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PAULA ZAHN NOW

Strife in Bush Administration?; Dangers of Internet Gambling; New Antidepressants Could Cause More Problems Than Good In Children

Aired December 11, 2003 - 20:00   ET

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

PAULA ZAHN, CNN ANCHOR: Is there a split in the Bush administration? The White House is reportedly outraged over the Pentagon memo excluding some allies from rebuilding Iraq. What is the president doing about it?
Plus, despite the shadow of the rape charge hanging over his pro basketball season, Kobe Bryant is leading the Western Conference in NBA all-star voting. What does it say about the fans and upcoming trial?

And the dangers of Internet gambling. Five million Americans will lose $3 billion this year. And some people just can't stop.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: I have basically wasted 10 years of my life that I can't go back and have.

(END VIDEO CLIP)

ZAHN: Good evening. Welcome. Glad to have you with us tonight.

Also ahead, on the day the Dow closed above 10000 for the first time in a year and a half, we'll be talking with former Treasury Secretary Robert Rubin. Are we really in a recovery?

And as attacks continue in Baghdad today, we're going to hear from a journalist with a military pedigree who has just spent a month in the field with U.S. forces.

Plus, a warning of children and antidepressants and the risk of suicide. We're going to look at what it means for thousands of American children who take them.

Also, coming soon to a pet shop near you, genetically engineered glow-in-the-dark fish.

First, though, here are some of the headlines you need to know right now.

A source tells CNN tonight that a Pentagon audit has found overcharges in contracts with a subcontractor of Halliburton, the big defense contractor, Halliburton once run by Vice President Cheney before he became the vice president. It has more than $15 billion in contracts to rebuild Iraq. Sirens screamed in Baghdad after multiple explosions near U.S. coalition headquarters. The area called the Green Zone is the most heavily guarded part of Baghdad. Sources say two projectiles landed inside the zone, causing minor damage to a building.

And two reporters and two soldiers were wounded when a hand grenade was tossed into their Humvee, most seriously wounded, "TIME" magazine senior correspondent Michael Weisskopf, who lost his hand when he tried to toss the grenade out of the Humvee. And tonight, we'll be speaking with a noted freelance journalist who spent the last month with the troops on the ground. He will give us a soldier's view of conditions in Iraq tonight.

We're putting the Halliburton story "In Focus" tonight. I'm joined now by "TIME" columnist and regular contributor Joe Klein. Democratic analyst Carlos Watson is here, too. And former GOP Congressman J.C. Watts joins us from Norman, Oklahoma.

Good evening, gentlemen.

(CROSSTALK)

ZAHN: Mr. Watts, I'm going to start with you first.

How serious of a problem is this for this administration, that this Pentagon audit shows overcharges by Halliburton?

J.C. WATTS (R), FORMER U.S. CONGRESSMAN: Well, Paula, this is the first I've heard of it, shortly before I came on the show.

I heard in your introductory remarks that, was it a subcontractor that overcharged or was it Halliburton that overcharged? I wasn't quite sure I understood that.

ZAHN: Well, apparently, from what CNN has learned Halliburton did not profit from the possible overcharges. The person we talked to, speaking anonymously, said that Halliburton may have paid a subcontractor too much for the gasoline in the first place.

WATTS: I see.

Yes, I don't know -- I don't know the facts concerning that. I've not talked to anyone, obviously. But they do have rules and regulations in place governing that. And I suspect the appropriate people at the Pentagon hopefully will get to the bottom of it.

ZAHN: These allegations, Joe, of course, are nothing new. A subcontractor of Halliburton before has been, what, fined twice for overcharges?

JOE KLEIN, CNN CONTRIBUTOR: Well, it's not a subcontractor. It's part of Kellogg, Brown & Root, which is one of the subsidiaries.

ZAHN: Subsidiaries, is that a more accurate way to say it?

(CROSSTALK) KLEIN: It's part of Halliburton.

Look, this is -- I don't think anybody is going to go to jail over this. I don't think it's a major criminal scandal. But what it is, is incredibly unseemly. And it continues a pattern in the Bush administration, and particularly with the vice president, Dick Cheney. When he had his energy panel, he consulted with people like Halliburton and the other oil companies, rather than with consumer and environmental groups.

His pals, his former company, Halliburton, has been benefiting from huge contracts, $15 billion. And the toughest part of this for him is that he was the guy who wrote the rules, when he was secretary of defense during the first Bush administration.

(CROSSTALK)

ZAHN: But we don't know who sat in those meetings, do we, as he wrote the rules as defense secretary?

KLEIN: No. That's one of the things that perhaps we should find out at this point, was, how were the privatization rules written during Cheney's time as secretary of defense? Were they written with Halliburton's input? Because, right after he was secretary of defense, he came out and became the chairman of Halliburton.

ZAHN: I understand.

But to keep things fair here, Carlos, isn't it also true that this push to privatize also continued under President Clinton?

CARLOS WATSON, DEMOCRATIC ANALYST: It continued during President Clinton's term.

But I think two points stand out here. One is, this is part of a broader critique of the Bush's preparation for postwar Iraq. And many critics will argue that, once again, this is proof that they didn't plan well, they didn't prepare well. And here you're seeing another kind of sloppy mistake. I think Joe's right. We won't see anyone go to jail over this. But, once again, it seems unseemly, and, certainly, when you compare it to some of the issues in the Clinton administration.

Mike Espy, the former Agriculture Secretary, had a special prosecutor essentially drummed out of office over something much smaller, you could see some reverberations.

The other thing, though, think -- fast-forward to the general election campaign. Couldn't you see a talented Democratic orator, maybe like a Howard Dean, saying, once again, they're always for the powerful and they're not for the people, that they're constantly to do kind of inside deals?

(CROSSTALK)

ZAHN: That's already been written. WATSON: I'm just saying, these little droplets, while they won't send anyone to jail, Joe and I and J.C. can see that these issues certainly may play.

(CROSSTALK)

ZAHN: OK, J.C., jump in here.

What is the strategy the White House has to use to take some of the sting out of at least the appearance of what some may view as an impropriety here, whether it's illegal or not?

WATTS: Well, Paula, Joe mentioned that Vice President Cheney, if he was involved in writing the rules, the fact is, we have rules in place governing these type of activities.

And if this has happened, it's pretty cut and dry, as far as I'm concerned. If someone violated the rules, they violated the rules. If they overcharged, that's about like saying we should address something that's -- should we address something that's illegal? Well, if it's illegal, we should address it. If they have overcharged, we should address it. It's that simple.

So the rules of the game will navigate this, will govern this. And this mantra about the administration looking out for the big guys, that's the mantra all the time. I mean, I heard that for eight years when I was in Washington: They're taking away food stamps from the poor people. They're taking away school lunches.

None of that stuff ever happened, but yet it doesn't discourage people from saying it.

KLEIN: Taking away is different from giving.

(CROSSTALK)

WATTS: No, I'm saying that's the mantra.

KLEIN: This is something that transcends politics. It is a diplomatic problem for us. It's a foreign policy problem, because

(CROSSTALK)

WATTS: Because someone overcharged?

KLEIN: Yes, because there are a lot of countries in the world that right now are considering whether to forgive debt in Iraq and how much a part of the reconstruction to be.

And as long as they get the appearance -- and, more importantly, the people in France and Germany and a lot of other countries that could be helping us, as long as the publics there think that we're only in this for the money, for oil money, then we're going to have a much tougher time getting

(CROSSTALK) WATTS: Hey, guys, we're kidding ourselves if we think that Germany and France would have helped us because -- if someone wouldn't have overcharged.

(CROSSTALK)

WATTS: They put their stake in the ground long before this overcharging claim came about.

ZAHN: Why don't we come and debate multilateralism and all this stuff tomorrow night?

(CROSSTALK)

KLEIN: But there's one last point. And that's this, that the president hired Jim Baker, James Baker, the former secretary of state this week to do this very thing, to get the allies to forgive the Iraq debt. And these sort of events have really hampered that.

ZAHN: All right, gentlemen, we've got to leave it there.

While you were talking, we learned some new information from our source, confirming this Pentagon audit, that the possible overcharging involved 5.6 million gallons of gasoline that KBR apparently supplied in Iraq from the end of the war until September 30. The official said that KBR was charging $2.27, while another contract was for $1.18. We will continue to follow this throughout the show tonight.

Thank you, gentlemen, Joe Klein, Carlos Watson, former Congressman J.C. Watts. Still a long way to go until the election. We'll be talking with you a lot.

On to the nation's economy. With the Dow closing above 10000 today, that's the first time that's happened in 18 months. There's growing sense of optimism that the dark days of a bear market are behind us. Is President Bush's economic policy working?

We turn now to my interview with Robert Rubin. He was the secretary of the Treasury under President Clinton. He is now director of Citigroup and the author "In An Uncertain World: Tough Choices from Wall Street to Washington."

I asked him if he thinks the U.S. is on the road to economic recovery.

(BEGIN VIDEOTAPE)

ROBERT RUBIN, FORMER SECRETARY OF TREASURY: I think, Paula, with the enormous stimulus that's in the system right now, from the Federal Reserve Board, from homeland security, from defense spending, and an estimated maybe 15 to 20 percent, from that portion of the tax cuts that fall into this period, that it is very likely that we will have at least a few quarters of strong economic conditions.

And then either it will be self-sustaining or it will fall back into something less satisfactory. ZAHN: But it's hard to argue that things aren't better now, right?

(CROSSTALK)

ZAHN: We just saw the Dow closing. Second quarter, the country experienced the largest growth rate in some 20 years.

RUBIN: Oh, I don't think there's any question, Paula, that, with all this stimulus in the system, we're going to have -- well, I shouldn't say I don't think any question. But it's highly likely that, with all the stimulus in the system, we're going to have good times for at least some period of time, whether it lasts for six or nine months or possibly for quite a bit longer.

The question is, how did you get there? And you could have gotten there in a way that stimulated the economy now, but didn't create long-term problems. And, instead, we got there in a way that provides stimulus now by borrowing from the future to pay for the present. And the due bill for what we're borrowing in the future is going to come. And there will be a day of reckoning that I think will be very, very serious and was totally unnecessary.

ZAHN: Let's talk about those federal deficits for a moment. A lot of economists point out, if you go back to 1983, when we had the largest deficit since World War II, it was followed by the longest sustained economic boom since this country had ever seen.

RUBIN: Not exactly. The longest boom the country has had was in the '90s, which was triggered by a deficit reduction program that President Clinton put in place in '93.

ZAHN: But, nevertheless, those deficits were followed by strong economic growth.

RUBIN: You had substantial deficits through the '80s and we had growth.

But we also began to enormously increase public debt. And it led exactly and, I think inevitably, to what eventually happened, which was a slowdown in '89 and then the recession and economy morass of the very early '90s. And I think, unfortunately, we're back on the exact same track again.

ZAHN: So, if you were heading up the economic team now, one of the things obviously you said you would be doing differently, you would have just put in short-term tax cuts and not put into those tax cuts that went into the 10th year of this plan.

RUBIN: Correct.

ZAHN: What else would you be doing?

RUBIN: Yes.

What I would have done is, I would have done exactly what you just said. I would have put in place a strong short-term stimulus that was temporary in order to create the kind of power to the economy that we have now, but I would not have done anything that created long-term deficits of the kind that we now face.

If I were there right now and had to face the situation that's been created, what I would say, if we were back there again, is, I would say, Mr. President, we have unfortunately created an enormously deep hole for ourselves. And I think what we have got to do, what is imperatively in our long-term self-interests, is to bring together both parties and both houses of Congress, and to put in place a program to repair that.

And I think, politically, for the very reason you said, Paula, that can only be done by everybody holding hands together. And the situation, unfortunately...

ZAHN: But do you think that's realistic?

RUBIN: I think there's a very real possibility that it won't happen until we actually run into difficult conditions.

But the day may come sooner than you think, because this situation gets worse and worse in terms of the projected 10-year deficits, because the baby boomer retirements begin to accelerate at a very rapid rate in the very beginning of the next decade.

ZAHN: But what is it that you would want Congress to implement that would appreciably change this picture 14, 16 months down the road?

RUBIN: Well, it's not a question of 14 months down the road that worries me.

Goldman Sachs put out a report not too long ago projecting a $5.5 trillion 10-year deficit for the next 10 years. They put out a report just about a week ago, saying they now think the risk in that number is on the upside, that it is likely be worse, rather than better. And the first line of their report said that the budget is out of control.

So I think what the Congress needs to do, with the president providing leadership, is to put in a program, and it is going to have to have revenue increases. And it's going to have to have spending discipline. And there's no way around either of those. That corrects that problem. And it is going to be difficult and it is going to be painful.

ZAHN: When do you see interest rates rising again?

RUBIN: Once private demand for capital for investment becomes strong again, that is going to collide with the government's demand for capital. And it's at that point that I think that the markets are going to look down the road, focus on these enormous deficits that we now have, and, at that point -- somewhere at that point, you will begin to have these kinds of effects, in my judgment.

ZAHN: Bob Rubin, thank you very much for spending some time with us this evening.

RUBIN: Paula, I'm delighted. Very nice to be with you.

ZAHN: Thank you.

(END VIDEOTAPE)

ZAHN: Some action coming in the Scott Peterson case. We'll ask our Jeffrey Toobin about the defense's chances of moving the trial out of Modesto.

Also, we're going to look at whether the decision to cut U.S. allies out of the Iraq rebuilding contract is evidence of a split within the Bush administration.

And we'll look at the ravages of addiction to gambling online.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: With the Internet, there's no trust. You send the money. They take it and you start gambling. And it's real convenient.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

ZAHN: Welcome back.

This year's presidential campaign will be different. The Supreme Court has upheld most of the new law that changes the way candidates raise cash. That could send some of them scrambling for dollars, maybe even dialing for dollars.

Senior legal analyst Jeffrey Toobin is here with that and other legal matters.

So what does this mean? And why should anybody out there care?

(CROSSTALK)

JEFFREY TOOBIN, CNN SR. LEGAL ANALYST: The single most boring subject of all time, campaign finance reform. I know. It's hard to make it interesting.

Why will it happen? Because it helps Republicans, for starters.

ZAHN: How so?

TOOBIN: Soft money is the money that went directly to the parties, not to the candidates.

(CROSSTALK)

ZAHN: Right. The hard money is when you cut a check directly to the candidate. TOOBIN: To a candidate.

Hard money has not changed. And there were small limits on those, $1,000, $2,000. Soft money, there were no limits. And Democrats did well with soft money. They had a lot of people -- or some number of people who would give millions of dollars. Republicans didn't have as many people who would do that. Soft money is now out.

So the Republicans always have had a big advantage in hard money. The Democratic soft money is gone. So a big help for Republicans.

ZAHN: And let's read what Justices Sandra Day O'Connor and John Paul Stevens had to say about the ruling -- quote -- "We are under no illusion that the law will be the last congressional statement on the matter. Money, like water, will always find an outlet. What problems will arise, and how Congress will respond, are concerns for another day."

Where is the red flag here? What are they warning us about?

(CROSSTALK)

TOOBIN: The law of unintended consequences has had a huge impact in campaign finance. Every time Congress has changed the rules, they said, oh we're taking money out of politics, and it's always comes back in.

Another thing we need to know about. There will be new independent groups that will be very powerful here, groups that have no limits on how they spend their money. All they have to do is not advocate for one specific candidate. But they can have unlimited amounts of money. It's a new wild card in politics. And they will have a lot of money, a new source of power in the country.

ZAHN: Let's switch gears and talk about the Scott Peterson case. Mark Geragos...

TOOBIN: Dramatic switch.

ZAHN: Yes.

The defense attorney is expected to file a motion to have the trial moved. Hasn't he already asked for a list of potential prospective jury members in other venues?

(CROSSTALK)

TOOBIN: Right.

This is the best change of venue motion I have ever seen.

ZAHN: Will he get it?

TOOBIN: I think he'll get it.

ZAHN: Why? TOOBIN: Because not only has this case received tremendous amounts of publicity, but it has been heavily concentrated in Modesto. Modesto has very much been the epicenter.

You take a case like Michael Jackson. That is a lot of publicity everywhere, but not extremely concentrated in Santa Barbara. This has been a Modesto case, the Laci Peterson case. There were hundreds of people, hundreds of people in that jury pool looking for Laci for weeks. That is a case that I think has to be moved somewhere else.

ZAHN: Where will it move?

TOOBIN: The rule in California tends to be to a comparable size county. Stanislaus County, which is where it is now, is a pretty small county. I would guess one of the smaller counties in Southern California. But I think it will be pretty far away from Modesto.

ZAHN: So how much does the prosecution team fear this possibility tonight?

TOOBIN: I think they really want to keep it in Modesto.

(CROSSTALK)

ZAHN: Because they think the empathy is there.

TOOBIN: And, also, it's a little like the military. Your supply lines are longer. It's hard to try a case 100, 200 miles from where you are.

Prosecutors are not used to going anywhere, to have to take physical evidence a long way, to have to go to an unfamiliar courtroom. Jurors are familiar to prosecutors, because they see them all the time. It's something the prosecutors really don't want, but I think they're going to get it.

ZAHN: Senior legal analyst Jeffrey Toobin, always on the case for us, thank you.

You thought you had seen everything. Wait until glow-in-the-dark fish arrive at your local pet store. They could be there sooner than you think.

And a report from Iraq on the ground with the troops from journalist Lucian Truscott.

(COMMERCIAL BREAK)

ZAHN: The evolution of pet fish has been genetically altered by a Texas-based company that has created a glow fish. The makers of these fluorescent creatures say they're perfect for your aquarium. And although the Food and Drug Administration says that is was OK for the sale here in the United States, some states and major pet stores don't want them.

Here's Rusty Dornin. (BEGIN VIDEOTAPE)

RUSTY DORNIN, CNN CORRESPONDENT (voice-over): Take your average zebra fish, add a gene from a sea anemone, and you get one fish, two fish, red fish, new fish. And that new fish glows in the dark, at least under a black light. Glow fish were first developed by researchers in Asia to fluoresce in the presence of environmental toxins.

ALAN BLAKE, YORKTOWN TECHNOLOGIES: We became aware of these fish that had been developed to fight pollution. And we, at that point, decided to try and share the fish with the public.

DORNIN: On sale now, says Yorktown Technologies.

But the state of California says glow fish, no fish. While state biologists decided the fish posed no environmental or health risk, the Fish & Game Commission didn't want to set a precedent. Commissioner Sam Schuchat says genetically altering animals for scientific research is fine, but he say, what's next, pigs with wings?

SAM SCHUCHAT, CALIFORNIA FISH AND GAME COMMISSIONER: We're not comfortable with the idea of moving genes from one species to another for no public benefit, simply to create a pet that people will want to buy.

DORNIN: But you can't buy them at two of the nation's largest pet stores, PETCO and PETsMART. "Anything genetically engineered, we don't want to be involved in," say PETCO officials.

But a smaller fish, like Tatao Lua says, he would have sold them.

(on camera): Are you upset that they're being banned in California?

TATAO LUA, ALL ABOUT FISH, ETC.: Not really, because my view on this is, this is more like a temporary thing. It's a fad. And when people get used to it, it's just another fish.

DORNIN: Would you be interested in buying, if you had a freshwater tank, a fish that glowed in the dark?

UNIDENTIFIED FEMALE: Yes, definitely, yes. But I would want to think a little more critically about the repercussions of that, too.

DORNIN: While it may be forbidden fish in California, some aquarium lovers are already trying to figure out ways to get a glow fish in their tank.

LUA: I've had at least one customer that said, I'm going to search for that.

DORNIN (voice-over): Which may not be too hard, because 49 other states have not banned the glow fish. Is it faded to sink and never swim in California? Company officials say they plan to float their fish before the state's Fish & Game Commission again in February. Rusty Dornin, CNN, San Francisco.

(END VIDEOTAPE)

ZAHN: Is there a split in the Bush administration on how to run and rebuild Iraq? We're going to look at just who is really making the policy decisions.

Plus, a new warning for parents that some antidepressant drugs may trigger suicidal thoughts in children.

(COMMERCIAL BREAK)

ZAHN: Welcome back.

Here are some of the headlines you need to know right now.

Federal prosecutors in Alabama will seek the death penalty against Eric Rudolph. Rudolph is charged with bombing a family planning clinic in Alabama in 1998, killing a police officer. He's also charged in three other blasts, including the 1996 Olympics bombing in Atlanta.

A scientific wants the Food and Drug Administration to do a better job of warning pregnant women and children about the dangers of eating fish tainted with mercury. The board says the government's advice about consuming specific type of tuna is confusing and doesn't make clear which fish to avoid.

More flu vaccines on the way. The U.S. government has purchased 250,000 extra flu shots to help ease the shortage around the country. Priority will be given to the elderly and the very young.

Now a critical look at Iraq through military eyes. Freelance journalist Lucian Truscott IV military blood in him. He happens to be the grandson of a four-star general and a graduate of West Point himself. And his opinion piece in the Sunday "New York Times" is a gritty, boots-on-the ground look at what he calls the disconnect between those who run the war and the G.I.s who follow their orders.

I asked Lucian Truscott if there was a difference between the way politicians and the troops see the enemy.

(BEGIN VIDEOTAPE)

LUCIAN TRUSCOTT IV, FREELANCE JOURNALIST: One of the first things that I was told over here was that it's not helpful when politicians back in Washington and officials down here in Baghdad talk about a disorganized and ineffective enemy. I've spent hour after hour after hour on patrol and in briefings and everything else with soldiers all the way down from privates through generals. And the subject is always a very organized and very effective enemy.

It's belittling to these men over here to say that the enemy that they face doesn't amount to much, because these guys are putting their lives on the line, and it's not fair to them to belittle them in that way and make it seem like the job they have is easy. It's not, it's hard.

ZAHN: So how sophisticated, how well-organized is the enemy?

TRUSCOTT: Well, some of the stuff I didn't put in that story -- down in the south in Basra, they have evidence and they have caught guys videotaping entrances to military compounds, NGO compounds, NGO offices, traffic patterns. And up in the north, they've caught at least two guys with cameras that were taking still pictures.

What that tells me, and what it tells the intelligence people that I've been around, is if you've got two guys and they're going to pull some operation, a car bombing, or shoot RPGs or whatever, they don't need pictures. They just go out there and eyeball it and do the operation.

ZAHN: One of the other challenges you talk about is the tension between the civilian and military camps and the troops in the field. You wrote, "the disconnect between the marbled hallways of the Coalition Provisional Authority palaces in Baghdad and the grubby camp in central Mosul where I spent last week as a guest of Bravo company, 1st Battalion, 502nd Infantry Regiment, is profound and perhaps unprecedented."

You come from a military family. What makes this so unprecedented?

TRUSCOTT: Well, I'll give you an example. I'm staying over in the green zone right now with a unit that I was with before, but I went into the palace complex today, and that is an out of body experience. I mean, it looks like a college campus. There are people walking around there with sweaters wrapped around their necks, and they have guys walking around with black t-shirts on and you Uzis hanging around earning god knows how much money. I've heard $100,000, $120,000 a year to be private security. And 50 feet away from them they have spec 4s earning $17,500 protecting them. You know, that's unprecedented.

It's extraordinary the disconnect between what's going on in that inner circle inside of a circle, inside a circle across the river here, and what's going on up there in Mosul where guys are walking down streets that don't even have a name on them. It's hard -- it's hard to put it into words, but it's visually it just takes your breath away.

ZAHN: Well, Lucian Truscott, we appreciate your sharing your perspective with us this evening. Thank you so much for dropping by.

President Bush today defended the decision to exclude non- coalition countries from construction contracts in Iraq. That means France, Germany and Russia are out, at least at the beginning stages. The decision seems to exposed a serious difference of opinion within the Bush administration.

Joining us now from Washington is Cliff May, president of the Foundation For the Defense of Democracies. We're also joined by Democratic strategist Julian Epstein. Welcome both of you. Julian, I'm going to start with you this evening. Who is in charge here?

JULIAN EPSTEIN, DEMOCRATIC STRATEGIST: Well, that's a good question. It looks confused and inept on the part of the administration. Remember, this foreign policy team was supposed to be the dream team. On the very day that Bush and James Baker are trying to build an international coalition to deal with the debt problem, you have Paul Wolfowitz, who represents the uber neocon inside the administration, acting like a bull in a china shop trying to settle an old score at this point. And in the process upsetting some of the progress that President Bush and James Baker were making.

The effect if this is to further fragment the good guys and to further isolate us. This is the type of isolationism this kind of small-minded petty settling of the scores that doesn't help us in the long run.

ZAHN: Cliff, how embarrassing is this for a White House that takes such great pride in managing the message.

CLIFF MAY, FOUNDATION FOR DEF. OF DEMOCRACIES: Not at all. I think this is being totally misunderstood and was entirely mischaracterized by my good friend Julian.

ZAHN: All right. But whats' being misunderstood?

MAY: OK. What we're doing here is showing some respect for the 63 nations that stood by us and stood by the Iraqi people, and favored their liberation, and have contributed to the reconstruction. Our reliable allies, as opposed to the nations that like to kick us in the shin.

Take France, for example, France was not in favor of the liberation of the people. They have not contributed a dollar to reconstruction. France haven't forgiven the debts incurred by Saddam Hussein, as he bought weapons from France. And now France said, yes, but there are lucrative contracts to be had, why should we be excluded?

Look, take a look at your own Web site. You've got a poll there. I know it's not scientific. I bets it's accurate. By 2:1, people say, this is American taxpayers dollars, let's have it go to those countries that are with us not those countries that are against us. By the way, since France wasn't in favor of liberation, I don't know how good they'll be at the reconstruction. Most Americans would agree with this.

EPSTEIN: With due respect -- I love Cliff's French accent there, but it misses the point. Last night when it was discovered that Paul Wolfowitz, while Bush was trying to negotiate with the very countries whom Paul Wolfowitz was sticking his finger in the eye of, the White House let it be known that it was furious with what Wolfowitz had done. Today the Bush administration was backing up what Wolfowitz was saying. So it looks -- at a minimum it looks confused. This is like when Bush went to London, and said we're not going to cut and run, and then Rumsfeld pulling troops out in June as the election approaches. This administration has more positions on these issues than a game of Twister and it makes it look like its uncertain of itself.

MAY: Paula, there is not one person in the Bush administration on the record saying any of these things --

EPSTEIN: "The New York Times."

MAY: "The New York Times" does not work for the Bush administration.

EPSTEIN: "The New York Times" quoted the Bush administration saying they were furious over it.

MAY: They didn't quote anybody on the record. I worked for the "New York Times" for ten years. It's possible "The New York Times" get things wrong. It's possible somebody is grumbling for their own reason. Nobody resigned and nobody went on the record on this.

Let me tell you, this helps. James Baker -- let me tell you why this helps, James Baker goes out and he says to the French, for example, we want you to forgive some of the debt Saddam Hussein incurred, and the French say yes, but we want some of these contracts, and they say let's talk Turkey, let's see if we can deal. This is how it's done in the private sector. You don't give away your bargaining chips before you start bargaining.

ZAHN: All right. Cliff --

Julian, take a look at the root of this argument that Cliff is making, Julian. There's no prohibition against the Russians and the Germans and French coming into the action on some subcontracting level is there?

EPSTEIN: No, well, there are people that believe there's an international legal issue. I don't believe that, but that's not the point. The point here right now is we have a fragmented international alliance that Bush in a belated way is now trying to repair with James Baker. In the process of doing that, Cliff says you don't want to give away all your marbles in the beginning. They're taking everything off the table and saying apriori, these countries will be disqualified from that.

(CROSSTALK)

ZAHN: Julian, finish your thought, and Cliff you'll have ten seconds.

EPSTEIN: It's a remarkable disorganization of this administration that says conflicting things on these matters. It's further fragmenting the international line...

MAY: Let me have my ten seconds. ZAHN: All right, you get the last 10 seconds, Cliff.

MAY: Not only can they subcontract, not only can they have other contracting baskets, but they can even get back into the action on this $18 billion. All they have to do is make some sessions and begin to work with us on this. The door is not closed. We can change our mind at any moment, and said you know what? The French has written down the debt, they made a contribution to the effort, we're going to let them in too. But we don't treat, right now, Britain and Australia the same way we treat France and Germany...

(CROSSTALK)

ZAHN: Gentlemen, we'll have to leave it there. Time-out. We've got to move on. Cliff May we really like -- you've got to work on your Peter Sellars imitation. Julian Eptstein, thanks for taking time.

MAY: Thank you very much. Merci beaucoup, Paula.

EPSTEIN: Good night.

ZAHN: We're going to look at the phenomenon of Kobe Bryant. He's leading the western division in the NBA all-star vote, despite the fact that he's facing trial on a sexual assault charge.

And fighting addiction to gambling on the Internet: as American's lose billions of dollars betting on line.

And tomorrow, we're going to take a look back at 2003, with the year in ideas, inventions breakthroughs and theories of 2003.

(COMMERCIAL BREAK)

ZAHN: In the courtroom, Kobe Bryant is facing charges of sexual assault, that if he's convicted could send him to prison for life, but on the court, the Los Angeles Laker player remains as popular as ever. In fact the NBA all-star results are coming in, and Kobe's first among fans in the Western Conference netting more than half a million votes.

And joining us is sports commentator and lawyer Rob Becker.

Good evening.

Before we get to what this polls action means, if you're a part of the prosecution team sitting in Eagle, Colorado, does it concern you?

ROB BECKER SPORTS COMMENTATOR: Only slightly bit. It shows the apathy toward Kobe Bryant. But I've just got to get a nice cross- section of my jury and that's not the same set of people that vote not all-star team. All-star voters tend to be men, they tend to be people who have been fans of Kobe Bryant, so I'm not really going to lose all that much sleep about it.

ZAHN: What does it say about these American fans in general? BECKER: It says we take the idea of innocent until proven guilty seriously. It would be grossly unfair to take him off the all-star team if it turns out that he isn't guilty. So let's just assume for now he's innocent and look at the stats. This man is the highest- scoring guard in the Western Conference. He's got the second most steals in the Western Conference among guards. That's an offensive and defensive star who clearly belongs on the team.

ZAHN: What kind of reaction is he getting at arenas across the country?

BECKER: Everyone expected a lot of razing outside of L.A., but there's been limited amount of razing, particularly in New York. It really just hasn't been that bad and not something that really wrecks his life.

ZAHN: So nothing particularly polarizing?

BECKER: Yes. It just hasn't been that big. You're always going to find some people who goes against him, but people just sort of see him as Kobe the athlete and they tend to love him.

ZAHN: What does it say about how we feel, a broader sense about celebrities? I mean you always talked about...

BECKER: There's the notoriety. Well, see here's the other thing, there's the notoriety that comes with this. This man has now become much more famous. He's not just an athlete, he's spread out into the world of fame beyond sports. And so anyone has really heard of this guy. You go and you vote, maybe you're not a big fan, but there's one name you know, Kobe Bryant, so you're more likely to vote for him. So in the end this notoriety helps him in the voting.

ZAHN: In the voting, but it certainly doesn't help with endorsements?

BECKER: Well, no, it hasn't helped him with endorsements.

ZAHN: He's lost some big bucks.

BECKER: But the only one that pulled out for sure was Nutella. A lot of the other ones have just sort of said lets laid back and see and maybe if he gets off then we'll keep in the contract and use him some more.

ZAHN: What is the team strategy now, as they manage his time leading into the next hearing?

BECKER: I think they try to use him as much as they can, and now and then -- you're talking about the legal team? Because the legal team wants to keep him out in a few games before his hearings, they are going to have to keep him out. The basketball wants to use him, but the legal team wants to meet with him now and then before the big hearings. And he'll probably miss a game here and there for preparation. He's got to do that.

ZAHN: Rob Becker, thanks for stopping buy this evening. Always good to see you.

BECKER: Thank you.

ZAHN: Do the new antidepressant drugs more harm than good for children?

We are going to get the details on a new warning.

And addicted to online gambling. $3 billion lost online a year. Some people just can't stop.

(COMMERCIAL BREAK)

ZAHN: A stark warning tonight about antidepressants and children. It comes from Britain's equivalent of the Food and Drug Administration, which says most newer antidepressants could trigger suicidal thoughts, self-injury and agitation in children. The new drugs include popular medication such as Zoloft, Celexa and Lexapro. And the news comes as the FDA conducts its own review of the drugs.

I'm joined from Los Angeles, by frequent contributor and addiction specially Dr. Drew Pinsky.

Welcome, doctor.

DR. DREW PINSKY, ADDICTION EXPERT: Thank you, Paula.

ZAHN: Are we talking about drugs that were never approved for the use of children in the first place?

PINSKY: Indeed we are, it turns out that Prozac was the only one that showed benefit for treating depression in children adolescents. I think people were extrapolating from the Prozac to other antidepressants that have a similar mechanism of action, and there are a good deal of studies under way that show -- beginning to show they may by efficacious, but certainly it has not been proven yet. I think what doctors were doing is saying well, Prozac worked. Prozac has side effects, maybe we could use a similar medication without some of the same side effects. But lo and behold, one of the side effects stumbled into is perhaps suicidal thinking.

ZAHN: So, how is that possible?

how could the intended purpose be the exact opposite of what happens here?

PINSKY: It's hard to understand that, isn't it?

And that really is the divide between the biology of depression and biology of suicidal thinking. It turns out they're related, but they are probably different. There are Institutes actually internationally studying suicide, what contributes to making people engage in suicidal thought and suicidal behaviors. And really the school is still out on this. The jury is still out. No one has a firm sense of the biology of suicide, as opposed to, separate from the biology of depression. And this is a great example of that. The antidepressants which improve the mood make suicidal thinking worse.

ZAHN: And isn't it true we don't have a fix of how many children we are talking about here. I mean, the latest static in a recent survey showed that it's estimated that 1 percent of American children are treated for depression in any given year and more than half of them are given antidepressants.

PINSKY: Isn't that amazing?

ZAHN: It is. It's extraordinary.

PINSKY: Yes, it's extraordinary. And I've seen data that that shows as high as 3 percent of children have depression, maybe 8 percent of adolescents, and amongst the adolescents as high as 7 percent, 8 percent will commit a suicide act. Will actually complete suicide. On one hand this is very serious medical condition. I mean, any condition that affected 1 percent to 8 percent of the population and 10 percent of them had a terminal condition as a result, we would sit up and listen and we would try to do something to help that.

The fact is antidepressants probably are useful in this, but it's just not been proven how and when. And even if you go to the Web sites for the FDA, National Student Mentality Health and the American Psychiatric Association, they're all very clear that psychotherapy really needs to be a part of the treatment, that you should not be using antidepressants alone. And as you mentioned, of that 1 percent of the study, you're quoting half the kids were on antidepressants only and not on any therapy.

ZAHN: Let's close with an FDA health advisory which reads, "The FDA recognizes the Pediatric Major Depressive Disorder is a serious condition for which there are few established treatment options. Currently, Prozac is the only drug label for use in Pediatric Major Depressive Disorder. So the FDA will officially weigh in on this sometime in February. In the meantime, should children be taken off these drugs?

PINSKY: Well, you shouldn't do anything without talking to your doctor. We may have an inadvertent effect of causing more suicide yearly by having depression improperly treated. This is a very, very serious and controversial issue. Should our kids be on medication and if they're on medication, shouldn't they be receiving other forms of therapies that are shown to be efficacious as well.

ZAHN: Dr. Drew Pinsky, thank you for the road map this evening. We'll be talking again soon.

PINSKY: Thank you.

ZAHN: The boom in gambling on the Internet. Americans losing billions of dollars. We're going to meet one man who is fighting addiction to online gambling.

Chrysler's tag line for its cars is "drive and love" but the company can't be loving this fact. Toyota has driven ahead to become the No. 3 selling auto maker in the U.S., a first for a foreign company. Key to its success? An increase in truck sales. Toyota is also doing well globally, edging past Ford in the third quarter to become the No. 2 auto maker worldwide. It trails only General Motors.

(COMMERCIAL BREAK)

ZAHN: Tonight, a look at one of the vices to come along with the promise of the Internet. Online gambling is actually illegal here in the United States but because of the limitless reach of the Internet, Web sites operating out of the Caribbean or Latin America are accessible anywhere in the world and for many, the lure is irresistible.

(BEGIN VIDEOTAPE)

COMPUTER VOICE: Player wins.

ZAHN: For millions, the Internet has become a ticking bomb.

UNIDENTIFIED FEMALE: I would be up all night long.

UNIDENTIFIED MALE: It drove me nuts.

UNIDENTIFIED FEMALE: I know logically that I cannot win.

UNIDENTIFIED MALE: I couldn't get up until my last dollar was gone.

ZAHN: Online gambling sites have become big business. They literally pop up at you. Most of us find them a nuisance but a staggering number of people find them impossible to resist.

KEITH WHYTE, NATIONAL COUNCIL ON PROBLEM GAMBLING: Roughly 5 million Americans, in the past year, have gambled online, we think, and the estimated revenues are somewhere in the neighborhood of $7 billion.

ZAHN: With all that money comes excess and addiction, attracting everyone from housewives to the fastest growing group of addicts, college-age men. For this man who won't reveal his real name but wants us to call him Dave, online gambling almost destroyed his life.

DAVE, INTERNET GAMBLER: My whole life revolved around work, gambling, and sleeping.

ZAHN: Dave has gambled since he was 15 years old.

DAVE: Everyone thinks it's the money. It's not the money. It's the juice that you get, it's unbelievable, the high that you get.

COMPUTER VOICE: 25...

ZAHN: And Internet gambling was a perfect place to search for that elusive high.

DAVE: You can make bets 24 hours a day, seven days a week. It started basically with all sports, but then exploring the Internet sites, I found that they offer such a diverse number of things that you can bet on. You can bet on who's going to win the next reality show. I'm sure they have odds already posted on who's going to win the next presidential election. It was just unbelievable all the different things that they offered.

ZAHN: Endless choices plus convenience added up to disaster for an 18-year-old college freshman away from home.

DAVE: I could have spent 8, 10, 12 hours right in my own bedroom, sitting on the Internet, gambling and have no problem with it. The time went just like that. It basically stopped my emotional growth from when I gambled compulsively since the age of 18. I isolated myself amongst my peers.

ZAHN: In those college years, Dave racked up almost $60,000 in credit card debt. By age 26, Dave was filing for bankruptcy, alienated from friends and family, and depressed. It was his rock- bottom moment.

DAVE: Alcohol and drugs were the only thing that could cure my depression and as a result, it made my depression more severe.

RICK BENSON, RECOVERING GAMBLING ADDICT: I think what it is doing, is it's taking people who have addictive potential, who may be gambling problematically, who may be gambling seriously socially, and it's driving them into the addiction more quickly.

ZAHN: Studies say as many as 74 percent of online gamblers have a serious problem. Rick Benson, a recovering addict himself knows.

BENSON: We welcome everybody.

ZAHN: He runs a Florida treatment program for online gambling addicts called Algamus. Dave is one of his patients.

BENSON: It's created the opportunity to gamble with greater frequency and, therefore, what it will probably do is it will probably cause people to become addicted more quickly.

ZAHN: And it is a hard habit to break. Keith Whyte of the National Council On Problem Gambling says many Internet gambling sites intentionally target people with a problem.

WHYTE: We've known some sites in the past that have used the words problem gambling in their search tags, so that someone that was searching, for example, our site, would actually get an Internet casino site as well.

UNIDENTIFIED MALE: I try not to stay on the computer that much.

ZAHN: The key to recovery, therapists say, is for addicts to recognize what online gambling has done to them.

BENSON: The more we can assist people to say, look, these are the consequences that you've created as a result of your gambling addiction, the more likelihood the person will say, I'll do whatever I need to do to recover because I don't want to feel these consequences anymore.

DAVE: I would set goals to achieve --

ZAHN: And Dave is committed. Between these group sessions with other gambling addicts and his private therapy sessions with Rick, he's recognizing his problems. What created it and what he must do in the real world to avoid it.

BENSON: He's come to significant realization about the depth of his addiction, where it has taken him.

DAVE: There's always the possibility, I guess, it's happened to me, where a pop-up window will come up, saying, "get a free $100 bet with a deposit of $100 or more." And you know, how am I going to react to that? I can't tell you because it hasn't happened to me yet. But I'm hoping with the tools that I've learned in this program that if that situation were to arise, I would just be able to hit the close window and get out of that.

(END VIDEOTAPE)

ZAHN: Well, that is it for us this evening. Thanks so much for being with us tonight. Tomorrow night, Senator Frank Lautenberg joins us as he calls for hearings into the Pentagon's deal with Haliburton to rebuild Iraq in light of some of the charges being confirmed tonight that Haliburton did, in fact, according to an audit, overcharge for some of its services. And the year in ideas. From the science of what makes a hit song to idiot-proof espresso. We're going to look at some of the inventions, breakthroughs, and theories of 2003.

Also, presidential politics and a look at what has gone wrong with John Kerry's campaign. Again, I appreciate your joining us tonight, "Larry King Live" is next. Hope you'll be back with us again tomorrow night.

END

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