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Lou Dobbs Tonight
Should Drugs Be Decriminalized?; New Weapon in War on Terror
Aired August 08, 2003 - 18:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JAN HOPKINS, CNN ANCHOR: A new weapon in the war on terror. Blimps could soon be flying over your neighborhood, hunting terrorists.
In our series of special reports, "The Forgotten War," whether drugs should be decriminalized and an interview with the nation's drug czar.
In the recall free-for-all, more slogans from Arnold Schwarzenegger, but also a brief glimpse of his political philosophy.
And what happened to our summer? Unusual weather around the world leaves many people wondering where the summer fun has gone.
ANNOUNCER: This is LOU DOBBS TONIGHT for Friday, August 8. Sitting in for Lou Dobbs, Jan Hopkins.
HOPKINS: Good evening. Lou is off tonight.
President Bush today accused Democrats of playing politics by suggesting Americans were misled about reasons for going to war in Iraq. The president said the coalition is making -- quote -- "good progress" 100 days after he announced the end of major combat. He said he will do -- quote -- "whatever is necessary" to win the war on terror.
White House correspondent Dana Bash joins us from near the president's ranch in Crawford, Texas -- Dana.
DANA BASH, CNN WHITE HOUSE CORRESPONDENT: Hi, Jan.
Well, the president used that 100-day marker and a visit from some of his top deputies today. The vice president, the defense secretary, and the chairman of the Joint Chiefs of Staff were all at his ranch today. And the president used that visit to talk about what he says is the progress in Iraq. Yes, there have been many deaths; 120 U.S. troops have been killed; 56 of them have been in major combat.
But the president said that it's important for Americans to see that there is -- there are good things happening on the ground in Iraq.
(BEGIN VIDEO CLIP)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: It turns out this is our 100th day since major military operations have ended in Iraq. And since then, we've made good progress. Iraq is more secure. The economy of Iraq is beginning to improve. I was interested to note that banks are now opening up and the infrastructure is improving.
(END VIDEO CLIP)
BASH: The president said it's improving. But how long will it take to get the job done? That is a question that the president simply said is not answerable right now. It is unclear just how long U.S. troops will have to stay in Iraq.
It's also unclear, he said, how much it will ultimately cost. But he did say he will be going back to Congress in the near future to ask for another large chunk of change in order to help pay for what is going on now in Iraq. But he also mentioned several times September 11 and said that Iraq is central right now to the war on terrorism.
But a new poll out says that Americans actually care a lot more about the economy now than about terrorism. And Democrats are certainly seizing on that. More and more are coming out and attacking the president on not only whether or not the intelligence was sound in leading up to the war with Iraq, but also whether he was prepared for the reconstruction effort. Al Gore was the most recent prominent Democrat to do that.
The president today brushed all that off, said that a lot of people are running for president right now on the Democratic side and this is all politics -- Jan.
HOPKINS: Well, and next week he's going to focus on the economy, right?
BASH: Absolutely.
He's going to have an economic summit next week here at the ranch. And he's also going to be traveling to California next week. He's going to do some fund-raising and have some other events. But, in terms of politics, just so you know, at this point, there's nothing on his schedule that has him with Arnold Schwarzenegger in California -- Jan.
HOPKINS: Thanks very much, Dana Bash in Crawford, Texas, where the president is on vacation.
And tonight, CNN has learned that the FBI has sent a team to Iraq to help with the investigation into the terrorist bombing of the Jordanian Embassy. That bombing killed at least 16 people and wounded 65. The U.S. commander in Iraq says the attack was the work of professional terrorists. Those terrorists could be members of Ansar al Islam, a group with ties to al Qaeda. Another soldier was killed in combat today. He was the 56th to die since the end of major combat.
As Dana Bash reported, President Bush today met with Defense Secretary Donald Rumsfeld to talk about military modernization. Rumsfeld is pushing for radical changes in the force structure to enable the armed forces to deal with new military threats. Pentagon correspondent Barbara Starr joins us.
(BEGIN VIDEOTAPE)
BARBARA STARR, CNN PENTAGON CORRESPONDENT (voice-over): When the Soviet army marched through Red Square, the U.S. military knew the threat. In today's post-9/11 world, the enemy can be unknown, the next crisis unpredictable. And so, with U.S. forces stretched thin, from Iraq to South Korea, Defense Secretary Donald Rumsfeld wants to dramatically reshape where troops are positioned, so they can respond more quickly.
MICHAEL O'HANLON, BROOKINGS INSTITUTION: I'm not saying they're outdated, but there's a certain amount of inertia that explains why we have 70,000 troops in Germany, why we have 20,000 Marines on Okinawa in Japan, and so forth.
STARR: Rumsfeld believes, more troops isn't necessarily the answer. Precision weapons, such as the Tomahawk missile, can mean fewer troops are needed. Small special forces teams are increasingly used instead of large armored divisions to hunt terrorists, for example. Marines could go ashore more often to replace worn-out Army troops.
DONALD RUMSFELD, SECRETARY OF DEFENSE: The war plans, the contingency plans that we have for various kinds of activities, are being reanalyzed to take a look and see, are they logical, given the increased lethality of our capabilities, which was demonstrated in Afghanistan and demonstrated in Iraq?
STARR: The idea: less reliance on large permanent bases in Europe and Asia dating from World War II, more flexible arrangements in new places, in Europe, moving troops from Germany to smaller bases in Romania, cheaper training closer to potential hot spots in Central Asia and the Persian Gulf, in North Africa, getting permission to temporarily base U.S. troops fighting terrorism, and, in Asia, pulling some troops back from the DMZ in Korea, trimming troops on Okinawa, and basing more long-range precision bombers on Guam.
(on camera): No final decisions yet on any of this. But with today's precision weapons and ever-changing threats, the military is looking for ways to move more quickly with less stress on the force.
Barbara Starr, CNN, the Pentagon.
(END VIDEOTAPE)
HOPKINS: Arnold Schwarzenegger today kept up a dizzy pace in the recall race in California. There were plenty of slogans, but Schwarzenegger also offered a brief insight into his political philosophy. He called himself a fiscal conservative who is socially moderate.
Thelma Gutierrez has more from Norwalk, California -- Thelma.
THELMA GUTIERREZ, CNN CORRESPONDENT: Hi there, Jan. Well, you're right. It has been a very busy day for the actor. It has also been a very anxious day for those who are trying to stop that recall election. Now, the latest effort by some of the local people to stop the recall election was thrown out of a Los Angeles superior court just moments ago. Davis supporters had filed a lawsuit challenging the validity of some of the recall signatures. Again, that lawsuit was thrown out of court. And so now that October 7 election is very much on.
Here in Los Angeles County, so far, there are more than 150 hopefuls. One of the most high-profile hopeful, of course, is the actor Arnold Schwarzenegger. Now, yesterday he came. He picked up his nomination papers in front of about 100 screaming fans and 50 reporters. And tomorrow some time at this office, the actor will return. He will file his paperwork. He will turn in his $3,500. The signatures will be validated.
And then his name and all those other hopefuls will go on the ballot. Now, again, that deadline is tomorrow, 5:00 p.m. Pacific time. Now, the actor kicked off his campaign bright and early in the morning by hitting the talk shows. In the afternoon, he showed up at the Inner City Games L.A., which is an after-school intervention and prevention program for inner city kids. For years, the actor has been a strong advocate for children, fitness, and after-school programs.
(BEGIN VIDEO CLIP)
ARNOLD SCHWARZENEGGER (R), CALIFORNIA GUBERNATORIAL CANDIDATE: I promise you, if I get elected to be governor of this great state, I will continue on my crusade in this state and across the country to make sure that after-school programs will be available in every public school in the whole United States.
(END VIDEO CLIP)
GUTIERREZ: Now, we had mentioned that there were some 150 hopefuls just in L.A. County alone.
We just learned that, statewide, 652 nomination papers have been issued by various counties. Now, only 36 people have actually completed the paperwork. They've actually turned in the money and had those signatures validated. Again, tomorrow is that deadline. I think we're somewhere between 25 and 26 hours away -- Jan, back to you.
HOPKINS: And a lot of people filing at the last minute, it seems.
Thelma Gutierrez in California, thanks.
The Pentagon today won a legal battle to go ahead with plans to burn hundreds of old chemical weapons at an incinerator in Alabama. The Army has not announced a start date for the incineration project, but thousands of local residents have been offered protective hoods and air filters as a precaution.
Chris Tatum from our affiliate WBMA joins us from Anniston, Alabama -- Chris.
CHRIS TATUM, WBMA REPORTER: Well, good evening.
There is an almost tension in the air here in Anniston, Alabama, about the possible firing-up of this incinerator as soon as tomorrow. We've heard from just about every side of this issue today. We've heard from plaintiffs, who were defeated in this lawsuit. We've also heard from people for and against the incinerator.
But the one camp that's kept surprisingly quiet today has been the Army. Now, earlier this week, one Army official assured me, if this judge voted in favor of the Army -- or ruled in favor of the Army, I should say -- they would fire the incinerator up as soon as tomorrow. Right now, we're waiting on official word from Washington Army brass.
(BEGIN VIDEOTAPE)
DAVID CHRISTIAN, PLAINTIFF: It's not the final death knell, but it's certainly moving in that direction.
TATUM (voice-over): David Christian admits he's disappointed by that federal judge's ruling, a ruling that gives a green light for the Army to fire up its chemical weapons incinerator in Anniston. Even so, Christian and his co-plaintiffs insist they're not finished fighting.
CHRISTIAN: That's always been our primary thrust, is to get them to actually compare incineration with the alternatives that are out there.
TATUM: Incinerator opponents still have two lawsuits pending, one in Washington, D.C. that seeks to stop every Army incinerator. Another in Birmingham accuses the Army of civil rights violations for building its incinerators near poor neighborhoods.
But it could be a while before a judge hears those cases. The Army doesn't want to wait that long. It insists, incineration is safe and not incinerating is costing taxpayers a fortune.
MIKE ABRAMS, ARMY SPOKESMAN: At the end of July, the beginning of August, we have run out of all meaningful work. And if we don't start now, then what we see is truly a waste of $300,000 a day, $9 million a month.
TATUM: But for plaintiffs like David Christian, money's not the issue. He believes he's fighting for his life and for his children's futures.
CHRISTIAN: Well, I've got a 6-year-old and a 4-year-old. And by the best estimates, it is likely that at least one or both of them will be in college before they're done out there.
(END VIDEOTAPE)
TATUM: And, again, local Army officials are waiting for some word from Washington Army leaders at the top. No word has come down yet. Local Army officials tell us they will have some kind of a news conference and let us know what their plans are, especially regarding firing it up tomorrow, as soon as they get word.
HOPKINS: Chris, the residents have been issued gas masks. Do they say that they're going to wear them if this incinerator is fired up?
TATUM: Some folks say they will wear them. I can tell you that, in the last week, more people have gone to get those gas masks than at all leading up to this point. They've been giving them out for months.
But this week, they've seen a real spike. One day -- I believe it was Tuesday -- as many as 1300 people went there to get those masks. But I should also tell you that, right now, about 6,000 people have not gone to get their protective gear. And most of those people, I'm hearing, live in the -- what is called the pink zone, the area closest to the incinerator.
HOPKINS: Chris Tatum of CNN affiliate WBMA, thanks for joining us.
And still to come tonight: The old military technology may get a new lease on life in the war on terror. Jeanne Meserve will have our report. Hundreds of homes wrecked by a tornado that caught meteorologists and residents by surprise. And unusual weather takes the fun out of summer, as many people bake in the worst heat wave in years.
(COMMERCIAL BREAK)
HOPKINS: Federal prosecutors in New York today charged a Pakistani man with trying to help an al Qaeda terrorist illegally enter the United States. The Pakistani is a legal permanent resident of the United States. And today, he appeared in court for a preliminary hearing. He has been in jail for four months as a material witness in the investigation into al Qaeda activities in this country.
Blimps could make a comeback as a military surveillance system in the war on terror. They would be equipped with cutting-edge sensors and high-resolution cameras for missions over land and water.
Homeland security correspondent Jeanne Meserve has the story.
(BEGIN VIDEOTAPE)
JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT (voice-over): It looks like a throwback to an earlier era, but this blimp is being touted as the coming thing in homeland security.
STEPHEN HUETT, NAVAL AIR SYSTEMS COMMAND: My vision would be to have airships over every major metropolitan area and every major harbor or port in the United States, providing continuous coverage. MESERVE: Tucked away under the gondola of this blimp, a state- of-the-art color-imaging system which scans the landscape for suspicious objects.
UNIDENTIFIED FEMALE: It will pinpoint for us and give us the exact longitude, latitude of it and the size and shape of it.
MESERVE: A high-resolution camera zooms in. And all the data can be transmitted instantaneously to a command-and-control center for distribution to law enforcement or the military.
HUETT: Everybody is interested in the same information. They want realtime, high-resolution data on demand.
MESERVE: A blimp is cheaper to operate than an airplane or helicopter. Relatively quiet and vibration-free, it is also easier on sensitive equipment. It can stay in one place for hours at a stretch, seeing huge areas from a high altitude. A blimp is virtually invisible to radar and would be hard to bring down with a bullet or missile.
If the burning Hindenburg is the only airship you can remember, forget it. Today, ships are filled with helium, a fire-suppressant. Among those checking out the possible homeland security uses, the Coast Guard, which sees potential for tracking ship traffic.
CMDR. HANK TEUTON, U.S. COAST GUARD: Right now, we in the world of aviation, we know where all the airplanes are. We don't know where all the ships are.
MESERVE: But privacy advocates worry about other things this eye in the sky could potentially see.
BARRY STEINHARDT, ACLU: This is very intrusive technology. It can be used secretly. It potentially can be used to give the government what amounts to Superman's special powers.
MESERVE: There is nothing to worry about yet. Government agencies are still evaluating what blimps with a variety of sensors might someday do. For now, this is just pie in the sky.
Jeanne Meserve, CNN, Manassas, Virginia.
(END VIDEOTAPE)
HOPKINS: Still ahead: our series of special reports on "The Forgotten War" on drugs. Tonight, Casey Wian looks at the debate over decriminalizing drugs. And we'll talk to the drug czar John Walters.
Plus: sex, celebrity, and big money. We'll talk to our "Editors Circle" about the Kobe Bryant case and its flood of media coverage.
And the new summer pastime: complaining about the weather. Kitty Pilgrim will report on a season of discontent.
(COMMERCIAL BREAK) HOPKINS: A possible remedy for a chronic medical problem: skyrocketing malpractice costs. Florida has a plan to limit doctors' liability, while offering victims a chance at a bigger payout. Florida's malpractice prescription -- right after this.
(COMMERCIAL BREAK)
HOPKINS: A huge settlement offer tonight in Boston. The Catholic Church there is offering $55 million to settle more than 500 sex abuse lawsuits. The settlement would resolve claims from men and women who say they were abused by priests as children. The offer comes a week after Archbishop Sean O'Malley became the head of the diocese.
There's an agreement tonight in Florida on how to deal with medical malpractice lawsuits. Governor Jeb Bush and state lawmakers agreed to limit the amount doctors would pay to a half-million dollars, but victims could still collect more money, up to $2.5 2 million, by suing other medical providers. The legislation is expected to pass next week.
An unexpected tornado that tore through Florida last night, leaving devastation in its wake; 500 homes were damaged or destroyed by the twister, which caught forecasters by surprise. Despite the damage, there were no serious injuries.
Just ahead: the war on drugs, "The Forgotten War." Tonight, in our series of special reports, a look at one of the most contentious issues: easing laws against drugs. Casey Wian will have that story.
And then, the editors of the nation's top business magazines join us for a look at the stories that may hit your portfolio.
And later: He spun the world of surfing and skateboarding into a $700-million-a-year company. Our "CEO of the Week" is coming up.
(COMMERCIAL BREAK)
HOPKINS: Tonight, in our series of special reports "The Forgotten War," we focus on decriminalizing drugs. Advocates for drug decriminalization in the United States don't have far to go to see the consequences of softer drug laws. Canada is trying several different and seemingly conflicting approaches, with mixed results.
Casey Wian reports from Vancouver, British Columbia.
(BEGIN VIDEOTAPE)
CASEY WIAN, CNN CORRESPONDENT (voice-over): A common sight in Vancouver: police arresting a suspected drug dealer.
UNIDENTIFIED MALE: We found four Tic Tac containers full of heroin, powder cocaine, and rock cocaine.
WIAN: With drug use in Canada at a 20-year high, authorities are struggling to find the right mix of law enforcement and treatment. That's evident in Vancouver's tiny downtown east side neighborhood, a longtime junkie's haven.
DOUG LEPARD, VANCOUVER POLICE DEPARTMENT: The epicenter was right here where we're standing. And we would see anything up to 150, 200 people actively involved in the open buying and selling of drugs. And it generated an incredible amount of disorder. And, basically, the drug traffickers and their customers had taken over these streets.
WIAN: Since April, police have tripled the number of officers on these streets. Scores of drug dealers have been arrested. Others have moved. Crime and overdose deaths are down. But this resident, a self-described heroin addict and crack head, says he's seen it before.
UNIDENTIFIED MALE: They come in gung-ho. They did. They come in really hard and really strong, right? And they did it hard and strong. But they're wearing down. And what's going to happen? When the money runs out, this place is going to go back to normal.
WIAN (on camera): Despite police efforts to crack down on drug trafficking and blatant drug use in Vancouver's downtown east side, a thriving open-air drug market still exists here. Behind me, you can see drug use and drug deals happening just a block away from the police station.
(voice-over): Police only arrest dealers. Users' drugs are sometimes confiscated, but they're not arrested, because possession charges rarely stick in Canadian courts. In fact, police here are supporting a new way of dealing with addicts called supervised injection clinics, where junkies can shoot up under a nurse's supervision and without police interference.
WIL STEWART, REGISTERED NURSE: They would bring their drugs in. We provide a spoon for them to mix the drugs with sterile water.
WIAN: Everything but the drugs is supplied in an effort to prevent the spread of disease.
STEWART: Once they've injected their drug, we have them stay with us in here for at least 15 minutes to ensure that they do not overdose.
DR. MARK TYNDALL, ST. PAUL'S HOSPITAL: If you went downtown and you saw teenagers leaning beside a dumpster, injecting drugs with puddle water, I think it's just a pragmatic thing to say, look, this is not a very good situation and we really need to get people out of that very dangerous situation into an environment where we can connect with them.
WIAN: A new government-funded supervised injection facility is scheduled to open in this building later this year. Canada is also considering decriminalizing possession of small amounts of marijuana. The Bush administration calls the proposal a threat to the United States, which remains deeply divided on the issue of softer drug laws. Libertarians say decriminalization would save taxpayers money and make room in jails for violent criminals.
GEORGE GETZ, LIBERTARIAN PARTY: Imagine how much safer your neighborhood would be if we could instantly lock up a million murderers, robbers, and rapists without spending one more tax dollar. That's exactly what we could do if we repealed prohibition, because we could let the nonviolent drug users out of prison.
WIAN: But drug enforcement officials say, ending the war on drugs would bring dire consequences.
MICHAEL VIGIL, SPECIAL AGENT IN CHARGE, DEA: I think that we would have a major impact in terms of an increase in the addict population. We would still see increase, a significant increase, in crime. And, at the same time, health care costs would skyrocket.
WIAN: That's what happened when Switzerland allowed drug users to shoot up openly in a public park in the late 1980s. Now the Swiss government provides pure heroin to some addicts in supervised injection sites.
While Canada isn't going that far, its delicate mix of compassion and crackdown is being watched closely by advocates on both sides of the war on drugs.
Casey Wian, CNN, Vancouver, British Columbia.
(END VIDEOTAPE)
HOPKINS: That brings us to our poll question tonight: Do you believe marijuana should be decriminalized, yes or no? You can vote on our Web site, CNN.com/Lou. We'll share preliminary results later in the show.
And now the final results of our poll question last night. We asked, which of Arnold Schwarzenegger's film titles best describes his run for governor? Nine percent of you said "Last Action Hero"; 13 percent said "The Terminator"; 12 percent said "Total Recall." And 66 percent of you said "Kindergarten Cop."
Earlier, Lou spoke with America's drug czar, John Walters, who's been director of the Office of National Drug Control Policy for nearly two years.
Lou began by asking him if we're winning or losing the war on drugs.
(BEGIN VIDEOTAPE)
JOHN WALTERS, DIRECTOR, OFFICE OF NATIONAL DRUG CONTROL POLICY: I think we've got use going down again, after a plateau for young people's use in the mid-'90s. We had a report that it was maybe as much as 13 percent declined in the last year was a result of renewed, invigorated efforts.
I think, overall, we have to remember that, since we got serious at the beginning of the '80s, overall drug use is half of what it was. And that's progress. If we did that in homelessness or with dropouts or with child abuse, it would be a victory. Now, we're all frustrated because it's not smaller. But this is a result of real effort. When we push back, it gets smaller. And when we don't push back, it can get bigger. So we have to stay at it.
LOU DOBBS, CNN ANCHOR: As you say, part of the frustration born of the fact that drug use has risen in a number of areas. And 20,000 people die in drug-related deaths every year. A third of the incarcerations in federal prisons, really more than a third, actually, relate to drug or substance abuse. What has to be done to win this war?
WALTERS: Well, we've had experience now. We know we have to be balanced. We have to do a better job of prevention, be serious, give kids messages, supervise them. We're doing that in a better way.
We have to treat people. The president has made a historic commitment to add 1.6 billion to federal treatment spending. We're spending almost over $3.5 billion on federal treatment spending. We know we can get people into recovery. We have to do that. But we also have to treat this as a real market phenomenon. We have to reduce supply. And I think the other encouraging sign is we are doing that in the largest single drug of expenditure by Americans, cocaine. With Colombia, we now have a 15 percent reduction last year. It's accelerated under President Uribe, who's actually on his first anniversary in office.
We have a partner in Colombia, and with President Fox in Mexico that are make historic changes. It's a market phenomenon. We have to reduce both supply and demand. Otherwise, simply making improvements on one half of that; the other half will tend to undermine it with high demand or large supply of dangerous, addictive substances.
DOBBS: The culture itself, there is a component of our culture, a subculture, in which marijuana is an accepted recreational drug, as you well know. It is also -- has the impetus of being medicinally redeemable, if you will, because in many cases it is effective. Is your office, is the United States government going to focus on that particular subculture and those conceptions and preconceptions about drug use, and attack that directly?
WALTERS: Biggest single area of ignorance is marijuana. No question about it. Today of the six million-plus people we have to treat, 60 percent are dependent on marijuana, treated for dependency on illegal drugs. More teenagers coming into treatment nationwide for marijuana dependency than for all other illegal drugs combined.
Baby boomers and the generation after them all have a great deal of ignorance about that problem. They think marijuana's not an addictive substance, it's not a serious threat. It's more than twice as important as a cause of dependency than the next most important illegal drug, which is cocaine. But most people think of heroin, cocaine, methamphetamine, those are dangerous substances. Marijuana's the soft drug. In fact, we ought to legalize it, as you say.
The fact of the matter is, marijuana is the most dangerous threat across a broader scale, and part of that is because of the ignorance about marijuana and the fact that people don't realize that today's marijuana is not 1 percent THC, the psychoactive ingredient of the '80s, it's 9 to 14 percent, and we now have high-potency varieties of 20 to 30 percent, increasing its danger coming from Canada and other places.
DOBBS: Mr. Walters, as you know, there are in this country a group of people, I would style them as presenting themselves as pseudosophisticates, who are wry in their dismissal and derision of the "just say no" to drugs slogan that came out of the middle '80s, Nancy Reagan. We don't have anything like that, but the fact is that campaign really worked, didn't it?
WALTERS: It did work. And we like to base our policies on facts and on results. And during the '80s, we started at the beginning of the '80s with the largest drug problem in the history of the United States, twice as high in the number of users as we have today, and it declined steadily, reaching a low point in '92 and rebounding a bit during the mid-'90s and plateauing. That campaign, which simply said directly at the culture that said it's OK to use it's not OK to use, and it's your responsibility first and foremost to not use.
DOBBS: Is this White House, Mr. Walters, sufficiently out in front on this forgotten war? Are you sufficiently in the public eye on this important, critically important issue?
DOBBS: We have a national media campaign where we spend over $150 million with messages that we've used the experience of the past 20 to 25 years to craft, and I think if you look at the preliminary results we've gotten from the changes we've made to improve that, a 13 percent decline in teen drug use in the last year is unprecedented.
Yeah, in the context of the war on terror and other things, it's hard to get the same kind of prominence there was at certain points in the '80s, but the president has made clear in putting his political credibility on the line, saying we want a reduction in two years of 10 percent, and five years of 25 percent drug use. That's putting his credibility and accountability on the line. He's led the effort on treatment. He's led the effort in working with Mexico and Colombia on this, and we're seeing results on both supply and demand that are historic.
DOBBS: John Walters, thank you very much for being with us.
WALTERS: My pleasure. Thank you, Lou.
(END VIDEOTAPE)
HOPKINS: Now a reminder to vote in our poll question tonight. Do you believe that marijuana should be decriminalized? Yes or no? You can vote on our Web site, cnn.com/lou, and we'll share the results later in the show.
Still ahead -- last summer. Kitty Pilgrim will report on the weather that for many has ruined a favorite season.
Plus, the nation's two mortgage giants are facing questions about their accounting practices, but still manage to stay on top in Washington. Louise Schiavone reports.
And editors from "Forbes," "BusinessWeek" and "Fortune" join me for our weekly "Editors' Circle." That's next.
(COMMERCIAL BREAK)
HOPKINS: You could call it the summer of discontent. Many parts of the world are experiencing excessive heat, rain, or drought conditions. It's all enough for some people to just give up and say, maybe next summer. Kitty Pilgrim has more.
(BEGIN VIDEOTAPE)
KITTY PILGRIM, CNNfn CORRESPONDENT (voice-over): What happened to summer fun? London is broiling. Paris is burning. Talking about the weather takes over the day in Portugal. Drinking water in London is a full-time job, although beer consumption is expected to skyrocket, up three million pints over the weekend. Animals in the European zoos are complaining. Wiped out. They're feeding them frozen fish and popsicles. They very sensibly trucked three tons of sand into Paris to spread along the Seine. But it's no day at the beach.
UNIDENTIFIED FEMALE: It can be a bit smelly at times, but I mean, I think you have to accept that that's the heat.
PILGRIM: Tourists in Paris are exhausted.
UNIDENTIFIED MALE: It's been overwhelmingly hot in the short time that we've been here.
PILGRIM: There are new sightseeing opportunities. The drought is so bad in the Danube river the water dropped to reveal a Nazi ship sunk during the war.
But some resort areas are devastated. Wildfires rage in Portugal, and in the beach towns on the French Riviera, and also in Italy.
JENNIFER GOLD, DIRECTOR OF NEW MEDIA ROUGH GUIDES: You can't even believe it. It's like the sky is falling. The weather being bad isn't bad enough, but it's sparking these forest fires, which sort of add this apocalyptic edge to the whole thing.
PILGRIM: Summer is also fairly ruined in the States. Meteorologists will explain the weather pattern is literally stuck for the summer. Blame it on the jetstream. Hot in the west and then, as it dips toward the east, unloading rain. We'll stay that way for several more weeks.
The summer activities not quite so much fun. It's swelter, get soaked, or stay inside. Tourists in Times Square are fashion forward with plastic suits. Umbrellas are the in accessory.
MICHAEL SCHLACTER, METEOROLOGIST, WEATHER 2000: Soda, beer, hot dog sales are obviously depressed. But also, people are ordering in and taking out food now that it's a damp summer. And movie sales are a little bit up, and perhaps even people are going to the mall more.
PILGRIM: At least there's always TV.
(on camera): It seems there may be no relief even after the summer is over. Now meteorologists are saying that this fall the hurricane season may be unusually severe.
Kitty Pilgrim, CNN, New York.
(END VIDEOTAPE)
HOPKINS: A start of a different sort for one of the nation's largest mortgage buyers. Ohio today filed suit against Freddie Mac, calling the company's accounting practices "shameful." Ohio Attorney General Jim Petro said the company's shoddy accounting practices and lack of corporate ethics led to a $25 million loss in that state's retirement system. It's a similar theme in Washington these days, as many are calling for more accountability within the two mortgage giants, Fannie Mae and Freddie Mac. Louise Schiavone reports.
(BEGIN VIDEOTAPE)
LOUISE SCHIAVONE, CNN CORRESPONDENT (voice-over): Fannie Mae CEO Franklin Raines, a former White House budget director, knows what it takes to maintain the perks of being a congressionally chartered, government-sponsored enterprise. Perks such as property tax exemptions, a line of credit from the U.S. treasury, which helps them borrow private money at below market rates. Fannie and its slightly smaller sibling Freddie Mac sink millions of dollars annually into their respective armies of lobbyists, nearly $20 million last year. Those lobbyists include many former congressional and administration staffers with proven results.
SEN. RICHARD SHELBY (R-AL), BANKING COMMITTEE CHAIR: You'd have to say they were very powerful. You know, they're huge institutions and very much aware of the workings of the Congress.
SCHIAVONE: When Freddie Mac recently said it might have to restate its earnings by as much as $4 billion and its CEO and president were ousted, you didn't see them before Congress taking the oath like corporate leaders from Enron and Worldcom. How has Congress reacted? Here's a sample. Urging caution was Ohio Republican Bob Ney, whose campaign got $10,750 from Fannie Mae and $750 in a private fund-raising event from Freddie Mac employees.
REP. BOB NEY, (R-OH), FINANCIAL SERVICES COMMITTEE: These companies have been leaders in safety and soundness and we have to ensure that investors continue to have faith that fact.
SCHIAVONE: But don't pick on Representative Ney. Fannie and Freddie definitely spread the wealth. In the 2001-2002 political cycle Fannie Mae contributed a total of $2.4 million to congressional candidates, party committees, and leadership packs. In the same cycle Freddie Mac spread $4.2 million around to individual candidates, parties, and packs.
LARRY NOBLE, CENTER FOR RESPONSIVE POLITICS: One of the big questions everybody's had, political scientists have been studying this for years, does it buy votes? Personally, I think it does influence policy.
TYSON SLOCUM, PUBLIC CITIZEN: The ability of these members of Congress to be effective legislators has been really compromised by their close financial ties and relationships with a lost these companies.
SCHIAVONE: Freddie Mac says it's just doing what it takes to be heard. Fannie agrees.
ARNE CHRISTENSON, FANNIE MAE: I never saw a situation where a Congressman's vote was dependent upon a contribution. But ultimately, what matters most to them is what impact this policy will have on their constituents.
(END VIDEOTAPE)
SCHIAVONE: Jan, it's pretty clear that Congress will somehow toughen the way these companies are regulated, and lawmakers are tempered in their efforts, not only by aggressive lobbying, but also by a profound concern that they not upset the housing market, which has been a beacon in an otherwise lagging economy -- Jan.
HOPKINS: That's something that a lot of people are concerned about. Thanks. Louise Schiavone in Washington.
The political circus in California. The media's fascination with the Kobe Bryant case. Plus other news of the week leave us with much to talk about in our editors' circle. Joining me now, the heads of leading business magazinings. The latest issue of "Businessweek" examines the future of technology. "Fortune" names the 25 most powerful people in business. And "Forbes" looks at the next battle for Hewlett-Packard CEO Carly Fiorina.
Joining me now, Steve Forbes, the editor-in-chief of "Forbes" magazine, Rik Kirkland, the managing editor of "Fortune," and Mark Morrison, the managing editor of "Businessweek." Welcome to all of you. And Steve, you mentioned that Fannie Mae and Freddie Mac didn't contribute anything to your presidential campaign. Why were you left out?
STEVE FORBES, EDITOR-IN-CHIEF "FORBES": Because I supported the flat tax and they had the mistaken notion that that would hurt housing, it would actually help housing, but -- so they campaigned against me. So I'm very angry I didn't get this largesse. I had to spend all of my own money. I would have liked to have some of theirs.
RIK KIRKLAND, MANAGING EDITOR "BUSINESSWEEK": He's the only one in Washington that didn't get it.
HOPKINS: Let's go to California, where we have kind of entered the silly season with the number of candidates and the kind of candidates for this governor recall race. How are you looking at it?
KIRKLAND: Have you entered?
HOPKINS: No, I haven't. Well, I don't live in California. KIRKLAND: That shouldn't bar you.
I heard Gary Coleman today. I think he's coming out for a flat tax. I'm waiting to see if steve's going to back him.
HOPKINS: In fact, I think we have Gary Coleman talking about that. Let's listen.
(BEGIN VIDEO CLIP)
GARY COLEMAN, ACTOR, RUNNING FOR CALIFORNIA GOVENOR: If you have a flat tax and you have all the people pay 25 bucks a month, that's 30 million people paying 25 bucks a month for health care. And if you have a flat tax, that would entice businesses to come back here. Gee, you might even get Ford or Chevrolet to build a car plant here.
(END VIDEO CLIP)
HOPKINS: Another former actor. What do you think of his flat tax plan for California? Will that solve the state's budget crisis?
FORBES: It would be a step in the right direction. I now think Gary Coleman is a genius.
MARK MORRISON, EDITOR "BUSINESSWEEK": The Democrats are obviously in trouble here with Arnold taking all the attention this week. I think maybe Ben and J. Lo should enter the race on the Democratic side given the way their latest movie bombed I think they have some pretty good experience with financial disasters.
KIRKLAND: Jay Leno said there are more people on the ballot, 300, than saw that movie last week.
HOPKINS: Well and, you know, Arnold's campaign may help his movie do better this weekend. Are there any predictions about that?
FORBES: I don't think he'd want people to go to that movie.
HOPKINS: The Terminator?
FORBES: Yes, stick with politics.
HOPKINS: What about Arnold as a serious candidate? What do you think?
FORBES: I take him very seriously. He's an immigrant who came to this country, started with little, made good, invested his money well, within an industry where that doesn't often happen. He's been involved in politics, like Reagan did, even though he hasn't run for elective office. He has been involved in the process. I think he is going to put some serious proposals on the economic front. So I do take him seriously.
MORRISON: Well, that's the question, what specific proposals he puts out there. He makes the comment that California needs to attract more business and that's absolutely true. That's the key to its long- term success. It's not done a good job of that. But the devil's in the details and he hasn't given us any yet.
KIRKLAND: But the good news is it's not a very long campaign. So he doesn't have to slog through months and months of all this stuff. I think it's -- I would -- I think he's got a good shot at it frankly.
HOPKINS: You know, "The Washington Post" this week said that all bets are off in terms of candidates' personal experience, their personal lives because Arnold has entered the race. What do you think about that? Do you think that the press should be looking at the personal side of these candidates?
FORBES: I think Arnold has kind of immunized himself by saying the Democrats, especially Davis, are better at running dirty campaigns than they are at running the state. They know he's had a frisky past and I don't think people are concerned about that. They're concerned about what is happening in California.
Ronald Reagan, lest we forget, was one of the first divorced men to get to the White House. So I think if they think it's in the past and it's not going to affect your performance, certainly in California I think they'll give him a bye.
HOPKINS: Anything from you, Rick?
KIRKLAND: I don't think the press will continue to look at these issues. They always do. I mean, we live in a world where personal lives are part of the political debate. But I agree with Steve. You know, I don't -- I think he's got a fairly large degree of immunization.
HOPKINS: Kobe Bryant has certainly been in all the media this week. Have your magazines dealt with Kobe Bryant, losing endorsements or anything else?
KIRKLAND: We're trying to do our little bit to not add to the all Kobe all the time coverage. At least at "Fortune."
MORRISON: Yes, he's clearly going to lose some of his promotional -- the income he gets from promotional activities but it's not a big story for us. And we're very glad to be in that position.
FORBES: Yes. To us it's a slam dunk. We don't have anything new to say.
HOPKINS: Let's talk a little bit about housing. We just had a story about Freddie Mac and Fannie Mae. Mortgage rates have really jumped in the last few weeks. Will these higher rates really put the brakes on the housing market, which has been doing so well?
MORRISON: I think they're going to hit the refi business very hard. As far as people buying homes, the rates are still at historically very low levels, very attractive levels, and consumers have the options -- option of doing adjustable rate types of mortgages. So at least from what we've seen so far on the rate front, I don't think that's a huge threat to the housing market. HOPKINS; Rik?
KIRKLAND: It's not a threat, but there's now more good news on that front. So it goes back to what we've been talking about for months, business spending needs to pick up the baton. Consumers are not going to be -- I mean, they can maintain the spending, be sort of the carriers here, but they're not going to do a lot more.
FORBES: The timing is in effect good on that because rates have gone up just at the time business investment has gone up. With a stronger economy, as Mark pointed out, the rates are still lower than they've been in 40 years. We got spoiled in the last three or four months. But they're still low so refinancings down, but housing sales will hold up, although in places like California where you have a peculiar situation, there housing will take a hit and has.
MORRISON: It's still amazing to me we ht blip we did to those very low levels because bond traders usually a little brighter than buying all of that whining about deflation. Which turned out to be...
KIRKLAND: May or June buy yourself a glass of champagne.
HOPKINS: Which I will do because I did. Thanks, Rik Kirkland and Mark Morrison and Steve Forbes. Thanks.
MORRISON: Thanks to you.
HOPKINS: He turned his love of surfing into a company worth more than half a billion dollars. Now this businessman is giving back, trying to save the world's coral reefs. Our "CEO of the Week" is next.
(COMMERCIAL BREAK)
HOPKINS: These are live pictures at Fort Stewart, Georgia, where more soldiers from the 3rd Infantry Division are returning to their base. The division led the attack on Baghdad and participated in stabilization operations after the end of major combat.
The division was the first large military unit to deploy to the Persian Gulf before the war. Some of the troops were in the region for nearly a year. The soldiers are expert in desert warfare, having spent months training in the Kuwaiti desert before the war against Saddam Hussein. Welcome home.
Confucius said "Choose a job you love, and you'll never have to work a day in your life." Our "CEO of the Week" followed that advice. He transformed his teenage passion for surfing into a company that earned more than $37 million last year.
Bob McKnight of Quiksilver is our "CEO of the Week."
(BEGIN VIDEOTAPE)
HOPKINS (voice-over): Just blocks from the surf and the sand in Huntington Beach, California, the company that makes the board shorts, the bikinis, the T-shirts, and the sweatshirts, must-have clothes and accessories for a generation.
BOB MCKNIGHT, CEO, QUIKSILVER INC.: We sort of began in 1969 as a little cobbler shop in Torquey, Victoria, Australia, by a couple of guys who were like me -- they got out of school and didn't want to go to work either. They wanted to go to the beach and keep surfing.
HOPKINS: They made board shorts. The world's best surfers started wearing them, and McKnight and fellow prosurfer Jeff Hackman, saw a business opportunity in California.
MCKNIGHT: We had no business plan. We had no idea of where we were going. It was kind of like a summer project.
Those days were incredible. We'd wake up in the morning. Jeff and I would drive up to L.A. We'd buy some fabric, buy some Velcro and snaps. We'd run down to a cutter in Santa Ana, have the shorts cut, take them down to Encinitas, have them sewn, 20 or 30 pairs would come out every day. Jeff would iron them all. I'd put the snaps on them. We'd put them in my car, drive to a little hole-in -he wall surf shop, sell them, collect the money, collect a few checks, and the next day we'd go back and pay everybody.
HOPKINS: By 2002, Quiksilver's revenues had grown to $700 million, its stock price riding high over both the Dow and the S&P.
MCKNIGHT: About half of the world's population lives at or near the beach, and the other half can't wait to get there.
HOPKINS: To continually innovate, set trends, Quiksilver employs young talented designers marketers, artists, many of them former prosurfers, snowboarders, skateboarders.
MCKNIGHT: The main thing is just for -- I believe -- is taking care of our people, because they're who really make it happen. They come in every day around the world and they just want to have this common thread of kicking butt out there and being the best of the best, and our role in being industry leader, is that we have to lead.
HOPKINS: And leading means giving back to the industry, to the community, and in taking care of the world's oceans.
In four years, a mission called Quiksilver Crossing has logged more than 63,000 nautical miles, charting the health of the world's coral reefs and doing other research.
(END VIDEOTAPE)
HOPKINS: Still ahead, the results of our poll. Then, your reaction to our series of special reports on "The Forgotten War," the war on drugs.
(COMMERCIAL BREAK)
HOPKINS: The preliminary results of our poll question tonight. We asked: "Do you believe that marijuana should be decriminalized?" Ninety-three percent of you said yes. Surprising results. Turning to stocks, the Nasdaq continued its losing streak today. Blue chips pushed higher. Dow Industrials up 64 points. The Nasdaq losing 8. The S&P up 3.
Christine Romans has the market for us -- Christine.
CHRISTINE ROMANS, CNNfn CORRESPONDENT: Jan, it was consumer stocks that led the Dow and the S&P higher today. You look at stronger sales for McDonald's in July. That was 20 percent of the Dow's gain. And Caterpillar hit an all-time high today. But as you said, the Nasdaq slipped, and that brought the week's losses for the Nasdaq to more than 4 percent. It was the worst weekly point loss since July of last year.
Now, the Nasdaq's been lagging the blue chips the last few weeks. And many say that's because it's outperformed the market so much this year. The Nasdaq gains this year are more than double the S&P 500 and the Dow.
Meanwhile, the FDA late today accuse Bristol-Myers of running misleading magazine and newspaper ads for Pravachol. The FDA say the print ads suggest the drug is the only treatment for preventing strokes. It is not. Florida's Medicaid Fraud Unit is the latest agency to investigate Tenet Health Care. This just days after Tenet paid $54 million to settle allegations of unnecessary surgery in California.
And, Jan, two big stock losers today. R.J. Reynolds said the SEC is looking into how it accounts for certain costs. And Winn-Dixie down 15 percent today. The grocery store chain said it's feeling the pinch from the economy and troop deployments -- Jan.
HOPKINS: Interesting. Thanks. Christine Romans.
And now a look at your thoughts.
Regarding our story on the growing use of antidepressants among children, Audrey of Louisiana wrote, " I had been on three different antidepressants before I was 16. None helped. Yet my doctor kept pushing them. If anything, they made me more depressed because I felt like I was taking this little pill to give me fake happiness, which is I wanted to live."
In response to our series "The Forgotten War," the war on drugs, David in Arizona wrote, "December 16, 1988 was the first day I was free from cocaine, crank and alcohol. Now I have a family, my own business and hope. I could not have done this without treatment."
And Thomas in California wrote, "I am a 17-year-old recovering addict and quitting drugs, getting my life back in order was the hardest thing I've ever had to do. The more the issues of addiction and treatment are addressed, the more people can beat this disease."
You can e-mail us anytime at loudobbstonight@cnn.com (sic).
That's our show tonight. Thanks for joining us. For all of us here, good night from New York. "LIVE FROM THE HEADLINES" with Anderson Cooper is next.
And we leave you now with more live pictures of soldiers from the 3rd Infantry Division returning to their families at Fort Stewart, Georgia. Have a great weekend.
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Terror>
Aired August 8, 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: A new weapon in the war on terror. Blimps could soon be flying over your neighborhood, hunting terrorists.
In our series of special reports, "The Forgotten War," whether drugs should be decriminalized and an interview with the nation's drug czar.
In the recall free-for-all, more slogans from Arnold Schwarzenegger, but also a brief glimpse of his political philosophy.
And what happened to our summer? Unusual weather around the world leaves many people wondering where the summer fun has gone.
ANNOUNCER: This is LOU DOBBS TONIGHT for Friday, August 8. Sitting in for Lou Dobbs, Jan Hopkins.
HOPKINS: Good evening. Lou is off tonight.
President Bush today accused Democrats of playing politics by suggesting Americans were misled about reasons for going to war in Iraq. The president said the coalition is making -- quote -- "good progress" 100 days after he announced the end of major combat. He said he will do -- quote -- "whatever is necessary" to win the war on terror.
White House correspondent Dana Bash joins us from near the president's ranch in Crawford, Texas -- Dana.
DANA BASH, CNN WHITE HOUSE CORRESPONDENT: Hi, Jan.
Well, the president used that 100-day marker and a visit from some of his top deputies today. The vice president, the defense secretary, and the chairman of the Joint Chiefs of Staff were all at his ranch today. And the president used that visit to talk about what he says is the progress in Iraq. Yes, there have been many deaths; 120 U.S. troops have been killed; 56 of them have been in major combat.
But the president said that it's important for Americans to see that there is -- there are good things happening on the ground in Iraq.
(BEGIN VIDEO CLIP)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: It turns out this is our 100th day since major military operations have ended in Iraq. And since then, we've made good progress. Iraq is more secure. The economy of Iraq is beginning to improve. I was interested to note that banks are now opening up and the infrastructure is improving.
(END VIDEO CLIP)
BASH: The president said it's improving. But how long will it take to get the job done? That is a question that the president simply said is not answerable right now. It is unclear just how long U.S. troops will have to stay in Iraq.
It's also unclear, he said, how much it will ultimately cost. But he did say he will be going back to Congress in the near future to ask for another large chunk of change in order to help pay for what is going on now in Iraq. But he also mentioned several times September 11 and said that Iraq is central right now to the war on terrorism.
But a new poll out says that Americans actually care a lot more about the economy now than about terrorism. And Democrats are certainly seizing on that. More and more are coming out and attacking the president on not only whether or not the intelligence was sound in leading up to the war with Iraq, but also whether he was prepared for the reconstruction effort. Al Gore was the most recent prominent Democrat to do that.
The president today brushed all that off, said that a lot of people are running for president right now on the Democratic side and this is all politics -- Jan.
HOPKINS: Well, and next week he's going to focus on the economy, right?
BASH: Absolutely.
He's going to have an economic summit next week here at the ranch. And he's also going to be traveling to California next week. He's going to do some fund-raising and have some other events. But, in terms of politics, just so you know, at this point, there's nothing on his schedule that has him with Arnold Schwarzenegger in California -- Jan.
HOPKINS: Thanks very much, Dana Bash in Crawford, Texas, where the president is on vacation.
And tonight, CNN has learned that the FBI has sent a team to Iraq to help with the investigation into the terrorist bombing of the Jordanian Embassy. That bombing killed at least 16 people and wounded 65. The U.S. commander in Iraq says the attack was the work of professional terrorists. Those terrorists could be members of Ansar al Islam, a group with ties to al Qaeda. Another soldier was killed in combat today. He was the 56th to die since the end of major combat.
As Dana Bash reported, President Bush today met with Defense Secretary Donald Rumsfeld to talk about military modernization. Rumsfeld is pushing for radical changes in the force structure to enable the armed forces to deal with new military threats. Pentagon correspondent Barbara Starr joins us.
(BEGIN VIDEOTAPE)
BARBARA STARR, CNN PENTAGON CORRESPONDENT (voice-over): When the Soviet army marched through Red Square, the U.S. military knew the threat. In today's post-9/11 world, the enemy can be unknown, the next crisis unpredictable. And so, with U.S. forces stretched thin, from Iraq to South Korea, Defense Secretary Donald Rumsfeld wants to dramatically reshape where troops are positioned, so they can respond more quickly.
MICHAEL O'HANLON, BROOKINGS INSTITUTION: I'm not saying they're outdated, but there's a certain amount of inertia that explains why we have 70,000 troops in Germany, why we have 20,000 Marines on Okinawa in Japan, and so forth.
STARR: Rumsfeld believes, more troops isn't necessarily the answer. Precision weapons, such as the Tomahawk missile, can mean fewer troops are needed. Small special forces teams are increasingly used instead of large armored divisions to hunt terrorists, for example. Marines could go ashore more often to replace worn-out Army troops.
DONALD RUMSFELD, SECRETARY OF DEFENSE: The war plans, the contingency plans that we have for various kinds of activities, are being reanalyzed to take a look and see, are they logical, given the increased lethality of our capabilities, which was demonstrated in Afghanistan and demonstrated in Iraq?
STARR: The idea: less reliance on large permanent bases in Europe and Asia dating from World War II, more flexible arrangements in new places, in Europe, moving troops from Germany to smaller bases in Romania, cheaper training closer to potential hot spots in Central Asia and the Persian Gulf, in North Africa, getting permission to temporarily base U.S. troops fighting terrorism, and, in Asia, pulling some troops back from the DMZ in Korea, trimming troops on Okinawa, and basing more long-range precision bombers on Guam.
(on camera): No final decisions yet on any of this. But with today's precision weapons and ever-changing threats, the military is looking for ways to move more quickly with less stress on the force.
Barbara Starr, CNN, the Pentagon.
(END VIDEOTAPE)
HOPKINS: Arnold Schwarzenegger today kept up a dizzy pace in the recall race in California. There were plenty of slogans, but Schwarzenegger also offered a brief insight into his political philosophy. He called himself a fiscal conservative who is socially moderate.
Thelma Gutierrez has more from Norwalk, California -- Thelma.
THELMA GUTIERREZ, CNN CORRESPONDENT: Hi there, Jan. Well, you're right. It has been a very busy day for the actor. It has also been a very anxious day for those who are trying to stop that recall election. Now, the latest effort by some of the local people to stop the recall election was thrown out of a Los Angeles superior court just moments ago. Davis supporters had filed a lawsuit challenging the validity of some of the recall signatures. Again, that lawsuit was thrown out of court. And so now that October 7 election is very much on.
Here in Los Angeles County, so far, there are more than 150 hopefuls. One of the most high-profile hopeful, of course, is the actor Arnold Schwarzenegger. Now, yesterday he came. He picked up his nomination papers in front of about 100 screaming fans and 50 reporters. And tomorrow some time at this office, the actor will return. He will file his paperwork. He will turn in his $3,500. The signatures will be validated.
And then his name and all those other hopefuls will go on the ballot. Now, again, that deadline is tomorrow, 5:00 p.m. Pacific time. Now, the actor kicked off his campaign bright and early in the morning by hitting the talk shows. In the afternoon, he showed up at the Inner City Games L.A., which is an after-school intervention and prevention program for inner city kids. For years, the actor has been a strong advocate for children, fitness, and after-school programs.
(BEGIN VIDEO CLIP)
ARNOLD SCHWARZENEGGER (R), CALIFORNIA GUBERNATORIAL CANDIDATE: I promise you, if I get elected to be governor of this great state, I will continue on my crusade in this state and across the country to make sure that after-school programs will be available in every public school in the whole United States.
(END VIDEO CLIP)
GUTIERREZ: Now, we had mentioned that there were some 150 hopefuls just in L.A. County alone.
We just learned that, statewide, 652 nomination papers have been issued by various counties. Now, only 36 people have actually completed the paperwork. They've actually turned in the money and had those signatures validated. Again, tomorrow is that deadline. I think we're somewhere between 25 and 26 hours away -- Jan, back to you.
HOPKINS: And a lot of people filing at the last minute, it seems.
Thelma Gutierrez in California, thanks.
The Pentagon today won a legal battle to go ahead with plans to burn hundreds of old chemical weapons at an incinerator in Alabama. The Army has not announced a start date for the incineration project, but thousands of local residents have been offered protective hoods and air filters as a precaution.
Chris Tatum from our affiliate WBMA joins us from Anniston, Alabama -- Chris.
CHRIS TATUM, WBMA REPORTER: Well, good evening.
There is an almost tension in the air here in Anniston, Alabama, about the possible firing-up of this incinerator as soon as tomorrow. We've heard from just about every side of this issue today. We've heard from plaintiffs, who were defeated in this lawsuit. We've also heard from people for and against the incinerator.
But the one camp that's kept surprisingly quiet today has been the Army. Now, earlier this week, one Army official assured me, if this judge voted in favor of the Army -- or ruled in favor of the Army, I should say -- they would fire the incinerator up as soon as tomorrow. Right now, we're waiting on official word from Washington Army brass.
(BEGIN VIDEOTAPE)
DAVID CHRISTIAN, PLAINTIFF: It's not the final death knell, but it's certainly moving in that direction.
TATUM (voice-over): David Christian admits he's disappointed by that federal judge's ruling, a ruling that gives a green light for the Army to fire up its chemical weapons incinerator in Anniston. Even so, Christian and his co-plaintiffs insist they're not finished fighting.
CHRISTIAN: That's always been our primary thrust, is to get them to actually compare incineration with the alternatives that are out there.
TATUM: Incinerator opponents still have two lawsuits pending, one in Washington, D.C. that seeks to stop every Army incinerator. Another in Birmingham accuses the Army of civil rights violations for building its incinerators near poor neighborhoods.
But it could be a while before a judge hears those cases. The Army doesn't want to wait that long. It insists, incineration is safe and not incinerating is costing taxpayers a fortune.
MIKE ABRAMS, ARMY SPOKESMAN: At the end of July, the beginning of August, we have run out of all meaningful work. And if we don't start now, then what we see is truly a waste of $300,000 a day, $9 million a month.
TATUM: But for plaintiffs like David Christian, money's not the issue. He believes he's fighting for his life and for his children's futures.
CHRISTIAN: Well, I've got a 6-year-old and a 4-year-old. And by the best estimates, it is likely that at least one or both of them will be in college before they're done out there.
(END VIDEOTAPE)
TATUM: And, again, local Army officials are waiting for some word from Washington Army leaders at the top. No word has come down yet. Local Army officials tell us they will have some kind of a news conference and let us know what their plans are, especially regarding firing it up tomorrow, as soon as they get word.
HOPKINS: Chris, the residents have been issued gas masks. Do they say that they're going to wear them if this incinerator is fired up?
TATUM: Some folks say they will wear them. I can tell you that, in the last week, more people have gone to get those gas masks than at all leading up to this point. They've been giving them out for months.
But this week, they've seen a real spike. One day -- I believe it was Tuesday -- as many as 1300 people went there to get those masks. But I should also tell you that, right now, about 6,000 people have not gone to get their protective gear. And most of those people, I'm hearing, live in the -- what is called the pink zone, the area closest to the incinerator.
HOPKINS: Chris Tatum of CNN affiliate WBMA, thanks for joining us.
And still to come tonight: The old military technology may get a new lease on life in the war on terror. Jeanne Meserve will have our report. Hundreds of homes wrecked by a tornado that caught meteorologists and residents by surprise. And unusual weather takes the fun out of summer, as many people bake in the worst heat wave in years.
(COMMERCIAL BREAK)
HOPKINS: Federal prosecutors in New York today charged a Pakistani man with trying to help an al Qaeda terrorist illegally enter the United States. The Pakistani is a legal permanent resident of the United States. And today, he appeared in court for a preliminary hearing. He has been in jail for four months as a material witness in the investigation into al Qaeda activities in this country.
Blimps could make a comeback as a military surveillance system in the war on terror. They would be equipped with cutting-edge sensors and high-resolution cameras for missions over land and water.
Homeland security correspondent Jeanne Meserve has the story.
(BEGIN VIDEOTAPE)
JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT (voice-over): It looks like a throwback to an earlier era, but this blimp is being touted as the coming thing in homeland security.
STEPHEN HUETT, NAVAL AIR SYSTEMS COMMAND: My vision would be to have airships over every major metropolitan area and every major harbor or port in the United States, providing continuous coverage. MESERVE: Tucked away under the gondola of this blimp, a state- of-the-art color-imaging system which scans the landscape for suspicious objects.
UNIDENTIFIED FEMALE: It will pinpoint for us and give us the exact longitude, latitude of it and the size and shape of it.
MESERVE: A high-resolution camera zooms in. And all the data can be transmitted instantaneously to a command-and-control center for distribution to law enforcement or the military.
HUETT: Everybody is interested in the same information. They want realtime, high-resolution data on demand.
MESERVE: A blimp is cheaper to operate than an airplane or helicopter. Relatively quiet and vibration-free, it is also easier on sensitive equipment. It can stay in one place for hours at a stretch, seeing huge areas from a high altitude. A blimp is virtually invisible to radar and would be hard to bring down with a bullet or missile.
If the burning Hindenburg is the only airship you can remember, forget it. Today, ships are filled with helium, a fire-suppressant. Among those checking out the possible homeland security uses, the Coast Guard, which sees potential for tracking ship traffic.
CMDR. HANK TEUTON, U.S. COAST GUARD: Right now, we in the world of aviation, we know where all the airplanes are. We don't know where all the ships are.
MESERVE: But privacy advocates worry about other things this eye in the sky could potentially see.
BARRY STEINHARDT, ACLU: This is very intrusive technology. It can be used secretly. It potentially can be used to give the government what amounts to Superman's special powers.
MESERVE: There is nothing to worry about yet. Government agencies are still evaluating what blimps with a variety of sensors might someday do. For now, this is just pie in the sky.
Jeanne Meserve, CNN, Manassas, Virginia.
(END VIDEOTAPE)
HOPKINS: Still ahead: our series of special reports on "The Forgotten War" on drugs. Tonight, Casey Wian looks at the debate over decriminalizing drugs. And we'll talk to the drug czar John Walters.
Plus: sex, celebrity, and big money. We'll talk to our "Editors Circle" about the Kobe Bryant case and its flood of media coverage.
And the new summer pastime: complaining about the weather. Kitty Pilgrim will report on a season of discontent.
(COMMERCIAL BREAK) HOPKINS: A possible remedy for a chronic medical problem: skyrocketing malpractice costs. Florida has a plan to limit doctors' liability, while offering victims a chance at a bigger payout. Florida's malpractice prescription -- right after this.
(COMMERCIAL BREAK)
HOPKINS: A huge settlement offer tonight in Boston. The Catholic Church there is offering $55 million to settle more than 500 sex abuse lawsuits. The settlement would resolve claims from men and women who say they were abused by priests as children. The offer comes a week after Archbishop Sean O'Malley became the head of the diocese.
There's an agreement tonight in Florida on how to deal with medical malpractice lawsuits. Governor Jeb Bush and state lawmakers agreed to limit the amount doctors would pay to a half-million dollars, but victims could still collect more money, up to $2.5 2 million, by suing other medical providers. The legislation is expected to pass next week.
An unexpected tornado that tore through Florida last night, leaving devastation in its wake; 500 homes were damaged or destroyed by the twister, which caught forecasters by surprise. Despite the damage, there were no serious injuries.
Just ahead: the war on drugs, "The Forgotten War." Tonight, in our series of special reports, a look at one of the most contentious issues: easing laws against drugs. Casey Wian will have that story.
And then, the editors of the nation's top business magazines join us for a look at the stories that may hit your portfolio.
And later: He spun the world of surfing and skateboarding into a $700-million-a-year company. Our "CEO of the Week" is coming up.
(COMMERCIAL BREAK)
HOPKINS: Tonight, in our series of special reports "The Forgotten War," we focus on decriminalizing drugs. Advocates for drug decriminalization in the United States don't have far to go to see the consequences of softer drug laws. Canada is trying several different and seemingly conflicting approaches, with mixed results.
Casey Wian reports from Vancouver, British Columbia.
(BEGIN VIDEOTAPE)
CASEY WIAN, CNN CORRESPONDENT (voice-over): A common sight in Vancouver: police arresting a suspected drug dealer.
UNIDENTIFIED MALE: We found four Tic Tac containers full of heroin, powder cocaine, and rock cocaine.
WIAN: With drug use in Canada at a 20-year high, authorities are struggling to find the right mix of law enforcement and treatment. That's evident in Vancouver's tiny downtown east side neighborhood, a longtime junkie's haven.
DOUG LEPARD, VANCOUVER POLICE DEPARTMENT: The epicenter was right here where we're standing. And we would see anything up to 150, 200 people actively involved in the open buying and selling of drugs. And it generated an incredible amount of disorder. And, basically, the drug traffickers and their customers had taken over these streets.
WIAN: Since April, police have tripled the number of officers on these streets. Scores of drug dealers have been arrested. Others have moved. Crime and overdose deaths are down. But this resident, a self-described heroin addict and crack head, says he's seen it before.
UNIDENTIFIED MALE: They come in gung-ho. They did. They come in really hard and really strong, right? And they did it hard and strong. But they're wearing down. And what's going to happen? When the money runs out, this place is going to go back to normal.
WIAN (on camera): Despite police efforts to crack down on drug trafficking and blatant drug use in Vancouver's downtown east side, a thriving open-air drug market still exists here. Behind me, you can see drug use and drug deals happening just a block away from the police station.
(voice-over): Police only arrest dealers. Users' drugs are sometimes confiscated, but they're not arrested, because possession charges rarely stick in Canadian courts. In fact, police here are supporting a new way of dealing with addicts called supervised injection clinics, where junkies can shoot up under a nurse's supervision and without police interference.
WIL STEWART, REGISTERED NURSE: They would bring their drugs in. We provide a spoon for them to mix the drugs with sterile water.
WIAN: Everything but the drugs is supplied in an effort to prevent the spread of disease.
STEWART: Once they've injected their drug, we have them stay with us in here for at least 15 minutes to ensure that they do not overdose.
DR. MARK TYNDALL, ST. PAUL'S HOSPITAL: If you went downtown and you saw teenagers leaning beside a dumpster, injecting drugs with puddle water, I think it's just a pragmatic thing to say, look, this is not a very good situation and we really need to get people out of that very dangerous situation into an environment where we can connect with them.
WIAN: A new government-funded supervised injection facility is scheduled to open in this building later this year. Canada is also considering decriminalizing possession of small amounts of marijuana. The Bush administration calls the proposal a threat to the United States, which remains deeply divided on the issue of softer drug laws. Libertarians say decriminalization would save taxpayers money and make room in jails for violent criminals.
GEORGE GETZ, LIBERTARIAN PARTY: Imagine how much safer your neighborhood would be if we could instantly lock up a million murderers, robbers, and rapists without spending one more tax dollar. That's exactly what we could do if we repealed prohibition, because we could let the nonviolent drug users out of prison.
WIAN: But drug enforcement officials say, ending the war on drugs would bring dire consequences.
MICHAEL VIGIL, SPECIAL AGENT IN CHARGE, DEA: I think that we would have a major impact in terms of an increase in the addict population. We would still see increase, a significant increase, in crime. And, at the same time, health care costs would skyrocket.
WIAN: That's what happened when Switzerland allowed drug users to shoot up openly in a public park in the late 1980s. Now the Swiss government provides pure heroin to some addicts in supervised injection sites.
While Canada isn't going that far, its delicate mix of compassion and crackdown is being watched closely by advocates on both sides of the war on drugs.
Casey Wian, CNN, Vancouver, British Columbia.
(END VIDEOTAPE)
HOPKINS: That brings us to our poll question tonight: Do you believe marijuana should be decriminalized, yes or no? You can vote on our Web site, CNN.com/Lou. We'll share preliminary results later in the show.
And now the final results of our poll question last night. We asked, which of Arnold Schwarzenegger's film titles best describes his run for governor? Nine percent of you said "Last Action Hero"; 13 percent said "The Terminator"; 12 percent said "Total Recall." And 66 percent of you said "Kindergarten Cop."
Earlier, Lou spoke with America's drug czar, John Walters, who's been director of the Office of National Drug Control Policy for nearly two years.
Lou began by asking him if we're winning or losing the war on drugs.
(BEGIN VIDEOTAPE)
JOHN WALTERS, DIRECTOR, OFFICE OF NATIONAL DRUG CONTROL POLICY: I think we've got use going down again, after a plateau for young people's use in the mid-'90s. We had a report that it was maybe as much as 13 percent declined in the last year was a result of renewed, invigorated efforts.
I think, overall, we have to remember that, since we got serious at the beginning of the '80s, overall drug use is half of what it was. And that's progress. If we did that in homelessness or with dropouts or with child abuse, it would be a victory. Now, we're all frustrated because it's not smaller. But this is a result of real effort. When we push back, it gets smaller. And when we don't push back, it can get bigger. So we have to stay at it.
LOU DOBBS, CNN ANCHOR: As you say, part of the frustration born of the fact that drug use has risen in a number of areas. And 20,000 people die in drug-related deaths every year. A third of the incarcerations in federal prisons, really more than a third, actually, relate to drug or substance abuse. What has to be done to win this war?
WALTERS: Well, we've had experience now. We know we have to be balanced. We have to do a better job of prevention, be serious, give kids messages, supervise them. We're doing that in a better way.
We have to treat people. The president has made a historic commitment to add 1.6 billion to federal treatment spending. We're spending almost over $3.5 billion on federal treatment spending. We know we can get people into recovery. We have to do that. But we also have to treat this as a real market phenomenon. We have to reduce supply. And I think the other encouraging sign is we are doing that in the largest single drug of expenditure by Americans, cocaine. With Colombia, we now have a 15 percent reduction last year. It's accelerated under President Uribe, who's actually on his first anniversary in office.
We have a partner in Colombia, and with President Fox in Mexico that are make historic changes. It's a market phenomenon. We have to reduce both supply and demand. Otherwise, simply making improvements on one half of that; the other half will tend to undermine it with high demand or large supply of dangerous, addictive substances.
DOBBS: The culture itself, there is a component of our culture, a subculture, in which marijuana is an accepted recreational drug, as you well know. It is also -- has the impetus of being medicinally redeemable, if you will, because in many cases it is effective. Is your office, is the United States government going to focus on that particular subculture and those conceptions and preconceptions about drug use, and attack that directly?
WALTERS: Biggest single area of ignorance is marijuana. No question about it. Today of the six million-plus people we have to treat, 60 percent are dependent on marijuana, treated for dependency on illegal drugs. More teenagers coming into treatment nationwide for marijuana dependency than for all other illegal drugs combined.
Baby boomers and the generation after them all have a great deal of ignorance about that problem. They think marijuana's not an addictive substance, it's not a serious threat. It's more than twice as important as a cause of dependency than the next most important illegal drug, which is cocaine. But most people think of heroin, cocaine, methamphetamine, those are dangerous substances. Marijuana's the soft drug. In fact, we ought to legalize it, as you say.
The fact of the matter is, marijuana is the most dangerous threat across a broader scale, and part of that is because of the ignorance about marijuana and the fact that people don't realize that today's marijuana is not 1 percent THC, the psychoactive ingredient of the '80s, it's 9 to 14 percent, and we now have high-potency varieties of 20 to 30 percent, increasing its danger coming from Canada and other places.
DOBBS: Mr. Walters, as you know, there are in this country a group of people, I would style them as presenting themselves as pseudosophisticates, who are wry in their dismissal and derision of the "just say no" to drugs slogan that came out of the middle '80s, Nancy Reagan. We don't have anything like that, but the fact is that campaign really worked, didn't it?
WALTERS: It did work. And we like to base our policies on facts and on results. And during the '80s, we started at the beginning of the '80s with the largest drug problem in the history of the United States, twice as high in the number of users as we have today, and it declined steadily, reaching a low point in '92 and rebounding a bit during the mid-'90s and plateauing. That campaign, which simply said directly at the culture that said it's OK to use it's not OK to use, and it's your responsibility first and foremost to not use.
DOBBS: Is this White House, Mr. Walters, sufficiently out in front on this forgotten war? Are you sufficiently in the public eye on this important, critically important issue?
DOBBS: We have a national media campaign where we spend over $150 million with messages that we've used the experience of the past 20 to 25 years to craft, and I think if you look at the preliminary results we've gotten from the changes we've made to improve that, a 13 percent decline in teen drug use in the last year is unprecedented.
Yeah, in the context of the war on terror and other things, it's hard to get the same kind of prominence there was at certain points in the '80s, but the president has made clear in putting his political credibility on the line, saying we want a reduction in two years of 10 percent, and five years of 25 percent drug use. That's putting his credibility and accountability on the line. He's led the effort on treatment. He's led the effort in working with Mexico and Colombia on this, and we're seeing results on both supply and demand that are historic.
DOBBS: John Walters, thank you very much for being with us.
WALTERS: My pleasure. Thank you, Lou.
(END VIDEOTAPE)
HOPKINS: Now a reminder to vote in our poll question tonight. Do you believe that marijuana should be decriminalized? Yes or no? You can vote on our Web site, cnn.com/lou, and we'll share the results later in the show.
Still ahead -- last summer. Kitty Pilgrim will report on the weather that for many has ruined a favorite season.
Plus, the nation's two mortgage giants are facing questions about their accounting practices, but still manage to stay on top in Washington. Louise Schiavone reports.
And editors from "Forbes," "BusinessWeek" and "Fortune" join me for our weekly "Editors' Circle." That's next.
(COMMERCIAL BREAK)
HOPKINS: You could call it the summer of discontent. Many parts of the world are experiencing excessive heat, rain, or drought conditions. It's all enough for some people to just give up and say, maybe next summer. Kitty Pilgrim has more.
(BEGIN VIDEOTAPE)
KITTY PILGRIM, CNNfn CORRESPONDENT (voice-over): What happened to summer fun? London is broiling. Paris is burning. Talking about the weather takes over the day in Portugal. Drinking water in London is a full-time job, although beer consumption is expected to skyrocket, up three million pints over the weekend. Animals in the European zoos are complaining. Wiped out. They're feeding them frozen fish and popsicles. They very sensibly trucked three tons of sand into Paris to spread along the Seine. But it's no day at the beach.
UNIDENTIFIED FEMALE: It can be a bit smelly at times, but I mean, I think you have to accept that that's the heat.
PILGRIM: Tourists in Paris are exhausted.
UNIDENTIFIED MALE: It's been overwhelmingly hot in the short time that we've been here.
PILGRIM: There are new sightseeing opportunities. The drought is so bad in the Danube river the water dropped to reveal a Nazi ship sunk during the war.
But some resort areas are devastated. Wildfires rage in Portugal, and in the beach towns on the French Riviera, and also in Italy.
JENNIFER GOLD, DIRECTOR OF NEW MEDIA ROUGH GUIDES: You can't even believe it. It's like the sky is falling. The weather being bad isn't bad enough, but it's sparking these forest fires, which sort of add this apocalyptic edge to the whole thing.
PILGRIM: Summer is also fairly ruined in the States. Meteorologists will explain the weather pattern is literally stuck for the summer. Blame it on the jetstream. Hot in the west and then, as it dips toward the east, unloading rain. We'll stay that way for several more weeks.
The summer activities not quite so much fun. It's swelter, get soaked, or stay inside. Tourists in Times Square are fashion forward with plastic suits. Umbrellas are the in accessory.
MICHAEL SCHLACTER, METEOROLOGIST, WEATHER 2000: Soda, beer, hot dog sales are obviously depressed. But also, people are ordering in and taking out food now that it's a damp summer. And movie sales are a little bit up, and perhaps even people are going to the mall more.
PILGRIM: At least there's always TV.
(on camera): It seems there may be no relief even after the summer is over. Now meteorologists are saying that this fall the hurricane season may be unusually severe.
Kitty Pilgrim, CNN, New York.
(END VIDEOTAPE)
HOPKINS: A start of a different sort for one of the nation's largest mortgage buyers. Ohio today filed suit against Freddie Mac, calling the company's accounting practices "shameful." Ohio Attorney General Jim Petro said the company's shoddy accounting practices and lack of corporate ethics led to a $25 million loss in that state's retirement system. It's a similar theme in Washington these days, as many are calling for more accountability within the two mortgage giants, Fannie Mae and Freddie Mac. Louise Schiavone reports.
(BEGIN VIDEOTAPE)
LOUISE SCHIAVONE, CNN CORRESPONDENT (voice-over): Fannie Mae CEO Franklin Raines, a former White House budget director, knows what it takes to maintain the perks of being a congressionally chartered, government-sponsored enterprise. Perks such as property tax exemptions, a line of credit from the U.S. treasury, which helps them borrow private money at below market rates. Fannie and its slightly smaller sibling Freddie Mac sink millions of dollars annually into their respective armies of lobbyists, nearly $20 million last year. Those lobbyists include many former congressional and administration staffers with proven results.
SEN. RICHARD SHELBY (R-AL), BANKING COMMITTEE CHAIR: You'd have to say they were very powerful. You know, they're huge institutions and very much aware of the workings of the Congress.
SCHIAVONE: When Freddie Mac recently said it might have to restate its earnings by as much as $4 billion and its CEO and president were ousted, you didn't see them before Congress taking the oath like corporate leaders from Enron and Worldcom. How has Congress reacted? Here's a sample. Urging caution was Ohio Republican Bob Ney, whose campaign got $10,750 from Fannie Mae and $750 in a private fund-raising event from Freddie Mac employees.
REP. BOB NEY, (R-OH), FINANCIAL SERVICES COMMITTEE: These companies have been leaders in safety and soundness and we have to ensure that investors continue to have faith that fact.
SCHIAVONE: But don't pick on Representative Ney. Fannie and Freddie definitely spread the wealth. In the 2001-2002 political cycle Fannie Mae contributed a total of $2.4 million to congressional candidates, party committees, and leadership packs. In the same cycle Freddie Mac spread $4.2 million around to individual candidates, parties, and packs.
LARRY NOBLE, CENTER FOR RESPONSIVE POLITICS: One of the big questions everybody's had, political scientists have been studying this for years, does it buy votes? Personally, I think it does influence policy.
TYSON SLOCUM, PUBLIC CITIZEN: The ability of these members of Congress to be effective legislators has been really compromised by their close financial ties and relationships with a lost these companies.
SCHIAVONE: Freddie Mac says it's just doing what it takes to be heard. Fannie agrees.
ARNE CHRISTENSON, FANNIE MAE: I never saw a situation where a Congressman's vote was dependent upon a contribution. But ultimately, what matters most to them is what impact this policy will have on their constituents.
(END VIDEOTAPE)
SCHIAVONE: Jan, it's pretty clear that Congress will somehow toughen the way these companies are regulated, and lawmakers are tempered in their efforts, not only by aggressive lobbying, but also by a profound concern that they not upset the housing market, which has been a beacon in an otherwise lagging economy -- Jan.
HOPKINS: That's something that a lot of people are concerned about. Thanks. Louise Schiavone in Washington.
The political circus in California. The media's fascination with the Kobe Bryant case. Plus other news of the week leave us with much to talk about in our editors' circle. Joining me now, the heads of leading business magazinings. The latest issue of "Businessweek" examines the future of technology. "Fortune" names the 25 most powerful people in business. And "Forbes" looks at the next battle for Hewlett-Packard CEO Carly Fiorina.
Joining me now, Steve Forbes, the editor-in-chief of "Forbes" magazine, Rik Kirkland, the managing editor of "Fortune," and Mark Morrison, the managing editor of "Businessweek." Welcome to all of you. And Steve, you mentioned that Fannie Mae and Freddie Mac didn't contribute anything to your presidential campaign. Why were you left out?
STEVE FORBES, EDITOR-IN-CHIEF "FORBES": Because I supported the flat tax and they had the mistaken notion that that would hurt housing, it would actually help housing, but -- so they campaigned against me. So I'm very angry I didn't get this largesse. I had to spend all of my own money. I would have liked to have some of theirs.
RIK KIRKLAND, MANAGING EDITOR "BUSINESSWEEK": He's the only one in Washington that didn't get it.
HOPKINS: Let's go to California, where we have kind of entered the silly season with the number of candidates and the kind of candidates for this governor recall race. How are you looking at it?
KIRKLAND: Have you entered?
HOPKINS: No, I haven't. Well, I don't live in California. KIRKLAND: That shouldn't bar you.
I heard Gary Coleman today. I think he's coming out for a flat tax. I'm waiting to see if steve's going to back him.
HOPKINS: In fact, I think we have Gary Coleman talking about that. Let's listen.
(BEGIN VIDEO CLIP)
GARY COLEMAN, ACTOR, RUNNING FOR CALIFORNIA GOVENOR: If you have a flat tax and you have all the people pay 25 bucks a month, that's 30 million people paying 25 bucks a month for health care. And if you have a flat tax, that would entice businesses to come back here. Gee, you might even get Ford or Chevrolet to build a car plant here.
(END VIDEO CLIP)
HOPKINS: Another former actor. What do you think of his flat tax plan for California? Will that solve the state's budget crisis?
FORBES: It would be a step in the right direction. I now think Gary Coleman is a genius.
MARK MORRISON, EDITOR "BUSINESSWEEK": The Democrats are obviously in trouble here with Arnold taking all the attention this week. I think maybe Ben and J. Lo should enter the race on the Democratic side given the way their latest movie bombed I think they have some pretty good experience with financial disasters.
KIRKLAND: Jay Leno said there are more people on the ballot, 300, than saw that movie last week.
HOPKINS: Well and, you know, Arnold's campaign may help his movie do better this weekend. Are there any predictions about that?
FORBES: I don't think he'd want people to go to that movie.
HOPKINS: The Terminator?
FORBES: Yes, stick with politics.
HOPKINS: What about Arnold as a serious candidate? What do you think?
FORBES: I take him very seriously. He's an immigrant who came to this country, started with little, made good, invested his money well, within an industry where that doesn't often happen. He's been involved in politics, like Reagan did, even though he hasn't run for elective office. He has been involved in the process. I think he is going to put some serious proposals on the economic front. So I do take him seriously.
MORRISON: Well, that's the question, what specific proposals he puts out there. He makes the comment that California needs to attract more business and that's absolutely true. That's the key to its long- term success. It's not done a good job of that. But the devil's in the details and he hasn't given us any yet.
KIRKLAND: But the good news is it's not a very long campaign. So he doesn't have to slog through months and months of all this stuff. I think it's -- I would -- I think he's got a good shot at it frankly.
HOPKINS: You know, "The Washington Post" this week said that all bets are off in terms of candidates' personal experience, their personal lives because Arnold has entered the race. What do you think about that? Do you think that the press should be looking at the personal side of these candidates?
FORBES: I think Arnold has kind of immunized himself by saying the Democrats, especially Davis, are better at running dirty campaigns than they are at running the state. They know he's had a frisky past and I don't think people are concerned about that. They're concerned about what is happening in California.
Ronald Reagan, lest we forget, was one of the first divorced men to get to the White House. So I think if they think it's in the past and it's not going to affect your performance, certainly in California I think they'll give him a bye.
HOPKINS: Anything from you, Rick?
KIRKLAND: I don't think the press will continue to look at these issues. They always do. I mean, we live in a world where personal lives are part of the political debate. But I agree with Steve. You know, I don't -- I think he's got a fairly large degree of immunization.
HOPKINS: Kobe Bryant has certainly been in all the media this week. Have your magazines dealt with Kobe Bryant, losing endorsements or anything else?
KIRKLAND: We're trying to do our little bit to not add to the all Kobe all the time coverage. At least at "Fortune."
MORRISON: Yes, he's clearly going to lose some of his promotional -- the income he gets from promotional activities but it's not a big story for us. And we're very glad to be in that position.
FORBES: Yes. To us it's a slam dunk. We don't have anything new to say.
HOPKINS: Let's talk a little bit about housing. We just had a story about Freddie Mac and Fannie Mae. Mortgage rates have really jumped in the last few weeks. Will these higher rates really put the brakes on the housing market, which has been doing so well?
MORRISON: I think they're going to hit the refi business very hard. As far as people buying homes, the rates are still at historically very low levels, very attractive levels, and consumers have the options -- option of doing adjustable rate types of mortgages. So at least from what we've seen so far on the rate front, I don't think that's a huge threat to the housing market. HOPKINS; Rik?
KIRKLAND: It's not a threat, but there's now more good news on that front. So it goes back to what we've been talking about for months, business spending needs to pick up the baton. Consumers are not going to be -- I mean, they can maintain the spending, be sort of the carriers here, but they're not going to do a lot more.
FORBES: The timing is in effect good on that because rates have gone up just at the time business investment has gone up. With a stronger economy, as Mark pointed out, the rates are still lower than they've been in 40 years. We got spoiled in the last three or four months. But they're still low so refinancings down, but housing sales will hold up, although in places like California where you have a peculiar situation, there housing will take a hit and has.
MORRISON: It's still amazing to me we ht blip we did to those very low levels because bond traders usually a little brighter than buying all of that whining about deflation. Which turned out to be...
KIRKLAND: May or June buy yourself a glass of champagne.
HOPKINS: Which I will do because I did. Thanks, Rik Kirkland and Mark Morrison and Steve Forbes. Thanks.
MORRISON: Thanks to you.
HOPKINS: He turned his love of surfing into a company worth more than half a billion dollars. Now this businessman is giving back, trying to save the world's coral reefs. Our "CEO of the Week" is next.
(COMMERCIAL BREAK)
HOPKINS: These are live pictures at Fort Stewart, Georgia, where more soldiers from the 3rd Infantry Division are returning to their base. The division led the attack on Baghdad and participated in stabilization operations after the end of major combat.
The division was the first large military unit to deploy to the Persian Gulf before the war. Some of the troops were in the region for nearly a year. The soldiers are expert in desert warfare, having spent months training in the Kuwaiti desert before the war against Saddam Hussein. Welcome home.
Confucius said "Choose a job you love, and you'll never have to work a day in your life." Our "CEO of the Week" followed that advice. He transformed his teenage passion for surfing into a company that earned more than $37 million last year.
Bob McKnight of Quiksilver is our "CEO of the Week."
(BEGIN VIDEOTAPE)
HOPKINS (voice-over): Just blocks from the surf and the sand in Huntington Beach, California, the company that makes the board shorts, the bikinis, the T-shirts, and the sweatshirts, must-have clothes and accessories for a generation.
BOB MCKNIGHT, CEO, QUIKSILVER INC.: We sort of began in 1969 as a little cobbler shop in Torquey, Victoria, Australia, by a couple of guys who were like me -- they got out of school and didn't want to go to work either. They wanted to go to the beach and keep surfing.
HOPKINS: They made board shorts. The world's best surfers started wearing them, and McKnight and fellow prosurfer Jeff Hackman, saw a business opportunity in California.
MCKNIGHT: We had no business plan. We had no idea of where we were going. It was kind of like a summer project.
Those days were incredible. We'd wake up in the morning. Jeff and I would drive up to L.A. We'd buy some fabric, buy some Velcro and snaps. We'd run down to a cutter in Santa Ana, have the shorts cut, take them down to Encinitas, have them sewn, 20 or 30 pairs would come out every day. Jeff would iron them all. I'd put the snaps on them. We'd put them in my car, drive to a little hole-in -he wall surf shop, sell them, collect the money, collect a few checks, and the next day we'd go back and pay everybody.
HOPKINS: By 2002, Quiksilver's revenues had grown to $700 million, its stock price riding high over both the Dow and the S&P.
MCKNIGHT: About half of the world's population lives at or near the beach, and the other half can't wait to get there.
HOPKINS: To continually innovate, set trends, Quiksilver employs young talented designers marketers, artists, many of them former prosurfers, snowboarders, skateboarders.
MCKNIGHT: The main thing is just for -- I believe -- is taking care of our people, because they're who really make it happen. They come in every day around the world and they just want to have this common thread of kicking butt out there and being the best of the best, and our role in being industry leader, is that we have to lead.
HOPKINS: And leading means giving back to the industry, to the community, and in taking care of the world's oceans.
In four years, a mission called Quiksilver Crossing has logged more than 63,000 nautical miles, charting the health of the world's coral reefs and doing other research.
(END VIDEOTAPE)
HOPKINS: Still ahead, the results of our poll. Then, your reaction to our series of special reports on "The Forgotten War," the war on drugs.
(COMMERCIAL BREAK)
HOPKINS: The preliminary results of our poll question tonight. We asked: "Do you believe that marijuana should be decriminalized?" Ninety-three percent of you said yes. Surprising results. Turning to stocks, the Nasdaq continued its losing streak today. Blue chips pushed higher. Dow Industrials up 64 points. The Nasdaq losing 8. The S&P up 3.
Christine Romans has the market for us -- Christine.
CHRISTINE ROMANS, CNNfn CORRESPONDENT: Jan, it was consumer stocks that led the Dow and the S&P higher today. You look at stronger sales for McDonald's in July. That was 20 percent of the Dow's gain. And Caterpillar hit an all-time high today. But as you said, the Nasdaq slipped, and that brought the week's losses for the Nasdaq to more than 4 percent. It was the worst weekly point loss since July of last year.
Now, the Nasdaq's been lagging the blue chips the last few weeks. And many say that's because it's outperformed the market so much this year. The Nasdaq gains this year are more than double the S&P 500 and the Dow.
Meanwhile, the FDA late today accuse Bristol-Myers of running misleading magazine and newspaper ads for Pravachol. The FDA say the print ads suggest the drug is the only treatment for preventing strokes. It is not. Florida's Medicaid Fraud Unit is the latest agency to investigate Tenet Health Care. This just days after Tenet paid $54 million to settle allegations of unnecessary surgery in California.
And, Jan, two big stock losers today. R.J. Reynolds said the SEC is looking into how it accounts for certain costs. And Winn-Dixie down 15 percent today. The grocery store chain said it's feeling the pinch from the economy and troop deployments -- Jan.
HOPKINS: Interesting. Thanks. Christine Romans.
And now a look at your thoughts.
Regarding our story on the growing use of antidepressants among children, Audrey of Louisiana wrote, " I had been on three different antidepressants before I was 16. None helped. Yet my doctor kept pushing them. If anything, they made me more depressed because I felt like I was taking this little pill to give me fake happiness, which is I wanted to live."
In response to our series "The Forgotten War," the war on drugs, David in Arizona wrote, "December 16, 1988 was the first day I was free from cocaine, crank and alcohol. Now I have a family, my own business and hope. I could not have done this without treatment."
And Thomas in California wrote, "I am a 17-year-old recovering addict and quitting drugs, getting my life back in order was the hardest thing I've ever had to do. The more the issues of addiction and treatment are addressed, the more people can beat this disease."
You can e-mail us anytime at loudobbstonight@cnn.com (sic).
That's our show tonight. Thanks for joining us. For all of us here, good night from New York. "LIVE FROM THE HEADLINES" with Anderson Cooper is next.
And we leave you now with more live pictures of soldiers from the 3rd Infantry Division returning to their families at Fort Stewart, Georgia. Have a great weekend.
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