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NEWS FROM CNN
Fierce Battles Near Najaf, Iraq; July job Growth Falls Short of Expectations; Sudan in Crisis; Interview With Treasury Secretary John Snow
Aired August 6, 2004 - 11:59 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL LIN, CNN ANCHOR: Two U.S. Marines and an American soldier are among the latest to die in fierce fighting around the southern Iraqi city of Najaf. The U.S. military says some 300 insurgents were killed.
"Christian Science Monitor" correspondent Scott Baldauf was in Najaf yesterday. Not an easy trip. And he witnessed some of the battle. He's reporting now from Baghdad by telephone.
Scott, give us an idea of exactly what you did see.
SCOTT BALDAUF, "CHRISTIAN SCIENCE MONITOR": Well, the fighting that we saw this afternoon as well as yesterday was very intense. The United States military had helicopters circling overhead, firing -- often was firing at (UNINTELLIGIBLE) rockets, but also a lot of -- a lot of machine gunfire into the insurgent position.
This is a group, the militia of Muqtada al-Sadr, who is a Shiite cleric who's trying to establish much more Shiite control and is not cooperating with the United States and the -- the government that was set up under Iyad Allawi. The fighting claimed the lives of at least -- at least 36 that the Sadr brigade had claimed to have lost last night and the night before.
The U.S. military says 300 were killed, but unfortunately we were not able to verify independently either of those numbers. Probably a range in between is about right.
There were also civilian casualties. We visited the hospital in Najaf, and we saw a number of people being brought in with gunshot and shrapnel wounds. Much of it they say was coming from U.S. bombs in residential areas.
LIN: Scott, reporting on this story, I mean, the American audience gets a sense of, look, was there -- there is this army, there was a cease-fire, it was a tentative cease-fire, and suddenly it looks like all hell is breaking loose on the ground. What is it that the people in Najaf you've spoken to, what is it that they think is going to happen? How long do you think they can hold up, not only against Iraqi forces, but also the U.S. coalition?
BALDAUF: Well, the U.S. forces are in a pretty strong position relative to the -- the Shiite militia. The militia at this point is holed up in the old city of Najaf, an old area with a lot of winding allies. They're not in any danger right now of being removed, but their water has been shut off and they don't have a whole lot of food.
More to the point, though, the people of Najaf are getting -- growing irritation with this particular Shiite militia. Many of them would rather cooperate, would rather cool things down and start working with the government rather than fighting against it. But that said, there are people who are supporting the Shiite militia.
This could go on for quite some time. It could be weeks.
LIN: Can you clarify a report yesterday that was -- we thought was confirmed then it was denied -- that U.S. forces attempted to capture Muqtada al-Sadr? What are you hearing on the ground?
BALDAUF: There have been rumors of that sort. Clearly, early this week a U.S. patrol did go into an area where Muqtada al-Sadr's house was located. At the time, Sadr was not around, but the -- the U.S. Marines who were in that convoy did come under heavy fire, and they responded. They say they killed those people in that firefight.
But that -- that break in the truce that had been set up two months ago is what apparently set off the fighting later this week. And now we have fighting erupting in cities like Basra and here in Baghdad, as well, in a northern neighborhood called Sadr City. This is far from over.
LIN: Clearly, as we're watching these pictures, these are dramatic pictures out of Najaf. Thank you very much, Scott Baldauf, with the "Christian Science Monitor," who traveled on his own to the holy city of Najaf to witness that fighting for himself.
Senator Kerry and Senator Edwards are hunting for votes today in one of the 17 states considered up for grabs in November. In fact, Senator Kerry just came out with a statement about the latest jobs growth numbers. CNN's Dana Bash is joining us live from Smithville in the Show-Me State of Missouri.
What did he have to say, Dana?
DANA BASH, CNN WHITE HOUSE CORRESPONDENT: Well, Carol, you know, the Kerry campaign's message of the day -- and, of course, they have one most every day on this two-week trek across the country -- was supposed to be touting some new aspects of his energy plan. But, of course, as soon as the campaign saw these new job numbers that do not look good for the president, they decided that the candidate is going to come out and speak about this at the top of this event.
And, of course, the cold hard fact this campaign year, that bad news on the job front is good political news for a Kerry campaign that's running against a president who has seen millions of jobs lost on his watch. Some have been reclaimed over the past few months.
But the senator will play on the president's new stump line, which is, "We're turning the corner and we're not turning back." The senator will say unfortunately the job numbers demonstrate the economy is making a U-turn. And, Carol, the Democratic National Committee is putting out an ad shortly thereafter, maybe later today, saying that the president has not done enough on -- on the jobs front. They're spending $6 million on that.
Now, the Bush campaign says this is all pessimistic talk from Senator Kerry that won't resonate with the -- on the campaign trail. But talking to Bush aides, they do acknowledge that even this for them is a hard one to spin.
Meanwhile, the senator and his running mate came here to Missouri last night, to Kansas City, via a train. They started in St. Louis yesterday. They are trying to emulate Harry Truman's "Whistle Stop" tour, even using the car that he was on in 1948.
And senators did make a few stops last night, even one in the Republican area where they stopped and were speaking, and even were greeted by some hecklers with some Bush-Cheney signs. But the senators will stay in Missouri, stay in Kansas City for the day. They will make their way to Arizona and then, of course, later to New Mexico.
But they will be traveling, interesting to note, across Kansas City overnight -- excuse me, across Kansas overnight, Carol. Kansas is a state that no Democrat thinks that they have a chance of winning. So that's the place they're not planning to stop.
LIN: You bet. All right. Dana, I'm just wondering if the candidates or the campaign had any reaction to this American Research Group survey of likely voters in Florida shows Senator John Kerry ahead by seven percentage points over President Bush.
BASH: Well, Carol, the reaction is what you would imagine it to be. The Kerry campaign is delighted by these numbers.
Florida, we don't need to tell our viewers, is a very important state based on what happened in 2000, based on the number of electoral votes there. As for the Bush campaign, they say they're not quite sure about whether those numbers match what their own internal numbers show.
But certainly, if you look at the travel schedules of both campaigns, and how much they're focusing on Florida, this is a very tight race. But certainly the Kerry campaign is quite happy about those numbers.
LIN: All right. Thanks very much, Dana Bash, reporting live with the Kerry campaign in Smithville, Missouri.
In Washington today, President Bush talked diversity when he addressed a conference of minority journalists. And he said that during his term in the White House, minority business ownership set new records. Mr. Bush didn't talk about the disappointing jobs numbers, but his chief economic adviser did.
(BEGIN VIDEO CLIP) GREG MANKIW, BUSH ECONOMIC ADVISER: We're not satisfied with the level of job creation we saw today. The economy is creating jobs, it's moving forward, but not at a rapid enough pace.
The president said many times that he won't be satisfied until every American who wants a job can find a job. And while we have created lots of jobs, we're not satisfied where we are.
(END VIDEO CLIP)
LIN: Well, this hour, President Bush is campaigning in New Hampshire. I'm going to check in with CNN's Jill Dougherty, traveling with Mr. Bush.
In the meantime, here is an early head's up on something big next week. The president and Laura Bush will join CNN's Larry King for an exclusive interview. That's "LARRY KING LIVE," next Thursday right here on CNN.
In the meantime, the war on terror comes to Connecticut. Federal authorities say a British citizen arrested yesterday in London created Web sites to fund terror operations, and one of those sites is based in Connecticut. Babar Ahmad is fighting extradition to the U.S. An indictment unsealed late this morning reveals a number of conspiracy charges against him. If convicted, Ahmad could spend anywhere from 10 years to life in prison.
(BEGIN VIDEO CLIP)
KEVIN O'CONNOR, U.S. ATTORNEY: The main purpose of all of these sites was to solicit financial support for terrorist organizations, including the Taliban and the Chechen Mujahedeen, as well as to recruit individuals to travel to Afghanistan and Chechnya for the purpose of waging jihad against the perceived enemies of Islam, including the United States. The sites also instructed visitors on how to obtain and send needed supplies, including gas masks, night vision goggles and clothing and hand warmers to these organizations, amongst other things.
(END VIDEO CLIP)
LIN: Well, Kevin O'Connor said authorities know of at least two Americans who made contributions to the Web sites, but added the Internet service providers that hosted Ahmad's Web sites are not under investigation.
We want to move now on to the crisis in Sudan, where more than a million people have fled their homes during a bleed ethnic war. U.N. observers arriving this weekend to get new information in the country's Darfur region.
CNN Christiane Amanpour just got back from Darfur. She's now in the capital city of Khartoum.
Christiane, share with us what you learned on that trip. CHRISTIANE AMANPOUR, CNN CHIEF INTERNATIONAL CORRESPONDENT: Well, actually, Carol, we're on our way in there. We've just arrived in Khartoum. But what we do know is that the government of Sudan is reacting to the increasing calibrated international pressure against it, including pressure by the United States.
There has been a resolution introduced which is giving this government now three weeks left to disarm their militias in the Darfur region which have basically unleashed really a reign of terror over the last year and a half. The government of Sudan mounted a big street demonstration in protest of this pressure, but the government still says that it will try to comply.
(BEGIN VIDEO CLIP)
MOSTAFA OSMAN ISMAIL, SUDANESE FOREIGN MINISTER: Our reaction is simply we feel that although the resolution is unfair -- but we are trying our best in order to cope with it. Yesterday, and the day before yesterday, we held meetings with the representative of the secretary-general, Ian Bram (ph), and we are now drafting sort of a road plan, what are we going to do for the whole problem, what are we going to do in the coming 30 days.
(END VIDEO CLIP)
AMANPOUR: Now, in response to what was an insurgency, a small rebellion that started in Darfur about a year-and-a-half ago in response of what they called a need for better treatment and also a share of the resources, the government has reacted very harshly. Aerial bombardments and unleashing this militia, called the janjui (ph), some 30,000 people have been killed. And satellite imagery shows that about 300 of Darfur's 500 villages.
The villages have been ethnically cleansed. Women are being systematically raped. So the need right now is very, very urgent.
According to USAID, there could be 300,000 people dead in Darfur by the end of the year, and that's if aid gets to them rapidly. If aid does not get there quickly, USAID is warning that a million people could die in Darfur by the end of this year. So the -- the need to get the Sudanese government to react and to end this is very, very urgent right now -- Carol.
LIN: Christiane, in some of the video we were just rolling of some of the scenes inside of Darfur, we saw the -- the typical United Nations blue tarps over some of the village huts that remained after -- after they were being burned through. I'm wondering how difficult is it for aid workers to get inside. How much is the Sudanese government doing to get food and shelter to these people?
AMANPOUR: Well, it's been extremely difficult. For instance, in March, there were only some 30 or so international aid workers, including U.N. members over here. Then there was a visit by Colin Powell, secretary of state, and Kofi Annan, the U.N. secretary- general. That happened early in July. And since then, the humanitarian situation has improved somewhat, but the violence hasn't stopped. And so these militias who are meant to be disarmed, and the government is meant to be controlling them, are still causing a great deal of violence. And that's a big threat right now.
Plus, as we've said, humanitarian aid needs to get there in much, much greater amount, and more aid workers need to be allowed to go in there. The government is doing better in terms of allowing people in. Visa restrictions are being somewhat eased. But it's still difficult to get travel permits and to get access to the Darfur region even once you're in Khartoum.
So there's a bit of, you know, a shell game being played over here. But the government is now reacting to some of this international pressure. And many believe that it's only continued pressure, real pressure that will cause any meaningful change in this.
LIN: All right. Christiane Amanpour, en route to the Darfur region in Sudan, right now, traveling from Khartoum.
Well, there was an interesting job report that came out today, and economists were upbeat about the nation's job outlook heading into July. Today those numbers are out, but is there anything worth celebrating? We'll get the latest in a live report. And I'm going to be talking with the Treasury secretary, John Snow.
Plus, a bit later, terror warnings, arrests and dirty politics. They're all on the table in our "Hot Topics" debate.
(COMMERCIAL BREAK)
LIN: Discouraging economic news today. U.S. companies added far fewer jobs to their payrolls in July than economists expected. Financial correspondent Kathleen Hays has more details on this -- Kathleen.
KATHLEEN HAYS, CNN FINANCIAL CORRESPONDENT: Hi, Carol.
Well, it really caught a lot of people by surprise, this number. In July, the economy created just 32,000 jobs. That's the weakest monthly gain of the year. Wall Street prepared for a gain north of 200,000. So, believe me, this one made an impact.
Let's take a look at a chart. You know, sometimes one picture does speak at least a thousand words. And you can see here some view of the trend of what's going on.
Are we losing momentum? That's true. The six-month average gain in jobs isn't too bad, 180,000. But the gain last month, the 32,000, just 78,000 jobs a month before, the problem is the trend is decelerating. It's slowing down.
Services sector, that accounts for 80 percent of all jobs. There were only 14,000 jobs created there. And people are wondering, the tax cuts seemed to help for a while, could the impact be waning now? The refinancing boom which put a lot of money in people's pockets is fading. And energy price are up, gas prices are up. That is taking a bite out of people's pocketbooks, out of their household budgets.
Now, a ray of hope, you might say, in the unemployment rate. It fell by a tenth of a percent to 5.5 percent in July. That's the lowest level in almost three years.
But even the Labor Department says this is a less reliable barometer, the labor market's health. It comes from a smaller survey, it doesn't give us much of a sense as the payrolls do. That's what Wall Street's watching, that's what policymakers are watching. And that's why this was such a disappointment.
Carol, back to you.
LIN: All right. Thanks very much, Kathleen.
Well, we want to get the big picture, of course. Treasury Secretary John Snow made a speech today about this, talking to business leaders. We want to bring him in as our guest.
Secretary Snow, good to have you.
JOHN SNOW, TREASURY SECRETARY: Thanks, Carol. Good to be with you.
LIN: Well, the smallest gain in jobs numbers in eight months. This has to be a disappointment to you.
SNOW: Well, we're not satisfied. That's -- that's for sure. But it needs to be looked at in the context of the falling unemployment rate, the increase in hourly earnings, the shortening of the duration of people being on unemployment, the increase in the average hourly work week. So there's a lot of positive news here, too.
And, of course, we have the divergence between the payroll survey, as you mentioned. It came in at 32,000. And the other major survey, the Household Survey, that came in at 629,000. So there's a real disparity there, and maybe -- maybe the truth lies somewhere in between.
LIN: Somewhere in between. Well, today, Senator Kerry campaigning, of course, for the White House, said basically that -- he was making a play on words of President Bush's campaign speech about turning the corner. He said, "Have we turned the corner when 44 million Americans don't have basic health care or lost nearly 1.8 million private sector jobs?" Clearly, these numbers are going to give ammunition to the Democrats to go after the Bush administration, which has said, including yourself, that the tax cuts were going to stimulate the economy and create many, many more jobs.
SNOW: Well, the tax cuts have done -- done just that. There can't be any doubt about the fact that, with those tax cuts, the economy got -- got some oxygen.
It began to move and got -- got to a much higher level of performance, as we've seen for the last -- last year, 11 separate months of job creation, the highest GDP growth rates in 20 years. So the American economy remains strong and sound and on a good path.
LIN: You're right, there have been job gains. Certainly not as much as economists have been predicting. But how do you explain this overall trend this year of fewer and fewer jobs being created? Yes, jobs being created, but there clearly is a trend. What are some of the theories that you might have?
SNOW: Well, Carol, I think we saw consumer weakening, consumer spending, which is so part -- such a large part of the economy. Weakening in June, and that reflects the high energy prices. It probably reflects some -- some terrorist concerns, some anxiety over the geopolitical situation and terrorist attacks.
We really need to deal with the issue of energy prices. They're too high, and they're unwelcome, and they're creating headwinds for our economy.
LIN: What are you hearing from some of the business leaders you've been talking to today?
SNOW: Well, I've talked to a number of business leaders today and over the course of the last few weeks. They remain positive. They remain confident. That's reflected in the consumer confidence surveys that, as you know, have reached two, three-year highs, both the Conference Board and the University of Michigan. The business community remains positive.
LIN: But what -- have they told you about what exactly is going to encourage them to create yet more jobs? Alan Greenspan, testifying on Capitol Hill last month, was saying clearly employers are very reluctant to hire more people.
SNOW: Well, the -- the chairman talked about a pause, a slowing down, but also talked about strong growth rates for the -- for the third and fourth quarter. I think he's right.
I think we'll continue to see strong growth rates in an expanding economy for -- for the second half. Stronger than we saw in the second period.
LIN: And what's going to -- what's going to be the catalyst, do you think?
SNOW: Well, the catalyst is rising real income. The report that you cited, the BLS report, indicated that hourly earnings are up. We know that disposable income is up. And it's disposable income, real income, rising compensation that -- that gives consumers the wherewithal to go to the malls, go to the shops, go to the stores, go to the auto dealers and buy more.
And we are seeing rising disposable income. People have more money in their pockets, and that's a good thing.
LIN: John Snow, secretary of the Treasury, just a few more weeks until the election. We are anxious to see what happens to the economy. Thanks for being with us today.
SNOW: Hey, thank you, Carol. Good to be with you.
LIN: Well, no doubt the latest job numbers will come up during both candidates' presidential campaign stops. We're going to get the view from the Kerry campaign with his senior economic adviser, Gene Sperling. There he is. He's going to join me next.
(COMMERCIAL BREAK)
LIN: Moments ago, I talked with the secretary of the Treasury and the Republican point of view on slower jobs growth figures for July. So let's get the Democratic response.
Gene Sperling is a senior economic adviser to the Kerry campaign -- campaign, excuse me. He also was the national economic adviser in the Clinton administration.
Mr. Sperling, thank you for being with us.
GENE SPERLING, SR. ECONOMIC ADVISER, KERRY CAMPAIGN: Thank you for having me.
LIN: Secretary Snow was saying that he's optimistic that jobs growth will continue and expand in the third and fourth quarters. He looks at some optimistic figures that he talks about, disposable income rising, and also better hopes for energy prices to go down. What do you make of -- of what he has said?
SPERLING: Well, these -- these job numbers are extremely anemic and disappointing. Not only are jobs not turning the corner, it's not even clear they're headed in the right direction.
I mean, you have to consider that over the 32 months of this recovery, we have averaged about 6,500 jobs a month in the private sector. We have never had such a poor job recovery since the great depression.
And in the midst of this, when we desperately need a sustained period of strong job growth, over 250,000 a month for a considerable amount of time to get people back working, to have two months where the average job growth was 55,000 is just extraordinarily disappointing. And I -- I really don't know how anybody could credibly put a positive interpretation on today's numbers. I think we all hope that things will get better, but this is a serious setback.
LIN: Well, the Bush administration will point to that it has, in fact, been 11 months of some job growth. Though, as the secretary said, that he is and they're disappointed in the rate of job -- job creation.
Alan Greenspan, testifying on Capitol Hill, said that a lot of it had to do with employers simply not having the confidence to hire more people at this point, even as their companies are making money. What is it that the Democrats can offer to give confidence to employers that they should be hiring and expanding their payrolls?
SPERLING: Well, I think those are good questions. First of all, let's just create some perspective.
Even if you give the most generous interpretation, let's say you look over the last 12 months of the economy, which is what the administration likes to talk about, that 12-month period is the worst 12 months for job creation for that period of recovery in over 50 years since 1949. It would be the -- it would be worse than any year under the Clinton administration.
LIN: So what is John Kerry's plan?
SPERLING: So, yes, it's job growth, but extremely weak.
LIN: So...
SPERLING: Senator Kerry would do several things to help reignite confidence. One, his stimulus was always directed towards jump- starting jobs. He had a new jobs tax credit. He does -- still has for two years, where he would refund the payroll taxes for new job hires for two years. That would have no negative long-term impact on the deficit, but encourage job creation.
He's got an aggressive plan to deal with rising health care costs, catastrophic costs, calling for disease management to bring down health care costs. This is one of the reasons why you see the tentativeness in the economy. A plan to deal with energy costs that he is talking about today.
And another thing is, we ignored -- the Bush administration ignored the states, and therefore they're raising property takes, raising tuition. That's hurting confidence.
And finally, let's face it, the American brand name around the world has been hurt by the way our foreign policy has been managed. We could do a lot more to recreate confidence by restoring fiscal discipline, by restoring respect for U.S. abroad, and dealing with some of these policy issues, like the spiraling health care costs that the administration has completely ignored.
LIN: Well, Mr. Sperling, that's fine. And I know that all the -- both camps are offering a lot to the average American in terms of job creation and health care. But the fact of the matter is, even the current budget numbers don't factor in the cost for the war on terror. I know you can't get into all of the details of it in such a short amount time, but how can John Kerry make those promises, for example, like refunding payroll taxes, when the budget deficit is soaring right now?
SPERLING: Because -- excellent question. And here's the answer. The problem with the administration is, instead of doing temporary things to jump-start job growth and confidence, but not have negative long-term fiscal impacts, they did just the opposite.
They did very little to ignite confidence, economic activity, job creation. But they did long-term measures that hurt our long-term fiscal situation and hurt confidence. And therefore, have made people less confident in our long-term sustainability.
Senator Kerry is talking about both jump-starting job growth with temporary measures, but also restoring the rules of fiscal discipline that both Democrats and Republicans lived by in the '90s when we had a strong period of fiscal discipline. And I have to add one point.
LIN: Very quickly.
SPERLING: When they mentioned the Household survey, when it -- when the economy was doing well in February, March, it was up 400,000 jobs, Household surveys were down 260,000. Secretary Snow, none of them mentioned one word. This really hurts their credibility to now come and mention this when they never mentioned this when Household surveys looked like we were going down 260,000.
LIN: Gene Sperling...
SPERLING: They shouldn't play games like that.
LIN: Gene Sperling, thank you very much.
SPERLING: Thank you.
LIN: Our own Kathleen Hays did say that the payroll numbers were considered the most reliable.
Well, President Bush is in New Hampshire this hour mingling with supporters at a picnic. CNN's Jill Dougherty is traveling with Mr. Bush and she joins us live from the Granite State.
Jill, we've been debating, or at least talking about the economy, the latest numbers. So far, we haven't yet heard President Bush address them before the -- the future voters.
JILL DOUGHERTY, CNN CORRESPONDENT: Right, Carol. Well, we don't know whether specifically he'll actually get into those numbers, but what the Bush campaign has been saying and the president has been saying is that the economy is creating jobs in certain cases, but not fast enough.
As you mentioned, we're here at Bittersweet Farm. That belongs to the Scamman family in Stratham, New Hampshire, and this is a picnic, outdoor picnic for 3,000 core supporters of President Bush.
You know, New Hampshire is a state of many flinty Independents. And you really see that if you go back four years to 2000. The president won this state, but really narrowly, just by one percent.
Mr. Bush started the day in Washington, D.C., at the Unity Conference. That is a grouping of -- of minority journalists. That's the same Unity Conference that his challenger, Senator John Kerry, addressed yesterday.
Kerry got quite a warm reception. The president got more muted reception. In fact, there was actually one heckler in the group. President Bush in his address to the journalists talked about Iraq, the war on terror, and he also defended these recent terror alerts.
(BEGIN VIDEO CLIP)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: When we find out intelligence that is real, that threatens people, I believe we have an obligation as government to share that with people. And imagine what would happen if we didn't share that information with the people in those buildings and something were to happen. Then what would you write? What would you say?
(END VIDEO CLIP)
DOUGHERTY: Here in New Hampshire, jobs, as in much of new England, that is a big issue. And these new figures, the July jobs report, are not good news for the president.
Payroll unemployment is up 32,000, but actually they had expected well over 200,000 more jobs. Unemployment is down ever so slightly to 5.5 percent, and it had been at 5.6 percent. Greg Mankiw, who's the chairman of the Council of Economic Advisers, said again that the administration feels that jobs are being created but not fast enough.
So President Bush will be here for a few hours, and then wraps up. And he will be heading for Kennebunkport, Maine, the family retreat there in Maine, and he'll be attending the wedding of his nephew -- Carol.
LIN: All right. Thanks very much, Jill.
Opinions on everything from the latest terror alerts to the campaign for the White House. We're going to get set for our "Hot Topics" debate.
(COMMERCIAL BREAK)
LIN: Neck and neck, that is how many see this race for president. Some say who wins depends on what's happening with the economy. Others, the war on terror.
Well, here with their views from Los Angeles, Karel Bouley. He's a radio talk show host and author of "You Can't Say That." And right here in Atlanta, talk show host Martha Zoller.
Good to have both of you.
MARTHA ZOLLER, TALK SHOW HOST: Thank you.
KAREL BOULEY, TALK SHOW HOST: Thank you. Good morning.
LIN: Let's talk about this job's report. Karel, I was just talking with the secretary of the Treasury... BOULEY: Yes.
LIN: ... and he's optimistic that more jobs, a more dramatic report will be made in the third and fourth quarter.
BOULEY: Well, the secretary of the Treasury is optimistic because he has a job. I mean, first and foremost, I mean, that's the truth. He has a job.
But speaking to millions of Americans who do not, and telling them that things are getting better, it's not playing anymore. It hasn't played well for the administration, it's not playing well for the administration. And now we see the numbers are even worse than they predicted. This is not a good situation.
LIN: Martha?
ZOLLER: Well, I will tell you, July is always a slow month. And I do think that there will be more job creation in the third and fourth quarter, because that's typically what happens.
But I will tell you that one of the things that doesn't get measured is people that are self-employed, and that is -- that is a growing number. Somebody like me would not show up as a person that's employed because I -- I am an independent contractor that works in a lot of different areas. But I will tell you that, of course, it was disappointing to have this low of a number of jobs created. It was...
BOULEY: Well, and as you state about -- about not doing the self-employed...
ZOLLER: Right.
BOULEY: ... the numbers don't also reflect the people that fall off unemployment because they've been on it and been out of work so long that they simply can't find a job.
ZOLLER: Well, no. Actually, the rate -- the rate -- the unemployment rate stayed stagnant for several month because of people reentering the workforce. They were able to measure that.
So that's why we saw it stay stagnant for several months when we had big job growth. But certainly jobs are important. But I will tell you, the war on terror is more important as an issue, because if you don't feel safe -- it addresses that consumer confidence issue that you were addressing in the last segment. If you don't feel safe, if you don't feel confident about the future, you're not going to feel confident about investing.
LIN: Martha, it's hard to judge because...
BOULEY: You know what? I don't think that...
LIN: ... because people are saying, you know, as the candidates are campaigning, it's either the war on terror -- but more and more people are talking about the economy, Martha. BOULEY: Yes.
LIN: Give me a perspective -- hang on one second, Karel. Give me a perspective, Martha. Long-term trends, we're not just looking at one month's figures. We're looking at an eight-month trend in decline in job creation.
ZOLLER: I think if long-term trends, as you heard Alan Greenspan say a couple of weeks ago when he was on the Hill, that it was a robust recovery. He was worried about it being too robust. I don't think he will be after today's numbers.
But I think long-term trend, we'd like it to be faster, but it is recovering. Maybe not as fast as we'd like to. When we had the fast recovery in the '90s, it ended up with a bubble that burst, and the technology bubble that burst. So I think that good, solid growth is really what we need, although we'd always like more people to be employed.
LIN: Karel, go for it.
BOULEY: You know what? I think blaming the war on terror for the slow economy is just another excuse to say, "I'm sorry, we can't fix it." When people go out to buy something in middle America, they don't go to Walmart and say, "Gee, should I buy that TV or do you think Osama is going to attack this week?"
That's not what this is about. They say, "Gee, I can't buy that because either I'm under-employed or my insurance bill is soaring, or I have to buy something for my kids, or my money just doesn't go as far anymore."
They're not worried about the war on terror. The war on terror is something for pundits and everyone else to talk about. Middle America is talking about the fact that tuitions are going up, programs are being cut, their -- their dollar is not able to go nearly as far as it used to be. And that makes them afraid. It makes them afraid to spend, and they don't have the money to spend.
LIN: Karel, speaking of the war on terror, you actually think that this terror warning system is -- is tipping off the terrorists.
BOULEY: Yes. Well, first of all, the 9/11 Commission report wasn't so much a much-needed report as it's a how-to manual to the terrorists. If I had a company and the company had a lot of shortfalls, and had a horrible event happening, I certainly wouldn't publish a manual as to all our shortcomings, oh, look, we're weak in this area, we're weak in this area, why don't you just come attack us here?
That's not the thing to do. And as for the war on terror, every time we raise the terror alert in this country, every time Tom Ridge goes out there, Osama bin Laden wins.
It does nothing for middle America except terrorize some people. It doesn't help our FBI or our CIA, or anyone else. All it does is terrorize America. Of course it does...
ZOLLER: Well, I don't know. We've had a lot of arrests in the last couple of weeks, and we've had a lot of information that's come together in this country and around.
BOULEY: We've had terror -- every -- and we couldn't have had that without terrorizing middle America? That's their job.
ZOLLER: Well, you know, I didn't support -- I didn't support the 9/11 Commission because I thought it became too partisan. However, the report was something that we in a free society -- you know, that's one of the things. We live in a free society.
The reason why we know about all of our country's failings is because we have an open society and we discuss them and we debate them. I think...
BOULEY: Well, perhaps when you're at war -- as we hear about this new America from George Bush and how everything changed after 9/11, maybe we need to rethink that. Because we're not fighting a traditional war with mortar rounds. We're fighting a diplomatic war, a war on ideology. So maybe we...
ZOLLER: And we're doing that on different fronts, all different fronts.
BOULEY: But we're not winning it. We're not winning the war.
ZOLLER: We are certainly winning the war on terror.
BOULEY: Then why have we had -- why have we had five terror alerts in the last six months? Or is it just the fact that every time Bush is in trouble there's a terror alert?
ZOLLER: Oh, you can't believe that.
BOULEY: Oh, I can believe...
ZOLLER: Even you cannot believe that.
BOULEY: Then why does America believe it? Why is...
(CROSSTALK)
LIN: Well, first of all, Karel...
ZOLLER: America does not believe it. Maybe you do in LA, but not America.
LIN: Hang on. Whoa, Martha. You're talking about my home town.
BOULEY: Thank you.
LIN: All right.
BOULEY: Because I guess we're all idiots out here, right? ZOLLER: I didn't say that.
BOULEY: Because we happen to question that every -- every time that Bush is in trouble...
LIN: (UNINTELLIGIBLE) with time.
BOULEY: ... when Kerry does a great speech...
ZOLLER: Not true.
LIN: Karel...
BOULEY: ... the next day Tom Ridge is out there. Come on.
LIN: But the fact of the matter is John Kerry has come out and said that he disagreed with Howard Dean's allegation that the Bush administration was using this for political gain. Stay right there. Don't move, either of you.
We're going to take a quick break. We're going to pick up on this note and talk about the campaign, 2004.
(COMMERCIAL BREAK)
LIN: Welcome back. We're talking presidential politics and the issues with my guests, radio talk show host and author, Karel Bouley, and talk show host Martha Zoller, right here in Atlanta.
Good to have both of you back.
BOULEY: Great to be here.
LIN: Let's talk about these campaign ads that are running, Martha.
BOULEY: Oy vey.
LIN: This veterans group, I know they don't have anything to do -- they say they don't have anything to do with the Bush campaign, but they're running this really nasty ad about John Kerry, saying that he lied about his war record.
ZOLLER: Well...
LIN: And John McCain, John McCain, one of your people, coming our and criticizing the negative ads against John Kerry, coming to Kerry's defense.
ZOLLER: Well, I think, though, unfortunate thing about the 527s is they didn't really solve -- and those are the organizations that can put out these kinds of ads. They didn't really solve the soft money problem.
And while my position is, is that both President Bush and John Kerry got honorable discharges from the service to their country that they provided, and really we shouldn't be doing ads on these kinds of things; however, $60 million worth of ads have been done from these kinds of groups against President Bush, making these same kinds of claims and these kinds of things.
And I tell you, it's really unseemly on both sides. I think that some good investigative journalist needs to investigate this story as far as John Kerry goes, but, you know, they're getting a lot more publicity than their $500,000 buy.
LIN: You're right -- Karel.
BOULEY: Well, you know, first of all, you know, there's a few things that we know. John Kerry went to Vietnam. He got the medals. And he came back.
We know that he served his country. We don't know anything about George W. Bush because those records have miraculously disappeared. And somehow Michael Moore...
ZOLLER: No. They actually found them, Karel. They found them all and turned them over.
BOULEY: No they found them -- no they did not. That's not true. It's just...
ZOLLER: A couple of weeks ago. A couple of weeks ago.
BOULEY: It just -- it's not true. In fact, they stated that a majority of them had been accidentally destroyed. Go and do your research. I don't have time for that now.
But I will tell you this, whatever they did in the war, I don't care. And I don't think America cares. What can you do for me now? And this goes to John Kerry as well.
ZOLLER: Absolutely. And that I'll agree with you about.
BOULEY: What can you do for me...
ZOLLER: But the problem is, if you're going to weigh...
BOULEY: ... on Pennsylvania Avenue?
ZOLLER: ... if you're going to weigh, though, one person's military service over another one, you can't do that. A person that serves in combat is as important to this country as the person who serves in the National Guard. And if we haven't learned that...
BOULEY: Well, then aren't these people -- are these people not patriotic then? Because when I was on my show disagreeing with the war, I was constantly told that I had to support the troops, that no matter whether I agreed with the war or not, I simply had to support the men and women who are in uniform.
ZOLLER: That's right. BOULEY: Are these veterans going on TV and calling John Kerry everything but a white woman supporting the troops, is that the way we honor veterans?
ZOLLER: Calling everything but a white woman, that's a weird thing to say. But anyway...
LIN: Hey, Karel, $80 million John Kerry has spent on campaign ads. What has that gotten him except a dead even race?
BOULEY: You know what? It hasn't. And you know why? Because America is pretty much divided.
We really -- I wish we could hold the election tomorrow, because we've all pretty much made up our minds. There may be a few that are here and there.
He's not getting the most bang for his buck. I see Kerry's ads and I'm not -- a Democrat, and I'm not very invigorated by them. I don't want to rush out to the polls.
I go to factcheck.org to make sure that what's in his ads are correct, make sure what's in Bush's ads are correct. They both have factual errors.
The problem is people take these ads as news. They take them as truth. And as we all know, they're not. They're rhetoric and they're spin. And that's a very dangerous electorate.
ZOLLER: Well, and the biggest problem -- the biggest problem that John Kerry has is just yesterday he said he might have supported the war anyway even knowing that the intelligence was bad. He's had very inconsistent views on the war, and I think that's what....
(CROSSTALK)
LIN: Speaking of -- and I'm afraid I'm going to have to end it here, because the candidate himself is campaigning in Missouri. So I'm going to wrap it up with you guys.
ZOLLER: Thank you.
LIN: Thank you very much, Martha, Karel.
BOULEY: You're welcome. Thank you, Carol.
LIN: It was great having both of you.
BOULEY: Thank you.
ZOLLER: Thank you.
LIN: We'll be right back.
(COMMERCIAL BREAK) LIN: Seven days and counting. Is Greece ready to welcome the world back to the birthplace of the Olympic games? CNN's Michael Holmes takes a look at one of the biggest challenges, keeping everyone safe.
(BEGIN VIDEOTAPE)
MICHAEL HOLMES, CNN CORRESPONDENT (voice-over): Of all of the records that have and will be set at the Athens Olympics, perhaps none are more impressive than the bill for security, $1.25 billion and counting, 15 times what Atlanta spent just eight years ago. Times have changed.
UNIDENTIFIED MALE (through translator): After September 11, Olympic security planning changed significantly because it had to take into consideration new factors that came into play.
HOLMES (on camera): Here at the main Olympic stadium, just a handful of the 70,000 Greek police and soldiers who will be on duty throughout the games. NATO is here also. There will be AWACS early warning planes in the skies. And in the water, warships, including submarines. In addition, some teams are bringing their own armed security.
JAMES APPATHURAI, NATO SPOKESMAN: This is a massively complex security operation involving, of course, a huge array of countries, all of which are coming with their own security details. But, also, specific countries and NATO have been engaged to provide security.
So, yes, there's some diplomacy, there's a lot of security. But again, it's the Greeks doing the choreography.
HOLMES (voice-over): There are teams on standby from the Czech Republic with chemical, biological and radiation experts. U.S. Special Forces will be here. Patriot missiles are in place. The FBI is coming with a hostage rescue team and bomb scene specialists. But according to NATO, on the delicate issue of chain of command, Greeks run the show.
APPATHURAI: Greece is in charge. This is absolutely a Greek lead and a Greek security operation.
HOLMES: Tourists we spoke with quite happy to see uniforms around them.
UNIDENTIFIED FEMALE: I personally like walking around, seeing all of the security guards, and just to feel safe with all of them around.
HOLMES: Yet, on the streets of Athens, little so far in terms of visible security. But lots of subtle signs. Cameras, hundreds of them, watching 24 hours a day.
In the sky, day and night, an ever-present airship with more cameras. Some Greeks feel the eye of big brother. "I don't like them because they are watching us without us knowing," says this man. Who protects us from the protectors?"
UNIDENTIFIED FEMALE (through translator): When that thing goes around it's very disturbing. But isn't security important for the games?
DORA BAKOYANNIS, ATHENS MAYOR: It's a price we have to pay. There's no other way. We're not thrilled with it. And I don't think that any city in the world would be thrilled with that. But we know it's necessary, so we live with it.
PROF. THEODORE COULOUMBIS, UNIVERSITY OF ATHENS: If you feel that you live in a brave new world, and that you have given up your freedom in order to get your stability and your security, then the terrorists have managed their own key objective to rob us of our democratic values.
HOLMES: Mayor Bakoyannis says that isn't happening.
BAKOYANNIS: We should not forget that this is not the moment of the police or the army, but it's the moment of the athletes, and of the people being able to look at this sport event. So we had to balance all that out. I believe we did it.
HOLMES: Nervous Greeks hope she's right, that the fears, the guns and the airship will all be forgotten in the euphoria that surely comes when the Olympic anthem is first played.
(END VIDEOTAPE)
LIN: I'm ready. There you go.
This footnote. A Greek civil rights group wants the security blimp grounded, complaining it violates people's privacy. You saw that in the piece. A ruling is expected late next week, just before the games begin.
And that's our program for today. Be sure to join us later at 5:00 p.m. Eastern for "WOLF BLITZER REPORTS." Jeanne Meserve is in today for Wolf. She's going to have more on the latest jobs report figures.
I'm Carol Lin. "LIVE FROM" with Kyra Phillips straight ahead. She's sitting right next to me, bugging me.
(COMMERCIAL BREAK)
KYRA PHILLIPS, CNN ANCHOR: Economic cold feet? Poor job numbers, the impact on you and the politics behind them.
Bloody uprising in Iraq. Hundreds of people dead. U.S. forces still battling insurgents.
Terror arrests in the United States and around the world. This hour, a progress report on the war on terror.
Pill pushers. Do commercials for prescription drugs help or hurt your health?
From the CNN Center in Atlanta, hello, everyone. I'm Kyra Phillips. Miles is off. CNN's LIVE FROM starts right now.
Well, we begin this hour with great expectations, miscalculations and political ramifications of jobs. We learned today the U.S. economy added 32,000 jobs last month, the 11th straight monthly net gain. But it's the smallest net gain since December and less than one-sixth of what economists expected.
After disappointing numbers for June, economists were looking for more than 2,000 -- or 200,000 new jobs in July. In their absence, investors are selling, the presidential campaigns are spinning. And CNN's Lisa Sylvester is explaining from Washington -- Lisa.
LISA SYLVESTER, CNN FINANCIAL NEWS CORRESPONDENT: Hi there, Kyra.
To say people that were caught off guard by this jobs report is clearly an understatement. Economists had widely believed that the economy was humming along and that hundreds of thousands of jobs would soon follow. But in July, only 32,000 jobs were created. Now, to put that in perspective, economists were hoping to create 235,000 jobs. The unemployment rate edged down from 5.6 percent to 5.5 percent.
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