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American Morning
Terrorist Attack Overnight in Spain; Secretary of State Rice Issues a New Warning to Iran
Aired February 09, 2005 - 07:00 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.
BILL HEMMER, CNN ANCHOR: Good morning. A terrorist attack overnight in Spain, dozens hurt at a huge convention center where the king was to visit later today.
Secretary of State Rice issuing a new warning to Iran over its nuclear program, and this morning, what it would take to launch airstrikes against that country.
The world's tiniest newborn now five months old and finally out of the hospital. Her parents are our guests this hour.
And it's a new year in China. The young and the old celebrating the year of the rooster, on this AMERICAN MORNING.
ANNOUNCER: From the CNN Broadcast Center in New York, this is AMERICAN MORNING, with Bill Hemmer and Soledad O'Brien.
HEMMER: Good Wednesday, everybody. Good to have you along with us today. 7:00 here in New York, and good morning to you as well.
SOLEDAD O'BRIEN, CNN ANCHOR: Good morning to you. Did you have fun at the Super Bowl?
HEMMER: I had a great time actually. It's always fun in person.
O'BRIEN: You took your brother this year, your dad last year.
HEMMER: Tons of entertainment, too. He had a great time. And the game was all right, too, not bad.
O'BRIEN: The halftime show?
HEMMER: Even better.
O'BRIEN: Good, good. Welcome back, everybody.
Other stories that we're following this morning, President Bush went after Iraq and Afghanistan. Many people now wondering if Iran is next.
Barbara Starr is taking a look at what it would really take to launch so-called limited airstrikes. We're going to talk about that, also talk about what Iran might do to retaliate if, in fact, it was attacked.
HEMMER: Also, Soledad, a very difficult situation for 11 Marines serving in Iraq, awarded purple hearts for injuries, only to have those medals taken back. We'll find out how the mistake was made. We'll talk to one of them live in a moment here. He's trying to explain all this to his community, and his friends and his family. And for him, it is not easy. So he's our guest today.
O'BRIEN: I can certainly imagine that.
Jack Cafferty, look at Jack's, got the money out. What's that about?
JACK CAFFERTY, CNN ANCHOR: This is a windfall.
Well, I ain't going to reach for it there.
HEMMER: At least not on TV.
O'BRIEN: I think this is yours, mister.
HEMMER: Jack, hang on a second. For two days I hear Jack is just bitching and moaning on the air everyday. He wants his dollar back. So at 5:00 this morning, I put it under his door. We're even.
CAFFERTY: Took you three days to pay up. You could have wired it.
So President Bush says he's going to cut the deficits in half in four years. Back before the election, you know that Medicare drug bill that he got through Congress? Medicare estimated the cost at about $530 billion over 10 years. That was before the election. Now, the cost is estimated by the White House at $1.2 trillion over the next 10 years. There ain't no way on this earth that this deficit's going to be cut in half. I'll eat this building if four years from now the deficit is 50 percent of what it's projected to be next year, which is about $450 billion. We'll look at some of the numbers, get your thoughts on deficit reduction as we move through the morning, and I reduced my deficit by one dollar.
HEMMER: You're making progress already. Thank you, Jack.
O'BRIEN: Let's get right to Heidi Collins. She's got a look at the stories at the top of this hour.
Good morning.
HEIDI COLLINS, CNN ANCHOR: It's only a buck, guys. Next year, maybe a little higher wager.
HEMMER: But a lot of pride.
CAFFERTY: Absolutely.
COLLINS: This is true.
Good morning to you, guys. And good morning to you, everybody.
A gun battle between Iraqi forces and insurgents now underway in central Baghdad. Want to get the very latest now from Nic Robertson standing by.
Nic, we have seen this kind of fighting before in this same area.
NIC ROBERTSON, CNN CORRESPONDENT: In this same area, Haifa Street, an area where insurgents roam fairly freely. And certainly the gun battle going on earlier today an indication of the sort of armaments being used. We can hear heavy machine gunfire, possible tank rounds being fired, a plume of black smoke was coming up in the air, not clear what was causing that. A lot of emergency service sirens going off. Right now, there are Apache helicopters circling the area.
The gun battle seems to have subsided. The smoke drops away, but the Apaches are circling the area.
This is an area that is particularly dangerous for U.S. troops when they pass through it. It is an area where insurgents are known to lurk in some of the high-rise buildings, fire sniper rounds and also launch mortars on the internationally controlled Green Zone in the city.
Also today, a member of -- key member of the ministry of interior kidnapped in Baghdad. And an Arabic-language channel television journalist killed in the southern city of Basra. The U.S. funded Al Houra (ph) station he worked for. He was shot dead this morning. His son of 6 was also killed along with him in Basra -- Heidi.
COLLINS: Awful news coming out of there, Nic Robertson, thanks so much.
In other news now, today the Lenten season begins without official blessings from the pope. For the first time in his 26-year term, Pope John Paul II is missing Ash Wednesday services at the Vatican. He's expected to stay at a Rome hospital until at least tomorrow. The 84-year-old pontiff is recovering from complications brought on by the flu. He also suffers from Parkinson's Disease.
The White House now saying Medicare's new prescription drug program will be more costly than originally thought. New estimates suggest the program will carry a $720 billion price tag during its first 10 years. That figure blamed in part on soaring drug costs. The new drug plan set to take effect next year.
And people in China ringing in the year of the rooster, literally. According to tradition, the big bell in Beijing rang 108 times at the stroke of midnight. Fireworks also lit up the city skyline. And what party would be complete without a special dance? OK. The new lunar year ushers out the Year of the Monkey. And those are little itty-bitty baby roosters, I guess, right?
HEMMER: It's our favorite video so far today.
O'BRIEN: Aren't they adorable? My kids have been running around going "gung hey, fat choy (ph)".
COLLINS: Really? O'BRIEN: Happy Chinese New Year, yes. To hear my 2 1/2 year old say it, hysterical, like those cute little pictures. Heidi, thank you very much.
A powerful car bomb exploded in Madrid, Spain this morning. Basque separatists issued a warning about half an hour before the explosion.
Bureau chief Al Goodman is in Madrid, on the video phone for us.
Hey, Al, good morning.
AL GOODMAN, CNN CORRESPONDENT: Soledad, 42 people injured in this powerful car bomb. Authorities say that most of them, all of them were injured just slightly, although 24 were taken to hospital as a precautionary measure.
Now, this six-story red brick and glass office building behind me, I counted 40 windows blown out on one of its facades from this car bomb. Also, 20 cars were damaged. Some of them basically can't be used again. Police say this car bomb had 50 kilos or more than 100 pounds of explosives. They haven't said exactly what kind of explosive. And they are blaming it on the Basque separatist group ETA, because there was a warning call made to a Basque newspaper about 35 minutes before the bomb went off.
The police were trying to clear out the area, but they didn't get everybody out of the area. And some of the people who were in that office building working were also injured. We've talked to some people in the area who suffered that bomb, and they said it was terrifying.
Now, this is right near the main convention center, just a couple blocks away where the Spanish king and queen and the president of Mexico, who's visiting, were due to inaugurate a big art fair this afternoon -- Soledad.
O'BRIEN: CNN's Madrid bureau chief Al Goodman for us this morning. Al, thank you very much -- Al.
HEMMER: Also from overseas, Secretary of State Condoleezza Rice warning Iran it may face U.N. sanctions if it doesn't pull back efforts to build nuclear weapons. Rice is in Brussels now at this hour, meeting with the NATO secretary general.
Earlier, she was in Paris, trying to mend the rift between the French and U.S. She said it's time to put disagreements of the past in the past.
(BEGIN VIDEO CLIP)
CONDOLEEZZA RICE, SECY. OF STATE: We've not always seen eye to eye, however, on how to address these threats. We have had our disagreements, but it's time to turn away from the disagreements of the past. It is time to open a new chapter in our relationship and a new chapter in our alliance. America stands ready to work with Europe on our common agenda, and Europe must stand ready to work with America.
(END VIDEO CLIP)
HEMMER: Secretary Rice also talking about Iran with French officials. She says European leaders need to stand together in all diplomatic efforts to halt Iran's nuclear ambitions -- Soledad.
O'BRIEN: Secretary Rice has said a U.S. attack on Iran is -- quote -- "not on the agenda right now." But if diplomacy fails, what other options are left?
Barbara Starr's at the Pentagon for us this morning.
Hey, Barbara, good morning.
BARBARA STARR, CNN CORRESPONDENT: Good morning to you, Soledad.
Well, with all the tough talk from Washington to Tehran, if it ever came to it, what would a limited strike against Iran look like? And would it work?
(BEGIN VIDEOTAPE)
STARR (voice-over): One-hundred and fifty miles southwest of Tehran, the Iraq heavy water plant, a facility international inspectors believe is critical to Iran's nuclear weapons program, one of many suspected nuclear sites the U.S. says are well hidden around the country.
Finding all of the sites would be just one problem in launching any so-called limited strike to take them out. To avoid Iranian military on the ground, the U.S. would likely fire from long distance, using Tomahawk cruise muscles from ships in the Persian Gulf and precision bombs from the long range B-2 stealth bomber.
But military and security experts agree Iran's religious leaders would strike back hard.
KEN POLLACK, BROOKINGS INSTITUTION: There's no reason to believe that the Iranians would see them limited. In fact, Iranians might choose to retaliate in a far less limited fashion, in particular, they're likely to try to employ terrorist attacks.
STARR: Iran's longstanding support for Hezbollah and its ability to marshal terrorist attacks in retaliation is a major concern. But there is more. Experts say Iran could retaliate with a missile strike. With a range of 1,500 kilometers, it's Shahab 3 (ph) and other missiles could hit U.S. troops in Iraq and Kuwait, strike Israel, and even reach Turkey. Iran's mobile launchers would be difficult to preemptively destroy.
Former Defense Secretary William Cohen is an ardent supporter of diplomacy with Iran, and he knows the limits of the limited-strike option.
In 1998, the U.S. conducted air strikes against Saddam Hussein's missile facilities, hoping to halt his missile production for two years.
RICHARD COHEN, FMR. SECY. OF DEFENSE: You can reconstitute facilities that are destroyed, and so unless you're talking about all- out devastation and an occupation of a country with widespread destruction, limited attacks are good on a temporary basis.
But again, the downside is you may end up causing a national -- a rise in nationalism and a revolution of a different support against the United States.
(END VIDEOTAPE)
STARR: So, Soledad, could the U.S. military launch a limited strike against Iran? The answer, of course, is yes. But right now, the Bush administration is making clear diplomacy is the preferred option and no military action is really anticipated -- Soledad.
O'BRIEN: An important point, I think, to underscore.
Barbara Starr at the Pentagon for us this morning. Barbara, thanks.
Tomorrow on AMERICAN MORNING, we'll look at a worst-case scenario, all-out war with Iran. That's Thursday morning, 7:00 a.m. Eastern, right here on CNN.
HEMMER: We want to show you dramatic videotape this morning. A Michigan apartment complex, after a man crashed his car into a building. Authorities say the crash ruptured a natural gas line, causing the explosion and fire yesterday afternoon. Police say at least two were injured. Authorities still working to account for everybody who lives in that area. The driver was pulled from the car before the fire. His condition is not known. Quite a blaze yesterday, though, in Michigan.
O'BRIEN: That's unbelievable.
(WEATHER REPORT)
HEMMER: A historic first for Pope John Paul II. he's a no-show on one of the church's holiest days. What does that say about his latest illness? We'll check it out.
O'BRIEN: Also, no bigger than a cell phone at birth. There is some very good news, though, this morning for the world's smallest baby. Her very happy parents will join us just ahead.
HEMMER: And the military strip a wounded Marine of his Purple Heart honor, saying he doesn't deserve it. Why the reversal? The Marines story in a moment on AMERICAN MORNING.
(COMMERCIAL BREAK)
O'BRIEN: Pope John Paul II will miss Ash Wednesday services at the Vatican today for the first time in his papacy.
Bureau chief Alessio Vinci live for us in Rome this morning.
Alessio, good morning.
ALESSIO VINCI, CNN ROME BUREAU CHIEF: Good morning to you, Soledad.
Well, the doctors have pursued (ph) Pope John Paul II to remain in hospital for a few more days. We do expect a Vatican bulletin, a medical bulletin, in about 24 hours tomorrow, by this time tomorrow.
But for the time being, the pope, while improving, is remaining in hospital, and that is why, for the first time in his long papacy, he was unable to attend and to preside over ceremonies marking the beginning of Lent, Ash Wednesday in St. Peter's Basilica.
It is unclear whether the pope held a special service in his hospital bedroom at the Gemelli Clinic. We do know, however, from Vatican officials that he does preside over a mass every morning for the nurses and doctors who are helping him. So we have no reasons to believe that he didn't do this, this morning.
Meanwhile, the pope did manage to release his Lenten message, this time, dedicated to the gift of longevity, and a quote from a passage written by the 84-year-old pontiff, saying, quote, "people should always remain open and welcoming toward older people, especially those who are weak, sick or suffering." So a message to pilgrims around the world helping elderly, but also a message very much describing his own condition.
Substituting the pope in St. Peter's Square this morning to hold his Ash Wednesday ceremony this morning was an American cardinal. His is named James Stafford. James Stafford told the pilgrims in the cathedral that the pope's spiritual presence was very much felt, and he also held a special prayer for the pope in which he wished him health and comfort.
Back to you, Soledad.
O'BRIEN: Alessio Vinci, updating us on the pope's condition this morning. Alessio, thank you -- Bill.
HEMMER: The U.S. Marines now admit they've made 11 mistakes; 11 Marines have been told their purple hearts are being revoked because they were not injured by enemy attack. One of them is Marine Corporal Travis Eichelberger. He suffered major injuries in the first weeks of war with Iraq. Corporal Eichelberger now is my guest in Kansas City, Missouri.
And welcome here. And good morning to you.
CPL. TRAVIS EICHELBERGER, U.S. MARINE CORPS: Good morning.
HEMMER: Let's go back to March of 2003, near Nasiriya, you're run over by a U.S. tank. What injuries did you sustain then, corporal? EICHELBERGER: I sustained a crushed pelvis, which gave me internal injuries to my bladder and my intestines and gave me a few injuries to my quadriceps and stuff like that.
HEMMER: It is extraordinary how you even survived. Do you ever stop and think about that?
EICHELBERGER: Oh, yes, I definitely stop and think about it every day.
HEMMER: About a month later, corporal, you're in Bethesda, Maryland, and you were given the Purple Heart by a Marine commander. What was your reaction when this medal was pinned on to you, knowing the injuries you sustained?
EICHELBERGER: I felt very proud about receiving the medal, especially receiving it from the assistant commandant of the Marine Corps, who's very -- an awesome gentleman. I met him a couple times, and I felt very proud about it.
HEMMER: Did you have any doubts that you deserved it?
EICHELBERGER: I thought about it for a little bit, because I knew that it was from a friendly tank which, you know, I didn't know the rules behind it or the criteria, but I did think about it. But the way I thought about it, I was 20 years old at the time, if I'm given it by the assistant commandant of the marine corps, I guess I deserved it.
HEMMER: Wow. How did you learn the news they were taking it back, corporal?
EICHELBERGER: I actually heard about it from a friend of mine in Washington D.C., and then I received the letter in the mail, and I heard about it from a friend of mine, Lieutenant Farrell (ph), from Camp Lejeune, North Carolina, we got in contact with each other, and we'd both received the letter.
HEMMER: Do you have any anger? Are you upset? What's your feeling at this point?
EICHELBERGER: Very disappointed, and that's kind of my feeling, because there's -- it's almost like they're kind of taking away from me, and what am I supposed to tell the people that know I have it, you know? And it's almost as if I'm lying to them, which I know I'm not, but it's just kind of that feeling.
HEMMER: When you got home, your town, a small town there in Missouri, they threw you a parade, right?
EICHELBERGER: Yes, a small town in Kansas threw me a little parade when I came home. It was great.
HEMMER: The Marines say this about what's happened on the screen for the viewers, you can read the statement: "The Marine Corps admits that our notification process was faulty. Each Marine should have been notified early in the process about certain concerns of the validity of their award. We have implemented new internal procedures to insure that early personal notification occurs in cases involving awards." What does that say to you? Make you feel better or not?
EICHELBERGER: It makes me feel better, because I definitely -- what I want to come out of this is definitely for it not to happen to anybody else, you know, especially for the families of fallen comrades of mine, you know, to -- that they received their son or daughter's Purple Heart, to have it taken away two years later, you know, that would be horrible. I definitely would not want this to happen to anybody else.
HEMMER: Our best to you. How is your health by the way now?
EICHELBERGER: It's very good, thank you.
HEMMER: Corporal Eichelberger, thanks for your time in Kansas City.
EICHELBERGER: Thank you very much.
O'BRIEN: Here's a question for you. Can't stand it when the kids wear those pants that kind of drop to their knees? Well, what if the style was actually made illegal? We've got details ahead on AMERICAN MORNING. Stay with us.
(COMMERCIAL BREAK)
HEMMER: Welcome back, everyone.
New developments in the trial against former Worldcom chief exec Bernie Ebbers.
And Andy Serwer checks in, the first check of "Minding Your Business."
Good morning to you.
ANDY SERWER, "FORTUNE" MAGAZINE: Good morning, Bill. Welcome back. You feeling OK?
HEMMER: I'm feeling just fine.
SERWER: Good, good to hear.
You may remember the dummy defense. This was what Bernie Ebbers, the CEO of Worldcom was said to employ in his trial, that he doesn't know anything about accounting, doesn't know anything about accounting fraud.
Yesterday in his trial, his former chief financial officer, Scott Sullivan, disputed that notion, however, saying that in October of 2000, he told Ebbers that the company wouldn't meet its financial projections and that they should inform Wall Street of that point. Ebbers looked at the numbers, looked up at Sullivan and said, "We have to meet our numbers." Now, the problem with this from the prosecution's standpoint is that it doesn't directly implicate him in fraud. Of course, also, there are no other witnesses, and no e-mails and no memos, so slightly problematic.
However, it did happen after the quarter had closed. So in other words, it wasn't a rallying cry to go out and tell the troops to sell more long-distance plans. It was find a way to make the numbers work. So I would say it's pretty damning and pretty incriminating.
HEMMER: That's the way it was implied based on the testimony. We have to meet our numbers -- doesn't every CEO say that, though?
SERWER: But the point, again, is after the quarter's closed, that means cook the books.
CAFFERTY: Weren't there two sets of books? Wasn't there testimony to the fact that there were to sets of books?
SERWER: There were two sets of books, which is always a convenient way to do business.
CAFFERTY: So that's how you make the numbers.
Give me the other book.
(CROSSTALK)
HEMMER: Thank you, Andy.
SERWER: You're welcome.
O'BRIEN: Time for "The Cafferty File," and the Question of the Day.
Good morning.
CAFFERTY: Speaking of accounting -- good morning -- not to worry, President Bush says he'll reduce the deficit by half in the next four years. Front-page story in "The Washington Post" today pegs the cost of the Medicare drug benefit -- remember that? -- $1.2 trillion over the next 10 years.
Now, last September, before the election, it was estimated to cost $534 billion. That was Medicare's estimate. The $1.2 trillion comes right from the White House. The president's budget for next year does not include the costs of the war in Iraq, the war in Afghanistan, doesn't take into account making the tax cuts permanent, doesn't include the costs of overhauling Social Security.
But the budget does call for eliminating or cutting back 150 government programs in order to save money, including cutting back on veterans benefits. How do you cut veterans benefits in this country? Of all the things you have to consider, how can you cut veterans benefits? Now this year's budget, that was presented a year ago at this time, called for eliminating 65 programs as a way to save money. Four were eliminated. Four. Here's the question, do you think President Bush can reduce the deficit by half in the next four years? When pigs fly.
(LAUGHTER)
SERWER: When straw men are set up, right?
CAFFERTY: I mean, this is just nonsense, and I don't know who's buying this stuff? There's no way this is going to happen.
O'BRIEN: Isn't it typical to do a budget that way? I mean, it sort of sounds like they're leaving off -- when you create a budget that doesn't have the war costs or Social Security factored in, it's almost like doing your home budget and saying I didn't put my mortgage in, and there's a car payment I didn't patch in.
CAFFERTY: This is the Worldcom approach to bookkeeping. It's you know, Enron, Worldcom. This is nonsense.
SERWER: Unconscionable.
CAFFERTY: This is a joke, but it's a cruel joke.
O'BRIEN: You just say no, not going to meet the budget.
CAFFERTY: I'll eat this building. I'll get a knife, and fork and some salt and I'll eat this building.
O'BRIEN: And salt.
Thank you, Jack.
CAFFERTY: Yes, got to have salt.
O'BRIEN: Have you guys heard this story? Virginia lawmakers have this warning. They're saying to kids, pull up your pants or you have to pay the price. Yesterday, state representatives passed a bill that would impose a 50-buck fine on anybody whose boxers, or briefs or thongs peek above their pants or their skirts. The bill sponsor says that his constituents have been offended by the exposed underpants.
(BEGIN VIDEO CLIP)
REP. DEL. ALGIE HOWELL (D), VIRGINIA: I think that undergarments were made to be worn under other clothes, not to be exposed in the public.
(END VIDEO CLIP)
O'BRIEN: They might need more to do there in Virginia. It is not clear, some big questions remain, as always, they do. Does the fine apply, in fact, to carpeters, or plumbers or laborers who have issues with low riding pants? These questions and more being tackled by the ACLU, now involved, saying that the bill, in fact, is unconstitutional. The bill goes to the state Senate.
HEMMER: And once we get that solved, we'll figure out the budget issues in Washington.
(CROSSTALK)
CAFFERTY: Aren't there a lot of causes out there, like issues that you can pick to crusade about besides that.
SERWER: Literacy in Virginia, or SAT scores.
O'BRIEN: Education, literacy, overall child welfare.
SERWER: Underwear in Virginia.
HEMMER: More on this in a moment. Let's get a break. Back in a moment here on AMERICAN MORNING.
Ahead on "90-Second Pop," want to own a piece of Bennifer's broken romance? Jenny's big rock is on the block.
Plus, is it Oscar the grouch?
(BEGIN VIDEO CLIP)
LEONARDO DICAPRIO: It's going to do me no good if you crack up on me like that.
(END VIDEO CLIP)
HEMMER: Find out why some winners may not get their golden moment on stage. That's ahead on AMERICAN MORNING.
(COMMERCIAL BREAK)
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Aired February 9, 2005 - 07:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
BILL HEMMER, CNN ANCHOR: Good morning. A terrorist attack overnight in Spain, dozens hurt at a huge convention center where the king was to visit later today.
Secretary of State Rice issuing a new warning to Iran over its nuclear program, and this morning, what it would take to launch airstrikes against that country.
The world's tiniest newborn now five months old and finally out of the hospital. Her parents are our guests this hour.
And it's a new year in China. The young and the old celebrating the year of the rooster, on this AMERICAN MORNING.
ANNOUNCER: From the CNN Broadcast Center in New York, this is AMERICAN MORNING, with Bill Hemmer and Soledad O'Brien.
HEMMER: Good Wednesday, everybody. Good to have you along with us today. 7:00 here in New York, and good morning to you as well.
SOLEDAD O'BRIEN, CNN ANCHOR: Good morning to you. Did you have fun at the Super Bowl?
HEMMER: I had a great time actually. It's always fun in person.
O'BRIEN: You took your brother this year, your dad last year.
HEMMER: Tons of entertainment, too. He had a great time. And the game was all right, too, not bad.
O'BRIEN: The halftime show?
HEMMER: Even better.
O'BRIEN: Good, good. Welcome back, everybody.
Other stories that we're following this morning, President Bush went after Iraq and Afghanistan. Many people now wondering if Iran is next.
Barbara Starr is taking a look at what it would really take to launch so-called limited airstrikes. We're going to talk about that, also talk about what Iran might do to retaliate if, in fact, it was attacked.
HEMMER: Also, Soledad, a very difficult situation for 11 Marines serving in Iraq, awarded purple hearts for injuries, only to have those medals taken back. We'll find out how the mistake was made. We'll talk to one of them live in a moment here. He's trying to explain all this to his community, and his friends and his family. And for him, it is not easy. So he's our guest today.
O'BRIEN: I can certainly imagine that.
Jack Cafferty, look at Jack's, got the money out. What's that about?
JACK CAFFERTY, CNN ANCHOR: This is a windfall.
Well, I ain't going to reach for it there.
HEMMER: At least not on TV.
O'BRIEN: I think this is yours, mister.
HEMMER: Jack, hang on a second. For two days I hear Jack is just bitching and moaning on the air everyday. He wants his dollar back. So at 5:00 this morning, I put it under his door. We're even.
CAFFERTY: Took you three days to pay up. You could have wired it.
So President Bush says he's going to cut the deficits in half in four years. Back before the election, you know that Medicare drug bill that he got through Congress? Medicare estimated the cost at about $530 billion over 10 years. That was before the election. Now, the cost is estimated by the White House at $1.2 trillion over the next 10 years. There ain't no way on this earth that this deficit's going to be cut in half. I'll eat this building if four years from now the deficit is 50 percent of what it's projected to be next year, which is about $450 billion. We'll look at some of the numbers, get your thoughts on deficit reduction as we move through the morning, and I reduced my deficit by one dollar.
HEMMER: You're making progress already. Thank you, Jack.
O'BRIEN: Let's get right to Heidi Collins. She's got a look at the stories at the top of this hour.
Good morning.
HEIDI COLLINS, CNN ANCHOR: It's only a buck, guys. Next year, maybe a little higher wager.
HEMMER: But a lot of pride.
CAFFERTY: Absolutely.
COLLINS: This is true.
Good morning to you, guys. And good morning to you, everybody.
A gun battle between Iraqi forces and insurgents now underway in central Baghdad. Want to get the very latest now from Nic Robertson standing by.
Nic, we have seen this kind of fighting before in this same area.
NIC ROBERTSON, CNN CORRESPONDENT: In this same area, Haifa Street, an area where insurgents roam fairly freely. And certainly the gun battle going on earlier today an indication of the sort of armaments being used. We can hear heavy machine gunfire, possible tank rounds being fired, a plume of black smoke was coming up in the air, not clear what was causing that. A lot of emergency service sirens going off. Right now, there are Apache helicopters circling the area.
The gun battle seems to have subsided. The smoke drops away, but the Apaches are circling the area.
This is an area that is particularly dangerous for U.S. troops when they pass through it. It is an area where insurgents are known to lurk in some of the high-rise buildings, fire sniper rounds and also launch mortars on the internationally controlled Green Zone in the city.
Also today, a member of -- key member of the ministry of interior kidnapped in Baghdad. And an Arabic-language channel television journalist killed in the southern city of Basra. The U.S. funded Al Houra (ph) station he worked for. He was shot dead this morning. His son of 6 was also killed along with him in Basra -- Heidi.
COLLINS: Awful news coming out of there, Nic Robertson, thanks so much.
In other news now, today the Lenten season begins without official blessings from the pope. For the first time in his 26-year term, Pope John Paul II is missing Ash Wednesday services at the Vatican. He's expected to stay at a Rome hospital until at least tomorrow. The 84-year-old pontiff is recovering from complications brought on by the flu. He also suffers from Parkinson's Disease.
The White House now saying Medicare's new prescription drug program will be more costly than originally thought. New estimates suggest the program will carry a $720 billion price tag during its first 10 years. That figure blamed in part on soaring drug costs. The new drug plan set to take effect next year.
And people in China ringing in the year of the rooster, literally. According to tradition, the big bell in Beijing rang 108 times at the stroke of midnight. Fireworks also lit up the city skyline. And what party would be complete without a special dance? OK. The new lunar year ushers out the Year of the Monkey. And those are little itty-bitty baby roosters, I guess, right?
HEMMER: It's our favorite video so far today.
O'BRIEN: Aren't they adorable? My kids have been running around going "gung hey, fat choy (ph)".
COLLINS: Really? O'BRIEN: Happy Chinese New Year, yes. To hear my 2 1/2 year old say it, hysterical, like those cute little pictures. Heidi, thank you very much.
A powerful car bomb exploded in Madrid, Spain this morning. Basque separatists issued a warning about half an hour before the explosion.
Bureau chief Al Goodman is in Madrid, on the video phone for us.
Hey, Al, good morning.
AL GOODMAN, CNN CORRESPONDENT: Soledad, 42 people injured in this powerful car bomb. Authorities say that most of them, all of them were injured just slightly, although 24 were taken to hospital as a precautionary measure.
Now, this six-story red brick and glass office building behind me, I counted 40 windows blown out on one of its facades from this car bomb. Also, 20 cars were damaged. Some of them basically can't be used again. Police say this car bomb had 50 kilos or more than 100 pounds of explosives. They haven't said exactly what kind of explosive. And they are blaming it on the Basque separatist group ETA, because there was a warning call made to a Basque newspaper about 35 minutes before the bomb went off.
The police were trying to clear out the area, but they didn't get everybody out of the area. And some of the people who were in that office building working were also injured. We've talked to some people in the area who suffered that bomb, and they said it was terrifying.
Now, this is right near the main convention center, just a couple blocks away where the Spanish king and queen and the president of Mexico, who's visiting, were due to inaugurate a big art fair this afternoon -- Soledad.
O'BRIEN: CNN's Madrid bureau chief Al Goodman for us this morning. Al, thank you very much -- Al.
HEMMER: Also from overseas, Secretary of State Condoleezza Rice warning Iran it may face U.N. sanctions if it doesn't pull back efforts to build nuclear weapons. Rice is in Brussels now at this hour, meeting with the NATO secretary general.
Earlier, she was in Paris, trying to mend the rift between the French and U.S. She said it's time to put disagreements of the past in the past.
(BEGIN VIDEO CLIP)
CONDOLEEZZA RICE, SECY. OF STATE: We've not always seen eye to eye, however, on how to address these threats. We have had our disagreements, but it's time to turn away from the disagreements of the past. It is time to open a new chapter in our relationship and a new chapter in our alliance. America stands ready to work with Europe on our common agenda, and Europe must stand ready to work with America.
(END VIDEO CLIP)
HEMMER: Secretary Rice also talking about Iran with French officials. She says European leaders need to stand together in all diplomatic efforts to halt Iran's nuclear ambitions -- Soledad.
O'BRIEN: Secretary Rice has said a U.S. attack on Iran is -- quote -- "not on the agenda right now." But if diplomacy fails, what other options are left?
Barbara Starr's at the Pentagon for us this morning.
Hey, Barbara, good morning.
BARBARA STARR, CNN CORRESPONDENT: Good morning to you, Soledad.
Well, with all the tough talk from Washington to Tehran, if it ever came to it, what would a limited strike against Iran look like? And would it work?
(BEGIN VIDEOTAPE)
STARR (voice-over): One-hundred and fifty miles southwest of Tehran, the Iraq heavy water plant, a facility international inspectors believe is critical to Iran's nuclear weapons program, one of many suspected nuclear sites the U.S. says are well hidden around the country.
Finding all of the sites would be just one problem in launching any so-called limited strike to take them out. To avoid Iranian military on the ground, the U.S. would likely fire from long distance, using Tomahawk cruise muscles from ships in the Persian Gulf and precision bombs from the long range B-2 stealth bomber.
But military and security experts agree Iran's religious leaders would strike back hard.
KEN POLLACK, BROOKINGS INSTITUTION: There's no reason to believe that the Iranians would see them limited. In fact, Iranians might choose to retaliate in a far less limited fashion, in particular, they're likely to try to employ terrorist attacks.
STARR: Iran's longstanding support for Hezbollah and its ability to marshal terrorist attacks in retaliation is a major concern. But there is more. Experts say Iran could retaliate with a missile strike. With a range of 1,500 kilometers, it's Shahab 3 (ph) and other missiles could hit U.S. troops in Iraq and Kuwait, strike Israel, and even reach Turkey. Iran's mobile launchers would be difficult to preemptively destroy.
Former Defense Secretary William Cohen is an ardent supporter of diplomacy with Iran, and he knows the limits of the limited-strike option.
In 1998, the U.S. conducted air strikes against Saddam Hussein's missile facilities, hoping to halt his missile production for two years.
RICHARD COHEN, FMR. SECY. OF DEFENSE: You can reconstitute facilities that are destroyed, and so unless you're talking about all- out devastation and an occupation of a country with widespread destruction, limited attacks are good on a temporary basis.
But again, the downside is you may end up causing a national -- a rise in nationalism and a revolution of a different support against the United States.
(END VIDEOTAPE)
STARR: So, Soledad, could the U.S. military launch a limited strike against Iran? The answer, of course, is yes. But right now, the Bush administration is making clear diplomacy is the preferred option and no military action is really anticipated -- Soledad.
O'BRIEN: An important point, I think, to underscore.
Barbara Starr at the Pentagon for us this morning. Barbara, thanks.
Tomorrow on AMERICAN MORNING, we'll look at a worst-case scenario, all-out war with Iran. That's Thursday morning, 7:00 a.m. Eastern, right here on CNN.
HEMMER: We want to show you dramatic videotape this morning. A Michigan apartment complex, after a man crashed his car into a building. Authorities say the crash ruptured a natural gas line, causing the explosion and fire yesterday afternoon. Police say at least two were injured. Authorities still working to account for everybody who lives in that area. The driver was pulled from the car before the fire. His condition is not known. Quite a blaze yesterday, though, in Michigan.
O'BRIEN: That's unbelievable.
(WEATHER REPORT)
HEMMER: A historic first for Pope John Paul II. he's a no-show on one of the church's holiest days. What does that say about his latest illness? We'll check it out.
O'BRIEN: Also, no bigger than a cell phone at birth. There is some very good news, though, this morning for the world's smallest baby. Her very happy parents will join us just ahead.
HEMMER: And the military strip a wounded Marine of his Purple Heart honor, saying he doesn't deserve it. Why the reversal? The Marines story in a moment on AMERICAN MORNING.
(COMMERCIAL BREAK)
O'BRIEN: Pope John Paul II will miss Ash Wednesday services at the Vatican today for the first time in his papacy.
Bureau chief Alessio Vinci live for us in Rome this morning.
Alessio, good morning.
ALESSIO VINCI, CNN ROME BUREAU CHIEF: Good morning to you, Soledad.
Well, the doctors have pursued (ph) Pope John Paul II to remain in hospital for a few more days. We do expect a Vatican bulletin, a medical bulletin, in about 24 hours tomorrow, by this time tomorrow.
But for the time being, the pope, while improving, is remaining in hospital, and that is why, for the first time in his long papacy, he was unable to attend and to preside over ceremonies marking the beginning of Lent, Ash Wednesday in St. Peter's Basilica.
It is unclear whether the pope held a special service in his hospital bedroom at the Gemelli Clinic. We do know, however, from Vatican officials that he does preside over a mass every morning for the nurses and doctors who are helping him. So we have no reasons to believe that he didn't do this, this morning.
Meanwhile, the pope did manage to release his Lenten message, this time, dedicated to the gift of longevity, and a quote from a passage written by the 84-year-old pontiff, saying, quote, "people should always remain open and welcoming toward older people, especially those who are weak, sick or suffering." So a message to pilgrims around the world helping elderly, but also a message very much describing his own condition.
Substituting the pope in St. Peter's Square this morning to hold his Ash Wednesday ceremony this morning was an American cardinal. His is named James Stafford. James Stafford told the pilgrims in the cathedral that the pope's spiritual presence was very much felt, and he also held a special prayer for the pope in which he wished him health and comfort.
Back to you, Soledad.
O'BRIEN: Alessio Vinci, updating us on the pope's condition this morning. Alessio, thank you -- Bill.
HEMMER: The U.S. Marines now admit they've made 11 mistakes; 11 Marines have been told their purple hearts are being revoked because they were not injured by enemy attack. One of them is Marine Corporal Travis Eichelberger. He suffered major injuries in the first weeks of war with Iraq. Corporal Eichelberger now is my guest in Kansas City, Missouri.
And welcome here. And good morning to you.
CPL. TRAVIS EICHELBERGER, U.S. MARINE CORPS: Good morning.
HEMMER: Let's go back to March of 2003, near Nasiriya, you're run over by a U.S. tank. What injuries did you sustain then, corporal? EICHELBERGER: I sustained a crushed pelvis, which gave me internal injuries to my bladder and my intestines and gave me a few injuries to my quadriceps and stuff like that.
HEMMER: It is extraordinary how you even survived. Do you ever stop and think about that?
EICHELBERGER: Oh, yes, I definitely stop and think about it every day.
HEMMER: About a month later, corporal, you're in Bethesda, Maryland, and you were given the Purple Heart by a Marine commander. What was your reaction when this medal was pinned on to you, knowing the injuries you sustained?
EICHELBERGER: I felt very proud about receiving the medal, especially receiving it from the assistant commandant of the Marine Corps, who's very -- an awesome gentleman. I met him a couple times, and I felt very proud about it.
HEMMER: Did you have any doubts that you deserved it?
EICHELBERGER: I thought about it for a little bit, because I knew that it was from a friendly tank which, you know, I didn't know the rules behind it or the criteria, but I did think about it. But the way I thought about it, I was 20 years old at the time, if I'm given it by the assistant commandant of the marine corps, I guess I deserved it.
HEMMER: Wow. How did you learn the news they were taking it back, corporal?
EICHELBERGER: I actually heard about it from a friend of mine in Washington D.C., and then I received the letter in the mail, and I heard about it from a friend of mine, Lieutenant Farrell (ph), from Camp Lejeune, North Carolina, we got in contact with each other, and we'd both received the letter.
HEMMER: Do you have any anger? Are you upset? What's your feeling at this point?
EICHELBERGER: Very disappointed, and that's kind of my feeling, because there's -- it's almost like they're kind of taking away from me, and what am I supposed to tell the people that know I have it, you know? And it's almost as if I'm lying to them, which I know I'm not, but it's just kind of that feeling.
HEMMER: When you got home, your town, a small town there in Missouri, they threw you a parade, right?
EICHELBERGER: Yes, a small town in Kansas threw me a little parade when I came home. It was great.
HEMMER: The Marines say this about what's happened on the screen for the viewers, you can read the statement: "The Marine Corps admits that our notification process was faulty. Each Marine should have been notified early in the process about certain concerns of the validity of their award. We have implemented new internal procedures to insure that early personal notification occurs in cases involving awards." What does that say to you? Make you feel better or not?
EICHELBERGER: It makes me feel better, because I definitely -- what I want to come out of this is definitely for it not to happen to anybody else, you know, especially for the families of fallen comrades of mine, you know, to -- that they received their son or daughter's Purple Heart, to have it taken away two years later, you know, that would be horrible. I definitely would not want this to happen to anybody else.
HEMMER: Our best to you. How is your health by the way now?
EICHELBERGER: It's very good, thank you.
HEMMER: Corporal Eichelberger, thanks for your time in Kansas City.
EICHELBERGER: Thank you very much.
O'BRIEN: Here's a question for you. Can't stand it when the kids wear those pants that kind of drop to their knees? Well, what if the style was actually made illegal? We've got details ahead on AMERICAN MORNING. Stay with us.
(COMMERCIAL BREAK)
HEMMER: Welcome back, everyone.
New developments in the trial against former Worldcom chief exec Bernie Ebbers.
And Andy Serwer checks in, the first check of "Minding Your Business."
Good morning to you.
ANDY SERWER, "FORTUNE" MAGAZINE: Good morning, Bill. Welcome back. You feeling OK?
HEMMER: I'm feeling just fine.
SERWER: Good, good to hear.
You may remember the dummy defense. This was what Bernie Ebbers, the CEO of Worldcom was said to employ in his trial, that he doesn't know anything about accounting, doesn't know anything about accounting fraud.
Yesterday in his trial, his former chief financial officer, Scott Sullivan, disputed that notion, however, saying that in October of 2000, he told Ebbers that the company wouldn't meet its financial projections and that they should inform Wall Street of that point. Ebbers looked at the numbers, looked up at Sullivan and said, "We have to meet our numbers." Now, the problem with this from the prosecution's standpoint is that it doesn't directly implicate him in fraud. Of course, also, there are no other witnesses, and no e-mails and no memos, so slightly problematic.
However, it did happen after the quarter had closed. So in other words, it wasn't a rallying cry to go out and tell the troops to sell more long-distance plans. It was find a way to make the numbers work. So I would say it's pretty damning and pretty incriminating.
HEMMER: That's the way it was implied based on the testimony. We have to meet our numbers -- doesn't every CEO say that, though?
SERWER: But the point, again, is after the quarter's closed, that means cook the books.
CAFFERTY: Weren't there two sets of books? Wasn't there testimony to the fact that there were to sets of books?
SERWER: There were two sets of books, which is always a convenient way to do business.
CAFFERTY: So that's how you make the numbers.
Give me the other book.
(CROSSTALK)
HEMMER: Thank you, Andy.
SERWER: You're welcome.
O'BRIEN: Time for "The Cafferty File," and the Question of the Day.
Good morning.
CAFFERTY: Speaking of accounting -- good morning -- not to worry, President Bush says he'll reduce the deficit by half in the next four years. Front-page story in "The Washington Post" today pegs the cost of the Medicare drug benefit -- remember that? -- $1.2 trillion over the next 10 years.
Now, last September, before the election, it was estimated to cost $534 billion. That was Medicare's estimate. The $1.2 trillion comes right from the White House. The president's budget for next year does not include the costs of the war in Iraq, the war in Afghanistan, doesn't take into account making the tax cuts permanent, doesn't include the costs of overhauling Social Security.
But the budget does call for eliminating or cutting back 150 government programs in order to save money, including cutting back on veterans benefits. How do you cut veterans benefits in this country? Of all the things you have to consider, how can you cut veterans benefits? Now this year's budget, that was presented a year ago at this time, called for eliminating 65 programs as a way to save money. Four were eliminated. Four. Here's the question, do you think President Bush can reduce the deficit by half in the next four years? When pigs fly.
(LAUGHTER)
SERWER: When straw men are set up, right?
CAFFERTY: I mean, this is just nonsense, and I don't know who's buying this stuff? There's no way this is going to happen.
O'BRIEN: Isn't it typical to do a budget that way? I mean, it sort of sounds like they're leaving off -- when you create a budget that doesn't have the war costs or Social Security factored in, it's almost like doing your home budget and saying I didn't put my mortgage in, and there's a car payment I didn't patch in.
CAFFERTY: This is the Worldcom approach to bookkeeping. It's you know, Enron, Worldcom. This is nonsense.
SERWER: Unconscionable.
CAFFERTY: This is a joke, but it's a cruel joke.
O'BRIEN: You just say no, not going to meet the budget.
CAFFERTY: I'll eat this building. I'll get a knife, and fork and some salt and I'll eat this building.
O'BRIEN: And salt.
Thank you, Jack.
CAFFERTY: Yes, got to have salt.
O'BRIEN: Have you guys heard this story? Virginia lawmakers have this warning. They're saying to kids, pull up your pants or you have to pay the price. Yesterday, state representatives passed a bill that would impose a 50-buck fine on anybody whose boxers, or briefs or thongs peek above their pants or their skirts. The bill sponsor says that his constituents have been offended by the exposed underpants.
(BEGIN VIDEO CLIP)
REP. DEL. ALGIE HOWELL (D), VIRGINIA: I think that undergarments were made to be worn under other clothes, not to be exposed in the public.
(END VIDEO CLIP)
O'BRIEN: They might need more to do there in Virginia. It is not clear, some big questions remain, as always, they do. Does the fine apply, in fact, to carpeters, or plumbers or laborers who have issues with low riding pants? These questions and more being tackled by the ACLU, now involved, saying that the bill, in fact, is unconstitutional. The bill goes to the state Senate.
HEMMER: And once we get that solved, we'll figure out the budget issues in Washington.
(CROSSTALK)
CAFFERTY: Aren't there a lot of causes out there, like issues that you can pick to crusade about besides that.
SERWER: Literacy in Virginia, or SAT scores.
O'BRIEN: Education, literacy, overall child welfare.
SERWER: Underwear in Virginia.
HEMMER: More on this in a moment. Let's get a break. Back in a moment here on AMERICAN MORNING.
Ahead on "90-Second Pop," want to own a piece of Bennifer's broken romance? Jenny's big rock is on the block.
Plus, is it Oscar the grouch?
(BEGIN VIDEO CLIP)
LEONARDO DICAPRIO: It's going to do me no good if you crack up on me like that.
(END VIDEO CLIP)
HEMMER: Find out why some winners may not get their golden moment on stage. That's ahead on AMERICAN MORNING.
(COMMERCIAL BREAK)
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