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CNN LOU DOBBS MONEYLINE
Martha Stewart Could Soon Face Criminal Charges in an Insider Trading Scandal; Bush Meets With Arab Leaders to Discuss Peace Initiative
Aired June 3, 2003 - 18:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JAN HOPKINS, CNN ANCHOR: Thank you, Wolf, and good evening everyone.
Target Martha, Martha Stewart could soon face criminal charges in an insider trading scandal. Her company's stock plunged today. Bill Tucker will have that report, and CNN Legal Analyst Jeffrey Toobin will be my guest.
Mid East Summit, President Bush today met Arab leaders to discuss his most ambitious peace initiative since coming into office. John King will have a report from Sharm El Sheikh in Egypt. Former Defense Secretary William Cohen will give us his assessment.
And a security scandal at this country's airports half of the airport screeners have not had any background checks. Homeland Security Correspondent Jeanne Meserve will have that disturbing report.
Tonight, Martha Stewart is one step closer to facing criminal charges. According to an announcement from her company, federal prosecutors are prepared to indict Martha Stewart for an alleged insider trading scandal that has sent her personal and professional fortunes plunging.
Bill Tucker has our report.
(BEGIN VIDEOTAPE)
BILL TUCKER, CNNfn CORRESPONDENT (voice-over): Will she or won't she? Only Martha knows if her resignation is in the making at the company she heads and which bears her name. Following the company's annual shareholder meeting, board members came out and would only say she hasn't left yet.
ARTHUR MARTINEZ, MARTHA STEWART DIRECTOR: A shareholder asked in the meeting if it was true that Martha had resigned as chairman and chief executive of the company. I responded that this was categorically untrue. Martha remains the chairman and chief executive of Martha Stewart Living OmniMedia.
TUCKER: And lawyers for Ms. Stewart also seem to shoot down any speculation about a pending plea bargain saying that if indicted she will plead innocent and take her case to trial. There appears to be little doubt that she will be indicted, sources telling CNN that an indictment could be handed down as early as Wednesday. There is also little doubt in the minds of many that she should be indicted.
JACOB ZAMANSKY, SHAREHOLDER ATTORNEY: Martha Stewart needs to be held to a higher standard. She was a director of the New York Stock Exchange, CEO of a public company, and a former broker. If anybody knew the rules on insider trading it was Martha Stewart.
TUCKER: And while there is still the question or guilt or innocence, Martha's controversy is not a good thing for business. Just about two weeks ago the company lowered expectations saying the controversy surrounding Martha Stewart was having "substantial negative impacts on its business."
RICHARD SERAFINI, WHITE COLLAR DEFENSE ATTY.: I suspect that however this works out it's going to be likely that she is no longer associated with her company and will be, in fact, barred by the SEC from association with a publicly traded company.
TUCKER: But in the executive suite or not, Martha Stewart seems unlikely to fade quietly into the background, especially since she currently holds about two-thirds of the outstanding shares or roughly 31 million shares.
(END VIDEOTAPE)
TUCKER: And, in the past year the value of that stock has fallen by more than a quarter of a billion dollars and this whole mess got started with the sale of ImClone stock which was worth just about a quarter of a million dollars -- Jan.
HOPKINS: There's a lot of irony in this case, Bill, because ImClone fortunes are actually rising at this point as the Martha Stewart fortunes are falling.
TUCKER: It is. Stock is not back up to the value of what it was when she sold it but you're right, Jan, over the past several months as the news on Erbitux has come out the value of that stock has been on the rise.
HOPKINS: Thanks, Bill Tucker.
And joining us now is CNN Legal Analyst Jeffrey Toobin. Jeffrey is the only journalist to have interviewed Martha Stewart since the scandal broke more than a year ago.
So, Jeffrey, in the article that you wrote after you had lunch with Martha, you said that you didn't see evidence of insider trading. So, are you surprised at this?
JEFFREY TOOBIN, CNN LEGAL ANALYST: Well, it's been building clearly for all this time and also clearly I didn't have access to all the evidence that the U.S. attorney does. But with those caveats I am stunned. I am astonished. I am very surprised that this case has gotten as far as it did because I simply didn't see the evidence against her.
HOPKINS: But is it obstruction of justice rather than insider trading that's going on here?
TOOBIN: You make a crucial point here because there are two parts of the investigation. One is whether she traded that stock the day before it sold on inside information illegally. That's one part of the case.
The other part is did she lie to investigators about why she sold the stock? That second part of the case is generally perceived to be stronger than the insider trading case. I didn't think it was all that strong but it's certainly the stronger part and it's the most likely to be charged when she's criminally charged.
HOPKINS: And, it's inevitable at this point that she is going to be indicted?
TOOBIN: She got what's called a target letter which in my experience as a federal prosecutor means 99 times out of 100 if you get a target letter you're going to be indicted. There's still a possibility for a plea bargain in advance but certainly it seems like the overwhelming likelihood that she's getting indicted.
HOPKINS: Interesting timing, Sam Waksal of ImClone is going to be sentenced next week. Is it related?
TOOBIN: I don't think it is. I mean remember Sam Waksal, it was incredibly in his interest to inform on her, to say look I can give you something on Martha Stewart so reduce my sentence. He hasn't done it. It may be that he hasn't done it because he has nothing to give.
HOPKINS: Ah hah. But if, in fact, she's indicted and convicted, anyway that she can avoid jail?
TOOBIN: You know her sentencing guidelines based on what it's likely the charges to be are probably on the borderline between mandatory jail and not mandatory jail. I'm sure that's been a big part of these plea negotiations, but I think if she forces the government to go to trial, I think the overwhelming likelihood is she'll go to jail.
HOPKINS: Wow. There's no way she can run the company even if she's indicted, right?
TOOBIN: See, what's tragic about this is she loses if she's indicted. If she's indicted it's virtually impossible for her to have any affiliation with the company anymore. She steps down as CEO. She steps down as a board member. She stops presumably doing her television show. I mean an indictment is a loss almost, almost as much as a conviction.
HOPKINS: Is this some kind of message? I mean is Martha really a target because of some bigger message here?
TOOBIN: Her timing was terrible to get into this mess because, you know, she got involved right at the time Enron, WorldCom, all these companies were falling apart and as Lou's tote board shows every night there are not that many people who have been called to account. Here she is far more famous than Ken Lay or any of these other people. She makes a very tempting person for the government to send a message on.
HOPKINS: Jeff Toobin thanks.
President Bush continues his overseas travels tonight. Earlier today the president said the Palestinians must not allow a few terrorists to prevent peace in the Middle East. The president met with Arab leaders in the Egyptian town of Sharm El Sheikh. Tomorrow he will go to Jordan to meet with the Israeli and Palestinian prime ministers.
Senior White House Correspondent John King reports from Sharm El Sheikh.
(BEGIN VIDEOTAPE)
JOHN KING, CNN SENIOR WHITE HOUSE CORRESPONDENT (voice-over): The meeting convened in a spirit of cautious optimism and the president quickly addressed a top concern of the Arab leaders around the table.
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Israel must deal with the settlements. Israel must make sure there is a continuous territory that the Palestinians can call home.
KING: It was the first time Mr. Bush met face-to-face with Palestinian Prime Minister Mahmoud Abbas, and one goal here at the edge of the Red Sea is to establish Mr. Abbas, not Yasser Arafat, as the point man in peace talks.
BUSH: We seek true peace, not just a pause between more wars and intifadas, but a permanent reconciliation among the peoples of the Middle East.
KING: The leaders of Egypt, Saudi Arabia, Jordan, and Bahrain were on hand to endorse the Bush road map and to promise to do more to choke off political and financial support to Palestinian militant and other terror groups.
HOSNI MUBARAK, EGYPTIAN PRESIDENT (through translator): We will continue to fight the scourge of terrorism against humanity and reject the culture of extremism and violence in any form or shape.
KING: Round two is a three-way summit on Wednesday with Mr. Abbas and Israeli Prime Minister Ariel Sharon. Administration sources tell CNN Mr. Sharon is poised to make a public commitment to dismantle some settlements.
The president was happy to take the wheel on an upbeat day here, but also says he will dedicate whatever time and energy it takes when things turn tough in the challenging days ahead. CONDOLEEZZA RICE, NATIONAL SECURITY ADVISER: This president will not back away. This is a president who is known for his determination, who's known for keeping his word.
KING: Officials tell CNN a new U.S. special Mid East envoy will soon be dispatched, Assistant Secretary of State John Wolf. The White House also envisions a more active role for National Security Adviser Rice in the new push for peace.
This is hardly the first summit at Sharm El Sheikh but the White House hopes this one will be different because Yasser Arafat is not at the table, found only on the walls.
(on camera): But the president told Prime Minister Abbas he must rise to the challenge of the moment and, as Mr. Bush put it bluntly, not allow a few killers, a few terrorists to derail this new hope and fragile new momentum for peace.
John King, CNN, Sharm El Sheikh, Egypt.
(END VIDEOTAPE)
HOPKINS: National Security Adviser Condoleezza Rice also told John King that she believes Israeli is ready to negotiate with the Palestinians.
(BEGIN VIDEO CLIP)
RICE: The Israeli prime minister has always said that when he had a partner for peace, when he had someone who was really willing to fight terror and to remove the scourge of terror that he would be ready to make the difficult choices that Israel must make, and I believe that we're getting to those conditions. Again, it's a long road ahead. The president came here to start the process but we believe we have a chance to make real progress.
(END VIDEO CLIP)
HOPKINS: You can see John King's entire interview with Condoleezza Rice on "LIVE FROM THE HEADLINES" at 7:00 p.m. Eastern right here on CNN.
Leaders of the world's largest industrialized nations today said that countries like Iran must not be allowed to develop nuclear weapons. Russian President Vladimir Putin said that Iran's nuclear program must come under stricter international control but Russia has no plans to abandon its lucrative deal to help Iran.
Kitty Pilgrim has that story.
(BEGIN VIDEOTAPE)
KITTY PILGRIM, CNNfn CORRESPONDENT (voice-over): President Putin said today Russia would continue to help Iran with its nuclear program. The original deal between Russia and Iran had nuclear safeguards. In it, Iran was supposed to send back the spent fuel rods from the Bushehr Reactor back to Russia to prevent them from being processed into fuel for nuclear weapons. Now, that's not the case.
FRANK GAFFNEY, CENTER FOR SECURITY POLICY: The Iranians have made now clear that they intend to do that in country which enables them to extract plutonium which in turn would give them precisely what they need for potentially quite large numbers of nuclear weapons.
PILGRIM: Iran says its nuclear program is for electric power but evidence is mounting that it could be trying to make weapons. Experts think the facilities at (unintelligible), another site in Iran, are about two years away from producing nuclear bombs.
DAVID ALBRIGHT, FMR. WEAPONS INSPECTOR: When the International Atomic Energy Agency visited the Iranian enrichment plan in February, they were surprised that Iran had made so much progress on this uranium enrichment equipment called gas centrifuges. There was a general concern that developed that Iran had made a lot of progress essentially in secret without it being detected.
The United States has been taking issue with Russia's involvement in the Bushehr project in Iran for a while but experts say Russians are not likely to give up the lucrative deal worth hundreds of millions of dollars.
FLYNT LEVERETT, BROOKINGS INSTITUTION: I think that Russia is trying to deflect some pressure from the administration over the issue. I think the Russians are looking for ways that they can appear responsive to those concerns without really -- without having to abandon their involvement in the Bushehr project.
(END VIDEOTAPE)
PILGRIM: The International Atomic Energy Agency meets on June 16 to look into the issue and to decide what to do about Iran. The United States would like this to be dealt with in that type of forum. It's been pushing hard for international support -- Jan.
HOPKINS: So, Kitty, is it likely that Russia is going to put pressure on Iran to change the way it does business?
PILGRIM: It looks like they're going to talk one game and do another. They are going to try to help Iran develop their non-weapons grade nuclear power plants but they're also going to pay lip service to having more monitoring also going on. They're going to try to play a bit of a double game for a while. That's what experts tell us.
HOPKINS: Kitty Pilgrim.
And, still to come, shoddy security more than a year and a half after September 11 and still the nation's airports have a startling lack of qualified safety screeners.
And, banning cell phones, why it may be the cure for a deadly trend on this country's highways. That report and much more still to come.
(COMMERCIAL BREAK)
HOPKINS: A 16th Enron executive was criminally charged today. John Forney, one of Enron's former top energy executives was charged with wire fraud and conspiracy. Forney was arrested this morning by FBI agents in Columbus, Ohio.
Another 50 executives have been charged in the rest of corporate America, still no one has been sent to jail, and it's been 547 days since Enron filed for bankruptcy.
Securities regulators are expanding their investigation into conflicts of interest on Wall Street to individuals. In April, regulators announced a historic $1.4 billion settlement with Wall Street firms.
The Securities and Exchange Commission, the New York Stock Exchange, the National Association of Securities Dealers are all asking the CEOs from the top 12 firms to turn over four years worth of e-mail. Regulators are looking to see if managers were properly supervising their employees.
Turning now to the market, slight gains on Wall Street today, the Dow was up 25 points, the NASDAQ added nearly 13 and the S&P 500 up four and a half. Today's gains lift the Dow and the S&P to new highs for the year.
Christine Romans is here with more on the market -- Christine.
CHRISTINE ROMANS, CNNfn CORRESPONDENT: Jan, if it weren't for IBM you would have had the Dow up twice as much. IBM was down four percent because of news of that SEC probe but more than two-thirds of the Dow stocks closed higher.
One hundred eighty-six stocks set new 52-week highs but they've borne only two new lows. And, average big board volume today about 1.4 billion shares and that took the Dow and the S&P up for the eighth session in nine.
Auto stocks though fell after two companies showed a drop in May sales. Now, General Motor sales rose but that was thanks to real heavy incentives and rebates, and GM and Ford said they will cut third quarter production levels.
And shares of Martha Stewart Living OmniMedia tumbling 15 percent today on anticipation of indictment against Martha Stewart that stock has now lost half of its value in just a year.
Meanwhile a rally in the treasuries got a lot of attention today. The two-year note yield, Jan, now below the Fed funds rate. Alan Greenspan today expressed confidence the U.S. economy can rebound but he didn't shut the door on lower interest rates perhaps as insurance against deflation -- Jan.
HOPKINS: Just over one percent for two years. ROMANS: Yes, 1.2 percent below the Fed funds rate. It doesn't happen very often.
HOPKINS: Amazing, thanks Christine Romans.
Time now for our nightly check on the national debt, tonight it stands at more than $6.5 trillion by our estimates.
Coming up, fighting the war on homegrown terror, Eric Rudolph has his day in court, probably the first of many. We'll have a live report from Birmingham, Alabama.
And, "Vanishing Retirement," our series of special reports continues with a look at how pensions are shrinking and what that means or millions of Americans.
(COMMERCIAL BREAK)
HOPKINS: In the war on terror, a federal jury in Detroit today convicted two men of conspiring to support terrorism. It was the first case against a terrorist sleeper cell in the United States. Prosecutors say the men may have been planning attacks on targets in the United States, Turkey, and Jordan. A third defendant was found guilty of document fraud and a fourth was acquitted.
A three judge panel today heard arguments that could determine whether the September 11 suspect, Zacarias Moussaoui, will continue to be tried in a civilian court.
Justice Correspondent Kelli Arena has that report from Richmond, Virginia.
(BEGIN VIDEOTAPE)
KELLI ARENA, CNN JUSTICE CORRESPONDENT (voice-over): The government sent one of its top guns, Assistant Attorney General Michael Chertoff, to argue its being forced to make an unfair choice between defending the country or prosecuting terrorists.
The Justice Department is trying to block a trial court ruling requiring the government to produce an al Qaeda captive for questioning in the case of Zacarias Moussaoui.
Chertoff said if the government was forced to do so, the "damage to the United States would be immediate and irreparable," compromising national security by disrupting the interrogation of this man, Ramzi Binalshibh who is undergoing questioning by the U.S. in an overseas location.
Moussaoui believes Binalshibh, an accused coordinator of the 9/11 attacks can clear him of any involvement. His attorney, Frank Dunham, told the court a jury should be able to hear for itself what Binalshibh has to say and it does not matter where in the world he is. He said, "declaring a witness unavailable who was alive and kicking in their custody should not be a freebie."
FRANK DUNHAM, MOUSSAOUI DEFENSE ATTY.: My view is, is that if you can't have the witness the case should be dismissed.
ARENA: It was revealed in court that Attorney General John Ashcroft had said in an affidavit that he will not produce Binalshibh. The government's argument is this. The constitutional right to call witnesses in your defense does not extend to foreign nationals overseas and, even if it did, the testimony would force the American military to compromise or alter its operations overseas.
Moussaoui himself was not present in the courtroom but was listening to the argument by phone from his jail in Alexandria, nearly 100 miles away.
(END VIDEOTAPE)
ARENA: The Appeals Court may not rule for weeks if not months and in the meantime, Jan, the trial against Moussaoui remains in limbo -- back to you.
HOPKINS: Kelli Arena in Richmond, Virginia, thanks Kelli.
From international terrorism to domestic terrorism, the captured fugitive Eric Rudolph today made his first appearance in court in Birmingham, Alabama. He pleaded not guilty to charges that he bombed a woman's clinic five years ago.
Brian Cabell joins us live from Birmingham. Brian, what happened?
BRIAN CABELL, CNN NATIONAL CORRESPONDENT: Jan, Eric Rudolph entered the federal courthouse behind me today for about 20 minutes. He heard the charges against him and his response was quite concise.
He said, "I enter a plea of not guilty." He entered the courtroom in a red jumpsuit issued by the jail of course, sat down, stared straight ahead at the judge the entire time, answered politely to the judge a number of times, yes Your Honor, no Your Honor, absolutely Your Honor. He sat between his two attorneys but uttered hardly a word to either of them.
Afterwards, after he left one of his attorneys came outside and asked the American public and the court system to treat his client fairly.
(BEGIN VIDEO CLIP)
RICHARD JAFFE, DEFENSE ATTORNEY: There has been a public perception painted of Eric Rudolph that's far from accurate. We, of course, are looking forward to learning as much as we can about him and for Mr. Rudolph to learn as much as he can about us. It's going to take some time.
(END VIDEO CLIP)
CABELL: The charges against Rudolph relate to a clinic bombing here in Birmingham some five years ago, only about a mile or so from the courthouse as a matter of fact. A cop was killed in that bombing. A nurse was maimed and the policeman's wife appeared just about a half hour ago outside here and said she has been watching and hoping for this moment for the last five years.
(BEGIN VIDEO CLIP)
FELECIA SANDERSON, BOMB VICTIMS' WIDOW: I believe that justice is going to be served. I have the utmost faith and confidence in the justice system and the law itself. My husband gave his life upholding and defending the law.
(END VIDEO CLIP)
CABELL: Rudolph's next appearance here in court is likely to be next Tuesday. That will be a detention hearing when it will be determined whether or not he'll be allowed out on bond. It seems unlikely that will happen.
The trial date has technically been set for August 4. That's unlikely to be upheld as well. In all likelihood, we are told, this case might start maybe in six months, perhaps as long as year from now -- Jan.
HOPKINS: Brian Cabell, thank you.
That brings us to tonight's poll. "Which investigation are you most interested in, Zacarias Moussaoui, Eric Rudolph, Scott Peterson or Martha Stewart?" Cast you vote at cnn.com/moneyline. We'll give you the preliminary results later in the broadcast.
And now, the final results of yesterday's poll. We asked: "How worried are you that you won't have enough money to retire?" Sixty- eight percent of you said a lot, 13 percent said somewhat, eight percent a little, and 11 percent said not at all.
When we return, finding a cure for Medicare that will give seniors help with prescription drugs but won't send them into bankruptcy. Jonathan Karl will have that report.
And, safety compromised at the nation's airports, a focus on deadlines and the bottom line leaves dangerous holes in security procedures that report and much more coming up.
(COMMERCIAL BREAK)
HOPKINS: Tonight, there are questions of national security at our nation's airports. Thousands of baggage screeners have not had complete background checks. Congress is angry and today demanded answers from transportation officials.
Jeanne Meserve has the report.
(BEGIN VIDEOTAPE)
JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT (voice-over): Making airport screeners federal employees was supposed to make flying safer but who has the federal government been putting on the job? It doesn't even have fingerprints for more than 1,000 screeners now working security at the nation's airports.
REP. HAROLD ROGERS (R), KENTUCKY: Without the fingerprints you can't check criminal records on federal databases or even state's databases then.
ADMIRAL JAMES LOY, TRANSPORTATION SECURITY ADMIN.: That's the first basic check, sir, you're correct.
MESERVE: Of the more than 55,000 screeners hired, 573 have not received even preliminary checks of their criminal, credit, and personal histories, and about 28,000 have not had complete background checks. For almost 18,000 of those, the paperwork for final checks isn't in order.
The head of the TSA blames a change in contractors and the crush of meeting congressionally mandated deadlines.
LOY: This was an immense challenge, 1.7 million application, 340,000 interviews, 5,000 plus hires per week at the peak period in July through November.
MESERVE: Warning signals went up on half of the screeners who did get preliminary background checks but they were put on the job anyway. Of those who have been investigated further, some had arrests but not convictions. Others had convictions for crimes that did not disqualify them like evictions and tax liens but more than 1,200 have been fired.
ROGERS: There are 429 commercial airports in the country. They handle some 600 million passengers a year. One mistake or one unsavory character and you have one huge potentially fatal circumstance on your hands.
(END VIDEOTAPE)
MESERVE: Several members of Congress noted that since this matter started getting publicity the pace of screener background checks has picked up considerably. Admiral Loy pledges they will all be done by the first of October.
And, Jan, I spoke a short time ago with a government official who said it was a matter of time and resources. He argued that no government agency would have been able to hire and screen the number of people necessary under the deadlines imposed by Congress -- Jan.
HOPKINS: Sure the deadline problem but in the meantime until October you have a lot of screeners out there that haven't really been checked.
MESERVE: Haven't been thoroughly checked in any event. About half of them have gone through the entire process but, as I said, the other half still are waiting for that final background check. I'm told part of the problem has to do with the contractors that were hired here that they simply didn't move things quickly enough but that isn't the only factor involved clearly.
HOPKINS: Thanks, Jeanne Meserve.
In other news across America tonight, three illegal immigrants have been found dead in a sweltering rail car in Texas. Two others escapes but said their companions were too weak to pull themselves out of the grain carrier.
A delayed decision from a California judge in the Laci Peterson murder case. The judge will meet privately with attorneys before deciding to unseal search warrants in the case. Scott Peterson has been charged with murdering his wife and unborn child.
There is a national debate on whether using cell phones while driving leads to accidents. The National Transportation Safety Board is taking no chances. Today it called on states to ban inexperienced drivers from talking on the phone while behind the wheel.
Kathleen Koch has the report.
(BEGIN VIDEOTAPE)
KATHLEEN KOCH, CNN CORRESPONDENT (voice-over): Music, eating, chatting with friends -- potentially deadly distractions to teenagers who make up less than 7 percent of the driving population, but have more than 14 percent of the fatal accidents. So federal safety officials say they don't need another distraction. The National Transportation Safety Board recommending states drive those with learning permits from using cell phones.
MICHELLE MCMURTRY, NTSB: Young, inexperienced drivers are particularly vulnerable to accidents, are easily distracted and are known to engage in risk-taking behavior.
KOCH: As to more experienced drivers, the NTSB says the jury is still out on whether cell phones are worse than anything else that takes drivers' eyes and mind off the road.
JOE OSTERMAN, NTSB OFFICE OF HIGHWAY SAFETY: The bottom is that all though cell phones are distracting, relative to other distractions, we can not rank that or the others as to which are the most severe.
KOCH: California is considering banning hand-held cell phones after a six month highway patrol studies show it was linked to 11 percent of collisions caused by inattention. New York state, and 22 municipalities already have such laws. But the cell phone industry argue such bans won't solve the problem.
TOM WHEELER, CELLULAR TELECOMMUNICATIONS AND INTERNET ASSN.: The studies have shown that accidents related to wireless phone use are way down the list below drinking coffee, below worrying about the kids, below the radio, below the CD and these sort of things.
KOCH: The NTSB wants the National Highway Traffic Safety Administration to do a comprehensive study on just which types of activities are most distracting and dangerous. To help collect data, the safety board also told states to make sure their accident investigation forms have a place where police can note distractions as a factor. Only 16 states now do that.
(END VIDEOTAPE)
KOCH: The NTSB also investigated a deadly 2002 railroad collision in Texas caused by an engineer distracted while using his cell phone. So the board also recommended that the Federal Railroad Administration propose a new regulations to limit the use of cell phones by rail workers -- Jan.
HOPKINS: Kathleen, did the NTSB say anything about the hands- free devices like those required in New York for people driving and using a cell phone?
Does it work, does it cut down on accidents?
KOCH: Well, they talked about them but would not endorse them. They simply cited studies saying that those phones, surprisingly, are equally as distracting as the traditional hand-held cell phone, that what really the issue is when the mind is distracted, it's not so much the act of taking your hands off the wheel, but anything that takes your mind off the road ahead.
Thanks very, Kathleen Koch.
HOPKINS: And checking on the U.S. trade Deficit tonight, it stands at more than $214 billion for the year, that's by our calculations.
Congress will again take up the hot button issue of Medicare reform in the coming days. The center of the debate is the same issue that has derailed negotiations in the past, prescription drug coverage. This time, however, Republicans and Democrats vow to make it work.
Jonathan Karl reports from Capitol Hill.
(BEGIN VIDEOTAPE)
BUSH: A new spirit and a new attitude.
JONATHAN KARL, CNN CONGRESSIONAL CORRESPONDENT (voice-over): For years, politicians have been elected by promising prescription drug coverage to seniors, only to deadlock on the issue in Congress. This year, both sides say, is different.
SEN. BYRON DORGAN (D), NORTH DAKOTA: Look, I admit there has been a barrelful of politics on all sides on this issue. There's no question about that. But senior citizens have waited far too long for a prescription drug benefit to be put in the Medicare plan. This president and this Congress now have a responsibility to do it.
KARL: As a candidate, George W. Bush promised seniors drug coverage. As president, he is pressuring fellow Republicans to get it done. The White House recently gave Republicans this videotaped personal appeal from the president. BUSH: My goal is to give seniors more choices and better benefits under Medicare, including a long-awaited prescription drug benefit.
KARL: The White House wants Republicans to play the video at town hall meetings back home. Under the president's plan, drug coverage would be given to all seniors. But those who opt to exchange traditional Medicare for a form of managed care from a private insurance company would get a more generous benefit.
But Democratic leaders are already signaling a tough fight against that idea, accusing Republicans of trying to force seniors to give up traditional Medicare.
SEN. TOM DASCHLE (D-SD), MINORITY LEADER: The Republican bill so far falls short. Not only that, they are coercing their seniors into accepting a private health care system in order to be eligible for any benefit at all. And we think that's wrong.
KARL: Republican Finance Chairman Chuck Grassley is working with moderate Democrats on a plan he insists will preserve traditional Medicare, but also provide a choice of private coverage.
GRASSLEY: I want choice. I want it to be universal. I want it to be comprehensive. And I want it to be voluntary.
(END VIDEOTAPE)
KARL: Now, the White House says key to controlling Medicare's cost is getting seniors or at least most senior into some form of privately administered managed-care type program.
The problem with that is the that nonpartisan Congressional Budget Office actually has put out an estimates, saying that they believe that such a move into privately administrated care would actually cost more than current Medicare system, which is a fee for service government run program -- Jan.
HOPKINS: So when do they realistically think they can get this legislation finish?
KARL: Right now they're on an extremely ambitious time line. The chairman of the Finance Committee, Chuck Grassley, says he believes he can get this passed in the Senate by the July 4th recess. Bill Frist, the majority leader for the Republicans here in the Senate, just came out of a meeting of the Finance Committee and says he believes that time line is doable. That's what they're shooting for.
And Jan, there is a reason why they have it on a fast track here. Because the fear is that if this does not get done until the fall that we get so close to the presidential campaign season, politics will be impossible to take out of this debate. It will dominate it even more than right now. They believe they won't get it done. There are after all four Democrats here in the Senate currently running for president.
HOPKINS: And it is a hot button issue. Thanks, Jonathan Karl.
A reminder to vote in tonight's poll. "Which investigation are you most interested in?" Zacharius Moussaoui, Eric Rudolph, Scott Peterson, or Martha Stewart.
Cast your vote at cnn.com/moneyline. We'll bring you preliminary results later.
And when we return, President Bush pushes ahead to a road to a peaceful Middle East.
Former defense secretary, William Cohen, will be here to talk about the summit and much more.
Then...
(BEGIN VIDEO CLIP)
MATTHEW CHANCE, CNN CORRESPONDENT: We had better days with Saddam because what have the Americans ever done for us?
(END VIDEO CLIP)
HOPKINS: Matthew Chance on those in Iraq who are nostalgic for the old regime and using violence to make their point.
(COMMERCIAL BREAK)
HOPKINS: A U.S. Soldier has died from wounds he received when gunmen attacked a check point in northern Iraq. The attacks on U.S. forces have led to the redeployment of part of the 3rd Infantry Division to positions west of Baghdad. Matthew Chance reports from Iraq.
CHANCE: While much of Iraq is pacified, these streets are not. Since major combat operations ended, U.S. troops have fought and died here. Saddam loyalists are said to be organizing attacks, and for those on patrol, the threat of grenades and gunfire is real.
UNIDENTIFIED MALE: They've attacked U.S. Forces here. Some say they are Iranians. A lot of them are Iranians. I don't know if that's true or not. We'll find out.
UNIDENTIFIED MALE: What are you going to do about it?
UNIDENTIFIED MALE: Well, if we get -- you know, if we attacked, we're definitely going to start firing and take them out. No doubt about that.
UNIDENTIFIED MALE: This is a hot bed right here. This is where (UNINTELLIGIBLE)
CHANCE: Finding a secure place to deploy an army division is no easy task. If the plan is to saturate whole towns with check points and search teams, backup must be powerful and close. In the village of Stefia, our patrol listened to locals with grievances to air. We do not want to harm Americans, one said, but you must respect us too. Right now you arrest and shoot our people for the simplest of reasons.
(on camera): It's situations like these that have become the biggest challenge for U.S. forces across Iraq. It's hope building trust with local communities will help undermine the militants among them and allow civilians and soldiers alike to establish peace.
(voice-over): Just a few kilometers away in the town of Ramadi (ph), a pro-Saddam rally hits the streets. At least the dictator was an Iraqi Arab and a Sunni Muslim like us, they say. Now resistance and opposition, say the generals, will be stamped out.
But the Imam of the local mosque told me only force will only make matters worse. Instead, he says, show these people real benefits.
UNIDENTIFIED MALE (through translator): We do not want Saddam. We never did. We just want the one who does some thing good for the nation, who fixes the country, who gives the people their rights.
At the moment, there are those who are nostalgic who say we had better days with Saddam because what have the Americans ever done for us?
CHANCE: The patrol I was with was mindful of that. While there may always be a few willing to fight and die in the name of Saddam, there are many more who are not. Giving them a reason to work with the new Iraq may be the toughest battle left to win.
Matthew Chance, CNN, Fallujah, Iraq.
(END VIDEOTAPE)
HOPKINS: South Korean officials today seized 80 kilograms of illegal drugs they believe came from North Korea. That's according to the Associated Press. Prosecutors made the discovery on a Chinese container ship in South Korea's largest port. The ship stopped in a North Korean port before arriving in the south. The methamphetamines have an estimated street value of $250 million.
The leader of a Congressional delegation that has just returned from North Korea says that Pyongyang is ready to negotiate over its nuclear weapons program. Congressman Curt Weldon said he's confident it will be possible to negotiate an end to the nuclear standoff.
(BEGIN VIDEO CLIP)
REP. CURT WELDON (R), PENNSYLVANIA: The meetings were long, they were intense, and they were pointed. But the meetings were very positive, extremely positive. In fact, so much so that we've already been invited back at a time of our choosing.
(END VIDEO CLIP) HOPKINS: Joining me now to talk about North Korea, the middle east and other issues is former defense secretary and regular contributor to this broadcast, William Cohen.
Are you as optimistic as the Congressional delegation about the possibility of getting some kind of settlement with North Korea to end the nuclear program?
WILLIAM COHEN, FORMER SECRETARY OF DEFENSE: Well, I'm optimistic in the sense we now have President Putin, who has declared publicly that Iran and North Korea -- and citing both of them -- cannot be allowed to develop nuclear weapons. That in combination with Japan, South Korea, uniting behind the United States, and also reiterating that along with the Chinese saying the same thing. So that gives me a good deal of confidence that all of the major countries concerned want to make sure that North Korea does not develop nuclear weapons.
Given that dynamic, it makes the possibility for negotiating a settlement more realistic.
HOPKINS: Now, Paul Wolfowitz is saying that the American troops may be deployed south of the DMZ. What does that have to do with all of this?
COHEN: Well, this particular proposal -- and it's only a proposal to date -- it's not really been discussed at any length with the South Koreans. We need to take a lot of time and consultation with them.
There are two factors involved, one military and one political. On the military side, some may see this repositioning of American forces as either a prelude to a pull-out or even ultimately to a preemptive strike, either way. In either case, it is very -- it is causing great deal of anxiety with the South Koreans.
The political side of it is that those on the left see President Roh as having sold out to the United States and tempering his comments about the U.S. position vis-a-vis the North. And those on the right who disagreed with his policy see it as being reprimanded or perhaps some retribution on the part of the United States toward the South Korean government. So he's caught in something of a cross-ref (ph) right now.
It's going to take a good deal of effort and consultation with us working with the South Koreans, persuading them this is the right thing to strategically to have a better deterrent posture against the North giving us much more leverage and dealing with them on a settlement basis.
HOPKINS: Let's move to another part of the world, the Middle East. How important is it that President Bush Has gotten involved in the Middle East?
COHEN: I think it's critical. Without President Bush getting involved, there is no hope for resolving the issue. The parties themselves can never resolve this. Only the United States taking this kind of leadership role can hope to bring it about.
I was very impressed that the Saudis, the Egyptians and the Bahrainis and others -- the Jordanians -- were there at this meeting in Sharm El-Sheikh. It sends a very strong signal that it's not only the Palestinians who are involved who can help make a peace with Israel. You must have the support of the Saudis and the Egyptians and the others. You must have a termination of the financial support for the terrorist groups.
There are -- several countries still missing from this particular picture. That would be certainly Lebanon, Syria and also Iran. Unless we're able to shut down the activities of Hamas and Hezbollah, then the ultimate goal of having a peace with a sovereign state for the Palestinians with opportunity for the Palestinians and security for Israel cannot become a reality.
So this is a major step forward. I'm very encouraged by President Bush's strong commitment to the Israeli/Palestinian peace process, but we have a long way to go and many cold showers to take along this difficult road.
HOPKINS: Bill Cohen, former defense secretary, thanks for joining us.
COHEN: My pleasure.
HOPKINS: Our "Quote of the Day" comes from Capitol Hill, where one senator said he would not oppose Congressional hearings reviewing U.S. claims that Iraq possessed weapons of mass destruction.
"I'm satisfied that Saddam Hussein not only had weapons of mass destruction, but if we had not overthrown him, he would have gone back to pursuing the development of weapons of mass destruction."
That from Senator John McCain, Republican of Arizona.
The war against Saddam Hussein has damaged global support for the United States, especially in Muslim nations. According to a new poll from the Pew Research Center, seven of eight Muslim nations think that they will be attacked by the United States, a concern shared by some African nations. The poll also found that in some Middle East countries, Osama bin Laden is seen as more likely to do the right thing than President Bush.
In other news "Around the World" tonight, World Health officials say that China's fight against SARS is far from over. They're criticizing Beijing for withholding information about the outbreak. China reported just three new SARS cases today. WHO officials, though, say that they're concerned about how the counting is being done.
Austria's schools and public transport systems shut down today, hundreds of thousands of workers protesting planned pension cuts. French state workers shut down airports and railway stations again today. They're protesting their own government's plan for pension reform. Coming up, Peter Viles will have our special report on vanishing retirement, the decline of pension plans and how tens of millions of retirees are affected.
And then we'll share some of your thoughts on the landmark media ownership decision and more.
(COMMERCIAL BREAK)
HOPKINS: Tonight we continue our series "Vanishing Retirement" with a look at pension plans. They were once the foundation of most retirement planning but now the use of pension plans has tumbled. Peter Viles tells us why and what has replaced them.
(BEGIN VIDEOTAPE)
PETER VILES, CNNfn CORRESPONDENT (voice-over): Meet Jim Myers and George Wenzle, retirement buddies with a lot in common. They play pool and peanuckle and take vacations together. But one is from the old school of retirement, the other from the new.
Jim is old school, 69-years-old, 32 years at AT&T. His retirement, straight pension, about a third of his old salary, free company health insurance, plus Social Security, plus Medicare, plus the money he saved while working.
JIM MYERS, RETIREE: Well, I think I'm fine. Not being from the Rockefeller family, you know, that kind of stuff. The average Joe, I think I probably have the average character that came up from the '40s and '50s and '60s until today which we're doing all right.
VILES: And that's George, 61-years-old, 30 years at Verizon. He took the riskier option, no pension. Instead, a lump sum payout, rolled it in with his 401(k), hired a money manager and took his chances. He also has health insurance and when the time comes, Social Security and Medicare too. He dodged much of the bear market but he did have some stressful moments.
GEORGE WENZEL, RETIREE: At the lowest point, which what was what? About a year ago at this time? I was going, do I have to go back to work, Bob? And he says, no, you're OK, not to worry.
So I was concerned. I think my wife was more concerned than I was. But it worked out well. We seem to have survived through it.
VILES: In the private sector, pensions are on the decline. 1975, 44 percent of private sector workers were covered by pensions, only 18 percent by employee contribution plans. By the year 2000, pension coverage down to 20 percent, defined contribution plans up to 50 percent.
CHRISTIAN WELLER, ECONOMIC POLICY INSTITUTE: Retirement adequacy, the whole total savings of the average household has actually declined slightly during the arrival of the defined contribution plans, which is not actually that surprising. VILES: So who still has a pension? Seventy-nine percent of public workers. That's teachers, police, firefighters and members of labor unions, notably, in communications and auto manufacturing, half a million workers and retirees at GM alone. And anyone powerful enough to demand a pension. CEOs, for example.
But in the private sector in general, the trend is against pensions. Employers don't want the risk and the cost. And in the '90s, lots of employees wanted 401(k)s.
RON GEBHARDTSBAUER, AMER. ACADEMY OF ACTUARIES: In addition, employees are more mobile now, too. So they want to see an account and if they quit after five or ten years, they want to be able to take that account with them.
(END VIDEOTAPE)
VILES: Analysts say this tide has turned somewhat. Now some employees much more interested in the security of pensions. But there is no indication corporate America wants to bring those pensions back -- Jan.
HOPKINS: Because they're expensive.
VILES: They're expensive, and when the economy goes south and the market goes south, the government says to them, you need to put some more money into this pension fund at just the time when they may not have the extra money. That's right now.
HOPKINS: Thanks, Pete.
VILES: Sure.
HOPKINS: That leads to us "Our Thought of the Day" on retirement which was a concern even in the second century B.C. "Cessation of work is not accompanied by cessation of expenses." That comes from a Roman statesman and author, Cato the Elder.
Tomorrow in our special series on vanishing retirement we'll tell you why many Americans have been forced to continue working and postpone retirement.
A lot of you seem to be concerned about retirement. We've received a number of e-mails about our series. We'll share some of those thoughts with you when we come back and the preliminary results of the poll.
(COMMERCIAL BREAK)
HOPKINS: Now the preliminary results of tonight's poll question, which investigation are you most interested in? Thirty-five percent of you said Zacarias Moussaoui, 13 percent said Eric Rudolph, 25 percent said Scott Peterson and 27 percent said Martha Stewart.
And Now for a look at some of your thoughts. Alan Speelman from Orlando, Florida wrote in in response to our series of special reports "Vanishing Retirement." "I'm 56-years-old and have been unemployed for the last two years. You bet I'm petrified about retirement and how I might support myself. Right now it looks like I'll be working as a bag boy in a supermarket for the rest of my life."
Ida Rhodes from Ormond Beach, Florida said, "There will not be any retirement for anyone until the CEOs, Congress and the president start demanding that business in this country operates with integrity and honesty and until CEOs are accountable to the stockholders and to the very system they have profited from."
Several of you wrote in response to the FCC's easing of media ownership rules. Augustin Anaya of Manteca, California said, "The airwaves belong to the people. The FCC was entrusted to guard that public domain. The big corporations have made billions using that domain virtually free of charge and now the FCC decides to give them even more access to what clearly belongs to the people."
Eric Frost-Barnes of Los Angeles asks, "Won't these unhealthy changes within the FCC only further America's lack of trust with what we're being fed in the name of news?"
And Paul Oughton from Lexington, Kentucky disagrees. "If the FCC had not allowed ownership of radio and TV stations to expand for groups, local stations would have less money to serve their audiences."
We love hearing from you. You can e-mail us at loudobbs@cnn.com. Thanks for joining us.
Tomorrow, Congressman Darrell Issa is just back from the Middle East. He'll join us to share his perspective on the peace process.
Also Senators Harry Reid and John Ensign of Nevada on the impact of the proposed Yucca Mountain nuclear waste facility on their state.
And we continue out special series of reports "Vanishing Retirement" with a look at retirees who have returned to work. For all of us here, good night from New York.
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