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Small Steam Eruption at Mount St. Helens; Rumsfeld Admits No Hard Evidence of Hussein/al Qaeda Link; SpaceShipOne Wins Ansari X Prize

Aired October 04, 2004 - 14:33   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.


KYRA PHILLIPS, CNN ANCHOR: Live pictures now, billowing clouds, lots of steam and some ash. That's what we've been seeing at Mount St. Helens today. Technically, geologists say it's just a small eruption, nothing like what folks saw back in 1980 when 57 people were killed. They say a larger one could follow this, however, and that's why a number of people are keeping their eye on this volcano, including Tom Pierson with the USGS.
Tom, bring us up to date. What are you looking at right now, and what are you foreseeing for the next 24 hours?

TOM PIERSON, U.S. GEOLOGICAL SURVEY: Well, what we saw this morning was a prelude to presumably something more that's going to happen. It was a burst of steam and ash that came out fairly continuously for about 40 minutes, starting at about 9:42 this morning.

It then ended -- and an interesting fact associated with that was that our earthquake activity did not change as this was occurring, unlike what happened when our first steam burst occurred when all the seismicity stopped for about four hours.

PHILLIPS: So, is that good news? Bad news? Put it in layman's terms for me.

PIERSON: Well, depends on your perspective. For us geologists waiting for an eruption, I think it's good news. What we saw was a steady buildup and are continuing to see a steady buildup in the seismic energy. Ultimately, the pressure driving the magma upward has not been dissipated at all by the steam bursts, and so presumably we're still building up to something else.

PHILLIPS: And so, what is it you're monitoring? What could lead to a bigger explosion? Is it the gases? Is it the heat?

PIERSON: Well, we know there's magma down there. We know that it is actively deforming the crater floor right now. Yesterday, we saw dramatic evidence of 50 to 100 feet of uplift of parts of the crater floor. So, we know the magma is coming up. It's coming in contact with wet ground underneath the glacier, and that's causing these steam bursts. The water is turning to steam and then blasting out.

But ultimately, when the magma gets to the surface, the gas within it will drive the eruption. It will provide the energy the eruption needs to push the ash up into the air.

PHILLIPS: And so, when you say there could be another explosion, how big it could get, Tom? I mean, obviously nothing like 1980, right?

PIERSON: Right. We're looking at something much, much smaller than 1980. If it were -- if it were a big batch of magma, we would be seeing deformation on the outer flanks of the volcano now, and we're not. All of those instruments are remaining stable. All our deformation right now is confined within the crater itself.

PHILLIPS: Any other concerns environmentally right now, or landscape-wise?

PIERSON: None right now. The ash, really in small amounts, is relatively harmless. It's a bit of an inconvenience for people. And if people have breathing difficulties, it sometimes can exacerbate those.

But really, we're fairly isolated out here in the country. There's lots of national forest and private timberland around and no large communities close by.

PHILLIPS: Inconvenience for some, tourist attraction for a number of other folks. Tom Pierson with the USGS, thank you so much. All right.

PIERSON: You're very welcome.

PHILLIPS: Now to the violent situation in Iraq. Two car bombs exploded in Baghdad this morning. At least 21 people killed, dozens were injured. Both bombs went off near the southern entrance of the green zone.

U.S. forces target insurgents once again in Fallujah. Coalition officials say that airstrikes were launched at an Abu Musab al-Zarqawi terror network. Hospital officials say at least eight people were killed there.

And a young victim in attack in the town of Baquba. Mortar rounds hit the city's municipality compound, killing a 13-year-old and injuring eight others.

And Poland may be withdrawing its troops from Iraq. Officials say there are discussions now about reducing troops by 40 percent by January and having all of them out by the end of next year. Poland's president says a final decision will be made after the Iraqi elections in January. There are about 2,500 Polish troops in Iraq now.

Secretary of Defense Donald Rumsfeld speaking in front of the Council on Foreign Relations. Barbara Starr was there monitoring what he had to say. What came about, Barbara?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, Kyra, monitoring what the secretary had to say at this lunchtime speech up in New York City, he answered a number of tough, pointed questions on the situation in Iraq and the war on terrorism.

Now, in Iraq, of course, it is the U.S. policy at the moment that Iraqi security forces will be key to long-term success over the insurgency in Iraq. So, the secretary was asked by someone in the audience what about the Iraqi security forces that have chosen not to fight, especially in Fallujah back in the springtime when the fighting by U.S. forces was so heavy there.

The secretary, giving a first-time answer on this point, saying in some instances it was understandable that the Iraqis didn't fight. Here's what he had to say.

(BEGIN VIDEO CLIP)

DONALD RUMSFELD, DEFENSE SECRETARY: There have been instances where Iraqi security forces were not well enough trained or well enough equipped, and they ran up against folks that were better trained and better equipped. And they left.

I do not consider that cowardice; I consider it prudent. If you've got a squirt gun and they've got an AK-47, it's best to come back another day.

(END VIDEO CLIP)

STARR: So, the secretary of defense saying in some case it may be prudent, not cowardice, to not engage in a fight.

Now, on another question, he asked about al Qaeda and Saddam Hussein. Someone in the audience saying very pointedly, once and for all, what was the relationship between Saddam Hussein and Osama bin Laden's al Qaeda network? The secretary began by saying he wasn't going to answer that question, but then he gave this answer.

(BEGIN VIDEO CLIP)

RUMSFELD: I have seen the answer to that question migrate in the intelligence community over a period of a year in the most amazing way.

Second, there are differences in the intelligence community as to what the relationship was. To my knowledge, I have not seen any strong, hard evidence that links the two.

(END VIDEO CLIP)

STARR: So, one of the Bush administration's so-called hard liners, Defense Secretary Donald Rumsfeld, saying today he sees no hard evidence of a link between Saddam Hussein and al Qaeda, something that was often discussed by Bush administration officials during the lead up to the war in Iraq -- Kyra?

PHILLIPS: All right. Barbara Starr, live from the Pentagon, thank you.

Well, let's talk more about the U.S. military action in Iraq: what it means for coalition forces and Iraqi elections set for January. CNN military analyst, retired Major General Don Shepperd, joining us live from Tucson. Good to see you, General.

MAJ. GEN. DON SHEPPERD (RET.), CNN MILITARY ANALYST: Good morning, Kyra.

PHILLIPS: Well, a number of things to talk about. Let's hit Samarra first. This was a very important city according to U.S. commanders to overtake -- or retake, I guess, the city again from extremists. Why? Why Samarra?

SHEPPERD: Well, fist of all, there's a lot of extremists and insurgents there, and it's the first step and probably the easiest step in the fairly large cities, a city of about 200,000.

Also, the Iraqi forces that were being used in this -- 3,000 American, 2,000 Iraqi forces -- are well enough trained and well enough equipped to do it and take part in the fighting. And then, most important, hopefully to maintain security after the city is cleared the first time. You don't want the insurgents to come back in, Kyra.

PHILLIPS: Well, for the first time, I had a chance to read some interesting details from different sources writing for different newspapers and magazines, General, about these foreign fighters, these insurgents coming in -- Sudanese, Egyptian, Tunisian -- saying and having papers.

That they come in saying they're chicken farmers, they're tea sellers, they're electricians. So, they infiltrate themselves in the cities and then, of course, turn around and join the fight against coalition forces.

Is this -- are these more creative tactics? Is this something you've always seen during a wartime scenario? Are they getting more create?

SHEPPERD: There's nothing new about this. The borders are extremely porous: the borders with Iran, the borders with Saudi Arabia, the borders with Syria and Turkey are ways to get through. These people can forge papers and get in.

But remember, once they get in, they have to go someplace, and that place has to provide them sanctuary with food, water, storage for their materials, and planning. And that's what you see going on in these cities, as you see U.S. and coalition forces dropping bombs in the cities. They get intelligence about these hideouts and where these people are gathering, and they go in and bomb them, Kyra.

PHILLIPS: Well, last week, too, we saw for the first time all those children that were targeted. It was pretty heartwrenching. It was the first time that we saw such graphic video. And we saw so many kids that had been killed.

Is this a different tactic now? Maybe, OK, they're thinking we're taking out U.S. troops -- we're attempting to take U.S. troops. We're attempting to take out police stations, recruits, Iraqis trying to rebuild the city. Now it's time to go for the children. Is this the mindset?

SHEPPERD: I don't think so. I think there's two things about this. I don't know whether we intentionally targeted those children or it just ended up happening in that particular fashion, but clearly the insurgents are trying to sew panic among the population.

They're trying to kill civilians, if you will -- not U.S. forces, where they get beat every time, but civilians -- so that the civilians will rise up and say, "Hey, we're better off without the United States here. We would rather have security than a future."

And that's what this is about. It's a fight for the future. And so, the more they can do, the more they can kill, the more they can assassinate, the more they can intimidate, the more they can keep people from serving or voting, they become victors. And it's a very effective tactic, Kyra.

PHILLIPS: Will those elections happen in January?

SHEPPERD: It appears they will happen. Prime Minister Allawi has said they will happen. He's staked his reputation on it.

How representative they will be and whether or not particularly the Sunnis will boycott the elections and stay out is the key question. So, I think they're going to happen, and we're going to have to live with the results. And it's going to be ugly.

And by the way, the violence won't stop at this election. There's another election at the end of '05 for the real government. You can expect violence all next year.

PHILLIPS: General Don Shepperd, thanks for the reality check.

Take a quick break. More LIVE FROM after this.

ANNOUNCER: You're watching LIVE FROM on CNN, the most trusted name in news.

(COMMERCIAL BREAK)

PHILLIPS: Well, there's a winner in a unique race into space. CNN space correspondent and, of course, my co-anchor Miles O'Brien saw it all from Mojave, California. He joins us now live from Mount St. Helens (sic), finally talking about the X Prize.

MILES O'BRIEN, CNN SPACE CORRESPONDENT: Now we've got our eye back on the prize, Kyra, just as it should be. Even as we speak, the X Prize team, the team -- Burt Rutan's team, funded by Microsoft billionaire Paul Allen, are giving a news conference offering some comments about what we witnessed just a few hours ago.

Take a look at the scene. This was a little after 7:00 local time, about 10:00 eastern -- a little before, actually. The White Knight aircraft carrying SpaceShipOne, only about 6,000 pounds in total with fuel, on its way up to altitude pretty close to 50,000 feet. And that's where the real fun began for the pilot, 51-year-old Brian Binnie.

Down he went, about three seconds after departing from White Knight. Boom, he hit that rocket motor, and off they went, straight up on a rapid elevator ride straight to space, setting a record and then some that was first set by the X-15 back in the early '60, well surpassing the 328,000 feet required to win the $10 million Ansari X Prize.

You'll recall the Ansari X Prize calls for a spacecraft capable of carrying three people to fly to space and back safely twice in as many weeks. Well, they did it twice successfully in five days.

This particular flight not as hairy as the first flight. Pilot Mike Melvill, at about the point you're looking at right now, got involved in a wild roll, 29 rolls in all. They tweaked it. They put it through the simulator and had a nice, well, routine kind of flight, if you can call it that.

The landing was smooth, too, and this was important for Brian Binnie. Twenty-year Navy veteran, when he landed SpaceShipOne in December 17th, 2003, after taking it supersonic for the first time, he came down hard. He is, after all, a Navy veteran, thought he was landing on an aircraft carrier, perhaps. But he came in steep, landed hard, and broke the main landing year. That bruised his pilot ego significantly, although did not hurt him, scraped up the plane.

Today, he just painted it on, and then enjoyed a victory tour, becoming the second civilian astronaut. It's a little bit of space history, and there's a lot of big talk here about a whole new space age. A new space race for civilians this time, perhaps paving the way for allowing ticket-paying members of the general public -- albeit well healed, initially -- to fly to space just like the boys and girls who wear the white scarves for NASA and for the other space agencies run by the governments.

So, that's the scene here now, Kyra. The Mojave High Desert once again playing host to a bit of aeronautical and space history. This time, the little guy at the stick as that piece of history was written and that $10 million prize was won -- Kyra?

PHILLIPS: Miles, what's he going to do with the $10 million?

O'BRIEN: Going to Disney World. No, actually...

PHILLIPS: I see the commercial right now.

O'BRIEN: ... the $10 million -- the $10 goes to Paul Allen, who funded this project 100 percent. And as the funder, he gets it. But he's not going to pocket it. He's going to take a portion of it, a good portion of it, give it back to Burt Rutan's team at Scaled Composites. And Burt has a group together that are going to dole out bonuses to the entire team.

So, that $10 million will go in the pockets of the 100-and-some- odd employees who put this amazing spectacle together today.

PHILLIPS: So, did you work out a seat in one of these spacecrafts?

O'BRIEN: Well, that's the subject of negotiations at the moment, Kyra. I'm working on that right now. There's no additional plans on the books right now to fly SpaceShipOne again.

Burt has a plan to build SpaceShipTwo, essentially. Sir Richard Branson of Virgin Airlines has contracted with him, bought the technology. Wants Burt Rutan to build him a seven-seat craft. And he's going to start selling tickets, he figures, as soon as 2007. They'll open up a hotel here in Mojave and turn this little one stoplight kind of town into, who knows, maybe a five-star destination for the rich and famous.

That will be something. For anybody who's been to Mojave, they will understand that.

PHILLIPS: That's true. That is very true. All right, Miles. We'll see you back here tomorrow.

Well, Honda or Hyundai: Which car do you think ranked highest on a consumer survey? We're going to have the results of a new report that just might surprise you.

(COMMERCIAL BREAK)

PHILLIPS: A potentially landmark case opens the 2004-2005 Supreme Court term. And justices heard arguments about whether federal sentencing guidelines should be dismantled. Judges throughout the country are delaying sentences or handing down lighter penalties because of the confusion.

Telemarketers will not get their day before the Supreme Court. The high court is refusing to hear a challenge to the federal "do not call" telephone list. Telemarketers claim that the law violated their free speech rights and could cost up to two million workers their jobs.

And a California Catholic charity has lost its birth control appeal. The Supreme Court let stand a ruling requiring the charity to include prescription contraceptives in its employee health insurance plan. The charity argued covering birth control conflicts with its religious beliefs.

Well, what car brands offer the best values for buyers? Rhonda Schaffler joins us now live from the New York Stock Exchange with an interesting story. Hi, Rhonda.

RHONDA SCHAFFLER, CNN SR. BUSINESS CORRESPONDENT: Hi there, Kyra.

If you're a car snob, this one might actually surprise you. It is also bad news for Detroit's big three automakers. Cars made by Korea's Hyundai are gaining respect. They're rated as one of the best values among all the makes.

According to a survey of car owners by consulting firm Strategic Vision, the once maligned budget brand has moved up in the rankings to number two in value behind only the luxury brand Lexus. Hyundai scored well because its vehicle quality has improved, it's models have a long warranty, and they're affordable.

However, except for Cadillac, domestic automakers GM, Ford, and Chrysler are missing from the top 10. Big rebates and low-cost financing have made their cars more affordable, but that's not causing buyers to see them as a better value -- Kyra?

PHILLIPS: All right, Rhonda, meanwhile how are things looking on Wall Street?

(STOCK MARKET REPORT)

PHILLIPS: Sounds good, Rhonda. Thank you so much. We'll see you tomorrow.

We're going to take a quick break, more LIVE FROM and then "INSIDE POLITICS" with Judy Woodruff. We'll be right back.

(COMMERCIAL BREAK)

PHILLIPS: Right now in the news -- Mount St. Helens puts on another pyro-classic show following Friday's so-called hiccup. The volcano started spewing steam again about two hours ago. Live pictures now from the volcano. Weekend tremors, air quality tests, and a growing bulge in the crater point to a possible buildup of magma in the volcano's neck. Seismologists say today's activity qualifies as a small eruption, and Mount St. Helens remains under level three alert, the highest alert.

Did convicted shoe bomber Richard Reid have a co-conspirator when he tried to blow up an American Airlines jet in December of 2001? In just a few minutes, Attorney General John Ashcroft is expected to announce the indictment of a man currently in British custody. A seven-count indictment alleges that Sajid Mohammed Badat and Richard Reid obtained custom-made shoe bombs in Afghanistan. CNN will carry that news conference live just ahead.

And it turns out the sky's not the limit after all. SpaceShipOne proves Wednesday's successful flight was no fluke with today's second trip beyond the edge of earth's atmosphere. The SpaceShipOne team won the $10 million X Prize. Pilot Brian Binnie also collecting a well- earned victory lap.

Judy Woodruff now, straight ahead with "INSIDE POLITICS" right now.

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 October 4, 2004 - 14:33   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KYRA PHILLIPS, CNN ANCHOR: Live pictures now, billowing clouds, lots of steam and some ash. That's what we've been seeing at Mount St. Helens today. Technically, geologists say it's just a small eruption, nothing like what folks saw back in 1980 when 57 people were killed. They say a larger one could follow this, however, and that's why a number of people are keeping their eye on this volcano, including Tom Pierson with the USGS.
Tom, bring us up to date. What are you looking at right now, and what are you foreseeing for the next 24 hours?

TOM PIERSON, U.S. GEOLOGICAL SURVEY: Well, what we saw this morning was a prelude to presumably something more that's going to happen. It was a burst of steam and ash that came out fairly continuously for about 40 minutes, starting at about 9:42 this morning.

It then ended -- and an interesting fact associated with that was that our earthquake activity did not change as this was occurring, unlike what happened when our first steam burst occurred when all the seismicity stopped for about four hours.

PHILLIPS: So, is that good news? Bad news? Put it in layman's terms for me.

PIERSON: Well, depends on your perspective. For us geologists waiting for an eruption, I think it's good news. What we saw was a steady buildup and are continuing to see a steady buildup in the seismic energy. Ultimately, the pressure driving the magma upward has not been dissipated at all by the steam bursts, and so presumably we're still building up to something else.

PHILLIPS: And so, what is it you're monitoring? What could lead to a bigger explosion? Is it the gases? Is it the heat?

PIERSON: Well, we know there's magma down there. We know that it is actively deforming the crater floor right now. Yesterday, we saw dramatic evidence of 50 to 100 feet of uplift of parts of the crater floor. So, we know the magma is coming up. It's coming in contact with wet ground underneath the glacier, and that's causing these steam bursts. The water is turning to steam and then blasting out.

But ultimately, when the magma gets to the surface, the gas within it will drive the eruption. It will provide the energy the eruption needs to push the ash up into the air.

PHILLIPS: And so, when you say there could be another explosion, how big it could get, Tom? I mean, obviously nothing like 1980, right?

PIERSON: Right. We're looking at something much, much smaller than 1980. If it were -- if it were a big batch of magma, we would be seeing deformation on the outer flanks of the volcano now, and we're not. All of those instruments are remaining stable. All our deformation right now is confined within the crater itself.

PHILLIPS: Any other concerns environmentally right now, or landscape-wise?

PIERSON: None right now. The ash, really in small amounts, is relatively harmless. It's a bit of an inconvenience for people. And if people have breathing difficulties, it sometimes can exacerbate those.

But really, we're fairly isolated out here in the country. There's lots of national forest and private timberland around and no large communities close by.

PHILLIPS: Inconvenience for some, tourist attraction for a number of other folks. Tom Pierson with the USGS, thank you so much. All right.

PIERSON: You're very welcome.

PHILLIPS: Now to the violent situation in Iraq. Two car bombs exploded in Baghdad this morning. At least 21 people killed, dozens were injured. Both bombs went off near the southern entrance of the green zone.

U.S. forces target insurgents once again in Fallujah. Coalition officials say that airstrikes were launched at an Abu Musab al-Zarqawi terror network. Hospital officials say at least eight people were killed there.

And a young victim in attack in the town of Baquba. Mortar rounds hit the city's municipality compound, killing a 13-year-old and injuring eight others.

And Poland may be withdrawing its troops from Iraq. Officials say there are discussions now about reducing troops by 40 percent by January and having all of them out by the end of next year. Poland's president says a final decision will be made after the Iraqi elections in January. There are about 2,500 Polish troops in Iraq now.

Secretary of Defense Donald Rumsfeld speaking in front of the Council on Foreign Relations. Barbara Starr was there monitoring what he had to say. What came about, Barbara?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, Kyra, monitoring what the secretary had to say at this lunchtime speech up in New York City, he answered a number of tough, pointed questions on the situation in Iraq and the war on terrorism.

Now, in Iraq, of course, it is the U.S. policy at the moment that Iraqi security forces will be key to long-term success over the insurgency in Iraq. So, the secretary was asked by someone in the audience what about the Iraqi security forces that have chosen not to fight, especially in Fallujah back in the springtime when the fighting by U.S. forces was so heavy there.

The secretary, giving a first-time answer on this point, saying in some instances it was understandable that the Iraqis didn't fight. Here's what he had to say.

(BEGIN VIDEO CLIP)

DONALD RUMSFELD, DEFENSE SECRETARY: There have been instances where Iraqi security forces were not well enough trained or well enough equipped, and they ran up against folks that were better trained and better equipped. And they left.

I do not consider that cowardice; I consider it prudent. If you've got a squirt gun and they've got an AK-47, it's best to come back another day.

(END VIDEO CLIP)

STARR: So, the secretary of defense saying in some case it may be prudent, not cowardice, to not engage in a fight.

Now, on another question, he asked about al Qaeda and Saddam Hussein. Someone in the audience saying very pointedly, once and for all, what was the relationship between Saddam Hussein and Osama bin Laden's al Qaeda network? The secretary began by saying he wasn't going to answer that question, but then he gave this answer.

(BEGIN VIDEO CLIP)

RUMSFELD: I have seen the answer to that question migrate in the intelligence community over a period of a year in the most amazing way.

Second, there are differences in the intelligence community as to what the relationship was. To my knowledge, I have not seen any strong, hard evidence that links the two.

(END VIDEO CLIP)

STARR: So, one of the Bush administration's so-called hard liners, Defense Secretary Donald Rumsfeld, saying today he sees no hard evidence of a link between Saddam Hussein and al Qaeda, something that was often discussed by Bush administration officials during the lead up to the war in Iraq -- Kyra?

PHILLIPS: All right. Barbara Starr, live from the Pentagon, thank you.

Well, let's talk more about the U.S. military action in Iraq: what it means for coalition forces and Iraqi elections set for January. CNN military analyst, retired Major General Don Shepperd, joining us live from Tucson. Good to see you, General.

MAJ. GEN. DON SHEPPERD (RET.), CNN MILITARY ANALYST: Good morning, Kyra.

PHILLIPS: Well, a number of things to talk about. Let's hit Samarra first. This was a very important city according to U.S. commanders to overtake -- or retake, I guess, the city again from extremists. Why? Why Samarra?

SHEPPERD: Well, fist of all, there's a lot of extremists and insurgents there, and it's the first step and probably the easiest step in the fairly large cities, a city of about 200,000.

Also, the Iraqi forces that were being used in this -- 3,000 American, 2,000 Iraqi forces -- are well enough trained and well enough equipped to do it and take part in the fighting. And then, most important, hopefully to maintain security after the city is cleared the first time. You don't want the insurgents to come back in, Kyra.

PHILLIPS: Well, for the first time, I had a chance to read some interesting details from different sources writing for different newspapers and magazines, General, about these foreign fighters, these insurgents coming in -- Sudanese, Egyptian, Tunisian -- saying and having papers.

That they come in saying they're chicken farmers, they're tea sellers, they're electricians. So, they infiltrate themselves in the cities and then, of course, turn around and join the fight against coalition forces.

Is this -- are these more creative tactics? Is this something you've always seen during a wartime scenario? Are they getting more create?

SHEPPERD: There's nothing new about this. The borders are extremely porous: the borders with Iran, the borders with Saudi Arabia, the borders with Syria and Turkey are ways to get through. These people can forge papers and get in.

But remember, once they get in, they have to go someplace, and that place has to provide them sanctuary with food, water, storage for their materials, and planning. And that's what you see going on in these cities, as you see U.S. and coalition forces dropping bombs in the cities. They get intelligence about these hideouts and where these people are gathering, and they go in and bomb them, Kyra.

PHILLIPS: Well, last week, too, we saw for the first time all those children that were targeted. It was pretty heartwrenching. It was the first time that we saw such graphic video. And we saw so many kids that had been killed.

Is this a different tactic now? Maybe, OK, they're thinking we're taking out U.S. troops -- we're attempting to take U.S. troops. We're attempting to take out police stations, recruits, Iraqis trying to rebuild the city. Now it's time to go for the children. Is this the mindset?

SHEPPERD: I don't think so. I think there's two things about this. I don't know whether we intentionally targeted those children or it just ended up happening in that particular fashion, but clearly the insurgents are trying to sew panic among the population.

They're trying to kill civilians, if you will -- not U.S. forces, where they get beat every time, but civilians -- so that the civilians will rise up and say, "Hey, we're better off without the United States here. We would rather have security than a future."

And that's what this is about. It's a fight for the future. And so, the more they can do, the more they can kill, the more they can assassinate, the more they can intimidate, the more they can keep people from serving or voting, they become victors. And it's a very effective tactic, Kyra.

PHILLIPS: Will those elections happen in January?

SHEPPERD: It appears they will happen. Prime Minister Allawi has said they will happen. He's staked his reputation on it.

How representative they will be and whether or not particularly the Sunnis will boycott the elections and stay out is the key question. So, I think they're going to happen, and we're going to have to live with the results. And it's going to be ugly.

And by the way, the violence won't stop at this election. There's another election at the end of '05 for the real government. You can expect violence all next year.

PHILLIPS: General Don Shepperd, thanks for the reality check.

Take a quick break. More LIVE FROM after this.

ANNOUNCER: You're watching LIVE FROM on CNN, the most trusted name in news.

(COMMERCIAL BREAK)

PHILLIPS: Well, there's a winner in a unique race into space. CNN space correspondent and, of course, my co-anchor Miles O'Brien saw it all from Mojave, California. He joins us now live from Mount St. Helens (sic), finally talking about the X Prize.

MILES O'BRIEN, CNN SPACE CORRESPONDENT: Now we've got our eye back on the prize, Kyra, just as it should be. Even as we speak, the X Prize team, the team -- Burt Rutan's team, funded by Microsoft billionaire Paul Allen, are giving a news conference offering some comments about what we witnessed just a few hours ago.

Take a look at the scene. This was a little after 7:00 local time, about 10:00 eastern -- a little before, actually. The White Knight aircraft carrying SpaceShipOne, only about 6,000 pounds in total with fuel, on its way up to altitude pretty close to 50,000 feet. And that's where the real fun began for the pilot, 51-year-old Brian Binnie.

Down he went, about three seconds after departing from White Knight. Boom, he hit that rocket motor, and off they went, straight up on a rapid elevator ride straight to space, setting a record and then some that was first set by the X-15 back in the early '60, well surpassing the 328,000 feet required to win the $10 million Ansari X Prize.

You'll recall the Ansari X Prize calls for a spacecraft capable of carrying three people to fly to space and back safely twice in as many weeks. Well, they did it twice successfully in five days.

This particular flight not as hairy as the first flight. Pilot Mike Melvill, at about the point you're looking at right now, got involved in a wild roll, 29 rolls in all. They tweaked it. They put it through the simulator and had a nice, well, routine kind of flight, if you can call it that.

The landing was smooth, too, and this was important for Brian Binnie. Twenty-year Navy veteran, when he landed SpaceShipOne in December 17th, 2003, after taking it supersonic for the first time, he came down hard. He is, after all, a Navy veteran, thought he was landing on an aircraft carrier, perhaps. But he came in steep, landed hard, and broke the main landing year. That bruised his pilot ego significantly, although did not hurt him, scraped up the plane.

Today, he just painted it on, and then enjoyed a victory tour, becoming the second civilian astronaut. It's a little bit of space history, and there's a lot of big talk here about a whole new space age. A new space race for civilians this time, perhaps paving the way for allowing ticket-paying members of the general public -- albeit well healed, initially -- to fly to space just like the boys and girls who wear the white scarves for NASA and for the other space agencies run by the governments.

So, that's the scene here now, Kyra. The Mojave High Desert once again playing host to a bit of aeronautical and space history. This time, the little guy at the stick as that piece of history was written and that $10 million prize was won -- Kyra?

PHILLIPS: Miles, what's he going to do with the $10 million?

O'BRIEN: Going to Disney World. No, actually...

PHILLIPS: I see the commercial right now.

O'BRIEN: ... the $10 million -- the $10 goes to Paul Allen, who funded this project 100 percent. And as the funder, he gets it. But he's not going to pocket it. He's going to take a portion of it, a good portion of it, give it back to Burt Rutan's team at Scaled Composites. And Burt has a group together that are going to dole out bonuses to the entire team.

So, that $10 million will go in the pockets of the 100-and-some- odd employees who put this amazing spectacle together today.

PHILLIPS: So, did you work out a seat in one of these spacecrafts?

O'BRIEN: Well, that's the subject of negotiations at the moment, Kyra. I'm working on that right now. There's no additional plans on the books right now to fly SpaceShipOne again.

Burt has a plan to build SpaceShipTwo, essentially. Sir Richard Branson of Virgin Airlines has contracted with him, bought the technology. Wants Burt Rutan to build him a seven-seat craft. And he's going to start selling tickets, he figures, as soon as 2007. They'll open up a hotel here in Mojave and turn this little one stoplight kind of town into, who knows, maybe a five-star destination for the rich and famous.

That will be something. For anybody who's been to Mojave, they will understand that.

PHILLIPS: That's true. That is very true. All right, Miles. We'll see you back here tomorrow.

Well, Honda or Hyundai: Which car do you think ranked highest on a consumer survey? We're going to have the results of a new report that just might surprise you.

(COMMERCIAL BREAK)

PHILLIPS: A potentially landmark case opens the 2004-2005 Supreme Court term. And justices heard arguments about whether federal sentencing guidelines should be dismantled. Judges throughout the country are delaying sentences or handing down lighter penalties because of the confusion.

Telemarketers will not get their day before the Supreme Court. The high court is refusing to hear a challenge to the federal "do not call" telephone list. Telemarketers claim that the law violated their free speech rights and could cost up to two million workers their jobs.

And a California Catholic charity has lost its birth control appeal. The Supreme Court let stand a ruling requiring the charity to include prescription contraceptives in its employee health insurance plan. The charity argued covering birth control conflicts with its religious beliefs.

Well, what car brands offer the best values for buyers? Rhonda Schaffler joins us now live from the New York Stock Exchange with an interesting story. Hi, Rhonda.

RHONDA SCHAFFLER, CNN SR. BUSINESS CORRESPONDENT: Hi there, Kyra.

If you're a car snob, this one might actually surprise you. It is also bad news for Detroit's big three automakers. Cars made by Korea's Hyundai are gaining respect. They're rated as one of the best values among all the makes.

According to a survey of car owners by consulting firm Strategic Vision, the once maligned budget brand has moved up in the rankings to number two in value behind only the luxury brand Lexus. Hyundai scored well because its vehicle quality has improved, it's models have a long warranty, and they're affordable.

However, except for Cadillac, domestic automakers GM, Ford, and Chrysler are missing from the top 10. Big rebates and low-cost financing have made their cars more affordable, but that's not causing buyers to see them as a better value -- Kyra?

PHILLIPS: All right, Rhonda, meanwhile how are things looking on Wall Street?

(STOCK MARKET REPORT)

PHILLIPS: Sounds good, Rhonda. Thank you so much. We'll see you tomorrow.

We're going to take a quick break, more LIVE FROM and then "INSIDE POLITICS" with Judy Woodruff. We'll be right back.

(COMMERCIAL BREAK)

PHILLIPS: Right now in the news -- Mount St. Helens puts on another pyro-classic show following Friday's so-called hiccup. The volcano started spewing steam again about two hours ago. Live pictures now from the volcano. Weekend tremors, air quality tests, and a growing bulge in the crater point to a possible buildup of magma in the volcano's neck. Seismologists say today's activity qualifies as a small eruption, and Mount St. Helens remains under level three alert, the highest alert.

Did convicted shoe bomber Richard Reid have a co-conspirator when he tried to blow up an American Airlines jet in December of 2001? In just a few minutes, Attorney General John Ashcroft is expected to announce the indictment of a man currently in British custody. A seven-count indictment alleges that Sajid Mohammed Badat and Richard Reid obtained custom-made shoe bombs in Afghanistan. CNN will carry that news conference live just ahead.

And it turns out the sky's not the limit after all. SpaceShipOne proves Wednesday's successful flight was no fluke with today's second trip beyond the edge of earth's atmosphere. The SpaceShipOne team won the $10 million X Prize. Pilot Brian Binnie also collecting a well- earned victory lap.

Judy Woodruff now, straight ahead with "INSIDE POLITICS" right now.

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