism coming from Hamas, Islamic Jihad and the al-Aqsa Martyrs Brigade, that you will crush them?

SHAATH: I can assure them here in the name of my government that once this goes into actual practice and implementation, we shall guarantee them our 100 percent effort in stopping all violence against them.

BLITZER: All right. Nabil Shaath, the foreign minister of the Palestinian Authority, joining us from Ramallah. Mr. Foreign Minister, good luck to you. Thank you very much for joining us on LATE EDITION.

Up next, the Israeli view. We'll talk with the Israeli deputy prime minister, Ehud Olmert.

LATE EDITION continues right after this.

(COMMERCIAL BREAK)

BLITZER: Welcome back to LATE EDITION. We're talking about the new road map for peace between the Israelis and the Palestinians.

Let's get an Israeli perspective right now. For that, we turn to the Israeli deputy prime minister, Ehud Olmert. He's joining us live from New York City.

Mr. Minister, welcome back to LATE EDITION.

And let me get your immediate reaction to what we just heard from the Palestinian foreign minister, Nabil Shaath, that if Israel takes the steps that the United States and the other partners of the road map negotiation are seeking, the Palestinians will indeed crack down on terrorism.

What do you make of that?

EHUD OLMERT, ISRAEL'S DEPUTY PRIME MINISTER: Well, there's certainly a positive aspect into what Nabil Shaath said just now. The fact that he's ready to make a commitment to crack down on the Hamas and the Islamic Jihad and the Hezbollah and to stop terror is positive, and I'm very encouraged by this commitment.

BLITZER: So is Israel...

OLMERT: However...

BLITZER: Is Israel ready to respond, Mr. Minister, by taking some of those steps the secretary of state, Colin Powell, is seeking -- for example, a freeze on settlements, lifting some of the restrictions on Palestinian movement, dismantling those settlements that were built supposedly illegally after 2001?

OLMERT: Well, you are outlining many different steps. I'd say that Israel is ready to take painful decisions if and when terror will stop. This is the main thing.

And that's the other aspect of what Nabil Shaath said. There can be no linkage of the immediate effort. It must be done by the Palestinians to stop terror.

This is not a preliminary condition that is tied up to something that Israel has to do. It has to be done unilaterally, without any hesitations. The source of all the aggravations and pains and difficulties in the Middle East is the Palestinian terror.

BLITZER: Well...

OLMERT: Therefore, it can't be conditioned -- I mean, the cracking down on the Hamas and Hezbollah can't be conditioned to anything. It has to stop right now.

BLITZER: If they do that, the Palestinian Authority, the new leadership of Prime Minister Mahmoud Abbas, his new security chief, Mohammed Dahlan, if they do with 100 percent effort, can you envisage the Israel government, your government, dismantling settlements, freezing settlements in the West Bank and Gaza?

OLMERT: If they will do it and when they will do it, then the Israeli government is ready to take painful measures with regard to all of these issues that you have mentioned. I don't know if necessarily in the same order, but in principle.

The prime minister said long ago that we are ready to take painful measures, painful from the point of view of Israel obviously, painful from the point of view of those who support the prime minister and hope he will not take certain measures.

But he's ready to take those measures only if and when terror will stop.

BLITZER: All right. Let me...

OLMERT: And I just want to add, Wolf, with your permission, just one aspect. There must be a very careful use of words here. 100 percent effort can only be measured in one way: by the outcome. If the Palestinians will come and say that they have tried 100 percent, but they failed to stop terror, that will mean nothing. BLITZER: But you...

OLMERT: It must be stopped.

BLITZER: Your security services, your intelligence community is good enough to know if in fact there's 100 percent effort or 80 percent effort. I'm convinced that you'll know it when you see it, if it's happening.

But let's specifically -- when you say "painful measures", that the prime minister's government will be willing to take painful steps, specifically will this Likud-led government of Israel go ahead and freeze, dismantle existing settlements, dismantle settlements the way an earlier Likud-led government of the late Prime Minister Menakhem Begin dismantled settlements in Sinai?

OLMERT: Well, you are talking about different phases. In Sinai, it was done after the full, comprehensive peace agreement with Egypt was signed, and this was already at the level of implementation. Here we're talking about preliminary steps, very initial steps, before an agreement is to be signed. The road map is just a framework for the negotiating process itself. And as you have outlined before, it consists of three different phases. We are talking about the first phase. So, I'm not certain that the comparison to the agreement with Egypt is appropriate in this context.

But what I say, and I repeat again, is that the government of Ariel Sharon will take serious measures in line with our commitments and within the framework of the agreement of the understanding of the road map.

BLITZER: One final question, Mr. Minister, a delicate question, given the sensitivities involved. There have been widespread reports in the Israeli news media, as well as here in the United States, that Prime Minister Sharon is holding out to try to get a better deal when he meets with President Bush on May 20th in Washington, as opposed to his meetings with the secretary of state, convinced apparently that President Bush is more sympathetic toward the Israel government position than Secretary of State Powell.

Are those reports accurate?

OLMERT: Well, you know, Wolf, very well that we have enormous respect for the secretary, Mr. Powell, and we are not trying to play between the president and the secretary of state.

At the same time, you also know that the prime minister say time and again before that we have certain ideas regarding the specific items in the road map that we would like to discuss further. And I am sure that the prime minister will discuss these items when he meet with the president.

But we are not going to play here. I think that the relations we have with the American administration, both Secretary Powell and President Bush, are such that we have full confidence in both. And there is one position for the Israeli government. It will be spelled out. It was spelled out today to the secretary. It will be spelled out again to the president.

BLITZER: The former mayor of Jerusalem, now the deputy prime minister of Israel, Ehud Olmert, joining us once again from New York.

Mr. Minister, as usual, thank you very much.

OLMERT: Thank you very much.

BLITZER: Good luck to you, as well.

OLMERT: Thank you.

BLITZER: Just ahead, with Saddam Hussein ousted from power, is the United States setting its sights on toppling another regime? Who will it be? Will there be a list?

We'll get diplomatic and military insight from former Clinton National Security Adviser Samuel Berger, former Reagan National Security Adviser Robert McFarland, and the former supreme allied commander of NATO, retired U.S. General Wesley Clark.

LATE EDITION will be right back.

(COMMERCIAL BREAK)

BLITZER: Welcome back to LATE EDITION. The success of toppling Saddam Hussein's regime has raised questions, and among them, concern that the Bush administration will use military means to remove governments it deems as hostile. Iran, Syria, North Korea, among others, have often been cited as potential targets.

Joining us now to talk about the challenges -- potential costs -- of this and more are three special guests. In Washington, the former Clinton national security adviser, Samuel Berger. In Salt Lake City, the former Reagan national security adviser, Robert McFarlane. And in Little Rock, Arkansas, the former NATO supreme allied commander, Retired U.S. Army General Wesley Clark.

Gentlemen, welcome back to LATE EDITION, and Samuel Berger, let me begin with you on what we just discussed with the Israelis and the Palestinians, the so-called road map.

As you know, you were the national security adviser to President Clinton when the whole peace process collapsed. In your opinion right now, based on what you know, based on what you've heard from the Israelis and the Palestinians, can this road map get off the ground?

SAMUEL BERGER, FORMER NATIONAL SECURITY ADVISER: Well, this is an extraordinarily important moment, Wolf. With our success in Iraq, with the selection of Abu Mazan as prime minister of the Palestinian Authority, we have to seize -- and with two and a half years of violence in which -- has been a disaster for everyone, we have to use this moment to maximum advantage. It requires the Palestinian national movement to decide it's going to halt military activity as a way of achieve its objectives. It requires the Israelis to decide that they will take reciprocal actions on the ground in order to make it possible for Abu Mazen, the prime minister, to move forward. And, perhaps equally important, it makes -- it is important that the United States decide.

This is not simply one visit from Secretary Powell, but we're now reengaging in a sustained effort to make progress, given the circumstances that exist today.

BLITZER: Robert McFarlane, let me remind our viewers what this road map includes. Some of the highlights put forward by the United States, the United Nations, the Russians, the European Union in this joint proposal. We'll put it up on the screen. Among other things, a provisional Palestinian state by the year 2004, meaning next year. An independent Palestine by 2005. An immediate ceasefire, Palestinian crackdown on militias, dismantling of Jewish settlements established since February 2001, and direct Israeli-Palestinian peace talks.

Looks like Prime Minister Sharon and Prime Minister Abbas are about to meet in the coming days. Are you upbeat that this can, indeed, work?

ROBERT MCFARLANE, FORMER NATIONAL SECURITY ADVISER: Well, I think certainly there is greater hope on both sides and a willingness to take very, very risky steps.

But I think we should be under no illusion. Progress or failure depends primarily upon whether the new Palestinian prime minister can move effectively against Islamic Jihad, Hamas, Hezbollah. Without that, there are not going to be any reciprocal steps on the Israeli side.

On the other hand, if he does, that will have an effect on the body politic of Israel that is very, very anxious for greater stability.

So I think we have to focus on what we can do to be helpful to the new prime minister on the Palestinian side. If he is able to move against these organizations, yes, I think we can be optimistic.

BLITZER: General Clark, you spent many, many years studying about this issue when you were the NATO commander of the European -- the supreme allied commander in Europe, as well. This part of the world was part of your command -- Israel, the West Bank.

What should the Bush administration be doing right now -- together with the European allies, the United Nations, the Russians -- to make sure this peace process works?

GEN. WESLEY CLARK (RET.), CNN MILITARY ANALYST: Well, the most important thing that I know of, Wolf, is to be behind the scenes working with the Palestinians and the Israelis as go-betweens, whether it's the Central Intelligence Agency or some other organization. Because the real question is, does the Palestinian prime minister, even if he has the will, does he have the means to crack down on Hamas? And if you go two weeks, three weeks and four weeks without an incident, and then something happens, is that a failure of the prime minister or is it a success that there's been nothing for two, three, four weeks? And so, how do you get some momentum into this?

And so, I think there's got to be a lot of work done behind the scenes, building trust, sharing intelligence, training forces, and developing the extraordinary means that are necessary to turn off the terror in the Palestinian areas (ph).

BLITZER: Samuel Berger, when you were the national security adviser, you tried, but eventually failed, to get Israeli-Syrian peace negotiations going. The Syrian president, Bashar al-Assad, tells Newsweek's -- Newsweek magazine, in the new issue, that he was -- that his father, Hafez al-Assad, was moving close to some sort of deal with the late Yitzhak Rabin when he was prime minister of Israel, but got nowhere with Ehud Barak. He also is leaving vague whether he's going to shut down some of those terrorist organizations in Damascus that Secretary Powell wants shut down.

Is there any opening right now as far as you can tell for parallel Israeli-Syrian negotiations on the Golan heights?

BERGER: Well, I think that has to be part of the larger picture. But I think Secretary Powell made it very clear to President Assad, Bashir Assad, last week that we expect Syria to shut down its support for terror groups like Hezbollah.

And I think that message was delivered clearly. They have to understand that there are consequences, economic, political and otherwise if they don't.

But they also have to understand that there is a path forward if they do. And that path forward includes not only a new level of economic and political relationship with the United States, but also ultimately resumption of some political process between Israel and Syria.

BLITZER: Robert McFarlane, in that interview in Newsweek, the new Syrian president simply said that he'd made no final decision as far as shutting down those organizations in Damascus like Hezbollah and Islamic Jihad are concerned.

What do you make of this young leader, of Syria right now at this critical moment, facing, obviously, a new strategic situation in the region in the aftermath of the major combat in Iraq?

MCFARLANE: Well, I think, Wolf, that the largest influence on his behavior in the coming weeks is the American victory in Iraq. Clearly, the ground has shifted underneath the Syrian president, and I think he understands that.

The public rhetoric that you just cited is one thing. But, clearly, he can see what the trends are. I think Secretary Powell is going to be offering both carrots, as well as the public sticks.

But I would be encouraged that in the coming weeks we're going to see those offices closed up and a more benign Syrian attitude.

BLITZER: Is that your assessment, General Clark?

CLARK: I think it's too early to say, Wolf, because I think a lot of this depends on the reception that the American forces are given inside Iraq.

I think if it's clear that we're effective in there, that we're winning the support of the Iraqi people, that there is not an effective resistance movement against the United States, then I think we do indeed gain power.

But I think that if we're clinging on by our fingernails, and there's demonstrations and we're continuing to lose people, that it will vitiate the impact of the very successful military operations we just conclude there.

BLITZER: All right, we're going to ask our guests to stand by because we have to take a quick commercial break, but we're going to continue our conversation, move on to some other subjects, as well, including the nuclear standoff with North Korea. We'll also be taking your phone calls.

LATE EDITION will be right back.

(COMMERCIAL BREAK)

BLITZER: Welcome back to LATE EDITION. We're continuing our discussion about the next targets in the war on terrorism with the former Clinton national security adviser Samuel Berger, the former Reagan national security adviser Robert McFarlane, and the former NATO supreme allied commander retired U.S. Army General Wesley Clark.

Samuel Berger, when I interviewed the defense secretary, Donald Rumsfeld, last week, he confirmed that in '93-'94, when you had a similar nuclear standoff with North Korea, the then Clinton administration -- and you were then deputy national security adviser -- seriously considered a military preemptive strike against North Korea.

How close were you to going to war against North Korea then?

BERGER: When the North Koreans in 1993-'94 began to do what they're beginning to do now, which is to separate plutonium from about 8,000 nuclear fuel rods, enough to make six nuclear weapons, we made it clear that was unacceptable to the United States, and that we would take action if that occurred.

We went to the United Nations -- we started to go to the United Nations. They said that would be an act of war, and we were reinforcing our position in South Korea when negotiations started.

Wolf, I think we have to recognize, this is, in my judgment, the most dangerous situation in the world.

CLARK: They are.

BERGER: The North Koreans are about to separate plutonium from fuel rods that have been frozen for eight years, under international supervision, enough to make six nuclear weapons the first year, and then more thereafter.

If they are able to do that -- and North Korea, unlike Iraq, has a demonstrated record of proliferation, of selling its weapons -- we will have essentially the first international nuclear Walmart in the world.

BLITZER: So let me ask you this blunt question. If they don't stop this process, should the U.S. consider a military preemptive strike?

BERGER: Well, I think our policy here has been dangerously confused. Number one, we have to make it clear to the North, which we have not, that reprocessing is a red line.

Number two, we have to be prepared to engage in serious negotiations with the North to determine whether or not an acceptable, verifiable agreement is reachable. If for no other reason than we will not have the support of China and South Korea if we don't.

And third, we need to make it clear to North Korea that there will be coercive action if they go forward, with every option on the table, including the military option.

BLITZER: What about that, Robert McFarlane?

MCFARLANE: Well, I think you should recall that the Clinton administration essentially made it a red line in 1993 and '94, but before long, partly because of how really unsatisfactory our own intelligence was, it eroded through pink and ultimately toward green.

I mean, we had to have the North Koreans tell us what they were doing. It wasn't our own good intelligence. That's a problem. It's a problem there, and it's a problem in Iran, separately, how woefully inadequate our intelligence is.

But I think Sandy and Wes would agree that there really are no good military options against North Korea.

BLITZER: Now, let me bring in General Clark and ask him.

There are what, 37,000 U.S. troops along the DMZ, the demilitarized zone. They would presumably be very vulnerable if it does come down to some sort of military option.

Is there a realistic military option, given that fact of life, 37,000 U.S. troops only feet away from North Korean forces, a million of them?

CLARK: Well, first of all, all those troops are not on the demilitarized zone, but they all are part of that theater of operations. And they, and along with 50,000-odd other Americans, would be at risk if war were to break out there.

There is a military option. We do have overwhelming force that we could apply against North Korea. Whether or not we could get all of their nuclear capabilities and all of their rocket-launching capabilities that could threaten their neighbors or not is problematic.

But there's clearly a military option, and what that military option would mean is that we would, I guess, strike first. North Korea would have to decide whether it would tolerate that, or that it would initiate general war, in which case the outcome is very clear: North Korea would be destroyed, it would cease to exist as a state.

So the North cannot neglect the fact that there is a military option. It is going to be on the table. How openly it's spoken of, it doesn't matter, because they know that we have that military capability.

BLITZER: A dangerous situation indeed.

I want to say thanks to all three of our guests, Samuel Berger, Robert McFarlane, Wesley Clark. Thanks to all of you once again for helping us better understand some of the strategic issues involved.

We say goodbye now to our international viewers. Thanks very much for watching.

Coming up for our North American audience, much more, including this: We'll get some legal insight into the week's big developments inside the courtroom, including a decision that made a connection between Iraq and the September 11th attacks.

That, much more, our Final Round as well, our panel to square off on the major stories of the week. LATE EDITION continues right after this short break.

(COMMERCIAL BREAK)

BLITZER: Welcome back.

An aggressive defense strategy is taking shape in the Laci Peterson murder case. Joining now with some legal insight into that, as well as other key developments inside the courtroom this week, are two special guests.

In New York, the renowned criminal defense attorney, Gloria Allred. Also in New York, Lisa Bloom of Court TV. In addition to being an attorney as well, she also happens to be the daughter of Gloria Allred.

Look at this. Mother, daughter -- a nice touch on this Mother's Day.

Happy Mother's day to you, Gloria. First of all, I assume... GLORIA ALLRED, CRIMINAL DEFENSE ATTORNEY: Thank you, Wolf.

BLITZER: ... it's a nice touch to be on with your daughter on this Mother's Day.

You don't always agree on these legal issues, do you?

ALLRED: No, we don't. And I always enjoy a good debate with my daughter, and also with my grandchildren.

BLITZER: All right, Lisa, you're going to have to be nice. It's Mother's Day, so don't get...

LISA BLOOM, COURT TV: Oh, I'll try.

BLITZER: ... don't get overly carried away.

(LAUGHTER)

Let's begin with the latest developments in the Scott Peterson case.

Gloria, I'll begin with you.

It seems like there are some critical decisions that are going to be made in the coming days that potentially could have an enormous impact on the way this case unfolds. Talk a little bit about that.

ALLRED: Well, yes. And I mean, I think that the question of the sealing or the unsealing of the search warrants, affidavit and the police -- and the arrest-warrant affidavits were certainly important questions resolved by the court of appeals, at least temporarily, that they're not going to be unsealed.

And neither the prosecutors nor the defense wanted them unsealed. I don't the defense wanted them unsealed because they don't want rather damaging affidavits, probably damaging, to come out and be out there in the court of public opinion, affecting what the public thinks about Scott Peterson. And I don't think that the prosecution wants them out there either.

So for the moment, at least, the court of appeals has said they're not going to be revealed, even though the media wants them out there, because the investigation is still an ongoing investigation, even though an arrest has been made and charges filed. As far as the court of appeals is concerned, it's still an ongoing investigation.

BLITZER: All right, well, that's a fair enough -- but let me take the role of the media, which I am a member of the news media.

Lisa, let me ask you. How much more damaging could some of the leaks that have already been put out there against Scott Peterson really be, based on what you know? Presumably some of those court documents involving the search warrant are only going to have more of what's already out in the public domain. BLOOM: Oh, I think it could be a lot more damaging, Wolf. We're talking about 30,000 pages of documents. We've only gotten drips and drabs in the media so far.

We know, for example, that Scott Peterson places himself at the crime scene within three miles of where the bodies washed up. But we know almost nothing, Wolf, about the forensic evidence that's going to be the cornerstone of the prosecution's case.

And I imagine that forensic scientists, as we speak, are pouring over every detail that they have, doing crime lab analysis, as we speak. Those reports are generated. They're handed to the prosecution and the defense. But the media does not have access to those.

BLITZER: But, Gloria, you know this procedure as well. Presumably in those court documents, there's some very useful information that Mark Geragos, the new criminal defense attorney for Scott Peterson, might be able to use.

Now, he's going to get access to that, even if those of us in the media -- even if those documents are not made public.

ALLRED: Yes, he certainly probably already has access to that. But he doesn't want the public to have access. And I imagine that he's also going to be doing his own testing, having his own experts in there to test. He's already indicated that he's got his own investigators out there, and they're going to be working vigorously. He's got other lawyers also working with him. For example, Kirk McAlister (ph), the former defense attorney for Scott Peterson, is now part of this new legal team.

So, yes, he's out there. And Mark Geragos is waging a vigorous defense in the court of public opinion, out there almost every day.

It's like a political campaign, which you so ably cover, Wolf, where he's out there in the 24-hour news cycle putting out something new every day, new bait for the press to grab at.

BLITZER: Lisa, as you well know, on Friday he released what some might call a little mini bombshell out there. I want you to listen to what he said after a court hearing on Friday in Modesto, California. Listen to this.

(BEGIN VIDEO CLIP)

MARK GERAGOS, SCOTT PETERSON'S DEFENSE ATTORNEY: We know that there are people out there, and specifically there's one particular young lady out there, who we believe has some very important information.

We're asking, and we will protect her anonymity, that she contact my office. We will do everything possible to keep you out of this.

(END VIDEO CLIP) BLITZER: Obviously, Lisa, that's pretty intriguing out there, raising the possibility that there's a witness or someone out there who might presumably have some information that could help his client, Scott Peterson. What do you make of that?

BLOOM: Well, isn't reaching out to a young lady what got Scott Peterson in trouble in the first place in this case, Wolf?

But seriously, Mark Geragos's promise of anonymity to this witness is what disturbs me. If there is a witness out there who's helpful for the defense, the defense is going to call that witness at trial. And her identity will be revealed through a witness list, through pre-trial discovery. So any promises of anonymity ring a little bit hollow to me.

BLITZER: As a criminal defense attorney, Gloria, what do you make of what Mark Geragos said on Friday?

ALLRED: Well, you know, it could be two things. It could be a total red herring, or it could be something real, something his client has indicated to him or someone else has indicated to him, that there's someone else that might either provide some alibi for Scott Peterson, or might provide some information about someone else that might be involved instead of Scott Peterson or in addition to.

We don't really know what that's all about. It's totally ambiguous. But it does require a lot of speculating. And maybe that's he wants. Maybe he wants the speculation to be on someone else other than his own client, Scott Peterson.

BLOOM: But what kind of alibi can he have? He has already placed himself at the crime scene by saying that he was fishing alone most of the day on Christmas Eve, the day that Laci went missing. So I'm curious as to what this witness could possibly say that would ultimately exonerate Scott Peterson.

ALLRED: Well, we don't know. But if there is another witness who might have information, I would only hope that that person would contact law enforcement. You know, no one has the duty to contact the defense. Of course, they are free to contact the defense and to talk to the defense. I wouldn't necessarily discourage it. But I'm saying they should certainly contact law enforcement if they have relevant information about a case.

BLOOM: And, of course, anybody that contacts law enforcement, that information will immediately be turned over to the defense under California discovery rules.

BLITZER: They would have that responsibility.

But, Gloria, when you say it could be a red herring, what kind of credibility would Mark Geragos have if he comes out with this kind of a statement, raising a possibility of a critical witness that may know something that could help his client and it turns out to be baloney? Doesn't that shatter a lot of his credibility? ALLRED: Well, he may never indicate whether anyone ever contacted him or not. If he is saying it's anonymous, you know, he may end up not disclosing who it is, or if, in fact, there ever was such a person.

We don't really know. But it's interesting he's talking about another woman. I'm sure he's looking for somebody who would help his client, because the other woman, Amber Frey, who was so brave to come forward and to provide relevant information to law enforcement, is not somebody who helped Scott Peterson. She hurt him and will be a key prosecution witness. And I certainly commend her for her bravery in all of this in doing the right thing.

BLITZER: Lisa, do you agree with your mother on that point?

BLOOM: Well, of course, since it's Mother's Day I agree with her on everything.

ALLRED: You better.

BLOOM: But let me add, or expound by merely saying, Mark Geragos in his last high-profile case, the Winona Ryder case, promised that receipts were going to be established to show that his client didn't shoplift. That did not turn out to be true. She ultimately was convicted.

So when you talk about credibility, you have to really listen carefully to what defense attorneys say before trial and what's actually proved at trial.

BLITZER: All right, let's take a caller California.

Gloria, you're from California.

Lisa, you grew up in California, even though you live in New York now.

We have a caller from California.

Go ahead with your question, please.

CALLER: Hi, are you there?

BLITZER: Go ahead.

CALLER: Yes, my question is, I live out in Modesto, California, with the media going in the wrong (ph), everything with Scott is negative. Would you say he's going to receive a fair trial? I've never heard anything good.

BLITZER: That's a fair question. Gloria, can this man, Scott Peterson, receive a fair trial, A, in Modesto, Stanislaus County in northern California, or anywhere in California, for that matter?

ALLRED: Well, I think the prosecution thinks he can get a fair trial there, although the mayor of Modesto didn't think so. And I'm sure that that will be something that will be enclosed in support of a motion for change of venue, if and when Mark Geragos makes it. And my guess is that he will make it. I'm sure the judge will do everything possible to ensure that.

And I think the suggestion somehow is that the jury can't be fair, that somehow they've made up their mind because there are shrines to Laci around Modesto, because there were signs when Scott Peterson was arrested, suggesting that he did it, as he was taken into jail.

But, you know, often jurors can say that they can be impartial. Often they are impartial. So it may be the case stays in Modesto, because, after all, it's gotten national coverage, and if it's moved elsewhere, people may also have feelings about whether or not they think that Mr. Peterson did it.

BLITZER: Lisa, what do you say?

BLOOM: Let me tell the caller that I was down at the David Westerfield trial in San Diego, California, recently. That was Camp O.J., in terms of the press being out there. There was huge media coverage, satellite trucks, enormous pressure on that jury.

They took 10 days of careful deliberations and ultimately came back with what I think everyone thinks is the right verdict. I think we should trust in juries to rise to the occasion, to review the evidence, and they will reach a verdict even in a high-profile case.

BLITZER: All right. One question before we take a break, Lisa, because I know you probably know the answer to this.

Is it a guarantee that, if in fact there is a trial, there's no plea agreement, no preliminary end to this whole case in advance, that there will be cameras in the courtroom, and Court TV, among other networks, would be able to carry this trial from beginning to end live on television?

BLOOM: Well, I can guarantee you that Court TV will do everything in our power to try to get cameras into the courtroom. That would be up to the trial judge, in California. We did get cameras in for the Robert Blake preliminary hearing, for the Westerfield case.

And we're hopeful that the judge will agree that allowing people to see the system of justice work is very important, and cameras should be allowed in.

BLITZER: Does that help or hurt, Gloria, the prosecution or the defense when there is live coverage like that in the courtroom?

ALLRED: Well, I think it can be helpful to both. I mean, I think that defense attorneys often feel that it's helpful to getting a fair trial for people to be able to scrutinize how the system works, with all of its strengths and with all of its flaws. And often the prosecution feels that way as well and generally there's a pool (ph) of cameras. So, there really isn't a problem. I'm glad that the public had an opportunity to see People vs. O.J. Simpson, the criminal case, although they weren't permitted to see the civil trial, and I hope they have an opportunity to see this one as well.

BLITZER: All right. We have much more questions, many more questions coming up on this LATE EDITION, on this and other legal issues of the week, but we have to take a quick break.

Much more of our conversation with Gloria Allred and her daughter Lisa Bloom on this Mother's Day, mother/daughter, talking the law, here on LATE EDITION. We'll also be taking more of your phone calls.

LATE EDITION will be right back.

(COMMERCIAL BREAK)

BLITZER: Welcome back to LATE EDITION. We're talking about some of the major legal stories of the week with the famed criminal defense attorney Gloria Allred and her loving daughter, Lisa Bloom, of Court TV, on this special Mother's Day.

Lisa, let me begin with you this time. Is this the slam-dunk case against Scott Peterson, based on what we know right now?

BLOOM: Well, we know so little right now, it's very hard to answer. As I said, I think the best evidence against him is his own words placing himself at the scene of the crime, fishing three miles away from where those bodies ultimately were found. That is very powerful evidence against him.

There is also evidence of motive, because we know that he was involved in an extramarital affair with Amber Frey, who did not know that he was married. And apparently, at least once he told her that he was a widow. That does not look good for Scott Peterson.

But it's also not evidence beyond a reasonable doubt. And I think this case is going to rise or fall on the forensic evidence, which is still a secret from those of us in the press.

BLITZER: All right, what about that, Gloria? Slam-dunk or not? If you were the defense attorney for Scott Peterson, you could probably throw a million holes into any of the kind of facts that we know, at least right now.

ALLRED: Well, the name of the game is doubt for a defense attorney like Mark Geragos. So each and every day, he's got to build doubt. And he has said that he is going to go further, that he is going to make sure that his client is found factually innocent, as well as legally innocent, which, of course, is not a legal requirement, nor do I expect him to do that in a court of law. But that's what he is going to do, is to try to build doubt.

Now, he himself has said, and I'm sure he doesn't want to be reminded of it but I'm going to be in there reminding him, that he thought there was enough to arrest Scott Peterson. He said this, of course, before he became the defense attorney for Mr. Peterson. Enough to arrest him, and he thought the prosecution had enough to convict.

I'm sure he's going to say at this point, Wolf, "Well, at that point, I hadn't seen the evidence -- all of the evidence. I was just a commentator."

But in his own words, at that point, at least, as to what was public, he thought there was enough to convict.

BLITZER: You know, Lisa, on that specific point, that Mark Geragos raised the bar, saying not only is he going to try to raise a reasonable doubt in favor of his client, but he's going to try to find the actual person who did kill Laci Peterson and her unborn son. Now, what's that -- that seems like an unusual strategy for a defense attorney.

BLOOM: Well, you raised the issue of credibility, Wolf, and I think that's an important issue here as well. Geragos didn't just say he was going to prove factual innocence. He didn't just say he was going to find the real killers. He said, quote, "We are not into reasonable doubt."

Now, I can guarantee you that the first words and the last words out of his mouth at trial in his opening statement and his summation are going to be "reasonable doubt." That's Criminal Defense Attorney 101. That's what he's going to be arguing at this trial.

So to say one thing in the media and another thing in the trial, I think, is going to cast doubt on his credibility. I highly doubt that in his closing argument, he's going to say to this jury, "Hey, if you don't think he's innocent, go ahead and convict him. Forget about reasonable doubt." It's just not going to happen.

ALLRED: And there's no question the press is going to try to hold him to his promise, to his commitment to show that his client is factually innocent.

He's not going to be able to just make a big show of that on one or two days, a big media splash -- as he did when he first said it -- and then later just forget all about it. Because they're going to remind him that he said it, and they're going to say, "OK, let's see the facts. Let's see what you've got."

BLITZER: It's a high hurdle that he's going to have to jump over.

ALLRED: Absolutely.

BLITZER: Gloria, let me switch gears, talk about another case that generated an enormous amount of interest this week. That so- called hazing incident outside of Chicago, in a suburb of Chicago, earlier in the week. We saw the videotape. Very, very damaging. Junior girls effectively being beaten up by senior girls there.

It was off the campus of the high school there, but should the high school be held responsible? Should parents of some of those senior girls who may have, in fact, bought liquor for the girls, beer or whatever, should they be held responsible?

Legally, what's going on here?

ALLRED: Well, yes, and I understand that there's some lawsuits that already have been filed, maybe more that will be filed.

I think one of the issues is going to be, what did the school district know and when did they know it? For example, apparently in the past, they decided not to condone this kind of event. And that's one of the reasons it's elsewhere and allegedly privately held.

Did they know, because some of the students were wearing T- shirts, what might happen? Should they have been taking some steps to try to prevent it? Did they have any role in this? These are the kinds of questions that are going to have to be answered as a matter of law.

And in addition, whether there is any kind of immunity in the school district and whether the parents had a role that contributed toward the ultimate damage that occurred.

BLITZER: Lisa, the fact that there were video cameras there, home video cameras taking pictures, we've seen the pictures -- apparently there are a lot more video cameras that were taking pictures as well.

There's presumably a lot of nervous parents right now, thinking they could be wiped out in lawsuits, whether the government goes after them, the local prosecutor or whether there are civil lawsuits.

BLOOM: Well, parents generally are vicariously liable for the acts of their children, meaning we have to pay for the things our kids do, which is kind of a disturbing message on Mother's Day, but there it is.

Tort liability for the school might be more difficult. It's going to depend on what the connections are between the school and this event. We can see they look like they're wearing school uniforms in that video. It looks like a school event, even though it's off campus.

You know, the purpose of tort liability is to keep people safe, to keep our kids safe in school. And if schools are encouraged because of a financial motivation to take steps to protect our children, I think that's a good thing.

BLITZER: One final question before I let both of you go on this Mother's Day, I know you both want to go celebrate. But, Gloria, that case you probably are familiar with it in New York, a civil lawsuit that was filed against the government of Iraq, supposedly for involvement in 9/11, a judge ruled, a U.S. district judge, Judge Harold Bear (ph), ruled, and I'll put it up on the screen, among other things, he ruled this, "I conclude that plaintiffs have shown, albeit barely, by evidence satisfactory to the court, that Iraq provided material support to bin Laden and al Qaeda. The opinion testimony of the plaintiffs' experts is sufficient to meet plaintiffs' burden that Iraq collaborated in or supported bin Laden and al Qaeda's terrorist acts of September 11th."

He awarded $100 million to two of those plaintiffs, but most people don't think that money is ever going to be provided. What do you make, though, of this decision?

ALLRED: Well, it certainly is going to be something the administration is going to be happy about, because the White House has been trying to say that there is a connection between Iraq and al Qaeda and what happened on 9/11.

No doubt that there will be an appeal from that lower court decision by the trial judge. But, you know, the interesting issue is, too, even if the plaintiffs prevail, that is, ultimately that they are successful, then they have to go about executing on the judgment. That is, collecting.

And apparently there is quite a bit of money that they could collect, that Iraqi funds, I believe, are presently frozen. So it's going to be interesting to try to unfreeze them, and get what they think that they deserve to have.

BLITZER: All right, you're going to have the last word, Gloria. I'm not going to get Lisa say anything else, because we're all out of time. And it's Mother's Day, you deserve the last word. Let your daughter give you a big hug and a kiss later in the day.

ALLRED: Thank you.

BLOOM: Fair enough.

BLITZER: Gloria Allred and her loving daughter, Lisa Bloom, on this special Mother's Day.

ALLRED: And happy Mother's Day to everyone who's watching.

BLITZER: Thank you very much.

And now to Bruce Morton on the changing boundaries of morality in America.

(BEGIN VIDEOTAPE)

BRUCE MORTON, CNN CORRESPONDENT (voice-over): Democracies have two kinds of morality: public and private.

In 1920, Americans amended their Constitution to say that women could not be denied the vote because of their sex. Not letting them vote, the country had decided, was immoral, wrong.

In 1964 and '65, civil rights laws ended legal segregation in the American South. Americans had decided it was immoral, wrong.

That doesn't mean there are no racists left in the country or, come to that, no anti-Semites, anti-Muslims, no people who think only men should vote even. But they're out of power, back in the closet somewhere.

During World War II, Japanese-Americans were put in concentration camps. I think that could not happen today. America is not a shining country on a hill, but it does get better bit by bit.

We have laws, state laws, usually, against crimes, murder, robbery, assault and so on. These crimes have, obviously, victims. What is moral treatment of the victims? We argue about that still. Should they be compensated somehow? Should they always sue?

Another part of morality involves respecting each other's privacy and cutting one another some slack. We don't -- well, some of us do, but most of us don't -- attack each other for belonging to the wrong religion. Faith, or its lack, is supposed to be private.

But lately that's been less true. Senator Rick Santorum and other -- hard to know how many -- Americans, think that, for instance, a homosexual act between consenting adults, against their religion, but no victim here, should be a crime, punishable by prison.

So, some say, should adultery, where there is a victim. In Nathaniel Hawthorne's novel, the adulterous woman's forehead is marked with a red A, but in modern America adultery, too, has been private. Maybe that will change, though such a proposal would have trouble passing Congress, I think.

And now gambling, thanks to William Bennett. Wealth may matter here. If I blow all my money at the track and my family can't buy food or pay the rent, that's one thing. If, as is apparently true in Mr. Bennett's case, he can lose whatever he loses while keeping his family in comfort, that's another. One example has victims, one doesn't.

Morality evolves. America, I think, is kinder than it used to be. Government tries to help our least fortunate. So do private charities.

But unkindnesses remain. We send some of our children to wretched public schools. We haven't solved homelessness. The shining country on a hill isn't here yet.

I'm Bruce Morton.

(END VIDEOTAPE)

BLITZER: Thanks very much, Bruce.

And on this Mother's Day, let me show our viewers how David Letterman the other night recalled Mother's Day and Wolf Blitzer.

(BEGIN VIDEO CLIP)

DAVID LETTERMAN, HOST, LATE SHOW WITH DAVID LETTERMAN: On our special day it's time once again to ask mom that burning question, "Why, oh why, did you name me Wolf?"

(LAUGHTER)

Wolf Blitzer.

(END VIDEO CLIP)

BLITZER: David Letterman having a few laughs at my expense. Yes, Wolf is my real name.

Happy Mother's Day to my mother out there.

Happy Mother's Day to my wife, Lynn (ph).

Happy Mother's Day to all the mothers watching us right now. It's your day. We love all of you.

Thanks very much for watching, especially on this Mother's Day.

Up next, our "Final Round." Jonathan Karl will be filling in for me back in Washington. Our panel is there with him. They're ready to square off on the week's big stories.

I'm Wolf Blitzer reporting from the CNN Center in Atlanta. LATE EDITION's Final Round right after the hour's headlines.

(COMMERCIAL BREAK)

JONATHAN KARL, CNN CONGRESSIONAL CORRESPONDENT: Welcome to LATE EDITION's "Final Round." I'm Jonathan Karl.

Joining me, Donna Brazile, the Democratic strategist, Peter Beinart of the New Republic, Jonah Goldberg of the National Review Online, and Robert George of the New York Post.

We begin with a major shakeup in the U.S. administration of Iraq. Retired Lieutenant General Jay Garner is being replaced as the chief administrator by former U.S. diplomat Paul Bremer. Also on the way out, the administration's central Iraq coordinator, Barbara Bodine.

Donna, is this a sign things are falling apart?

DONNA BRAZILE, DEMOCRATIC STRATEGIST: I think things have fallen apart in Baghdad, and thank God this shakedown is occurring right now.

Look, this is the most ambitious nation-building challenge since World War II, and they've failed miserably with Plan A. So Plan B needs to come on the table before there's a meltdown in Iraq.

ROBERT GEORGE, NEW YORK POST: Yes, it's not exactly looking good initially. But, you know, remember, we've only been in there for about a month. There was always going to be a matter of reassessing and bringing in new people, though it does seem to suggest, though, that the State Department has won the internecine administration battle with the Department of Defense.

KARL: But what is this? I mean, Peter, it's only been three weeks. I mean, why this big shakeup now? Were they expecting to accomplish anything?

PETER BEINART, THE NEW REPUBLIC: No, I think you're right. Realistically, three weeks, you can't have expected to accomplish very much.

For me, the much larger issue is this idea that we're going to start rapidly withdrawing American troops. Everybody who's looked at this knows we already don't have enough troops to ensure security. And the idea that we're going to do -- really are serious about building liberal institutions in Iraq, when we're going to start pulling out American troops quite quickly, is crazy to me and represents a potentially a very serious betrayal of the stated mission of this war.

KARL: Jonah.

JONAH GOLDBERG, NATIONAL REVIEW ONLINE: I think Peter's probably right that we're pulling out troops too quickly. In terms of this being a disaster and everything falling apart, I think that overstates the case. Everyone said that the day after would be the hard part.

And I think in some ways the fact that they're taking Garner out and putting Bremer in shows that this administration has some flexibility and is willing to sort of correct its mistakes as it goes, which is a positive sign.

KARL: OK. All right. Let's move on.

There are signs that the president may be actually winning the debate over tax cuts. A new CNN-USA Today Gallup poll shows 52 percent of Americans questioned say the president's tax cuts are a good idea. That's a big jump over just a month ago.

Earlier today, Treasury Secretary John Snow pressed the administration's case that the president's plan is the best way to get the economy moving again.

(BEGIN VIDEO CLIP)

SNOW: The economy isn't growing as fast as it should. And that's precisely the reason, Wolf, that's precisely the reason that the president is pressing for his jobs and growth plan. Because if enacted by the Congress, and we're getting closer, it will create enormous number of new jobs.

(END VIDEO CLIP)

KARL: All right. Peter, it's no secret you don't like the president's tax plan. But he's taken the case to the American people, and it seems -- it at least seems he is making some headway.

BEINART: Well, look, if the American people think this tax cut is a good idea, they're dead wrong.

(LAUGHTER)

That's -- you know, I've got no problem saying that.

The truth is, this tax cut is going to force the states to raise taxes to balance their budgets, which will counteract the effect. And most economists will tell you the way to stimulate the economy is to get money into the hands of people who will spend it. With people further down the economic ladder, this doesn't happen.

You know, what really annoys me about this is that Republicans want to cut taxes in any economic circumstances. We all know that's the truth. They're dressing up this as fiscal stimulus, when it has actually -- that's not why they really support it. I wish they would be honest about it.

KARL: Be honest, Robert.

GEORGE: I will be honest. And I'll be even more honest than Peter knows.

In a sense, he's right. The way the president first put forth his tax cut, in terms of getting rid of dividends and so forth, that was not a great stimulus.

The irony of this is, that with the debate, what's coming out of the House right now, in terms of cutting capital gains and things like that, is actually a better stimulus package than the White House wanted.

KARL: And the White House doesn't want that, though.

GEORGE: But it's actually -- I think it's, ultimately, maybe a better plan.

KARL: What's going to happen?

BRAZILE: First of all, I think the American people are confused. They think they're going to get a tax cut. They're not going to get a tax cut. Unless you're wealthy in this country and have a lot of money in stocks, you're not going to get a tax break. So, that's the first thing.

GOLDBERG: Why'd you look at me?

(LAUGHTER)

I'm sure you've got a better portfolio than I do.

BRAZILE: I hope.

GEORGE: But you've got the child tax credit.

(LAUGHTER)

BRAZILE: And the marriage penalty...

GOLDBERG: Yeah.

BRAZILE: But look, this is a fiscal train wreck that we're about to see. This is -- this should be relabeled the spend-and-borrow package. We're spending money from the Social Security and Medicare trust fund. We're continuing to spend all this money that we don't have. We're raising the deficit. I feel like someone has stolen my credit card, and they're running up the tab, and pretty soon I'm going to, you know, inherit that bill, and I'm going to send it to Jonah.

GOLDBERG: Thanks.

Look, the Democrats' plan, the alternative plan, basically works on the assumption that if they raise taxes, that it's going to cause an economic boon, which is just as ludicrous as anything Peter says about the Republican plan.

I basically don't like any of these kinds of plans. I just like to see spending cut whenever possible. I like to see taxes cut whenever possible...

KARL: Well, that's not happening.

GOLDBERG: And I'm a big believer in the business cycle. And I think that things are going to get better on their own. And most of the debate about economic plans in this town is idiotic.

KARL: Well, at the end of the day, the president's going to get almost all -- I mean, at least a sizable chunk of this tax cut, right?

BRAZILE: I think he will, and that will be an embarrassment to the Democrats who, I believe, are trying to stop this fiscal train wreck from happening.

GEORGE: And the president will declare victory and move on.

BEINART: The thing that I love is that the Republicans are on record as supporting a balanced-budget amendment. They still support a balanced budget. I love this.

(CROSSTALK)

GEORGE: That is so 1995.

KARL: OK. We've got to take a quick break. But when we come back, a stunning admission by the New York Times.

The Final Round will be right back.

(COMMERCIAL BREAK)

KARL: Welcome back to the Final Round.

The New York Times is acknowledging fraud by one of its reporters in exhaustive detail today. The paper outlined dozens of plagiarized and fabricated stories by 27-year-old Jayson Blair and apologized to its readers.

Jonah, obviously this is a problem for the New York Times, but what are the larger implications here?

GOLDBERG: Look, well, first of all, this 7,000-word phone book of an apology is a pinata. You can bash it from any angle and bear some reward. But I'll pick one.

They say that this is the low point in their 154-year history. Some guy making up quotes, you know, is a bad story, but this is the newspaper that put the Holocaust on the junk pages. This is the newspaper that won a Pulitzer Prize for a guy who said that Stalin didn't do anything wrong in the 1930s and '40s.

This is a newspaper that -- this apology is so self-serving, it is like a serial killer getting caught stealing a loaf of bread and saying it's the worst thing they've ever done.

And they're trying to put all the blame on this one guy and exempt all the executives for the culture that they've bred over there. It is an outrage.

KARL: You want to pile on, Robert?

GEORGE: Sure. You know, the New York Post, which increased its circulation by 10 percent while the Times went down 5 percent in the last reporting period...

(LAUGHTER)

KARL: Founded by Alexander Hamilton.

GEORGE: Yes, founded by Alexander Hamilton.

Look, the Times has had a credibility problem for a while, and it came to a head during the war -- or in the buildup to the war, where they felt that they were being so one-sided on the liberal side, so that's one major problem. But the lack of executive accountability here shows that they've got problems well beyond just liberal bias.

BRAZILE: Well, I do think that someone in the personnel department should be fired, because the guy fabricated his own resume.

But that aside, I think the New York Times is one of America's finest newspapers. I am going to continue to read it. I'm going to read all of the excuses and all of the apologies, but it's one of the better newspapers in this country.

(CROSSTALK)

BEINART: You know, my magazine, the New Republic, has had its own trauma with this. And what we've learned from it, sadly, is that, when someone is a skilled liar and fraud, it's hard to find him.

You do everything you can, but people like Blair and Steven Glass are very good at this.

(CROSSTALK)

GEORGE: The Times has an army of fact-checkers, or it should.

GOLDBERG: Your public sins are much less than the New York Times's.

KARL: Let's move on. The debate is heating up over the president's nominees to federal courts. This week, President Bush and Senate Minority Leader Tom Daschle squared off over the confirmation of the president's most controversial nominees.

(BEGIN VIDEO CLIPS)

BUSH: Highly qualified judicial nominees are waiting years to get an up or down vote from the United States Senate. They wait for years, while partisans search in vain for reasons to reject them.

DASCHLE: 124 circuit and district court nominees have been confirmed since this president has taken office. Here is the number that have not. That's right: two. 124 to 2.

(END VIDEO CLIPS)

KARL: All right, Peter. Who's telling the truth here? Is the system broken, like Republicans say, or is Daschle right and everything is just fine except for a couple of controversial...

BEINART: The system is working a lot better than it was working when Bill Clinton was president.

BEINART: Here's all you need to know. When Bill Clinton left office, judicial vacancies were at an all-time high. Today judicial vacancies, which is the issue here, right, are at their -- are better than they've been for 13 years. The Republicans put secret holds on 60 Clinton nominees.

What the Democrats are doing is absolutely child's play compared to what the Republicans did under Clinton.

KARL: All right. Jonah?

GOLDBERG: Well, look, look, finding hypocrisy over judicial nominations is like finding hay in a haystack. I mean, that's all there is in these arguments.

Both sides have done things wrong. You can play that game forever.

BEINART: No, I'm saying the Republicans have done it much, much worse. I'm not saying...

GOLDBERG: But, Peter, Peter, Peter, prior to the 2002 elections, you were writing steadily about the Democrats must filibuster, must stop Bush's judges.

Bush went out, and he won a huge landslide in the Senate. Got a giant mandate for his own judges. There is no excuse for what's going on now.

BEINART: How many are they filibustering? Two? Three?

GOLDBERG: For no good reason, though.

(CROSSTALK)

BRAZILE: I have to correct the record. It was not a landslide on November 5th, it was just a seismic shift, but not a landslide.

(LAUGHTER)

That's the first thing. The second thing...

KARL: And not in Louisiana.

BRAZILE: Absolutely. The Democrats are doing their job. That's their job, to provide advice and consent. If the president was serious about, you know, fixing this problem, if there's a problem -- I don't think it's a problem -- he should sit down with the Democrats and take off what they have on the table and go out there and fix the problem.

KARL: All right, all right. Quick, Robert, what have you got?

GEORGE: As Jonah said, lots of hypocrisy on both sides. If the Democrats want to continue doing this, though, Bush will, in a sense, do the same thing next year and see if he gets more people in the Senate to be able to confirm his judges.

KARL: Hard to imagine judges being a pivotal issue in the election...

GEORGE: Actually, polling showed that it was...

KARL: ... but we'll see. We will see.

All right, we've got to take a quick break. The Lightning Round is just ahead. Stay with us.

(COMMERCIAL BREAK)

KARL: A Norwegian legislator has nominated President Bush and British Prime Minister Tony Blair for the Nobel Peace Prize. Jan Simonson (ph) says by initiating and winning the war with Iraq, the two men prevented a much more dangerous war in the future.

All right, is war peace? Is this a good idea?

BEINART: Not yet. I would say give it a year. Let's see, if Iraq is on the road to a stable, decent government. I'd give it to them then. But if it's not, they don't deserve it.

GEORGE: Yes, this is sort of an extension of the Reagan peace- through-strength doctrine, and I think it's actually a good idea. I forget who it was who actually said that the U.S. Army was the greatest peace-bringing institution.

KARL: OK, now wait a minute. A peace prize for going to war? Help me out. BRAZILE: Thank you very much.

(LAUGHTER)

That's really stretching it a bit. At this point, I would nominate someone like Pope John Paul, or Bono, or some other ...

KARL: Bono?

GOLDBERG: Look, first of all, wars do bring peace. War ended slavery, war ended the Holocaust, wars have done lots of good things. But you have to wait a year anyway, because we missed the deadline, so this is for 2004 anyway.

KARL: All right. OK, President Bush, moving on, President Bush is taking some flack from Democrats for his appearance last week aboard the USS Abraham Lincoln. They're accusing him of exploiting the military for political purposes and wasting taxpayer dollars in the process.

All right, Robert, is this a winning issue for the Democrats? Obviously not, but do they have a point?

GEORGE: You know, I don't think they've got a point. I what I think is especially -- I think it's very, very silly, because, you know, you're going to see this same scene over and over again, the more Democrats remind people.

The thing is, the Democrats actually have legitimate issues out there as an opposition party to remind people about. Like, for example, the Halliburton no-bid contract, as we later then found out...

(CROSSTALK)

GEORGE: No, I'm totally serious. Those are some of the issues that, as an opposition party, the Democrats should be focusing on rather than these silly things.

KARL: And Donna, Waxman raised that, but then raised this issue at the same time and totally blew himself out of the water. I mean, this is not a winning...

BRAZILE: Well, Harry Waxman is a great legislator, and so -- but let me just say this. I think we have many more issues to rattle the cage of the Republicans, one being the Halliburton contract, and of course the economy. So that's what we should be talking about.

GOLDBERG: I'll leave it to the Democratic strategist. She's absolutely right, it's idiotic for the Democrats to harp on this.

BEINART: Maybe, but the Democrats need to get it across to the American people, which they haven't, that this administration plays fast and loose with the truth.

Fleischer said we have to get on the jet because that's the only way we can get to the aircraft carrier. Untrue, which is part of a pattern. And the Democrats have to hit that because they have to change the perception, and they'll be right if they change the perception.

KARL: But, I mean, every time they say it, we're going to show the pictures over and over again. These are the best, some of the most attractive pictures of the Bush presidency.

BEINART: I'm sure, but the truth is that the Bush administration on very, very important issues having to do with war and peace have...

KARL: All right. We've got to get out.

BRAZILE: Just remember, they're going to be selling these pictures soon.

KARL: OK. That's it. Thank you very much.

BRAZILE: Happy Mother's Day.

KARL: Happy Mother's Day, of course.

That's your LATE EDITION for Sunday, May 11.

Coming up at the top of the hour, "IN THE MONEY" explores whether the three-strikes-and-you're-out rule should apply to corporations as well as regular citizens.

That's followed at 4:00 p.m. Eastern by "CNN LIVE SUNDAY" with the latest news. And at 5:00 p.m. Eastern, "NEXT@CNN" brings you the story of a man who plans to send a manned ship into space with no help at all from NASA.

Be sure to join Wolf next Sunday and every Sunday at noon Eastern for the last word in Sunday talk. Until then, thank you for watching.

Have a great Mother's Day. And to my mother out in South Dakota watching, happy Mother's Day, and to all the others, as well.

I'm Jonathan Karl in Washington.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com



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