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CNN Live At Daybreak

U.S. Attack on Iraqi Wedding Party Kills 40 People; Recapping Yesterday's Testimony by Former NYC Mayor Rudy Giuliani Before 9/11 Commission

Aired May 20, 2004 - 05:00   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.


CAROL COSTELLO, CNN ANCHOR: And good morning to you.
From the CNN global headquarters in Atlanta, I'm Carol Costello.

Let me bring you up to date with what's happening right now.

In Baghdad this morning, one U.S. soldier is killed and three wounded in a hand grenade attack. The death toll since the start of the war now stands at 794 U.S. troops.

We are awaiting a verdict in Israel's trial of the West Bank head of Yasser Arafat's Fatah faction. Marwan Barghouthi is accused of killing 26 Israelis.

In money news, the rising price of oil has the stock market over a barrel. U.S. blue chip stocks fell because of the oil concern. The Dow ended below 10,000.

In sports, for the third year in a row, the Sacramento Kings lose game seven in the play-offs. The Minnesota Timberwolves beat them 83- 80 to move on to the Western Conference finals.

In culture, Dreamworks Studios hopes a green ogre will help bring in the green. "Shrek 2" is now showing. Along with it, a massive campaign to sell millions of dollars in movie related products.

And in weather, look at this scene in southeastern Ohio. A storm dumped more than two inches of rain there. Some people had to be rescued by boat, as you see, because of the flooding that came after the rain -- Rob.

(WEATHER REPORT)

COSTELLO: Two new pictures have surfaced in the Iraq prison abuse scandal. They appear to show American soldiers gloating over a body. In one, Specialist Charles Graner of the 372nd Military Police is seen smiling, giving the thumbs up. In the other, Specialist Sabrina Harmon, a member of the same unit, is in a similar pose. The identity of the body in the picture is not yet known. While the pictures have not yet been authenticated, the soldiers who appear in them are among those who already face charges in the prison abuse scandal. These pictures came out following the first court-martial in connection with the abuse.

And there is another vexing situation developing for the U.S. military in Iraq. The Pentagon is denying it mistakenly targeted a wedding party in western Iraq. Dozens of civilians were killed.

Our senior Pentagon courrespondent Jamie McIntyre has details.

(BEGIN VIDEOTAPE)

JAMIE MCINTYRE, CNN CORRESPONDENT (voice-over): These Iraqis say the bodies they are burying are victims of a U.S. air strike against a wedding party in western Iraq, a characterization the U.S. is disputing.

This man says a plane came and struck at the wedding and killed the whole family at three o'clock in the morning.

Another man says 26 people were killed from one family and five of the same family are seriously injured. The dead included women and children and numbered more than 40 according to accounts that were not disputed by the U.S. military.

The air strike occurred in a remote desert region about 15 miles from the Syrian border, an area popular with smugglers and under constant surveillance by U.S. troops looking for foreign fighters trying to slip into Iraq.

A statement from the U.S. Central Command says that during "a military operation against a suspected foreign fighter safe house, coalition forces came under hostile fire and close air support was provided." It said coalition forces on the ground recovered numerous weapons, two million Iraqi and Syrian dinar, foreign passports and a SATCOM radio.

With the U.S. image already tarnished by the abuse of Iraqi prisoners at the hands of American soldiers, the top U.S. military spokesman, Brigadier General Mark Kimmitt was quick to appear on Arab television denying the U.S. might have mistaken traditional celebratory gunfire for hostile fire. "I cannot prove it was a wedding and neither can you" he told the Al-Jazeera anchor who asked if it might have been a misunderstanding.

In July of 2002, Afghan officials said 48 civilians were killed at a wedding party in Afghanistan in an air attack the U.S. later ruled was justified because American planes had come under fire.

(END VIDEOTAPE)

COSTELLO: The Israeli military is pushing deeper into Gaza. There have been more attacks there overnight. Palestinian security forces say seven Palestinians have been killed, including a 3-year-old boy in Rafah. Up to 10 Palestinians were killed Wednesday when an Israeli missile struck demonstrators. Watch these pictures.

Israel says it's trying to find tunnels used to smuggle weapons and explosives.

The U.N. Security Council has voted to condemn Israel's actions in Gaza. The U.S. abstained, but did not veto the resolution. Despite the abstention, President Bush stepped up criticism of Israel. (BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I continue to urge restraint. It is essential that people respect innocent life in order for us to achieve peace.

(END VIDEO CLIP)

COSTELLO: At the half hour, we take you live to the Middle East for much more on this topic. You can get the history of this latest violence on our Web site. Just click onto cnn.com. The major players, the background of the conflict, it's all there, at cnn.com.

The second day of the 9/11 Commission hearings in New York was turbulent. In the hot seat, the city's former mayor, Rudy Giuliani. He fielded questions on how emergency teams responded to the attacks.

Homeland security correspondent Jeanne Meserve has more for you.

(BEGIN VIDEOTAPE)

JEANNE MESERVE, CNN CORRESPONDENT: More than two years after the attacks, fury and frustration still seethe and erupt. Audience members, including family of 9/11 victims, accused the commission of lobbing softballs at former Mayor Rudy Giuliani and other witnesses.

ROSALEEN TALLON, LOST BROTHER ON SEPTEMBER 11: It is just unbelievable to me that we are not getting at the issues. This is our last opportunity to have people swear under oath what happened.

MESERVE: The commission chair said many key questions had been asked, just not in public.

THOMAS KEAN, CHAIRMAN, 9/11 COMMISSION: Every one of these witnesses has testified at length in private. So, if we didn't ask questions here, we probably have asked them already in private.

MESERVE: Giuliani said he understood the demonstrators emotions, but felt they should be channeled elsewhere.

GIULIANI: Our anger should clearly be directed and the blame should clearly be directed at one source and one source alone, the terrorists who killed our loved ones.

MESERVE: The former mayor testified that, in the years before 9/11, the city had been warned of a terrorist threat and had drilled and prepared for many scenarios, but not an aerial attack. Would he have taken different steps if he had been aware of the president's daily brief of August 6, 2001, which mentioned hijacking and New York City?

GIULIANI: If that information had been given to us or more warnings had been given in the summer of 2001, I can't honestly tell you we would have done anything differently.

MESERVE: In hopes of applying the lessons of 9/11, the commission has underscored several failures in New York City's response, the lack of a unified command, shortcomings in communications equipment, poor exchange of information among emergency responders, and 911 operators who did not get information to pass on to desperate callers inside the World Trade Center.

Addressing some of those issues takes money, and the current mayor said the city is not getting enough. Michael Bloomberg said an irrational and tragically misguided funding system left New York 49th among the 50 states in per capita homeland security funding security, behind Nebraska, Wyoming, and American Samoa.

MICHAEL BLOOMBERG (R), MAYOR OF NEW YORK: This is pork barrel politics at its worst. It is the kind of short-sighted me-first nonsense that gives Washington a bad name.

MESERVE: Homeland Security Secretary Tom Ridge acknowledged the allocations are out of whack.

TOM RIDGE, HOMELAND SECURITY SECRETARY: If we are able to direct more resources to areas where the potential loss of life is greatest or the greatest percentage of critical infrastructure exists, and, frankly, where we know the threat exists.

(END VIDEOTAPE)

COSTELLO: And stick with us. Rudy Giuliani drops in on "American Morning" to talk with Bill and Soledad about his 9/11 Commission testimony. "American Morning," of course, comes your way at 7:00 a.m. Eastern.

Stories across America this Thursday, at the Denver airport, things were up in the air for a while, or should I say they weren't. A radar failure grounded all flights for more than an hour last night and you can imagine the chain reaction of delays that caused.

In northern Texas, a more serious transportation problem. An engineer was killed and four people were injured when two freight trains collided head on. The accident derailed about 20 cars. It's still not known why both trains were on the same track.

These two sailors were roommates in Virginia. Now police think a burned body found in Massachusetts is that of the woman. There were signs of a violent struggle at their apartment and police are searching for the man.

It may cost you 50 or 60 bucks to fill up that SUV now, but U.S. auto makers insist it's not high gas prices that are driving their rebate offers.

And when it comes to gay marriage, there's a modern day fight in Massachusetts over a 1913 race law.

A Pentagon decision forces South Korea to rethink its military defense along the DMZ. We'll have a live report for you out of Seoul.

And our Anderson Cooper explores just what makes a mind beautiful or creative or just plain crazy.

We'll be right back.

(COMMERCIAL BREAK)

COSTELLO: Record high gas prices -- are they affecting sales of sports utility vehicles? Something must be, especially those school bus sized SUVs, because auto makers are offering rebates.

CNN's Chris Huntington takes a look.

(BEGIN VIDEOTAPE)

CHRIS HUNTINGTON, CNN CORRESPONDENT (voice-over): As gas prices go through the roof, SUVs are sticking to the showroom floors and now automakers are offering substantial rebates to move those monsters off the lot. Cause and effect or just coincidence?

BOB SCHNORBUS, CHIEF ECONOMIST, J.D. POWER & ASSOCIATES: Certainly, they have to be concerned about SUVs, which is a primary profit center for them. Oil prices are likely to continue to remain high perhaps throughout the summer.

HUNTINGTON: According to industry analyst Autodata, U.S. sales of large SUVs fell 15 percent "L.A. Times" month compared to the same period a year ago. Some models were particularly hard-hit. Ford Expedition sales fell 33 percent, while sales of the Hummer H2 and the Chevy Suburban each fell 21 percent.

General Motors says its overall SUV sales are up from a year ago and insist that rising gas prices have nothing to do with certain models slumping, nor the new rebates. GM is now offering $5,000 cash back on 2004 Chevy Blazers, Suburbans and TrailBlazers, as well as some of its big GMC models. DaimlerChrysler also says the cost of gasoline has nothing to do with inspiring a $4,500 rebate now available on Dodge Durangos.

But Ford concedes that higher gas prices are a factor and have hurt SUV sales and led to rebates such as $2,000 to $3,000 back on Explorers, Expeditions and Excursions.

(END VIDEOTAPE)

COSTELLO: Your news, money, weather and sports.

It is 5:15 Eastern.

Here's what's all new this morning.

A U.S. military spokesman says around 40 people were killed in a U.S. raid in Iraq's western desert. Witnesses say it was a wedding party. The U.S. spokesman says a safe house for fighters from other countries was targeted and U.S. troops came under fire.

Pressure on private contractors in Iraq. Senator Charles Schumer will demand today that civilian contractors who have committed offenses in Iraqi prisons be prosecuted. And Schumer promises to unveil new evidence.

In money news, the Republican majority in the House has rammed through a $2.4 trillion building for 2005. The House vote was 216- 213. The Senate takes up the bill today.

In sports, American sprinter Kelli White has accepted a two year suspension for using a banned stimulant. The suspension will cost White a trip to the Athens Olympics and she'll lose every medal she's won in the past four years.

In culture, elementary my Dear Watson -- a collection of the papers of Arthur Conan Doyle has been sold at auction in London for $1.7 million. Conan Doyle was the author who created Sherlock Holmes -- Rob.

MARCIANO: Hey, Carol.

(WEATHER REPORT)

COSTELLO: Those are the latest headlines.

Rising oil and gas prices fuel fears in European stocks.

For that and more, we turn to Todd Benjamin, live in London, who is checking the numbers for us -- good morning.

TODD BENJAMIN, CNN CORRESPONDENT: Good morning, Carol.

That's absolutely right. You know, we had a great rally going on Wall Street on Wednesday. At one point the NASDAQ was up two percent, the Dow was up one and a quarter percent. And by the close, the Dow was actually in negative territory and the NASDAQ was flat.

And the reason we had the late sell-off -- higher oil prices on the back of gasoline supplies -- gasoline supplies didn't rise as much last week as the market was anticipating. People are very worried about tight supplies. We've been talking all morning about those high gasoline prices. And it's really having a knock on effect on the market.

Right now, you can see the FTSE is off three quarters of one percent. The DAX is off 1.2 percent and the CAC is off nearly one percent.

And NYMEX crude in electronic trading right now is $41.60 a barrel, and that's just $0.15 shy of the record high we saw on Monday. And people expect, certainly going into the summer driving season, that supplies will remain tight. And that's a real, a real stone around the market's neck.

In terms of what we can expect today for the U.S. market, the futures markets pointing to a pretty flat open right now. We'll get the latest jobless claims and numbers. They're expected to be down about 325,000 for the latest week -- back to you.

I always feel like I'm the man of doom and gloom here. It's terrible.

COSTELLO: I know. Why don't you ever give us some good news?

Thank you, Todd Benjamin.

BENJAMIN: I want to.

COSTELLO: I know.

BENJAMIN: It's just not happening.

COSTELLO: I know.

Thank you, Todd.

Todd Benjamin reporting live from London this morning.

Next on DAYBREAK, an "American Idol" icon is seeing red, literally.

And an upscale California salon could get nailed.

The battle lines over gay marriage are being redrawn in Massachusetts but the battle is far from over.

This is DAYBREAK for Thursday.

(COMMERCIAL BREAK)

COSTELLO: Welcome back to DAYBREAK.

The Massachusetts State Senate votes to repeal a 1913 law on gay marriage. But the repeal faces a rough hearing in the statehouse. The old law has been used by the governor to bar out of state gay couples from getting married in Massachusetts.

More on this from CNN correspondent Adaora Udoji.

(BEGIN VIDEOTAPE)

ADOARA UDOJI, CNN CORRESPONDENT (voice-over): For these three couples, it was a race from New York to a Massachusetts altar.

UNIDENTIFIED MALE: We've been watching the news on the Internet every minute and hearing what Governor Romney has been saying and his people have been saying. And it was clear to me that he was going to do whatever he could to stop out of staters from being married.

UDOJI: These couples may have reason to fear. Though four cities and towns have issued roughly 80 licenses to out of state couples, Governor Mitt Romney, a gay marriage opponent, says they're illegal and has demanded to review the records.

(on camera): The governor's office says a 1913 law prohibits the marriage of out of state couples who don't plan to live in the state. The law was originally meant to prevent interracial couples from flocking to Massachusetts because they could not legally marry in their home states.

LT. GOV. KERRY HEALY (R), MASSACHUSETTS: We intend to enforce the law as it stands. And at this point, all we've done is request information from four clerks about the marriages that they have performed.

UDOJI: Massachusetts is the only state that now permits same-sex marriages, although a few states are considering recognizing them. Only New York has explicitly said it will.

Lesbian and gay rights advocates say the governor is playing politics. The law has never been tested.

KEVIN CA, LAMDA DEFENSE FUND: They're inviting, I think, a great deal of litigation, including challenges to that 1913 statute, which has never been challenged before and which many people believe could be held unconstitutional.

UDOJI: Which could take weeks or months or years -- plenty of time for this.

Adaora Udoji, CNN, New York.

(END VIDEOTAPE)

COSTELLO: Time for our DAYBREAK Eye-Openers.

What do you think? Is a painting worth $8.3 million?

Casino owner Steve Wynn thinks so. He paid that much at auction for this painting of Scottish writer Robert Louis Stevenson by John Singer Sargent. The 19th century author of "Treasure Island" and "Kidnapped" called the painting excellent, but too eccentric. Too eccentric to be exhibited. Hmmm. Times were different back then, weren't they?

MARCIANO: I suppose so, yes.

COSTELLO: Meet a California pooch with a determination to survive. Shadow fell into a pit in Death Valley National Park back on April 15. His owners couldn't reach him and thought he was dead. But on Sunday, two brothers hiking in the area heard Shadow barking and they rescued him. Shadow isn't casting as big a shadow now. He actually lost five pounds during to ordeal.

MARCIANO: And he still chases his tail and shakes hands.

COSTELLO: Oh, poor Shadow.

Some people have bad hair days, others bad manicure days. Take, for instance, Paula Abdul. The entertainer tells the TV program "Celebrity Justice" she may sue over a manicure. She claims the manicure left her with an infected thumbnail that doctors had to remove. Oooh. It's too early in the morning to talk about that, isn't it?

MARCIANO: The last time I had a manicure that was exactly what happened to me, but I haven't sued yet.

COSTELLO: Really?

MARCIANO: Now she gave me the bright idea of doing that.

COSTELLO: Maybe it'll become a class action suit and you just join right in.

MARCIANO: That would be the easy way out, I suppose.

COSTELLO: Exactly.

We're going to talk about the "Da Vinci Code," because Dan Brown, the author, gave a speech in New Hampshire and he brought up an interesting fact that he -- well, I shouldn't say fact -- an interesting set of theories that he left out of the book.

MARCIANO: A point he'd like to make.

COSTELLO: A point he would like to make. But he thought it was just too dicey, that Jesus survived the Crucifixion, as if the thought of him marrying Mary Magdalene wasn't enough.

MARCIANO: Right. Right. So he's got all these people in an uproar now. And this little point is going to...

COSTELLO: Even more so.

MARCIANO: ... maybe sell a few more books.

COSTELLO: That's right. But keep in mind, he's going to write a sequel to the "Da Vinci Code." He's already sold, what, 7.5 million books?

MARCIANO: It's a hot book.

COSTELLO: It's going to be made into a movie.

MARCIANO: So I suppose in this next book he'll be talking more about this other point, that maybe Jesus didn't die.

COSTELLO: Exactly. And exactly what did Jesus do after the Crucifixion?

MARCIANO: As these authors like to say, you'll just have to buy the book.

COSTELLO: I'm sure Mr. Brown will be saying that.

MARCIANO: Well, what's about -- what's this other story online we had about if you're nice, you get a free airline ticket?

COSTELLO: That comes at the next chat time.

MARCIANO: No, it says 5:20. Is it not 5:20?

COSTELLO: Do you want us to talk about that now? Yes. Quickly. Quickly.

Oh, yes, Song Airlines is offering like a free...

MARCIANO: If you're nice and you're -- especially in a bad situation -- say the plane is stuck on the runway for a while and you're nice to your fellow passengers, they give -- they're going to give you a free ticket.

COSTELLO: Really? How nice do you have to be?

MARCIANO: Well, for you it's -- you have an advantage, because you're just, you're normally nice.

COSTELLO: I try.

MARCIANO: Normally. So I think you'll be fine.

COSTELLO: I hear some disagreements from back there.

MARCIANO: No, no, no.

COSTELLO: Well, that's interesting. I'm going to be extra nice the next time I fly Song.

MARCIANO: We'll have weather in a little bit.

COSTELLO: We certainly will.

Here's what's all new in the next half hour of DAYBREAK.

Unlocking the mysteries of the human brain. We'll tap into the personal creativity that could also make you crazy.

And bloodshed in Gaza overnight, with escalating violence and a rising death toll. How long will this crackdown continue? We'll get the latest for you in a live report.

This is DAYBREAK for Thursday.

(COMMERCIAL BREAK)

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


Aired May 20, 2004 - 05:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL COSTELLO, CNN ANCHOR: And good morning to you.
From the CNN global headquarters in Atlanta, I'm Carol Costello.

Let me bring you up to date with what's happening right now.

In Baghdad this morning, one U.S. soldier is killed and three wounded in a hand grenade attack. The death toll since the start of the war now stands at 794 U.S. troops.

We are awaiting a verdict in Israel's trial of the West Bank head of Yasser Arafat's Fatah faction. Marwan Barghouthi is accused of killing 26 Israelis.

In money news, the rising price of oil has the stock market over a barrel. U.S. blue chip stocks fell because of the oil concern. The Dow ended below 10,000.

In sports, for the third year in a row, the Sacramento Kings lose game seven in the play-offs. The Minnesota Timberwolves beat them 83- 80 to move on to the Western Conference finals.

In culture, Dreamworks Studios hopes a green ogre will help bring in the green. "Shrek 2" is now showing. Along with it, a massive campaign to sell millions of dollars in movie related products.

And in weather, look at this scene in southeastern Ohio. A storm dumped more than two inches of rain there. Some people had to be rescued by boat, as you see, because of the flooding that came after the rain -- Rob.

(WEATHER REPORT)

COSTELLO: Two new pictures have surfaced in the Iraq prison abuse scandal. They appear to show American soldiers gloating over a body. In one, Specialist Charles Graner of the 372nd Military Police is seen smiling, giving the thumbs up. In the other, Specialist Sabrina Harmon, a member of the same unit, is in a similar pose. The identity of the body in the picture is not yet known. While the pictures have not yet been authenticated, the soldiers who appear in them are among those who already face charges in the prison abuse scandal. These pictures came out following the first court-martial in connection with the abuse.

And there is another vexing situation developing for the U.S. military in Iraq. The Pentagon is denying it mistakenly targeted a wedding party in western Iraq. Dozens of civilians were killed.

Our senior Pentagon courrespondent Jamie McIntyre has details.

(BEGIN VIDEOTAPE)

JAMIE MCINTYRE, CNN CORRESPONDENT (voice-over): These Iraqis say the bodies they are burying are victims of a U.S. air strike against a wedding party in western Iraq, a characterization the U.S. is disputing.

This man says a plane came and struck at the wedding and killed the whole family at three o'clock in the morning.

Another man says 26 people were killed from one family and five of the same family are seriously injured. The dead included women and children and numbered more than 40 according to accounts that were not disputed by the U.S. military.

The air strike occurred in a remote desert region about 15 miles from the Syrian border, an area popular with smugglers and under constant surveillance by U.S. troops looking for foreign fighters trying to slip into Iraq.

A statement from the U.S. Central Command says that during "a military operation against a suspected foreign fighter safe house, coalition forces came under hostile fire and close air support was provided." It said coalition forces on the ground recovered numerous weapons, two million Iraqi and Syrian dinar, foreign passports and a SATCOM radio.

With the U.S. image already tarnished by the abuse of Iraqi prisoners at the hands of American soldiers, the top U.S. military spokesman, Brigadier General Mark Kimmitt was quick to appear on Arab television denying the U.S. might have mistaken traditional celebratory gunfire for hostile fire. "I cannot prove it was a wedding and neither can you" he told the Al-Jazeera anchor who asked if it might have been a misunderstanding.

In July of 2002, Afghan officials said 48 civilians were killed at a wedding party in Afghanistan in an air attack the U.S. later ruled was justified because American planes had come under fire.

(END VIDEOTAPE)

COSTELLO: The Israeli military is pushing deeper into Gaza. There have been more attacks there overnight. Palestinian security forces say seven Palestinians have been killed, including a 3-year-old boy in Rafah. Up to 10 Palestinians were killed Wednesday when an Israeli missile struck demonstrators. Watch these pictures.

Israel says it's trying to find tunnels used to smuggle weapons and explosives.

The U.N. Security Council has voted to condemn Israel's actions in Gaza. The U.S. abstained, but did not veto the resolution. Despite the abstention, President Bush stepped up criticism of Israel. (BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I continue to urge restraint. It is essential that people respect innocent life in order for us to achieve peace.

(END VIDEO CLIP)

COSTELLO: At the half hour, we take you live to the Middle East for much more on this topic. You can get the history of this latest violence on our Web site. Just click onto cnn.com. The major players, the background of the conflict, it's all there, at cnn.com.

The second day of the 9/11 Commission hearings in New York was turbulent. In the hot seat, the city's former mayor, Rudy Giuliani. He fielded questions on how emergency teams responded to the attacks.

Homeland security correspondent Jeanne Meserve has more for you.

(BEGIN VIDEOTAPE)

JEANNE MESERVE, CNN CORRESPONDENT: More than two years after the attacks, fury and frustration still seethe and erupt. Audience members, including family of 9/11 victims, accused the commission of lobbing softballs at former Mayor Rudy Giuliani and other witnesses.

ROSALEEN TALLON, LOST BROTHER ON SEPTEMBER 11: It is just unbelievable to me that we are not getting at the issues. This is our last opportunity to have people swear under oath what happened.

MESERVE: The commission chair said many key questions had been asked, just not in public.

THOMAS KEAN, CHAIRMAN, 9/11 COMMISSION: Every one of these witnesses has testified at length in private. So, if we didn't ask questions here, we probably have asked them already in private.

MESERVE: Giuliani said he understood the demonstrators emotions, but felt they should be channeled elsewhere.

GIULIANI: Our anger should clearly be directed and the blame should clearly be directed at one source and one source alone, the terrorists who killed our loved ones.

MESERVE: The former mayor testified that, in the years before 9/11, the city had been warned of a terrorist threat and had drilled and prepared for many scenarios, but not an aerial attack. Would he have taken different steps if he had been aware of the president's daily brief of August 6, 2001, which mentioned hijacking and New York City?

GIULIANI: If that information had been given to us or more warnings had been given in the summer of 2001, I can't honestly tell you we would have done anything differently.

MESERVE: In hopes of applying the lessons of 9/11, the commission has underscored several failures in New York City's response, the lack of a unified command, shortcomings in communications equipment, poor exchange of information among emergency responders, and 911 operators who did not get information to pass on to desperate callers inside the World Trade Center.

Addressing some of those issues takes money, and the current mayor said the city is not getting enough. Michael Bloomberg said an irrational and tragically misguided funding system left New York 49th among the 50 states in per capita homeland security funding security, behind Nebraska, Wyoming, and American Samoa.

MICHAEL BLOOMBERG (R), MAYOR OF NEW YORK: This is pork barrel politics at its worst. It is the kind of short-sighted me-first nonsense that gives Washington a bad name.

MESERVE: Homeland Security Secretary Tom Ridge acknowledged the allocations are out of whack.

TOM RIDGE, HOMELAND SECURITY SECRETARY: If we are able to direct more resources to areas where the potential loss of life is greatest or the greatest percentage of critical infrastructure exists, and, frankly, where we know the threat exists.

(END VIDEOTAPE)

COSTELLO: And stick with us. Rudy Giuliani drops in on "American Morning" to talk with Bill and Soledad about his 9/11 Commission testimony. "American Morning," of course, comes your way at 7:00 a.m. Eastern.

Stories across America this Thursday, at the Denver airport, things were up in the air for a while, or should I say they weren't. A radar failure grounded all flights for more than an hour last night and you can imagine the chain reaction of delays that caused.

In northern Texas, a more serious transportation problem. An engineer was killed and four people were injured when two freight trains collided head on. The accident derailed about 20 cars. It's still not known why both trains were on the same track.

These two sailors were roommates in Virginia. Now police think a burned body found in Massachusetts is that of the woman. There were signs of a violent struggle at their apartment and police are searching for the man.

It may cost you 50 or 60 bucks to fill up that SUV now, but U.S. auto makers insist it's not high gas prices that are driving their rebate offers.

And when it comes to gay marriage, there's a modern day fight in Massachusetts over a 1913 race law.

A Pentagon decision forces South Korea to rethink its military defense along the DMZ. We'll have a live report for you out of Seoul.

And our Anderson Cooper explores just what makes a mind beautiful or creative or just plain crazy.

We'll be right back.

(COMMERCIAL BREAK)

COSTELLO: Record high gas prices -- are they affecting sales of sports utility vehicles? Something must be, especially those school bus sized SUVs, because auto makers are offering rebates.

CNN's Chris Huntington takes a look.

(BEGIN VIDEOTAPE)

CHRIS HUNTINGTON, CNN CORRESPONDENT (voice-over): As gas prices go through the roof, SUVs are sticking to the showroom floors and now automakers are offering substantial rebates to move those monsters off the lot. Cause and effect or just coincidence?

BOB SCHNORBUS, CHIEF ECONOMIST, J.D. POWER & ASSOCIATES: Certainly, they have to be concerned about SUVs, which is a primary profit center for them. Oil prices are likely to continue to remain high perhaps throughout the summer.

HUNTINGTON: According to industry analyst Autodata, U.S. sales of large SUVs fell 15 percent "L.A. Times" month compared to the same period a year ago. Some models were particularly hard-hit. Ford Expedition sales fell 33 percent, while sales of the Hummer H2 and the Chevy Suburban each fell 21 percent.

General Motors says its overall SUV sales are up from a year ago and insist that rising gas prices have nothing to do with certain models slumping, nor the new rebates. GM is now offering $5,000 cash back on 2004 Chevy Blazers, Suburbans and TrailBlazers, as well as some of its big GMC models. DaimlerChrysler also says the cost of gasoline has nothing to do with inspiring a $4,500 rebate now available on Dodge Durangos.

But Ford concedes that higher gas prices are a factor and have hurt SUV sales and led to rebates such as $2,000 to $3,000 back on Explorers, Expeditions and Excursions.

(END VIDEOTAPE)

COSTELLO: Your news, money, weather and sports.

It is 5:15 Eastern.

Here's what's all new this morning.

A U.S. military spokesman says around 40 people were killed in a U.S. raid in Iraq's western desert. Witnesses say it was a wedding party. The U.S. spokesman says a safe house for fighters from other countries was targeted and U.S. troops came under fire.

Pressure on private contractors in Iraq. Senator Charles Schumer will demand today that civilian contractors who have committed offenses in Iraqi prisons be prosecuted. And Schumer promises to unveil new evidence.

In money news, the Republican majority in the House has rammed through a $2.4 trillion building for 2005. The House vote was 216- 213. The Senate takes up the bill today.

In sports, American sprinter Kelli White has accepted a two year suspension for using a banned stimulant. The suspension will cost White a trip to the Athens Olympics and she'll lose every medal she's won in the past four years.

In culture, elementary my Dear Watson -- a collection of the papers of Arthur Conan Doyle has been sold at auction in London for $1.7 million. Conan Doyle was the author who created Sherlock Holmes -- Rob.

MARCIANO: Hey, Carol.

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COSTELLO: Those are the latest headlines.

Rising oil and gas prices fuel fears in European stocks.

For that and more, we turn to Todd Benjamin, live in London, who is checking the numbers for us -- good morning.

TODD BENJAMIN, CNN CORRESPONDENT: Good morning, Carol.

That's absolutely right. You know, we had a great rally going on Wall Street on Wednesday. At one point the NASDAQ was up two percent, the Dow was up one and a quarter percent. And by the close, the Dow was actually in negative territory and the NASDAQ was flat.

And the reason we had the late sell-off -- higher oil prices on the back of gasoline supplies -- gasoline supplies didn't rise as much last week as the market was anticipating. People are very worried about tight supplies. We've been talking all morning about those high gasoline prices. And it's really having a knock on effect on the market.

Right now, you can see the FTSE is off three quarters of one percent. The DAX is off 1.2 percent and the CAC is off nearly one percent.

And NYMEX crude in electronic trading right now is $41.60 a barrel, and that's just $0.15 shy of the record high we saw on Monday. And people expect, certainly going into the summer driving season, that supplies will remain tight. And that's a real, a real stone around the market's neck.

In terms of what we can expect today for the U.S. market, the futures markets pointing to a pretty flat open right now. We'll get the latest jobless claims and numbers. They're expected to be down about 325,000 for the latest week -- back to you.

I always feel like I'm the man of doom and gloom here. It's terrible.

COSTELLO: I know. Why don't you ever give us some good news?

Thank you, Todd Benjamin.

BENJAMIN: I want to.

COSTELLO: I know.

BENJAMIN: It's just not happening.

COSTELLO: I know.

Thank you, Todd.

Todd Benjamin reporting live from London this morning.

Next on DAYBREAK, an "American Idol" icon is seeing red, literally.

And an upscale California salon could get nailed.

The battle lines over gay marriage are being redrawn in Massachusetts but the battle is far from over.

This is DAYBREAK for Thursday.

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COSTELLO: Welcome back to DAYBREAK.

The Massachusetts State Senate votes to repeal a 1913 law on gay marriage. But the repeal faces a rough hearing in the statehouse. The old law has been used by the governor to bar out of state gay couples from getting married in Massachusetts.

More on this from CNN correspondent Adaora Udoji.

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ADOARA UDOJI, CNN CORRESPONDENT (voice-over): For these three couples, it was a race from New York to a Massachusetts altar.

UNIDENTIFIED MALE: We've been watching the news on the Internet every minute and hearing what Governor Romney has been saying and his people have been saying. And it was clear to me that he was going to do whatever he could to stop out of staters from being married.

UDOJI: These couples may have reason to fear. Though four cities and towns have issued roughly 80 licenses to out of state couples, Governor Mitt Romney, a gay marriage opponent, says they're illegal and has demanded to review the records.

(on camera): The governor's office says a 1913 law prohibits the marriage of out of state couples who don't plan to live in the state. The law was originally meant to prevent interracial couples from flocking to Massachusetts because they could not legally marry in their home states.

LT. GOV. KERRY HEALY (R), MASSACHUSETTS: We intend to enforce the law as it stands. And at this point, all we've done is request information from four clerks about the marriages that they have performed.

UDOJI: Massachusetts is the only state that now permits same-sex marriages, although a few states are considering recognizing them. Only New York has explicitly said it will.

Lesbian and gay rights advocates say the governor is playing politics. The law has never been tested.

KEVIN CA, LAMDA DEFENSE FUND: They're inviting, I think, a great deal of litigation, including challenges to that 1913 statute, which has never been challenged before and which many people believe could be held unconstitutional.

UDOJI: Which could take weeks or months or years -- plenty of time for this.

Adaora Udoji, CNN, New York.

(END VIDEOTAPE)

COSTELLO: Time for our DAYBREAK Eye-Openers.

What do you think? Is a painting worth $8.3 million?

Casino owner Steve Wynn thinks so. He paid that much at auction for this painting of Scottish writer Robert Louis Stevenson by John Singer Sargent. The 19th century author of "Treasure Island" and "Kidnapped" called the painting excellent, but too eccentric. Too eccentric to be exhibited. Hmmm. Times were different back then, weren't they?

MARCIANO: I suppose so, yes.

COSTELLO: Meet a California pooch with a determination to survive. Shadow fell into a pit in Death Valley National Park back on April 15. His owners couldn't reach him and thought he was dead. But on Sunday, two brothers hiking in the area heard Shadow barking and they rescued him. Shadow isn't casting as big a shadow now. He actually lost five pounds during to ordeal.

MARCIANO: And he still chases his tail and shakes hands.

COSTELLO: Oh, poor Shadow.

Some people have bad hair days, others bad manicure days. Take, for instance, Paula Abdul. The entertainer tells the TV program "Celebrity Justice" she may sue over a manicure. She claims the manicure left her with an infected thumbnail that doctors had to remove. Oooh. It's too early in the morning to talk about that, isn't it?

MARCIANO: The last time I had a manicure that was exactly what happened to me, but I haven't sued yet.

COSTELLO: Really?

MARCIANO: Now she gave me the bright idea of doing that.

COSTELLO: Maybe it'll become a class action suit and you just join right in.

MARCIANO: That would be the easy way out, I suppose.

COSTELLO: Exactly.

We're going to talk about the "Da Vinci Code," because Dan Brown, the author, gave a speech in New Hampshire and he brought up an interesting fact that he -- well, I shouldn't say fact -- an interesting set of theories that he left out of the book.

MARCIANO: A point he'd like to make.

COSTELLO: A point he would like to make. But he thought it was just too dicey, that Jesus survived the Crucifixion, as if the thought of him marrying Mary Magdalene wasn't enough.

MARCIANO: Right. Right. So he's got all these people in an uproar now. And this little point is going to...

COSTELLO: Even more so.

MARCIANO: ... maybe sell a few more books.

COSTELLO: That's right. But keep in mind, he's going to write a sequel to the "Da Vinci Code." He's already sold, what, 7.5 million books?

MARCIANO: It's a hot book.

COSTELLO: It's going to be made into a movie.

MARCIANO: So I suppose in this next book he'll be talking more about this other point, that maybe Jesus didn't die.

COSTELLO: Exactly. And exactly what did Jesus do after the Crucifixion?

MARCIANO: As these authors like to say, you'll just have to buy the book.

COSTELLO: I'm sure Mr. Brown will be saying that.

MARCIANO: Well, what's about -- what's this other story online we had about if you're nice, you get a free airline ticket?

COSTELLO: That comes at the next chat time.

MARCIANO: No, it says 5:20. Is it not 5:20?

COSTELLO: Do you want us to talk about that now? Yes. Quickly. Quickly.

Oh, yes, Song Airlines is offering like a free...

MARCIANO: If you're nice and you're -- especially in a bad situation -- say the plane is stuck on the runway for a while and you're nice to your fellow passengers, they give -- they're going to give you a free ticket.

COSTELLO: Really? How nice do you have to be?

MARCIANO: Well, for you it's -- you have an advantage, because you're just, you're normally nice.

COSTELLO: I try.

MARCIANO: Normally. So I think you'll be fine.

COSTELLO: I hear some disagreements from back there.

MARCIANO: No, no, no.

COSTELLO: Well, that's interesting. I'm going to be extra nice the next time I fly Song.

MARCIANO: We'll have weather in a little bit.

COSTELLO: We certainly will.

Here's what's all new in the next half hour of DAYBREAK.

Unlocking the mysteries of the human brain. We'll tap into the personal creativity that could also make you crazy.

And bloodshed in Gaza overnight, with escalating violence and a rising death toll. How long will this crackdown continue? We'll get the latest for you in a live report.

This is DAYBREAK for Thursday.

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