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CNN Live At Daybreak

A Nuclear Scandal Widens; Michael Jackson Takes to the Airwaves

Aired February 07, 2005 - 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: Straight ahead on DAYBREAK, a nuclear scandal widens, and that has tensions around the world mushrooming.
Also, on the defensive, Michael Jackson takes to the airwaves. We'll find out what effect that may have on his trial.

And the Patriot Act was in full force at the Super Bowl. We will recap Sunday's showdown.

It is Monday, February 7.

You are watching DAYBREAK.

And good morning to you.

From the Time Warner Center in New York, I'm Carol Costello, along with Chad Myers.

Now in the news, a devastating day for Iraqi police officers. Twenty-five killed so far; 14 by a car bomb at a police station in Ba'qubah; 11 in a mortar attack on a hospital in Mosul.

Condoleezza Rice is pushing ahead with Mideast peace efforts. The secretary of state has just wrapped up a meeting with Palestinian Authority President Mahmoud Abbas. She met earlier with Israeli leaders. We'll have a live report from Ramallah in three minutes.

And we're just getting word that a hostage stand-off in the Swiss capital of Berne is over. State radio reporting three hostage takers have left the Spanish consulate. All the staff members are safe.

And any minute now, we expect to get an update from the Vatican on Pope John Paul II's health. He delivered a blessing from his hospital room window in Rome yesterday. The pope has been hospitalized since last Tuesday with breathing problems likely linked to the flu. We'll bring you that update live when it happens.

To the forecast center now and Chad -- good morning.

CHAD MYERS, CNN METEOROLOGIST: Good morning, Carol.

I bet you didn't watch any racing this weekend, did you?

COSTELLO: No, I didn't.

MYERS: No.

COSTELLO: I'm sorry.

MYERS: Twenty-four hour Rolex of Daytona. You missed it. They had 14 hours of live broadcast.

COSTELLO: That's just sick.

MYERS: I actually watched 10 of the 14 live.

COSTELLO: That's even sicker.

MYERS: I know, but -- Jimmy Johnson came in second.

COSTELLO: Great!

MYERS: Yes, I know. I mean, and some of the NASCAR guys didn't do too badly down there in Daytona. Obviously, Speed Week is now in full swing.

(WEATHER REPORT)

COSTELLO: Washington's new top diplomat is breaking new ground in the Middle East today. Secretary of State Condoleezza Rice is trying to pave the way for the peace process to move forward. She and Palestinian Authority President Mahmoud Abbas just wrapped up a news conference in Ramallah, and she called this moment in time promising.

(BEGIN VIDEO CLIP)

CONDOLEEZZA RICE, NATIONAL SECURITY ADVISER: Palestinians voted last month for a president who ran on a platform of democratic reform, a negotiated settlement to the conflict between the Israelis and the Palestinians and an end to violence. And that, in our view, is the right approach. And we are pleased that President Abbas is following through on his mandate to take concrete steps on security and to restore law and order.

We are also pleased that security coordination has begun taking place directly between the Israelis and the Palestinians and that other constructive contacts have resumed. This is, indeed, the way forward, and we hope that this bodes well for the summit tomorrow in Sharm el-Sheikh.

(END VIDEO CLIP)

COSTELLO: Let's go live now to the West Bank town of Ramallah.

CNN's Guy Raz standing by -- good morning, Guy.

Tell us more.

GUY RAZ, CNN CORRESPONDENT: Good morning, Carol.

A promising moment, indeed, and that was essentially the purpose of this visit by Condoleezza Rice here to Ramallah to meet with Palestinian officials, one of the highest level meetings between American and Palestinian officials in years, and certainly the first time that Condoleezza Rice has been to Ramallah now since 2002.

Now, in that news conference that we just saw an excerpt from, Condoleezza Rice pledged to appoint a U.S. security coordinator to come to the region, perhaps as soon as by the end of this month, somebody who will make sure that this fragile and delicate period of quiet and calm between the both sides remains in place.

Now, she also promised to help the Palestinian Authority rebuild its economy and strengthen its security apparatus.

We also heard relatively strong language from Condoleezza Rice calling, essentially urging, both sides not to pre-judge any final status talks. So one the one hand, persuading the Palestinian Authority to crack down on militant groups, to continue to keep this period of calm going; but also on the Israelis not to expand settlements in the West Bank and perhaps not to continue the construction of the barrier in the West Bank and areas that may affect Palestinians who live there -- Carol.

COSTELLO: Guy Raz reporting from Ramallah this morning.

Thank you.

It is being called austere. President Bush is sending Congress a $2.5 trillion budget today. The president revealed in his State of the Union address it slashes or kills 150 domestic programs that he says aren't working.

CNN correspondent Dick Uliano now joins us live from Washington with more details -- good morning, Dick.

DICK ULIANO, CNN RADIO CORRESPONDENT: And a very good morning to you, Carol.

COSTELLO: You know, the president's plan cuts funding to federal programs.

If it passes, will taxpayers notice?

ULIANO: Well, the $2.5 trillion budget plan the president is sending Congress today definitely reorganizes priorities because the president says he wants to cut the deficit over the next several years. So, yes, taxpayers would notice that this would be the toughest budget in 11 years, seeking cuts in 150 different programs in domestic spending, things like the big community development block grants, which go for housing for poor people in some of the big cities.

There would be a couple of little interesting increasing that people might notice, like an increase in Pell Grants for education and a new $1.5 billion program to improve education at the high school level.

COSTELLO: Interesting. You know, the budget doesn't take into account the cost of the war, Social Security reform or permanent tax cuts, important and very expensive items.

Why aren't they included in this budget, Dick?

ULIANO: Well, the president has set a goal of reducing the budget deficit over the next several years and this year, this would be the third straight budget deficit for the federal government, $427 billion if all of this goes the same way. So the president wants the deficit to really, the numbers to look as good as they possibly can.

But remember, some of these programs aren't even soup yet, so to speak. Social Security is simply a proposal. It's estimated that the changes could cost $2 trillion over 10 years, but nobody really knows what those changes are going to be yet -- Carol.

COSTELLO: Exactly.

You know, but without those things, I mean the -- I mean even -- we know the costs of the war because the administration has just requested, what, $80 billion. If those things aren't included, can the president really cut the deficit in half?

ULIANO: Well, that's the goal. This, as I say, would be the third straight year. The White House believes that it can. There are critics, Democrats, who suggest that the way the president is setting up the budget is that you will see some of these reductions over the next five years. But, for example, Senate budget Democrat Kent Conrad says the spending would explode in the five years after that.

So you'll see different numbers. What we know for sure is it's going to be a big fight, because Democrats want -- and Republicans -- cherish some of these programs, 150 of them, that the president is recommending some outright cuts in.

COSTELLO: Interesting.

Dick Uliano live in Washington, joining us this morning.

Thank you.

Here are some stories to keep an eye out for the rest of the week.

Tomorrow it's the annual Feast of Fat Tuesday for Mardi Gras. So, splurge in New Orleans and around the country, and at carnival in Rio and around the world.

On Wednesday, the U.S. Postal Service releases the Ronald Reagan stamp, with four different likenesses of the late president.

On Thursday, it's the Democratic National Committee's winter meeting in Washington. Howard Dean is the frontrunner for the new party leader. And on Friday, perhaps Winston Churchill's brightest hour. A museum dedicated entirely to his life opens in London. Churchill died just over 40 years ago.

It's all over, Super Bowl 39, that is. But probably not all the shouting, especially around Boston.

CNN's Larry Smith joins us live from Jacksonville with a wrap-up of the game.

And it was a pretty good game.

LARRY SMITH, CNN CORRESPONDENT: I think it is, but it always is, though, Carol, when the Patriots play. What is it about New England and close Super Bowl wins? Now three Super Bowl championships in four years, all three by a margin of three points.

Tom Brady threw for 236 yards and two touchdowns. And wide receiver Deion Branch was named the game's most valuable player for tying a Super Bowl record with 11 catches in the 24-21 victory over Philadelphia.

The Patriots' defense forced four turnovers to help Brady improve to a record 9-0 in the post-season.

(BEGIN VIDEO CLIP)

RICHARD SEYMOUR, PATRIOTS OFFENSIVE LINEMAN: We just hung tough. That's what it's all about. When the tough situations are here, how are you going to react in those situations? And we've just been able to do it all year long. And it's no different tonight.

TERRELL OWENS, EAGLES WIDE RECEIVER: We made too many turnovers. And on this stage we knew coming in, you know, they're a great team on offense. Obviously they're good on defense. And we knew that.

TOM BRADY, PATRIOTS QUARTERBACK: We haven't had the day off in seven months, at least I haven't had a day off in seven months. And it's all for this. And wait until we get that Super Bowl ring and go to the White House and hopefully have a parade again. It's another championship for the city of Boston, another championship for our great franchise.

(END VIDEO CLIP)

SMITH: Yes, they've been through this before. Obviously, they know the routine -- getting the rings, the White House. Head Coach Bill Belichick of the New England Patriots becomes just the fourth coach to win at least Super Bowl titles. And they mentioned, too, about the city of Boston and the championships. Now, two Super Bowl championships and a World Series title in the same 12 month span. Only Pittsburgh did that, 25 years ago. So it has been a banner, banner year for the city of Boston and now the Patriots once again champions of the Super Bowl.

Let's go back to you. COSTELLO: Yes, Larry, I wanted to read you an e-mail from a viewer from Massachusetts. This is from Dave. He says: "The dynasty is underway. We have the Patriots, Red Sox and we didn't even vote for Bush here in Massachusetts. What a time to be a Bostonian."

You know, what, it was interesting...

SMITH: It's still a very good year for them.

COSTELLO: ... that two presidents were at the Super Bowl game. A lot of celebrities showed up. Tell us what that was like.

SMITH: Well, when you get to this kind of a game, it is on the world stage and you're liable to see anybody at the game, at all the parties and functions all during the week. I know I saw a lot of celebrities at the Maxim Party the other night, Saturday night, before the game.

It's one of these game where it's a seen and be seen. It's bigger than just the game itself. It is an event, one of the biggest events on the world stage, even if you're not a sports fan. And that's why you see so many celebrities and dignitaries show up at these kinds of games.

COSTELLO: Larry, we want names.

Give us names, Larry.

SMITH: No names. A lot of people out there, a lot of football players, how's that?

COSTELLO: Jeez. Man, I hate when you don't spill the dirt.

What did you think of the half-time show? Did the crowd get into the half-time show?

SMITH: You know, I thought it was great. Obviously no wardrobe malfunctions, so everyone was happy with that. But, you know, it's Paul McCartney. He's legendary. But I think it was also nice, after last year and the fiasco that happened with half-time, that the focus was on the game and the phenomenal performance, really, by both teams. It was summed up very well there, that the Eagles had just way too many turnovers to get a victory. But they played an outstanding game.

The Patriots, though, there's no question, the dynasty is in place right now with three titles in four years.

COSTELLO: Larry Smith live for us this morning.

Thank you.

We've got more on Super Sunday for you. NFL insider Paul Atner of the "Sporting News" magazine will join us live from Jacksonville. That will come your way in just about 40 minutes.

And if you want to weigh in the Super Bowl, the half-time show or your favorite ads, daybreak@cnn.com. That's daybreak@cnn.com.

Just ahead, the sonogram, the newest weapon for anti-abortion activists.

Then, A.Q. Khan, Pakistan's nuclear scientist and nuclear salesman. A report on him just in time.

And a delay in the jury selection for the Michael Jackson trial. But that has not stopped them from making another public statement. We'll talk with our legal analyst, Kendall Coffey, next.

(COMMERCIAL BREAK)

(STOCK MARKET REPORT)

COSTELLO: We're just getting in word from the Vatican this morning on the pope's health. The Vatican says it is extending John Paul II's stay in a Rome hospital by a few days. But it says that is just a precaution and the pope's health continues to improve. As you know, he was rushed to the hospital last week suffering from a respiratory infection.

Defense Secretary Donald Rumsfeld is rejecting calls for a timetable for a U.S. troop withdrawal from Iraq. Rumsfeld told CNN's Wolf Blitzer the level of insurgency cannot be predicted.

In money news, pump prices up again. A national survey finds the average price for a self-serve regular -- for a gallon of self-serve regular gas rose more than $0.06 over the past two weeks.

In culture, actors honor their own at the Screen Actors Guild Awards. "Sideways" won the top prize in the best ensemble cast category. It beat out "Million Dollar Baby" and "The Aviator."

In sports, if you haven't heard, the Pats did it again. The New England Patriots are Super Bowl champs for the third time in four seasons. They beat the Philadelphia Eagles 24-21 last night in Jacksonville -- good morning, Chad.

MYERS: Good morning.

A field goal again, now the third time they've won that game by a field goal.

Good morning, everybody.

(WEATHER REPORT)

COSTELLO: Those are the latest headlines for you this morning.

Some news for all of you online auction fans. EBay is rethinking some of its fees. Find out if you will benefit.

Plus, an exclusive look -- the man behind the network supplying nuclear technology to some pretty dangerous clients, like, perhaps, Iran. Stay with us.

(COMMERCIAL BREAK)

CARRIE LEE, CNN CORRESPONDENT: Sellers are complaining and eBay is responding.

Good morning, everyone.

I'm Carrie Lee at the Nasdaq market site.

EBay users have been giving the company some negative feedback and now eBay is responding by lowering some fees and expanding its customer support.

Last month, the online auction company announced some fee increases. Well, those increases were met with anger and threats of boycotts by users. So eBay is responding by lowering listing fees for certain items. They also plan to credit a one month fee, $15.95, for eBay store users. A group of eBay store operations had threatened to leave the company after the fee increases. EBay is also going to expand its customer service, tone down the automated e-mails, decrease the amount, that is, and also make it easier for users to reach a live operator.

So eBay is responding to its very broad customer base.

Turning to stocks, after very nice gains last week, the Dow higher by 2.8 percent. Futures are looking pretty flat for today's session. Tobacco stocks will be in focus today, after a favorable legal ruling on Friday. Altria, parent company of Philip Morris, one of the Dow 30, saw nice gains on that day, and we will see if there's any follow through into today's session.

And that is the latest business news.

I'm Carrie Lee at the Nasdaq market site.

(COMMERCIAL BREAK)

COSTELLO: America's nuclear arsenal is getting an upgrade.

According to the "New York Times," scientists are busy making a new generation of nuclear arms. The goal? To make nukes sturdier and more reliable. The new models could be produced in the next five to 10 years.

And while American scientists work on the U.S. nuclear arsenal, Iran fires off a warning. Iran's chief nuclear negotiator says it will retaliate if the U.S. attacks in order to derail Iran's nuclear activities. This is in response to the remarks the president made in his State of the Union speech. Tehran still insisting its nuclear program is for peaceful purposes.

And at this time, when the international community is in this potential showdown with Iran, comes a disturbing article about Pakistan's father of the nuclear bomb, A.Q. Khan. As always on Monday, and just in time, correspondent Viveca Novak.

Good morning, Viveca.

VIVECA NOVAK, "TIME" MAGAZINE: Good morning, Carol.

COSTELLO: Well, we know that Mr. Khan sold nuclear secrets, but "Time" is reporting his list of nuclear clients is dizzying. Iran is on that list.

Tell us more.

NOVAK: Well, it's possible. Right now there are investigations going on into whether Saudi Arabia, perhaps Egypt and some other Arab countries, may also have bought centrifuges and designs from the Kahn network.

COSTELLO: The United States wants to question Dr. Khan. Pakistan is now allowing it to do that.

Why?

NOVAK: Well, Pakistan has protected Dr. Khan for quite some time. In fact, Musharraf pardoned him after he was arrested and he's basically living in seclusion, in house arrest. But we are still, you know, not -- we have not been allowed to question him directly. There is -- it looks like as though there is going to be access given to his former aide, which is almost as good. They worked very closely together.

But he has been, khan himself has been very protected.

COSTELLO: And that's because he is so, I guess, worshipped within Pakistan. It's really politically sensitive, you know, as to how President Musharraf treats him, isn't it?

NOVAK: Right. He may be the most famous person in Pakistan, yes.

COSTELLO: "Time" is also reporting that Khan made, what, $400 million at one point selling nuclear secrets.

Did he have some other motive besides just money?

NOVAK: Well, I think his motive, especially after 1998, his motive became, I think, increasingly religious. He became much more devout as a Muslim and he wanted to help the Muslim world essentially arm itself and once again be great. And so I think he more actively pursued Arab clients after that.

COSTELLO: So how worried should Americans be in light of his apparent negotiations, or you know, deals with Iran and Saudi Arabia and others?

NOVAK: Right. That's the question. It is possible that because some members of Pakistan's military and intelligence establishment are sympathetic to al Qaeda, it is possible that he has had contact with al Qaeda. It's also possible, of course, that some of these client states that he had have been in touch with members of terrorist groups and are selling technology that they acquired through khan to terrorist groups.

And some members of our intelligence establishment believe that it is in some ways a race against time, because it's inevitable that terrorist groups are going to get this technology, if it is so prevalent out there thanks to A.Q. Khan.

COSTELLO: Viveca Novak, thank you for joining us live.

NOVAK: It's good to be with you.

COSTELLO: If you want to know more, the article is in "Time" magazine this week.

Just ahead in the next half hour of DAYBREAK, church groups are using a controversial practice to discourage women from having abortions. We'll hear from people on both sides of that hot issue.

Plus, the Michael Jackson case -- some seats in the courtroom will be conspicuously empty today. Kendall Coffey will be along to talk about the significance of this.

(COMMERCIAL BREAK)

COSTELLO: Good morning to you.

Welcome to the last half hour of DAYBREAK.

From the Time Warner Center in New York, I'm Carol Costello, along with Chad Myers.

Now in the news, Secretary of State Condoleezza Rice announces the United States will give $40 million to the Palestinians over the next 90 days. Meeting in Ramallah with the Palestinian leader, Rice says the $40 million is the first installment on $350 million President Bush promised the Palestinians earlier.

A foreign ministry official in Berne, Switzerland confirms that a hostage stand-off there has ended. State radio reports three hostage takers left the Spanish consulate. All the staff members are safe.

A deadly morning for police in Iraq. More than two dozen officers and recruits have been killed in two separate attacks. Mortars struck a police station in Mosul and a car bomb went off at a police station in Ba'qubah.

And the Associated Press says President Bush is sending Congress a $2.5 trillion budget plan today. The plan slashes or kills 150 domestic programs, but it does not include the cost of the Iraq war.

Let's head to the Forecast Center to say good morning to Chad -- good morning.

MYERS: Good morning, Carol. (WEATHER REPORT)

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 February 7, 2005 - 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: Straight ahead on DAYBREAK, a nuclear scandal widens, and that has tensions around the world mushrooming.
Also, on the defensive, Michael Jackson takes to the airwaves. We'll find out what effect that may have on his trial.

And the Patriot Act was in full force at the Super Bowl. We will recap Sunday's showdown.

It is Monday, February 7.

You are watching DAYBREAK.

And good morning to you.

From the Time Warner Center in New York, I'm Carol Costello, along with Chad Myers.

Now in the news, a devastating day for Iraqi police officers. Twenty-five killed so far; 14 by a car bomb at a police station in Ba'qubah; 11 in a mortar attack on a hospital in Mosul.

Condoleezza Rice is pushing ahead with Mideast peace efforts. The secretary of state has just wrapped up a meeting with Palestinian Authority President Mahmoud Abbas. She met earlier with Israeli leaders. We'll have a live report from Ramallah in three minutes.

And we're just getting word that a hostage stand-off in the Swiss capital of Berne is over. State radio reporting three hostage takers have left the Spanish consulate. All the staff members are safe.

And any minute now, we expect to get an update from the Vatican on Pope John Paul II's health. He delivered a blessing from his hospital room window in Rome yesterday. The pope has been hospitalized since last Tuesday with breathing problems likely linked to the flu. We'll bring you that update live when it happens.

To the forecast center now and Chad -- good morning.

CHAD MYERS, CNN METEOROLOGIST: Good morning, Carol.

I bet you didn't watch any racing this weekend, did you?

COSTELLO: No, I didn't.

MYERS: No.

COSTELLO: I'm sorry.

MYERS: Twenty-four hour Rolex of Daytona. You missed it. They had 14 hours of live broadcast.

COSTELLO: That's just sick.

MYERS: I actually watched 10 of the 14 live.

COSTELLO: That's even sicker.

MYERS: I know, but -- Jimmy Johnson came in second.

COSTELLO: Great!

MYERS: Yes, I know. I mean, and some of the NASCAR guys didn't do too badly down there in Daytona. Obviously, Speed Week is now in full swing.

(WEATHER REPORT)

COSTELLO: Washington's new top diplomat is breaking new ground in the Middle East today. Secretary of State Condoleezza Rice is trying to pave the way for the peace process to move forward. She and Palestinian Authority President Mahmoud Abbas just wrapped up a news conference in Ramallah, and she called this moment in time promising.

(BEGIN VIDEO CLIP)

CONDOLEEZZA RICE, NATIONAL SECURITY ADVISER: Palestinians voted last month for a president who ran on a platform of democratic reform, a negotiated settlement to the conflict between the Israelis and the Palestinians and an end to violence. And that, in our view, is the right approach. And we are pleased that President Abbas is following through on his mandate to take concrete steps on security and to restore law and order.

We are also pleased that security coordination has begun taking place directly between the Israelis and the Palestinians and that other constructive contacts have resumed. This is, indeed, the way forward, and we hope that this bodes well for the summit tomorrow in Sharm el-Sheikh.

(END VIDEO CLIP)

COSTELLO: Let's go live now to the West Bank town of Ramallah.

CNN's Guy Raz standing by -- good morning, Guy.

Tell us more.

GUY RAZ, CNN CORRESPONDENT: Good morning, Carol.

A promising moment, indeed, and that was essentially the purpose of this visit by Condoleezza Rice here to Ramallah to meet with Palestinian officials, one of the highest level meetings between American and Palestinian officials in years, and certainly the first time that Condoleezza Rice has been to Ramallah now since 2002.

Now, in that news conference that we just saw an excerpt from, Condoleezza Rice pledged to appoint a U.S. security coordinator to come to the region, perhaps as soon as by the end of this month, somebody who will make sure that this fragile and delicate period of quiet and calm between the both sides remains in place.

Now, she also promised to help the Palestinian Authority rebuild its economy and strengthen its security apparatus.

We also heard relatively strong language from Condoleezza Rice calling, essentially urging, both sides not to pre-judge any final status talks. So one the one hand, persuading the Palestinian Authority to crack down on militant groups, to continue to keep this period of calm going; but also on the Israelis not to expand settlements in the West Bank and perhaps not to continue the construction of the barrier in the West Bank and areas that may affect Palestinians who live there -- Carol.

COSTELLO: Guy Raz reporting from Ramallah this morning.

Thank you.

It is being called austere. President Bush is sending Congress a $2.5 trillion budget today. The president revealed in his State of the Union address it slashes or kills 150 domestic programs that he says aren't working.

CNN correspondent Dick Uliano now joins us live from Washington with more details -- good morning, Dick.

DICK ULIANO, CNN RADIO CORRESPONDENT: And a very good morning to you, Carol.

COSTELLO: You know, the president's plan cuts funding to federal programs.

If it passes, will taxpayers notice?

ULIANO: Well, the $2.5 trillion budget plan the president is sending Congress today definitely reorganizes priorities because the president says he wants to cut the deficit over the next several years. So, yes, taxpayers would notice that this would be the toughest budget in 11 years, seeking cuts in 150 different programs in domestic spending, things like the big community development block grants, which go for housing for poor people in some of the big cities.

There would be a couple of little interesting increasing that people might notice, like an increase in Pell Grants for education and a new $1.5 billion program to improve education at the high school level.

COSTELLO: Interesting. You know, the budget doesn't take into account the cost of the war, Social Security reform or permanent tax cuts, important and very expensive items.

Why aren't they included in this budget, Dick?

ULIANO: Well, the president has set a goal of reducing the budget deficit over the next several years and this year, this would be the third straight budget deficit for the federal government, $427 billion if all of this goes the same way. So the president wants the deficit to really, the numbers to look as good as they possibly can.

But remember, some of these programs aren't even soup yet, so to speak. Social Security is simply a proposal. It's estimated that the changes could cost $2 trillion over 10 years, but nobody really knows what those changes are going to be yet -- Carol.

COSTELLO: Exactly.

You know, but without those things, I mean the -- I mean even -- we know the costs of the war because the administration has just requested, what, $80 billion. If those things aren't included, can the president really cut the deficit in half?

ULIANO: Well, that's the goal. This, as I say, would be the third straight year. The White House believes that it can. There are critics, Democrats, who suggest that the way the president is setting up the budget is that you will see some of these reductions over the next five years. But, for example, Senate budget Democrat Kent Conrad says the spending would explode in the five years after that.

So you'll see different numbers. What we know for sure is it's going to be a big fight, because Democrats want -- and Republicans -- cherish some of these programs, 150 of them, that the president is recommending some outright cuts in.

COSTELLO: Interesting.

Dick Uliano live in Washington, joining us this morning.

Thank you.

Here are some stories to keep an eye out for the rest of the week.

Tomorrow it's the annual Feast of Fat Tuesday for Mardi Gras. So, splurge in New Orleans and around the country, and at carnival in Rio and around the world.

On Wednesday, the U.S. Postal Service releases the Ronald Reagan stamp, with four different likenesses of the late president.

On Thursday, it's the Democratic National Committee's winter meeting in Washington. Howard Dean is the frontrunner for the new party leader. And on Friday, perhaps Winston Churchill's brightest hour. A museum dedicated entirely to his life opens in London. Churchill died just over 40 years ago.

It's all over, Super Bowl 39, that is. But probably not all the shouting, especially around Boston.

CNN's Larry Smith joins us live from Jacksonville with a wrap-up of the game.

And it was a pretty good game.

LARRY SMITH, CNN CORRESPONDENT: I think it is, but it always is, though, Carol, when the Patriots play. What is it about New England and close Super Bowl wins? Now three Super Bowl championships in four years, all three by a margin of three points.

Tom Brady threw for 236 yards and two touchdowns. And wide receiver Deion Branch was named the game's most valuable player for tying a Super Bowl record with 11 catches in the 24-21 victory over Philadelphia.

The Patriots' defense forced four turnovers to help Brady improve to a record 9-0 in the post-season.

(BEGIN VIDEO CLIP)

RICHARD SEYMOUR, PATRIOTS OFFENSIVE LINEMAN: We just hung tough. That's what it's all about. When the tough situations are here, how are you going to react in those situations? And we've just been able to do it all year long. And it's no different tonight.

TERRELL OWENS, EAGLES WIDE RECEIVER: We made too many turnovers. And on this stage we knew coming in, you know, they're a great team on offense. Obviously they're good on defense. And we knew that.

TOM BRADY, PATRIOTS QUARTERBACK: We haven't had the day off in seven months, at least I haven't had a day off in seven months. And it's all for this. And wait until we get that Super Bowl ring and go to the White House and hopefully have a parade again. It's another championship for the city of Boston, another championship for our great franchise.

(END VIDEO CLIP)

SMITH: Yes, they've been through this before. Obviously, they know the routine -- getting the rings, the White House. Head Coach Bill Belichick of the New England Patriots becomes just the fourth coach to win at least Super Bowl titles. And they mentioned, too, about the city of Boston and the championships. Now, two Super Bowl championships and a World Series title in the same 12 month span. Only Pittsburgh did that, 25 years ago. So it has been a banner, banner year for the city of Boston and now the Patriots once again champions of the Super Bowl.

Let's go back to you. COSTELLO: Yes, Larry, I wanted to read you an e-mail from a viewer from Massachusetts. This is from Dave. He says: "The dynasty is underway. We have the Patriots, Red Sox and we didn't even vote for Bush here in Massachusetts. What a time to be a Bostonian."

You know, what, it was interesting...

SMITH: It's still a very good year for them.

COSTELLO: ... that two presidents were at the Super Bowl game. A lot of celebrities showed up. Tell us what that was like.

SMITH: Well, when you get to this kind of a game, it is on the world stage and you're liable to see anybody at the game, at all the parties and functions all during the week. I know I saw a lot of celebrities at the Maxim Party the other night, Saturday night, before the game.

It's one of these game where it's a seen and be seen. It's bigger than just the game itself. It is an event, one of the biggest events on the world stage, even if you're not a sports fan. And that's why you see so many celebrities and dignitaries show up at these kinds of games.

COSTELLO: Larry, we want names.

Give us names, Larry.

SMITH: No names. A lot of people out there, a lot of football players, how's that?

COSTELLO: Jeez. Man, I hate when you don't spill the dirt.

What did you think of the half-time show? Did the crowd get into the half-time show?

SMITH: You know, I thought it was great. Obviously no wardrobe malfunctions, so everyone was happy with that. But, you know, it's Paul McCartney. He's legendary. But I think it was also nice, after last year and the fiasco that happened with half-time, that the focus was on the game and the phenomenal performance, really, by both teams. It was summed up very well there, that the Eagles had just way too many turnovers to get a victory. But they played an outstanding game.

The Patriots, though, there's no question, the dynasty is in place right now with three titles in four years.

COSTELLO: Larry Smith live for us this morning.

Thank you.

We've got more on Super Sunday for you. NFL insider Paul Atner of the "Sporting News" magazine will join us live from Jacksonville. That will come your way in just about 40 minutes.

And if you want to weigh in the Super Bowl, the half-time show or your favorite ads, daybreak@cnn.com. That's daybreak@cnn.com.

Just ahead, the sonogram, the newest weapon for anti-abortion activists.

Then, A.Q. Khan, Pakistan's nuclear scientist and nuclear salesman. A report on him just in time.

And a delay in the jury selection for the Michael Jackson trial. But that has not stopped them from making another public statement. We'll talk with our legal analyst, Kendall Coffey, next.

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COSTELLO: We're just getting in word from the Vatican this morning on the pope's health. The Vatican says it is extending John Paul II's stay in a Rome hospital by a few days. But it says that is just a precaution and the pope's health continues to improve. As you know, he was rushed to the hospital last week suffering from a respiratory infection.

Defense Secretary Donald Rumsfeld is rejecting calls for a timetable for a U.S. troop withdrawal from Iraq. Rumsfeld told CNN's Wolf Blitzer the level of insurgency cannot be predicted.

In money news, pump prices up again. A national survey finds the average price for a self-serve regular -- for a gallon of self-serve regular gas rose more than $0.06 over the past two weeks.

In culture, actors honor their own at the Screen Actors Guild Awards. "Sideways" won the top prize in the best ensemble cast category. It beat out "Million Dollar Baby" and "The Aviator."

In sports, if you haven't heard, the Pats did it again. The New England Patriots are Super Bowl champs for the third time in four seasons. They beat the Philadelphia Eagles 24-21 last night in Jacksonville -- good morning, Chad.

MYERS: Good morning.

A field goal again, now the third time they've won that game by a field goal.

Good morning, everybody.

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COSTELLO: Those are the latest headlines for you this morning.

Some news for all of you online auction fans. EBay is rethinking some of its fees. Find out if you will benefit.

Plus, an exclusive look -- the man behind the network supplying nuclear technology to some pretty dangerous clients, like, perhaps, Iran. Stay with us.

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CARRIE LEE, CNN CORRESPONDENT: Sellers are complaining and eBay is responding.

Good morning, everyone.

I'm Carrie Lee at the Nasdaq market site.

EBay users have been giving the company some negative feedback and now eBay is responding by lowering some fees and expanding its customer support.

Last month, the online auction company announced some fee increases. Well, those increases were met with anger and threats of boycotts by users. So eBay is responding by lowering listing fees for certain items. They also plan to credit a one month fee, $15.95, for eBay store users. A group of eBay store operations had threatened to leave the company after the fee increases. EBay is also going to expand its customer service, tone down the automated e-mails, decrease the amount, that is, and also make it easier for users to reach a live operator.

So eBay is responding to its very broad customer base.

Turning to stocks, after very nice gains last week, the Dow higher by 2.8 percent. Futures are looking pretty flat for today's session. Tobacco stocks will be in focus today, after a favorable legal ruling on Friday. Altria, parent company of Philip Morris, one of the Dow 30, saw nice gains on that day, and we will see if there's any follow through into today's session.

And that is the latest business news.

I'm Carrie Lee at the Nasdaq market site.

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COSTELLO: America's nuclear arsenal is getting an upgrade.

According to the "New York Times," scientists are busy making a new generation of nuclear arms. The goal? To make nukes sturdier and more reliable. The new models could be produced in the next five to 10 years.

And while American scientists work on the U.S. nuclear arsenal, Iran fires off a warning. Iran's chief nuclear negotiator says it will retaliate if the U.S. attacks in order to derail Iran's nuclear activities. This is in response to the remarks the president made in his State of the Union speech. Tehran still insisting its nuclear program is for peaceful purposes.

And at this time, when the international community is in this potential showdown with Iran, comes a disturbing article about Pakistan's father of the nuclear bomb, A.Q. Khan. As always on Monday, and just in time, correspondent Viveca Novak.

Good morning, Viveca.

VIVECA NOVAK, "TIME" MAGAZINE: Good morning, Carol.

COSTELLO: Well, we know that Mr. Khan sold nuclear secrets, but "Time" is reporting his list of nuclear clients is dizzying. Iran is on that list.

Tell us more.

NOVAK: Well, it's possible. Right now there are investigations going on into whether Saudi Arabia, perhaps Egypt and some other Arab countries, may also have bought centrifuges and designs from the Kahn network.

COSTELLO: The United States wants to question Dr. Khan. Pakistan is now allowing it to do that.

Why?

NOVAK: Well, Pakistan has protected Dr. Khan for quite some time. In fact, Musharraf pardoned him after he was arrested and he's basically living in seclusion, in house arrest. But we are still, you know, not -- we have not been allowed to question him directly. There is -- it looks like as though there is going to be access given to his former aide, which is almost as good. They worked very closely together.

But he has been, khan himself has been very protected.

COSTELLO: And that's because he is so, I guess, worshipped within Pakistan. It's really politically sensitive, you know, as to how President Musharraf treats him, isn't it?

NOVAK: Right. He may be the most famous person in Pakistan, yes.

COSTELLO: "Time" is also reporting that Khan made, what, $400 million at one point selling nuclear secrets.

Did he have some other motive besides just money?

NOVAK: Well, I think his motive, especially after 1998, his motive became, I think, increasingly religious. He became much more devout as a Muslim and he wanted to help the Muslim world essentially arm itself and once again be great. And so I think he more actively pursued Arab clients after that.

COSTELLO: So how worried should Americans be in light of his apparent negotiations, or you know, deals with Iran and Saudi Arabia and others?

NOVAK: Right. That's the question. It is possible that because some members of Pakistan's military and intelligence establishment are sympathetic to al Qaeda, it is possible that he has had contact with al Qaeda. It's also possible, of course, that some of these client states that he had have been in touch with members of terrorist groups and are selling technology that they acquired through khan to terrorist groups.

And some members of our intelligence establishment believe that it is in some ways a race against time, because it's inevitable that terrorist groups are going to get this technology, if it is so prevalent out there thanks to A.Q. Khan.

COSTELLO: Viveca Novak, thank you for joining us live.

NOVAK: It's good to be with you.

COSTELLO: If you want to know more, the article is in "Time" magazine this week.

Just ahead in the next half hour of DAYBREAK, church groups are using a controversial practice to discourage women from having abortions. We'll hear from people on both sides of that hot issue.

Plus, the Michael Jackson case -- some seats in the courtroom will be conspicuously empty today. Kendall Coffey will be along to talk about the significance of this.

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COSTELLO: Good morning to you.

Welcome to the last half hour of DAYBREAK.

From the Time Warner Center in New York, I'm Carol Costello, along with Chad Myers.

Now in the news, Secretary of State Condoleezza Rice announces the United States will give $40 million to the Palestinians over the next 90 days. Meeting in Ramallah with the Palestinian leader, Rice says the $40 million is the first installment on $350 million President Bush promised the Palestinians earlier.

A foreign ministry official in Berne, Switzerland confirms that a hostage stand-off there has ended. State radio reports three hostage takers left the Spanish consulate. All the staff members are safe.

A deadly morning for police in Iraq. More than two dozen officers and recruits have been killed in two separate attacks. Mortars struck a police station in Mosul and a car bomb went off at a police station in Ba'qubah.

And the Associated Press says President Bush is sending Congress a $2.5 trillion budget plan today. The plan slashes or kills 150 domestic programs, but it does not include the cost of the Iraq war.

Let's head to the Forecast Center to say good morning to Chad -- good morning.

MYERS: Good morning, Carol. (WEATHER REPORT)

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