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CNN Live At Daybreak

North Carolina's Outer Banks Under Hurricane Warning; Bush Administration's Reaction to 9/11 Commission Report

Aired August 03, 2004 - 06:00   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: Ooh, an eerily beautiful picture for you this morning. Hurricane warnings for North Carolina's Outer Banks. You're looking at Atlantic Beach. We'll get to Chad Myers live in just a second.
It is Tuesday, August 3.

This is DAYBREAK.

And good morning to you.

From the CNN Global Headquarters in Atlanta, I'm Carol Costello.

Now in the news, the 9/11 Commission report is front and center again on Capitol Hill today. The Senate Governmental Affairs Committee will hold its second hearing on the panel's recommendations. It begins, oh, just about four hours from now.

Lady Liberty will start receiving guests this morning. The landmark Statue of Liberty reopens for the first time since the September 11th attacks. Ceremonies are set for 11:00 Eastern.

Another space walk is under way at the international space station. It began just about three hours ago. The two man crew is making repairs, preparing to receive more cargo and performing scientific assignments. It is a busy day, indeed.

Back here on Earth, tropical storm Alex has been upgraded to a hurricane and North Carolina's Outer Banks is under a hurricane warning.

Are we going to Chad now or Rob?

We're going to Chad in North Carolina -- good morning, Chad.

CHAD MYERS, CNN CORRESPONDENT: Either one. It doesn't matter, Carol.

It's about to go downhill rather fast here. We have outer bands of the squall line here, just squally bands rotating around this storm now. It's actually gone downhill significantly since we first talked here about 20 minutes ago or so. Things are now beginning to blow in, the rain showers, the rain band is beginning to blow in from the storm. There you see North Carolina, the Outer Banks, Moorehead City, that's just about where we are, just about, I would say, maybe three miles closer to the ocean than Moorehead City, but right on the ocean there.

And the orange and the yellows and the eye wall that you see it there on the radar, that's what the concern is here. The residents are most concerned, too, about rip currents. Not getting in the water. Nobody in the water today, absolutely, up and down the beach. And that's probably, it should have been that way yesterday, but people were out there trying to find some of this surf.

The rest of the day, across the rest of the nation, not all that bed. Really, this is the bogie of the entire day. You can see how large the storm is, all the way, almost, from Richmond, Virginia right on down south, even into Florida. They even had a couple of showers around Brunswick, Georgia in the overnight hours, and that's 300 miles from the center of the storm.

(WEATHER REPORT)

MYERS: It's going to get worse before it gets better here, Carol. The residents here not all that concerned, but some of them should be. We're right out here on the Outer Banks. Obviously, you can see the water here really getting whipped up now this morning. And the winds now only probably 35. We're about to get to 70 here in the next two or three hours. So it's going to go downhill rather fast.

We'll keep you updated as the day goes on.

COSTELLO: All right, you be careful out there, Chad.

MYERS: I will.

COSTELLO: Thank you.

We'll get back to you.

The new terror alert has created a new sense of urgency on Capitol Hill to get moving on reforming U.S. intelligence. Despite being in summer recess, two congressional committees will hold hearings today. Law makers will discuss recommendations proposed by the 9/11 Commission. They'll especially take a look at establishing a new national intelligence director.

With the new terror alert on everybody's minds this morning, and the 9/11 report still flying off of store shelves, President Bush is already taking action on the intelligence front.

Here's more from CNN's Elaine Quijano.

(BEGIN VIDEO TAPE)

ELAINE QUIJANO, CNN CORRESPONDENT (voice-over): Less than two weeks after the September 11 Commission released its report, President Bush asked Congress to create a new national intelligence director and a national counterterrorism center as the panel recommended.

BUSH: We are a nation in danger. We're doing everything we can in our power to confront the danger.

QUIJANO: Senior administration officials say the new director would coordinate 15 intelligence agencies, now a job handled by the head of the CIA. But in a departure from the commission's recommendations, Mr. Bush said that new position should remain outside the White House, in part, to ensure you autonomy.

MICHAEL O'HANLON, BROOKINGS INSTITUTION: The basic idea is you want the president to hear bad news, if there is bad news, even if it runs against the presidents policies. You don't want someone deliberately manufacturing intelligence or perhaps more realistic -- sort of slanting intelligence.

QUIJANO: The president's announcements come against the backdrop of increasing criticism by his Democratic opponent, John Kerry, who says the White House has not moved quickly enough to reform the intelligence community. Kerry also says the administration's actions in carrying out the war on terror have focused an I animosity and anger against the U.S., an idea the president rejects.

BUSH: It is a ridiculous notion to assert that because the United States is on the offense more people want to hurt us. We're on the offense because people do want to hurt us.

(END VIDEO TAPE)

COSTELLO: We want to know what you think this morning. So, does the idea of creating the position of a national intelligence director make you feel safer? Is it a good idea? E-mail us. We're going to read some of your responses later. The address, daybreak@cnn.com. That's daybreak@cnn.com.

It may be a commuter's nightmare in the nation's capital this morning. As part of increased security, police are inspecting every single car that drives by the Capitol and its office buildings. Plus, all traffic around the perimeter of the Capitol complex is being funneled through about 10 checkpoints. That includes heavily traveled Constitution and Independence Avenues.

Much of the intelligence that sparked the latest terror alerts has come from a computer expert in Pakistan. The suspected al Qaeda operative is now in custody. A military officials says a computer seized from the suspect contained hundreds of images, including photographs, drawings and layouts of potential U.S. targets. Some of the pictures were old, while others had been taken as recently as in the last few months. And they indicate that terrorists have done extensive research on the target buildings, including surveillance.

We're going to have a live report for you out of Pakistan with more on this side of the story in the next half hour of DAYBREAK.

A homecoming for one Army Reserve unit that saw its share of controversy in Iraq. You're looking at more than 100 members of the 372nd Military Police Company. They were met by family and friends.

Now, this is the unit that's at the center of the Abu Ghraib Prison scandal. They returned home Monday to a rousing welcome after more than 16 months in Iraq. Seven soldiers from that unit were charged as part of the abuse scandal.

And the woman who's become the face of the Abu Ghraib Prison scandal will be in a military courtroom today. You know her name by now -- Private First Class Lynndie England. She's in Fort Bragg, North Carolina for her Article 32 hearing. In civilian speak, that's a precursor to a general court martial.

England is charged with abusing Iraqi prisoners and with personal sexual misconduct.

England's attorney says his client was just following orders and that the responsibility for the abuse goes up the chain of command.

(BEGIN VIDEO CLIP)

RICHARD HERNANDEZ, LYNNDIE ENGLAND'S LAWYER: PFC England is not the end of the black mark on the Army that comes out of the Abu Ghraib Prison scandal.

(END VIDEO CLIP)

COSTELLO: England's attorney also says a plea bargain is possible in the case. One soldier has already been sentenced to one year in prison after pleading guilty in the abuse scandal.

And in another high profile case, the prosecution may be in trouble in the Kobe Bryant case. It's one of the bombshells coming out of recently released court transcripts. The judge has released more than 100 pages of testimony and rulings. Also included is the defense experts claim that the accuser had sex with another man before she reported the alleged attack by Kobe Bryant.

So time for some Coffey Talk now.

Our legal analyst Kendall Coffey live from Miami by phone -- good morning, Kendall.

KENDALL COFFEY, CNN LEGAL ANALYST: Good morning.

COSTELLO: So let's start with the Kobe Bryant case.

These transcripts seem to be quite damaging to the alleged accuser. In fact, the prosecutor is quoted as saying if the accuser's sex life in the days surrounding the alleged attack is released, the prosecution may have to reevaluate the case.

That doesn't sound good.

COFFEY: Well, it's a totally different landscape now from the prosecution's standpoint. The 72-hour period, which is a narrow one in some sense, is still critical for the defense theory, especially if they can show that after the alleged assault, the alleged victim had sexual contact with somebody else within a few hours. Because obviously their position is going to be that that's totally inconsistent with any theory that -- of how a rape victim would act in those circumstances. And they know and believe it's going to discredit the alleged victim's testimony in a lot of ways.

So big trouble for the prosecution. But remember, Carol, if that jury hears Kobe Bryant and hears the alleged victim and if, at the end of the day, they decide to believe the alleged victim, that's it. He can get convicted no matter how many procedural victories the defense wins in the meantime.

COSTELLO: Yes, but the stuff in these transcripts, I mean the evidence presented in the transcripts seemed to indicate that the alleged victim in this case did have sex after the alleged rape.

So, if potential jury members out there read those transcripts, because it's out there floating about and you know people are going to talk about it, how in the world is this going to be a fair trial?

COFFEY: Well, it's going to be all over Eagle, Colorado and despite what the judge is going to try to do to limit it, you're not going to get jurors that have heard nothing. They're just hoping that they will have an open mind and be able to hear the evidence.

And while it's obviously going well for the defense in every imaginable way, the alleged victim and the prosecutor seem determined to go on.

There is one more big issue that remains to be ruled on, Carol, and that's whether some of the issues of the mental, emotional health of the victim can be considered by the jury. If that comes in, too, and we recall that there were two hospitalizations in the months before the alleged assault, either for attempted suicide or some kind of breakdown. If that evidence comes in, too, before the jury, I don't see how there's going to be a conviction.

COSTELLO: Let's talk about the Abu Ghraib Prison scandal, because Private Lynndie England has a preliminary hearing today.

Tell us how that will work.

COFFEY: Well, you accurately described it. It's sort of the military's version of the kind of preliminary hearing we saw in the cases of Scott Peterson, Kobe Bryant, where the tribunal will consider portions of the evidence, highlights of the evidence, and decide if there is enough evidence to bind Lynndie England over for trial. In the case of a military defendant, it will be a general court martial.

Three of her colleagues from the military police unit have already gone through Article 32 hearings, have been bound over for trial and, like Lynndie England, are basing their defense on I was only following orders, putting the blame on higher-ups, if they can.

COSTELLO: But just the image of her, I mean, what, she's six months pregnant and a new charge has been added, sexual misconduct charges, you know, for having sex with other guards in the prison. She could spend like 38 years in the brig or in prison, whichever she goes to, if she's convicted. COFFEY: Boy, talk about busted with her grinning face seen around the world. And I think the personal misconduct charges were added, perhaps, to force a plea bargain. Because let's face it, on those personal things, which are the kinds of charges that you have in military cases that don't necessarily exist in the civilian world, she can't claim following orders as a defense. It takes her out of the war zone kind of issues.

And I think from that standpoint, unless she's ready to go through an unbelievably humiliating ordeal, which ultimately she can't win, there's going to be a plea bargain in her case at some point.

COSTELLO: We'll see what happens.

Kendall Coffey live on the phone for us from Miami.

Thank you.

It's been nearly three years since the Statue of Liberty has been open. Just ahead on DAYBREAK, live from New York, just hours away from the reopening of the 117-year-old statue.

And it's a busy night for NASA. Details on the launch of a probe to the sun's closest planet.

And why more and more Americans are skipping insurance through their jobs.

This is DAYBREAK for Tuesday, August 3.

(COMMERCIAL BREAK)

COSTELLO: Wall Street opens up this morning up. Monday's Dow closed at 10179. That's up 39.45 points. The tech heavy Nasdaq closed at 1892, gaining 4.73 points. And the S&P 500 closed at just over 1106.

Time for a little business buzz now.

Fewer Americans are getting health insurance from their employers.

Carrie Lee is back.

She joins us live from the Nasdaq market site.

Boy, you think it would be more expensive from a private source.

CARRIE LEE, CNN CORRESPONDENT: Well, Carol, you know, insurance costs have been going up, and that's part of the problem. Most employees do get their health insurance from their employer, but still, we're seeing the numbers drop off. According to the Center for Studying Health System Change, the number of people who get health insurance through employers fell sharply from 2001 to 2003. This resulted in nine million fewer people with employer coverage. This, after you account for population growth. Two big reasons here -- unemployment and the rising cost of insurance. Both blamed for the falloff, which saw the percentage of people under the age of 65 who get health insurance through employers go from 67 percent in 2001 to 63 percent in 2003.

Premiums, as we all know, have been on the rise, up 28 percent during the period. So, Carol, it's not only more expensive for people when they're having to increase their co-pays, things like that, it's also very expensive for companies, as well.

So that is the latest on this story.

COSTELLO: A quick look at the futures?

LEE: Things are looking pretty weak after moderate gains yesterday. As you were saying, the Dow and Nasdaq, all the major market indices ending in the plus column, rather surprising, overcoming terrorism fears yesterday.

One stock we're watching, Priceline.com. The company's third quarter outlook disappointing Wall Street, although travel booking strength helped to boost the second quarter results above Wall Street estimates -- Carol.

COSTELLO: I do like their new commercials, though. They're funny.

LEE: Yes, there you go, Leonard Nimoy and William Shatner teaming up.

COSTELLO: Really funny.

Carrie Lee live from the NASDAQ market site.

Your news, money, weather and sports.

It is 6:16 Eastern.

Here's what's all new this morning.

Lori Hacking was, indeed, murdered. That's what Salt Lake City police believe after they placed husband Mark Hacking under arrest. Police say they've been building their case against the husband since Lori Hacking first disappeared.

Voters in Missouri will ponder a proposed gay marriage ban when they head to the polls today. The measure is the first on a state ballot since a Massachusetts court legalized same-sex marriages last year.

In money news, the days of screaming stock traders may be numbered. The New York Stock Exchange is planning changes that could make computer trade easier and more prevalent.

In culture, Barack Obama is now a best selling author. Get this -- preorders of his 9-year-old biography have hit the big time since his high profile appearance at the Democratic national convention. The Illinois Senate hopeful's biography re-release is set for August 10.

In sports, Smarty Jones is heading to stud. The Kentucky Derby winning horse entered early retirement due to an ankle problem. Don't despair, though. The horse's owners can expect stud fees of about, oh, $100,000 per mare.

MYERS: Wow!

COSTELLO: And in weather, hurricane Alex -- Chad, that struck you all the way to North Carolina.

MYERS: Holy cow. Wooh! Man oh man!

Yes, we are actually out here, Atlantic Beach, North Carolina, Carol. The winds are about to pick up. We've had winds about 35, maybe even 40 miles per hour overnight. But now things are going to get a whole lot trickier as some of these outer bands of the squall bands begin to move onshore.

Here you go. The surf's up about six to eight feet right now and it's going to come up even higher, probably eight to 10 before it's all over. A lot of rip currents out there. Folks are going to need to stay out of that water, stay in their houses. Not many people are boarded up here across the Carolinas. We'll get to that in a few minutes and tell you why, because they don't think a Cat 1 is a big hurricane. And I'll tell you what they should think so -- back to you.

COSTELLO: Yes, it's better to be safe than sorry.

Thank you, Chad.

Lady Liberty is opening her arms once again. Next on DAYBREAK, we'll take you live to New York with a preview of what visitors to the Statue of Liberty can expect.

Plus, anxious fans of a popular but violent video game get ready for its re-release. That story when DAYBREAK returns.

(COMMERCIAL BREAK)

COSTELLO: Time for our DAYBREAK "Eye Opener."

The Messenger is on the way. Just a few hours ago, NASA launched its Messenger mission to Mercury. How's that for alliteration? It'll take the craft about seven years to reach the planet closest to the sun. NASA is hoping that Mercury can provide a look back into Earth's early history.

We're all doomed -- at least that's what retailers are hoping. The third version of the popular Doom video game hits stores today. Game experts say the release of Doom 3 could lead many to upgraded to faster and more powerful home computers. New York City's Transit Museum in Brooklyn Heights is hosting an exhibit marking the subway system's 100th anniversary. It goes deep, so to speak, to document the massive effort to build the nation's largest public transit system. More than 30,000 workers helped build the subway in the early 20th century.

It's been almost three years since the last visitors climbed up the Statue of Liberty's spiral staircase. But now, the lower part of the monument is ready to reopen, although you still can't take a trip to the very top.

CNN's Alina Cho has more on the grand reopening.

(BEGIN VIDEO TAPE)

ALINA CHO, CNN CORRESPONDENT (voice-over): Policemen armed with rifles stand guard on the Statue of Liberty's observation deck, part of the security that comes with a new terror alert.

UNIDENTIFIED MALE: We have beefed up patrols here on the island, as well as in the harbor.

CHO: Visitors are able to go inside Lady Liberty's pedestal, which includes a museum and the observatory. Some of the highlights -- the original torch and a view through the glass of the statue's structure. The statue itself, including the crown, remains closed, officials say for safety, not security reasons.

New York's senior senator calls it a disgrace.

SEN. CHARLES SCHUMER (D), NEW YORK: To open the statue without allowing people to go to the crown is a partial victory for the terrorists.

CHO: News the terrorists are targeting financial institutions means more security at the New York Stock Exchange and America's symbol of freedom.

UNIDENTIFIED FEMALE: When we were talking around, there was plenty of policemen with their rifles and everything. And so that was kind of -- it made you feel more comfortable being here, knowing that there's like so much heightened security.

CHO: Some say America should get used to it.

UNIDENTIFIED MALE: In other parts of the world, people live with this all the time.

CHO (on camera): To get the statue ready for the reopening today, Lady Liberty had to be fixed up with new sprinkler systems, new lighting and new emergency exits. It was a project that took nearly three years and cost nearly $7 million.

Alina Cho, CNN, Ellis Island, New York.

(END VIDEO TAPE) COSTELLO: And you know you can count on us for live coverage when the Statue of Liberty reopens. It'll all get started at 11:00 a.m. Eastern. It'll take place live right here on CNN.

And here's what's ahead in the next half hour of DAYBREAK.

Hurricane Alex is looming over the Carolina coast and Chad Myers is in the middle of it -- hello, Chad.

MYERS: Good morning, Carol.

Starting to go downhill a little bit now. The wind's beginning to pick up just a touch. We're probably up to about 40, maybe 45 miles per hour. And you can see squalls right on the horizon. You don't have to look very far out. Literally, 100, 150 yards, some very heavy rainfall here. The winds now and the waves picking up, probably waves at least eight to 10 feet out there. Definitely overhead. No question no surfers out there today, even though I'm sure they would like to be. This is no place for anybody else out here.

We are in a safe position on Atlantic Beach, North Carolina.

We'll bring you the latest in just a few minutes.

COSTELLO: Thank you, Chad.

The work of the 9/11 Commission goes on. A preview of the next steps they'll take.

And our DAYBREAK e-mail Question of the Day -- does the idea of creating the position of a national intelligence director make you feel safer? We've gotten a lot of responses this morning. We want more. E-mail us daybreak@cnn.com.

(COMMERCIAL BREAK)

COSTELLO: Slow but steady, Hurricane Alex moves closer to North Carolina's Outer Banks.

It is Tuesday, August 3.

This is DAYBREAK.

And good morning to you.

From the CNN Global Headquarters in Atlanta, I'm Carol Costello.

Now in the news, Congress is on summer break, but two committees will hold hearings today to discuss some of the recommendations from the 9/11 Commission. The Senate Governmental Affairs Committee goes first. It's set a hearing three and a half hours from now.

The case of Army Private Lynndie England goes before a military court in just about 90 minutes. That hearing will determine whether England should be court-martialed in the Abu Ghraib Prison abuse scandal. Lady Liberty will start receiving guests this morning. The landmark Statue of Liberty reopens for the first time since the September 11 attacks. The reopening ceremonies are set for 11:00 a.m. Eastern.

And tropical storm Alex became a hurricane overnight, the first of the season in the Atlantic. Despite sustained 80 miles per hour winds, few residents of North Carolina's Outer Banks are boarding up their homes or leaving. In fact, they're staying.

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 August 3, 2004 - 06:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL COSTELLO, CNN ANCHOR: Ooh, an eerily beautiful picture for you this morning. Hurricane warnings for North Carolina's Outer Banks. You're looking at Atlantic Beach. We'll get to Chad Myers live in just a second.
It is Tuesday, August 3.

This is DAYBREAK.

And good morning to you.

From the CNN Global Headquarters in Atlanta, I'm Carol Costello.

Now in the news, the 9/11 Commission report is front and center again on Capitol Hill today. The Senate Governmental Affairs Committee will hold its second hearing on the panel's recommendations. It begins, oh, just about four hours from now.

Lady Liberty will start receiving guests this morning. The landmark Statue of Liberty reopens for the first time since the September 11th attacks. Ceremonies are set for 11:00 Eastern.

Another space walk is under way at the international space station. It began just about three hours ago. The two man crew is making repairs, preparing to receive more cargo and performing scientific assignments. It is a busy day, indeed.

Back here on Earth, tropical storm Alex has been upgraded to a hurricane and North Carolina's Outer Banks is under a hurricane warning.

Are we going to Chad now or Rob?

We're going to Chad in North Carolina -- good morning, Chad.

CHAD MYERS, CNN CORRESPONDENT: Either one. It doesn't matter, Carol.

It's about to go downhill rather fast here. We have outer bands of the squall line here, just squally bands rotating around this storm now. It's actually gone downhill significantly since we first talked here about 20 minutes ago or so. Things are now beginning to blow in, the rain showers, the rain band is beginning to blow in from the storm. There you see North Carolina, the Outer Banks, Moorehead City, that's just about where we are, just about, I would say, maybe three miles closer to the ocean than Moorehead City, but right on the ocean there.

And the orange and the yellows and the eye wall that you see it there on the radar, that's what the concern is here. The residents are most concerned, too, about rip currents. Not getting in the water. Nobody in the water today, absolutely, up and down the beach. And that's probably, it should have been that way yesterday, but people were out there trying to find some of this surf.

The rest of the day, across the rest of the nation, not all that bed. Really, this is the bogie of the entire day. You can see how large the storm is, all the way, almost, from Richmond, Virginia right on down south, even into Florida. They even had a couple of showers around Brunswick, Georgia in the overnight hours, and that's 300 miles from the center of the storm.

(WEATHER REPORT)

MYERS: It's going to get worse before it gets better here, Carol. The residents here not all that concerned, but some of them should be. We're right out here on the Outer Banks. Obviously, you can see the water here really getting whipped up now this morning. And the winds now only probably 35. We're about to get to 70 here in the next two or three hours. So it's going to go downhill rather fast.

We'll keep you updated as the day goes on.

COSTELLO: All right, you be careful out there, Chad.

MYERS: I will.

COSTELLO: Thank you.

We'll get back to you.

The new terror alert has created a new sense of urgency on Capitol Hill to get moving on reforming U.S. intelligence. Despite being in summer recess, two congressional committees will hold hearings today. Law makers will discuss recommendations proposed by the 9/11 Commission. They'll especially take a look at establishing a new national intelligence director.

With the new terror alert on everybody's minds this morning, and the 9/11 report still flying off of store shelves, President Bush is already taking action on the intelligence front.

Here's more from CNN's Elaine Quijano.

(BEGIN VIDEO TAPE)

ELAINE QUIJANO, CNN CORRESPONDENT (voice-over): Less than two weeks after the September 11 Commission released its report, President Bush asked Congress to create a new national intelligence director and a national counterterrorism center as the panel recommended.

BUSH: We are a nation in danger. We're doing everything we can in our power to confront the danger.

QUIJANO: Senior administration officials say the new director would coordinate 15 intelligence agencies, now a job handled by the head of the CIA. But in a departure from the commission's recommendations, Mr. Bush said that new position should remain outside the White House, in part, to ensure you autonomy.

MICHAEL O'HANLON, BROOKINGS INSTITUTION: The basic idea is you want the president to hear bad news, if there is bad news, even if it runs against the presidents policies. You don't want someone deliberately manufacturing intelligence or perhaps more realistic -- sort of slanting intelligence.

QUIJANO: The president's announcements come against the backdrop of increasing criticism by his Democratic opponent, John Kerry, who says the White House has not moved quickly enough to reform the intelligence community. Kerry also says the administration's actions in carrying out the war on terror have focused an I animosity and anger against the U.S., an idea the president rejects.

BUSH: It is a ridiculous notion to assert that because the United States is on the offense more people want to hurt us. We're on the offense because people do want to hurt us.

(END VIDEO TAPE)

COSTELLO: We want to know what you think this morning. So, does the idea of creating the position of a national intelligence director make you feel safer? Is it a good idea? E-mail us. We're going to read some of your responses later. The address, daybreak@cnn.com. That's daybreak@cnn.com.

It may be a commuter's nightmare in the nation's capital this morning. As part of increased security, police are inspecting every single car that drives by the Capitol and its office buildings. Plus, all traffic around the perimeter of the Capitol complex is being funneled through about 10 checkpoints. That includes heavily traveled Constitution and Independence Avenues.

Much of the intelligence that sparked the latest terror alerts has come from a computer expert in Pakistan. The suspected al Qaeda operative is now in custody. A military officials says a computer seized from the suspect contained hundreds of images, including photographs, drawings and layouts of potential U.S. targets. Some of the pictures were old, while others had been taken as recently as in the last few months. And they indicate that terrorists have done extensive research on the target buildings, including surveillance.

We're going to have a live report for you out of Pakistan with more on this side of the story in the next half hour of DAYBREAK.

A homecoming for one Army Reserve unit that saw its share of controversy in Iraq. You're looking at more than 100 members of the 372nd Military Police Company. They were met by family and friends.

Now, this is the unit that's at the center of the Abu Ghraib Prison scandal. They returned home Monday to a rousing welcome after more than 16 months in Iraq. Seven soldiers from that unit were charged as part of the abuse scandal.

And the woman who's become the face of the Abu Ghraib Prison scandal will be in a military courtroom today. You know her name by now -- Private First Class Lynndie England. She's in Fort Bragg, North Carolina for her Article 32 hearing. In civilian speak, that's a precursor to a general court martial.

England is charged with abusing Iraqi prisoners and with personal sexual misconduct.

England's attorney says his client was just following orders and that the responsibility for the abuse goes up the chain of command.

(BEGIN VIDEO CLIP)

RICHARD HERNANDEZ, LYNNDIE ENGLAND'S LAWYER: PFC England is not the end of the black mark on the Army that comes out of the Abu Ghraib Prison scandal.

(END VIDEO CLIP)

COSTELLO: England's attorney also says a plea bargain is possible in the case. One soldier has already been sentenced to one year in prison after pleading guilty in the abuse scandal.

And in another high profile case, the prosecution may be in trouble in the Kobe Bryant case. It's one of the bombshells coming out of recently released court transcripts. The judge has released more than 100 pages of testimony and rulings. Also included is the defense experts claim that the accuser had sex with another man before she reported the alleged attack by Kobe Bryant.

So time for some Coffey Talk now.

Our legal analyst Kendall Coffey live from Miami by phone -- good morning, Kendall.

KENDALL COFFEY, CNN LEGAL ANALYST: Good morning.

COSTELLO: So let's start with the Kobe Bryant case.

These transcripts seem to be quite damaging to the alleged accuser. In fact, the prosecutor is quoted as saying if the accuser's sex life in the days surrounding the alleged attack is released, the prosecution may have to reevaluate the case.

That doesn't sound good.

COFFEY: Well, it's a totally different landscape now from the prosecution's standpoint. The 72-hour period, which is a narrow one in some sense, is still critical for the defense theory, especially if they can show that after the alleged assault, the alleged victim had sexual contact with somebody else within a few hours. Because obviously their position is going to be that that's totally inconsistent with any theory that -- of how a rape victim would act in those circumstances. And they know and believe it's going to discredit the alleged victim's testimony in a lot of ways.

So big trouble for the prosecution. But remember, Carol, if that jury hears Kobe Bryant and hears the alleged victim and if, at the end of the day, they decide to believe the alleged victim, that's it. He can get convicted no matter how many procedural victories the defense wins in the meantime.

COSTELLO: Yes, but the stuff in these transcripts, I mean the evidence presented in the transcripts seemed to indicate that the alleged victim in this case did have sex after the alleged rape.

So, if potential jury members out there read those transcripts, because it's out there floating about and you know people are going to talk about it, how in the world is this going to be a fair trial?

COFFEY: Well, it's going to be all over Eagle, Colorado and despite what the judge is going to try to do to limit it, you're not going to get jurors that have heard nothing. They're just hoping that they will have an open mind and be able to hear the evidence.

And while it's obviously going well for the defense in every imaginable way, the alleged victim and the prosecutor seem determined to go on.

There is one more big issue that remains to be ruled on, Carol, and that's whether some of the issues of the mental, emotional health of the victim can be considered by the jury. If that comes in, too, and we recall that there were two hospitalizations in the months before the alleged assault, either for attempted suicide or some kind of breakdown. If that evidence comes in, too, before the jury, I don't see how there's going to be a conviction.

COSTELLO: Let's talk about the Abu Ghraib Prison scandal, because Private Lynndie England has a preliminary hearing today.

Tell us how that will work.

COFFEY: Well, you accurately described it. It's sort of the military's version of the kind of preliminary hearing we saw in the cases of Scott Peterson, Kobe Bryant, where the tribunal will consider portions of the evidence, highlights of the evidence, and decide if there is enough evidence to bind Lynndie England over for trial. In the case of a military defendant, it will be a general court martial.

Three of her colleagues from the military police unit have already gone through Article 32 hearings, have been bound over for trial and, like Lynndie England, are basing their defense on I was only following orders, putting the blame on higher-ups, if they can.

COSTELLO: But just the image of her, I mean, what, she's six months pregnant and a new charge has been added, sexual misconduct charges, you know, for having sex with other guards in the prison. She could spend like 38 years in the brig or in prison, whichever she goes to, if she's convicted. COFFEY: Boy, talk about busted with her grinning face seen around the world. And I think the personal misconduct charges were added, perhaps, to force a plea bargain. Because let's face it, on those personal things, which are the kinds of charges that you have in military cases that don't necessarily exist in the civilian world, she can't claim following orders as a defense. It takes her out of the war zone kind of issues.

And I think from that standpoint, unless she's ready to go through an unbelievably humiliating ordeal, which ultimately she can't win, there's going to be a plea bargain in her case at some point.

COSTELLO: We'll see what happens.

Kendall Coffey live on the phone for us from Miami.

Thank you.

It's been nearly three years since the Statue of Liberty has been open. Just ahead on DAYBREAK, live from New York, just hours away from the reopening of the 117-year-old statue.

And it's a busy night for NASA. Details on the launch of a probe to the sun's closest planet.

And why more and more Americans are skipping insurance through their jobs.

This is DAYBREAK for Tuesday, August 3.

(COMMERCIAL BREAK)

COSTELLO: Wall Street opens up this morning up. Monday's Dow closed at 10179. That's up 39.45 points. The tech heavy Nasdaq closed at 1892, gaining 4.73 points. And the S&P 500 closed at just over 1106.

Time for a little business buzz now.

Fewer Americans are getting health insurance from their employers.

Carrie Lee is back.

She joins us live from the Nasdaq market site.

Boy, you think it would be more expensive from a private source.

CARRIE LEE, CNN CORRESPONDENT: Well, Carol, you know, insurance costs have been going up, and that's part of the problem. Most employees do get their health insurance from their employer, but still, we're seeing the numbers drop off. According to the Center for Studying Health System Change, the number of people who get health insurance through employers fell sharply from 2001 to 2003. This resulted in nine million fewer people with employer coverage. This, after you account for population growth. Two big reasons here -- unemployment and the rising cost of insurance. Both blamed for the falloff, which saw the percentage of people under the age of 65 who get health insurance through employers go from 67 percent in 2001 to 63 percent in 2003.

Premiums, as we all know, have been on the rise, up 28 percent during the period. So, Carol, it's not only more expensive for people when they're having to increase their co-pays, things like that, it's also very expensive for companies, as well.

So that is the latest on this story.

COSTELLO: A quick look at the futures?

LEE: Things are looking pretty weak after moderate gains yesterday. As you were saying, the Dow and Nasdaq, all the major market indices ending in the plus column, rather surprising, overcoming terrorism fears yesterday.

One stock we're watching, Priceline.com. The company's third quarter outlook disappointing Wall Street, although travel booking strength helped to boost the second quarter results above Wall Street estimates -- Carol.

COSTELLO: I do like their new commercials, though. They're funny.

LEE: Yes, there you go, Leonard Nimoy and William Shatner teaming up.

COSTELLO: Really funny.

Carrie Lee live from the NASDAQ market site.

Your news, money, weather and sports.

It is 6:16 Eastern.

Here's what's all new this morning.

Lori Hacking was, indeed, murdered. That's what Salt Lake City police believe after they placed husband Mark Hacking under arrest. Police say they've been building their case against the husband since Lori Hacking first disappeared.

Voters in Missouri will ponder a proposed gay marriage ban when they head to the polls today. The measure is the first on a state ballot since a Massachusetts court legalized same-sex marriages last year.

In money news, the days of screaming stock traders may be numbered. The New York Stock Exchange is planning changes that could make computer trade easier and more prevalent.

In culture, Barack Obama is now a best selling author. Get this -- preorders of his 9-year-old biography have hit the big time since his high profile appearance at the Democratic national convention. The Illinois Senate hopeful's biography re-release is set for August 10.

In sports, Smarty Jones is heading to stud. The Kentucky Derby winning horse entered early retirement due to an ankle problem. Don't despair, though. The horse's owners can expect stud fees of about, oh, $100,000 per mare.

MYERS: Wow!

COSTELLO: And in weather, hurricane Alex -- Chad, that struck you all the way to North Carolina.

MYERS: Holy cow. Wooh! Man oh man!

Yes, we are actually out here, Atlantic Beach, North Carolina, Carol. The winds are about to pick up. We've had winds about 35, maybe even 40 miles per hour overnight. But now things are going to get a whole lot trickier as some of these outer bands of the squall bands begin to move onshore.

Here you go. The surf's up about six to eight feet right now and it's going to come up even higher, probably eight to 10 before it's all over. A lot of rip currents out there. Folks are going to need to stay out of that water, stay in their houses. Not many people are boarded up here across the Carolinas. We'll get to that in a few minutes and tell you why, because they don't think a Cat 1 is a big hurricane. And I'll tell you what they should think so -- back to you.

COSTELLO: Yes, it's better to be safe than sorry.

Thank you, Chad.

Lady Liberty is opening her arms once again. Next on DAYBREAK, we'll take you live to New York with a preview of what visitors to the Statue of Liberty can expect.

Plus, anxious fans of a popular but violent video game get ready for its re-release. That story when DAYBREAK returns.

(COMMERCIAL BREAK)

COSTELLO: Time for our DAYBREAK "Eye Opener."

The Messenger is on the way. Just a few hours ago, NASA launched its Messenger mission to Mercury. How's that for alliteration? It'll take the craft about seven years to reach the planet closest to the sun. NASA is hoping that Mercury can provide a look back into Earth's early history.

We're all doomed -- at least that's what retailers are hoping. The third version of the popular Doom video game hits stores today. Game experts say the release of Doom 3 could lead many to upgraded to faster and more powerful home computers. New York City's Transit Museum in Brooklyn Heights is hosting an exhibit marking the subway system's 100th anniversary. It goes deep, so to speak, to document the massive effort to build the nation's largest public transit system. More than 30,000 workers helped build the subway in the early 20th century.

It's been almost three years since the last visitors climbed up the Statue of Liberty's spiral staircase. But now, the lower part of the monument is ready to reopen, although you still can't take a trip to the very top.

CNN's Alina Cho has more on the grand reopening.

(BEGIN VIDEO TAPE)

ALINA CHO, CNN CORRESPONDENT (voice-over): Policemen armed with rifles stand guard on the Statue of Liberty's observation deck, part of the security that comes with a new terror alert.

UNIDENTIFIED MALE: We have beefed up patrols here on the island, as well as in the harbor.

CHO: Visitors are able to go inside Lady Liberty's pedestal, which includes a museum and the observatory. Some of the highlights -- the original torch and a view through the glass of the statue's structure. The statue itself, including the crown, remains closed, officials say for safety, not security reasons.

New York's senior senator calls it a disgrace.

SEN. CHARLES SCHUMER (D), NEW YORK: To open the statue without allowing people to go to the crown is a partial victory for the terrorists.

CHO: News the terrorists are targeting financial institutions means more security at the New York Stock Exchange and America's symbol of freedom.

UNIDENTIFIED FEMALE: When we were talking around, there was plenty of policemen with their rifles and everything. And so that was kind of -- it made you feel more comfortable being here, knowing that there's like so much heightened security.

CHO: Some say America should get used to it.

UNIDENTIFIED MALE: In other parts of the world, people live with this all the time.

CHO (on camera): To get the statue ready for the reopening today, Lady Liberty had to be fixed up with new sprinkler systems, new lighting and new emergency exits. It was a project that took nearly three years and cost nearly $7 million.

Alina Cho, CNN, Ellis Island, New York.

(END VIDEO TAPE) COSTELLO: And you know you can count on us for live coverage when the Statue of Liberty reopens. It'll all get started at 11:00 a.m. Eastern. It'll take place live right here on CNN.

And here's what's ahead in the next half hour of DAYBREAK.

Hurricane Alex is looming over the Carolina coast and Chad Myers is in the middle of it -- hello, Chad.

MYERS: Good morning, Carol.

Starting to go downhill a little bit now. The wind's beginning to pick up just a touch. We're probably up to about 40, maybe 45 miles per hour. And you can see squalls right on the horizon. You don't have to look very far out. Literally, 100, 150 yards, some very heavy rainfall here. The winds now and the waves picking up, probably waves at least eight to 10 feet out there. Definitely overhead. No question no surfers out there today, even though I'm sure they would like to be. This is no place for anybody else out here.

We are in a safe position on Atlantic Beach, North Carolina.

We'll bring you the latest in just a few minutes.

COSTELLO: Thank you, Chad.

The work of the 9/11 Commission goes on. A preview of the next steps they'll take.

And our DAYBREAK e-mail Question of the Day -- does the idea of creating the position of a national intelligence director make you feel safer? We've gotten a lot of responses this morning. We want more. E-mail us daybreak@cnn.com.

(COMMERCIAL BREAK)

COSTELLO: Slow but steady, Hurricane Alex moves closer to North Carolina's Outer Banks.

It is Tuesday, August 3.

This is DAYBREAK.

And good morning to you.

From the CNN Global Headquarters in Atlanta, I'm Carol Costello.

Now in the news, Congress is on summer break, but two committees will hold hearings today to discuss some of the recommendations from the 9/11 Commission. The Senate Governmental Affairs Committee goes first. It's set a hearing three and a half hours from now.

The case of Army Private Lynndie England goes before a military court in just about 90 minutes. That hearing will determine whether England should be court-martialed in the Abu Ghraib Prison abuse scandal. Lady Liberty will start receiving guests this morning. The landmark Statue of Liberty reopens for the first time since the September 11 attacks. The reopening ceremonies are set for 11:00 a.m. Eastern.

And tropical storm Alex became a hurricane overnight, the first of the season in the Atlantic. Despite sustained 80 miles per hour winds, few residents of North Carolina's Outer Banks are boarding up their homes or leaving. In fact, they're staying.

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