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Inside Politics

California Special Election; Guntanamo Controversy; Lynching Apology; New Information Leads to New Search in Aruba

Aired June 14, 2005 - 15:30   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.


ANNOUNCER: Governor Schwarzenegger's new campaign.
GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: One way or another, with the people's help, there will be action this year.

ANNOUNCER: How is his call for a special election playing with Californians still buzzing about Michael Jackson?

Senators Bill Frist and John McCain join forces for a cause, and make news on another topic altogether.

President Bush on the fundraising circuit. We'll follow the money and tell you how a pornstar turned politician is trying to cash in.

(END VIDEO CLIP)

ANNOUNCER: Now live from Washington, CNN's INSIDE POLITICS.

SUZANNE MALVEAUX, CNN ANCHOR: Thanks for joining us. I'm Suzanne Malveaux.

There've been countless searches all over Aruba for Natalee Holloway in the last two weeks. Now, a new effort to find the missing Alabama teen is underway. The search is taking place near a beachfront hotel more than two weeks after Holloway vanished. Three men remain in custody in the case. We're keeping a close watch on developments and happenings right now on what's on the Caribbean island, and we'll go live to reporters in Aruba if the story changes.

But, now, let's move on to politics. Arnold Schwarzenegger got where he was today at least in part because he's good at promotion. But, he finds himself in an unusual position as he tries to sell voters on his reform agenda and the special election he called yesterday. It seems even the "Terminator" turned California governor can be upstaged. We begin our coverage with senior political analyst Bill Schneider.

(BEGIN VIDEOTAPE)

BILL SCHNEIDER, CNN SR POLITICAL ANALYST: Can anyone muscle out Arnold Schwarzenegger? Turns out the answer is yes. On Monday, just after 5:00 California-time, Governor Arnold Schwarzenegger went on state-wide television to make an important announcement.

SCHWARZENEGGER: Today I signed the proclamation calling for a special election.

SCHNEIDER: OK. It's 5:00 in Los Angeles. TV sets are on and where is Arnold? He's not on. He got pushed aside by this guy. No TV station in L.A., the state's biggest media market, took the governor's speech live. We know what happened to him. What is going on with him? Special elections are Governor Arnold Schwarzenegger's thing.

UNIDENTIFIED MALE: Clearly, this is a governor who came into office by special election, now seems to think it's his job to govern by special election.

SCHNEIDER: Schwarzenegger is asking Californians to vote on several measures. One would give him the authority to cut spending on his own without the legislature's approval in order to balance the budget. Californians are not demanding a special election on this or any other issue this year. They'd just as soon wait until next year's regular election. Public employee unions have been running ads against the governor. They protested his speech.

UNIDENTIFIED FEMALE: And he's ready to spend 45, $70 million or whatever, on an election that does nothing for the people of California.

SCHNEIDER: It's taken a toll on the governor's job rating which dropped to 40 percent last month. Schwarzenegger is framing the vote as a referendum on reform.

SCHWARZENEGGER: With the people's help, there will be a reform. Our broken state government will be modernized and revitalized.

SCHNEIDER: He intends to campaign against the state legislature which is considerably less popular than he is. But a Republican consultant acknowledges...

UNIDENTIFIED MALE: There's no doubt this is going to be a referendum on Arnold Schwarzenegger ability to persuade people what direction they want to see the state.

SCHNEIDER: What happens if the measures are defeated?

UNIDENTIFIED MALE: If he fails on all fronts, I don't see why he would want to seek reelection.

SCHNEIDER: It's Governor Schwarzenegger reelection campaign in a special election, a whole year ahead of time.

(END VIDEOTAPE)

SCHNEIDER (on camera): The top Democrat in the California State Senate said yesterday, quote, "this special election is about the governor wanting to star in another war movie, only this is a war he alone has started," unquote, what some might call a preemptive war.

MALVEAUX: Well, thank you very much, Bill. We look forward to more on that story. We'll have more on Schwarzenegger's political challenges ahead. We'll get the latest from a California political reporter and get dueling partisan takes on the governor's strategy.

Now, here in Washington today, Defense Secretary Donald Rumsfeld suggested the United States will need the Guantanamo Bay prison for years, until the war on terror is over. Many Democrats and even some Republicans say the prison should be closed because of alleged mistreatment of detainees. Rumsfeld defended the military's handling of the facility and the suspected terrorists held there.

(BEGIN VIDEO CLIP)

DONALD RUMSFELD, DEFENSE SECRETARY: They are not common car thieves. They are believed to be determined killers. Arguably, no detention facility in the history of warfare has been more transparent or received more scrutiny than Guantanamo.

(END VIDEO CLIP)

MALVEAUX: Also today, two prominent Senate Republicans weighed in on the debate over Guantanamo Bay. Let's now bring in our congressional correspondent Ed Henry. Ed?

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT: Good afternoon, Suzanne.

That's right. Democrats, in fact, continue to turn up the heat on the White House over the prison at Guantanamo with Senate Democratic Whip Dick Durbin charging today that he believes the administration's handling of detainees has been, quote, "as shameful as the handling of the Japanese internment camps in World War II." Some tough talk from Dick Durbin, and it may in fact be a preview of tomorrow's hearing before the Senate Judiciary Committee on detainee abuses.

We're hearing from some Democrats, privately, that this could become a real knock-down, drag-out fight. Democrats are planning to use this as a platform to beat up on the administration's policies. In fact, another senior Democrat on the judiciary panel, Joe Biden, was the first lawmaker to come out and say that Guantanamo should actually be shut down. That's a notion that, as you mentioned, picked up some bipartisan steam over the weekend when Republican Senator Mel Martinez, a former member of the Bush cabinet, said that might be a good idea. Another Republican, Chuck Hagel, has not called for it to be shut down but seemed to be leaving the door open a bit when he said over the weekend that he believes Guantanamo is adding to a difficult U.S. image abroad right now.

All of this talk led Senate Majority Leader Bill Frist today to come out hard and say the prison should not be shut down.

(BEGIN VIDEO CLIP)

SEN. BILL FRIST (R-TN), MAJORITY LEADER: I believe absolutely that we should not shut it down. That, yes, there is an image challenge that we have that centers on Guantanamo, a image challenge that we have at Abu Ghraib. Whatever the issues are, the legal issues, they do need to be addressed in a current fashion. But let's address those. Let's not cut and run because of image problems.

(END VIDEO CLIP)

HENRY: Now, Vice President Cheney yesterday warned that moving too quickly to release the over 500 prisoners at the prison in Guantanamo could be very dangerous to national security. He cited the cases of at least 10 prisoners who had been released and then turned up on various battlefields trying to kill U.S. troops. But, Democratic Senator Dick Durbin today fired back saying that he does not want to just dump these prisoners out on battlefields. What he's saying is that, in fact, these prisoners should be charged with crimes if in fact they committed crimes, if in fact, they are terrorists.

He noted that some of these prisoners have been held for three years without being charged with a crime. Durbin, saying the Democrats are not suggesting they should just be released out on to battlefields. He wants some resolution to this. And, I can tell you he mentioned a second Republican in addition to Frist coming out, Senator John McCain, the Republican from Arizona, kind of agreed with Durbin in saying, just in general, he believes the key here is getting the legal process going again. McCain said that two years ago he visited Guantanamo; he came back from there and told Defense Secretary Donald Rumsfeld it was time to get that legal process going. McCain said today, he's still waiting.

MALVEAUX: Ed, we'll be keeping a close eye on that.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R), ARIZONA: I think the key to this is to move the judicial process forward so that these individuals will be tried, brought to trial, for any crime that they are accused of rather than residing in Guantanamo facility in perpetuity.

(END VIDEO CLIP)

HENRY: Now Senator McCain was appearing with Senator Frist at a press conference where they were on a somewhat rare occasion here joining forces. In this case, trying to push Democrats to stop the opposition to the president's nominee to be the U.S. ambassador to the United Nations, John Bolton. There was a lot of laughter at this press conference because there was a question about whether or not presidential politics is playing any role in the Bolton fight.

As you know, Frist and McCain, potential rivals for the 2008 Republican nomination. They both feigned ignorance at the possibility presidential politics was playing any role, and they said it's time for the Democrats to stop their stalling, but I can tell you Democrats, like Chris Dodd, Joe Biden, insist they are going to fight on and they're continue to demand -- continue to demand more documents from the Bush administration over the Bolton case. Suzanne?

MALVEAUX: Ed, thank you very much. I'm sure we'll be following many of those fights on Capitol Hill. Ed Henry.

Now with the Senate Judiciary Committee holding a hearing on Guantanamo Bay tomorrow, who has the strongest case, the prison's defenders or its critics? I'll ask two panel members, Democrat Patrick Leahy and Republican John Cornyn.

Also ahead, President Bush is campaigning for Social Security reform in Pennsylvania. Is he doing -- is he doing Senator Rick Santorum any favors?

Later, in our "Strategy Session," calls for a troop pull-out in Iraq from the public and a congressional Republican. Is the Bush administration listening?

(COMMERCIAL BREAK)

MALVEAUX: And back to the developing story that we have been following. Our own John Zarrella in Aruba. That missing American teenager Natalee Holloway. There seems to be an expanded search that is under way. John, what can you tell us at this time?

JOHN ZARRELLA, CNN CORRESPONDENT: Suzanne, what we can tell you is that apparently acting on some new information that they have, police have been searching for about the past hour and a half to two hours an area a couple of hundred yards up the beach from the Marriott Hotel. So about a mile and a half from where we are here at the Holiday Inn, which is where Natalee Holloway was staying.

Now, there were -- there's a diver that may well be in the water. There's a boat off the shore there. Information not coming out from police as to what they are looking for, exactly, if anything. We have just been told from a videographer, Jerry Simonson (ph), who is at the Marriott shooting videophone pictures for us, that there are dog teams that are out there now as well, searching in the mangrove area, which is not far from the beach.

So, clearly indications are that police here in Aruba acting on some new fairly significant information, are searching an area where they had not searched before. So they had not searched this area before now -- Suzanne.

MALVEAUX: John, we know you'll be following those developments. We'll get back to you if you have anything later in the program.

Now returning now to the controversy over the U.S. detention center at Guantanamo Bay, Cuba. Amnesty International calls the facility the gulag of our times and critics are stepping up their calls for the Bush administration to shut it down.

Among the most vocal critics, Democratic senator Patrick Leahy of Vermont. He's a member of the judiciary committee which will hold hearings on the issue tomorrow. He spoke with me earlier today.

(BEGIN VIDEOTAPE)

SEN. PATRICK LEAHY, (D) VERMONT: Well, I think the hearing wants some straight answers to the American people. We've been holding hundreds of people there since -- well, for about three years now. And we don't know the names of all the people being held. We don't know why they're being held. We don't know if they're terrorists, if they committed crimes or they're just people turned over by bounty hunters in other countries.

You know, the United States has a well deserved reputation of being a nation that follows the rule of law. A lot of other countries rely on us as an example of following the rule of law. But now some of our own allies are asking us questions because of Guantanamo.

I was at a NATO parliamentarian meeting a couple weeks ago in Europe. These are our most fervent allies, these are closest friends, and they were all coming up to me and saying, what are you doing in Guantanamo? They're not being held according to the Geneva Convention.

They're not being held according to our own classification, where the president said we'd hold them there so they could undergo military commissions. We haven't had any military commissions. I think we're in a position -- we either better show that we have something to charge these people with, or release them.

MALVEAUX: Well, the president was asked about this and he said that really, he leaves all the options open when it comes to looking at that base, whether or not it should be closed. Secretary Rumsfeld said he wasn't aware of such options and then Vice President Dick Cheney flat out ruled this out.

From your discussions, either on the Hill or at the White House, does there seem to be some sort of doublespeak that's going on or even some wiggle room here?

LEAHY: Well, I think that a lot of people, both Republicans and Democrats on Capitol Hill, feel that Guantanamo is becoming now an embarrassment to the United States. It's a recruiting poster for terrorists. If anything, it hurts our security. It doesn't help our security. And everybody knows there's going to have to be a change.

I think what we would like and our hearing tomorrow in the judiciary committee to have both administration supporters and critics who will testify -- I hope out of that will come some way where the administration can get out of this bind. But if we simply keep the status quo at Guantanamo, it hurts America's interest. It doesn't enhance our security. And many, many experts would say it hurts our security in the long run.

MALVEAUX: Well, Senator John McCain, a Republican of Arizona, he describes it this way. He says, yes, there is an image problem here with Guantanamo Bay, the alleges of abuse and torture. But he says that it's more problem with the judicial process, not the facility itself, that it's a matter of getting these detainees to trial. Do you agree with him?

LEAHY: You imagine if 100 or so Americans were being held somewhere in exactly the same condition, basically in communicado, their names not being released, nobody saying what the charges are, can you imagine how we'd be reacting in this country? Now, I have no question that some of the people there are people who would do serious harm to the United States if they are allowed to. But take those people and charge them. But at least let us know who is there.

MALVEAUX: Very quickly, Mr. Senator, if I could bring up a quote from a Republican Senator Lindsey Graham. He puts it this way -- he says, "When you catch somebody in Afghanistan or other parts of the world that's engaged in the war on terror, you need to take them off the battlefield. Prisoners of war are released should be released when the war is over. But of course, nobody's going to sign a surrender treaty here." Is the war on terror different then conventional wars, in terms of how to treat these detainees? How do you resolve that?

LEAHY: Basically -- well, basically, what Senator Graham says is absolutely right. And this is a different situation, but the fact is, we stand so much for the rule of law. At the very least, we ought to be letting the world know who are the people we're holding and why they're holding them.

(END VIDEOTAPE)

MALVEAUX: Well, we've heard the views of one of the Democratic leaders in the Senate. When we return, Republican Senator John Cornyn of Texas weighs in on the Guantanamo controversy.

(COMMERCIAL BREAK)

MALVEAUX: Earlier we heard from Democratic Senator Patrick Leahy on the controversy swirling around the U.S. detention facility at Guantanamo Bay, Cuba. While Democrats are calling for the prison to be shut down, Republicans say that is the wrong thing to do. A short time ago Republican Senator John Cornyn of Texas, a member of the judiciary committee, spoke with me about the issue and possible alternatives to closing down the facility.

(BEGIN VIDEOTAPE)

SEN. JOHN CORNYN (R), TEXAS: Well I think the problem is there just don't seem to be very many good alternatives to the detention facility at Guantanamo Bay. If you bring it to one of the United States, I can't imagine any United States Senator or any Congressman that would want to have it in their district.

And we simply have to have a facility like that where we can gather the intelligence that's important to saving American lives. So, I think that's part of the quandary is: where else but Guantanamo Bay, if we were to move it.

MALVEAUX (on camera): Earlier today, I spoke with Senator Patrick Leahy and talked about his hearings. Tomorrow, of course, the Senate Judiciary Committee. They are going to talk about these detainees, and just why they are being held. He says that they are looking for some straight answers here. Is there any question in your mind why they are being held? and to what extent do members of Congress really know who is being held there?

CORNYN: Well, I'm on the judiciary committee and also on the armed services committee, so I participated in a number of hearings about Guantanamo Bay and our interrogation practices there. I've also visited Guantanamo Bay.

I'm one of 11 senators who's been there and seen the facility in use. And I was very impressed; favorably impressed that we are not only observing the law, but we are actually providing quite humane and indeed, pretty generous living conditions to some of the detainees there who happen to be some of the worst terrorists in the world.

These are people who we've got to get information from using every lawful means to help save American lives and protect our troops in the field. And it's been very productive, the intelligence, that I believe has in part contributed to the fact that we have not yet been hit again in the United States since September 11.

MALVEAUX: Now, you said, before, that closing Guantanamo would really be counted onto a win for the terrorists, but Republican Senator Mel Martinez of Florida has said and, of course, this is a Bush loyalist --someone who was in Bush's previous cabinet, he says, and I'm quoting here, he calls this prison, "An icon for bad stories." He goes on also to say that, "It's one of the reasons that the United States is losing the image war around the world." Is he wrong or he is just off message?

CORNYN: Well, I think part of the problem is people have not -- who have not been to Guantanamo Bay, who do not yet know what the facts are, and I think, unfortunately, some of us have been too slow to get the facts out. And leaving the field to people who for various reasons want to be critical of what's happening there, for some advantage.

But the fact is, we've got to use every lawful means within our ability to get actionable intelligence to protect our country, to protect innocent civilians against future terrorist attacks. We've got to use every legal means to interrogate, to get information from some of these worst terrorists in the world. People who finance, recruit, carry out terrorist activities, and people who would like nothing more than to continue the kinds of attacks that devastated America on September the 11th.

MALVEAUX: Now, Senator, you said before that you think that perhaps people are being critical for their own political purposes, for their own gain, but again, we are hearing from Republicans -- Senator Chuck Hagel as well as, Senator Martinez. Are you saying that they are coming out, speaking out for political gain?

CORNYN: Well, I didn't mean to suggest that my colleagues in Congress were necessarily using this as a political tool. What I'm saying is the enemies of the United States are using some of this rhetoric, that I think we have to be very careful about, to try to disparage what we are doing and try to cast it in an unfavorable light.

(END VIDEOTAPE)

MALVEAUX: Senator John Cornyn from earlier today. Now, he is usually the star, but yesterday Arnold Schwarzenegger was a supporting actor. So, will the loss of the limelight hurt the California governor's push for his proposals in a special November election?

The story when we come back.

Plus the president hits the trail to help a friend, and holds a dinner tonight to help his party. We've got our eyes on some serious campaign cash.

(COMMERCIAL BREAK)

(MARKET UPDATE)

MALVEAUX: As the markets get set to close on Wall Street, I'm joined by Kitty Pilgrim in New York with "The Dobbs Report" -- Kitty.

KITTY PILGRIM, CNN CORRESPONDENT: Hi, Suzanne, thanks.

We have stocks mixed on Wall Street. And right now the Dow, up about 27 points. The Nasdaq is slightly lower, so there's a mixed picture.

A couple snapshots on the economy we have today. Producer prices fell 6/10 of a percent in May. That's the biggest drop in two years -- it was energy. Oil prices edged lower today. They held above $55 a barrel, though, and OPEC meets tomorrow, is expected to raise the official production limit. That won't have any impact on actual production. Retail sales, also, fell slightly in May.

G.M. stock up 4 percent. The Auto Workers Union says General Motors wants cuts in healthcare benefits by the end of the month. G.M. would like the union to offer the concession, so the company doesn't have to impose the cuts. Well, G.M.'s healthcare costs are considerable. They add $1,500 to every vehicle it makes.

Morgan Stanley in the news these days. Philip Purcell, its CEO and chairman, announced yesterday he's retiring from the firm amid criticism from investors and former executives. He's not walking away empty-handed. He could get more than $62 million in stock options, pension benefits and other compensation he already earned.

Coming up on CNN, 6:00 p.m. Eastern, "LOU DOBBS TONIGHT," U.S. taxpayers pay for flights to deport illegal aliens out of this country deep into Mexico. But will that repatriation work?

(BEGIN VIDEO CLIP)

ANDREA ZORTMAN, U.S. BORDER CONTROL: It is an important program for two reasons. One, to mitigate some of the deaths that we've been having in the desert. And two, to stop the cycle of smuggling.

(END VIDEO CLIP)

PILGRIM: Also tonight, companies like Microsoft are willing to go to great lengths to do business in China. They're even rewriting software to ban words like democracy and freedom. We'll have a special report on that. And then, Los Angeles County district attorney explains his plan to extradite Mexican criminal suspects back to the United States to stand trial. We'll tell you all about that.

Plus, a new poll finds many Americans want U.S. troops withdrawn from Iraq and some in Capitol Hill are calling on the president to set a timetable to bring the troops home.

We'll have all that and more, 6:00 Eastern on "LOU DOBBS TONIGHT." But for now, back to Suzanne.

MALVEAUX: Thanks very much, Kitty.

Now back to our developing story. There have been countless searches all over Aruba for Natalee Holloway in the last two weeks. Today a new effort to find the missing Alabama teen is underway. The search is taking place near a beachfront hotel more than two weeks after she vanished. Three men remain in custody in the case. We are keeping a close watch on the developments and will continue to update you.

But now, back to "INSIDE POLITICS." Governor Arnold Schwarzenegger says if you break your arm, you don't wait to get until your next physical to get it fixed. That's his justification for calling a special election in November to put the fate of his reform agenda in the hands of voters. A day after his announcement, Schwarzenegger is out campaigning, and so are the Democrats and union forces that oppose him and his initiatives. That would cap state spending, strip lawmakers of their power to draw legislative boundaries and increase the amount of time it takes public school teachers to get tenure.

Well, let's talk about all of this, the governor's strategy and his critics' game plan, with Dan Walters of "The Sacramento Bee." Dan, thanks very much for joining us now.

DAN WALTERS, "SACRAMENTO BEE": You're welcome.

MALVEAUX: Now, Schwarzenegger announced that he would hold this special election in November to try to pass these reforms. But wasn't his speech last night also really an acknowledgement of how much his relationship with state lawmakers has eroded?

WALTERS: Well, I suppose it was, and that -- of course, that's why he's doing this. The relationship began to erode about a year ago when they got into a big squabble over the state budget and Schwarzenegger came to believe that he was being jerked around by the legislature, which they deny, of course.

And ever since then, it's pretty much been an escalating war. He vetoed a lot of the Democrats' bills, he tried to defeat a lot of them at the polls in November. And now, after that, he launched the series of ballot measures that, in total, would kind of undercut the Democratic control of the Capitol and more particularly, undercut union control of the Democratic party in the Capitol. MALVEAUX: Well, a Public Policy Institute of California poll shows that 33 percent support the governor's plan for this special election, but 61 percent would prefer that he put his reforms on the ballot in June of 2006. Now, coming a year before he's up for reelection, could this special election actually hurt him?

WALTERS: I don't think there's any question that's it's a year early referendum on Arnold Schwarzenegger. In fact, he's kind of calling an early election as if he were prime minister. And it's a referendum on him. And he wanted it to be a referendum on him when he started all this, because his popularity in those days was 65 or 70 percent.

His enemies understood there was going to be a referendum on him and spent several million dollars, maybe as much as $10 million, pulling down that popularity in a media barrage and it worked. It's got it down into 40-50 percent range somewhere. So yes, yes, that's exactly right. This is a referendum on Arnold Schwarzenegger, and if he were playing poker, you could say he's gone all in.

MALVEAUX: What is the Democrat strategy to deal with Schwarzenegger's announcement? I mean, how are they making this into an early referendum on the governor?

WALTERS: Basically, by portraying him as an enemy of dedicated public servants. Policemen, firemen, teachers and so forth. And as one Democratic leader said the other day, instead of attacking California's problems, he's attacking Californians. Schwarzenegger will respond and say, yes, he's not attacking policeman and fireman and teachers, he's attacking their unions, which have a stranglehold control on the Capitol and are preventing the state budget from being balanced -- we've run up tens of billions in debts -- and in other ways, thwarting the ability of the legislature to respond to this state.

MALVEAUX: Another interesting development here is that the California state treasurer -- he sent a press release that said Schwarzenegger has decided to launch a political agenda to bring Bush's agenda to California. Now do you think the Democrats are trying to link Schwarzenegger to Bush? You think that this is actually going to work?

WALTERS: Well, absolutely. In fact, that state treasurer, Phil Angelides, is probably the leading Democratic candidate for governor in 2006. So he has a vested interest in that, obviously. But yes, of course. Bush lost California by about 1.2 million votes in both of the previous two elections. And he's not a popular person in this state. And so trying to tie Schwarzenegger to Bush is a good tactic on the part of the Democrats.

MALVEAUX: Well, thank you very much, Dan Walters of "The Sacramento Bee." We appreciate your time.

WALTERS: You're welcome.

MALVEAUX: President Bush is also in campaign mode today. He is working to raise cash for fellow Republicans and he's continuing a more difficult task -- that, of course, selling his Social Security reform plan.

We now go to our White House correspondent, Dana Bash -- Dana, how are you?

DANA BASH, CNN WHITE HOUSE CORRESPONDENT: Hi, Suzanne.

Well, President Bush did go to Pennsylvania today and started his trip there by having a fundraiser for Rick Santorum, a Republican senator from that state, a member of the leadership, who is in a very tough race. He's got a tough race ahead against Robert Casey, Jr., his Democratic opponent.

We're told that the president raised about $1.5 million for the senator and for the state party, a lot more than expected. From there, the president took the senator off to Penn State for what was, by our account, Mr. Bush's 35th event to promote his plan for Social Security reform.

There he did what he has done time and time again, which is try to implore Democrats who refuse to offer an alternative because they say they don't want to negotiate on his idea for private accounts. He implored them at least to come to the table.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The facts are irrefutable and now we need to do something about it. I said, why don't we get rid of all the partisan bickering in Washington, D.C. and come together for the good of a generation of people coming up.

(END VIDEO CLIP)

BASH: Now, Senator Santorum was sitting in the audience. And there's no question he has been an enthusiastic supporter of President Bush and of his plan to reform Social Security. But I talked to several Republican operatives, both here in Washington and in Pennsylvania, Suzanne, who said that it might not have been the best timing for President Bush to come to Rick Santorum's state and talk about Social Security today.

This race is expected to be a tough one. Pennsylvania, they say, is the second oldest in the nation when it comes to the population, and it's no secret that in the several months that President Bush has been talking about Social Security, it really has not taken off in polls across the country and also in Pennsylvania.

As one operative I talked to said, that perhaps the senator is trying to walk very carefully on this issue now. Another I talked to was a little bit more blunt, said if the president comes back, we would like him to talk about other issues next time -- Suzanne?

MALVEAUX: But, Dana, I'm sure, as well, there is going to be a lot of thankful Republicans tonight. I understand President Bush is going to be raising very big money. BASH: Big bucks tonight, Suzanne. The president is going to be heading a fundraiser for both Republican campaign committees. He's going to raise -- it's expected to be about $23 million. And the president is going to be in campaign mode, if you will. He's going to be talking politics.

We're told from White House officials going to step up, along the lines what we heard from him on Social Security, talk about the fact that he believes Democrats are obstructing on issues across the board on his agenda, on his nominees like John Bolton. That is something, Suzanne, as you know, that has been a winning strategy, Republicans think, against Democrats over the last two cycles. And the president is going to step it up on that issue again tonight.

MALVEAUX: Dana, thank you very much.

It was another very violent day in Iraq. Coming up, how much is the daily bloodshed hurting the White House? And does the violence offer Democrats a political opportunity?

Plus, the Downing Street memo. We'll go "Inside the Blogs" as both the right and left fire away over the controversial report.

And later, it got overshadowed by the Jackson verdict, but we're not letting it pass without notice. We'll put our spotlight on the Senate's move to right a wrong.

(COMMERCIAL BREAK)

MALVEAUX: The ongoing violence in Iraq presents the Bush administration with some big political problems. CNN political analyst Ron Brownstein of the "Los Angeles Times" joins us now to take more of a look at that.

First of all, thanks for being with us. You know, we look at what's happening in Iraq today, and 30 people were killed by suicide bombers. The White House is always saying look, there's a political victory here. They're doing so well. But, if you continue to take a look at this violence, eventually, are Americans and Iraqis going to lose support in that argument?

RON BROWNSTEIN, "LOS ANGELES TIMES": Well, I think what we're seeing is a pretty clear pattern here of unrelenting violence punctuated by intermittent political progress, and I think the lesson of the past, really since the fall of Baghdad, is that the political progress is not sufficient to outweigh the concerns generated by the violence in public opinion, and so, what happens is that when we get to these moments of sort of break through -- the capture of Saddam, the formation of the interim government, the election, maybe later this summer, the writing of the constitution -- there is a momentary, short-term uptick in public support for the war, but the long-term trend, as long as the violence continues, has been growing alienation and concern whether this was the right thing to do and how it's going.

MALVEAUX: Well, Ron, let's take a look at the latest poll here. You bring up public opinion; a Gallup poll shows that 56 percent now say it was not worth it going to war in Iraq. That is the highest figure ever when it comes to that question. Do you think that Iraq essentially has become a political liability for this president? He is one who actually, when you look at the broader war on terror, that argument has scored relatively high.

BROWNSTEIN: Right, and it's been a very consistent pattern. The president's ratings on the war on terror have always been good. But on Iraq, we do see, I think, largely because of the relentlessness of the violence, a clear erosion in public support for the war, not only in your poll, Pugh, recently, ABC, "Washington Post," a lot of concern.

What's missing from this, though, Suzanne, is an alternative perspective from the political leadership. It's really striking. Usually, with the kind of numbers we're seeing on the war, on the president's approval on the war, concern about whether it was the right thing to do, you would see the opposition party kind of jumping up and down to differentiate themselves, but the Democrats have been conspicuously quiet in terms of offering alternatives.

MALVEAUX: We saw a really interesting picture yesterday, a rare picture of Saddam Hussein fielding questions from this judge and the special tribunal. Looking at the trial in the fall and if people see these kinds of images, do you really think that perhaps the United States, its image, will be bolstered in some way, that the insurgency will step back a bit, when they say that, oh, look, well, Saddam Hussein is being brought to justice.

BROWNSTEIN: I think the biggest lesson, to me anyway, of the post-full scale war period is there are no turning points in Iraq, that there are moments in which we make a short-term gain, but the insurgency exists on almost a completely opposite track. What we're having, I think, really is that there are these two different tracks going on. We have a political process which haphazardly, unevenly shows gains toward moving toward creating an independent Iraqi government, but yet, that progress doesn't seem to diminish the insurgency which it seems, from all the indications to the administration from other governments is going to be a very long-term, difficult, bloody, struggle to tamp down. And, I think as long as that violence remains in place, that is probably going to be the dominant impact on public opinion, more than any kind of political progress which I would include a trial of Saddam.

MALVEAUX: And Ron, very quickly, tell us about Gitmo here, a heated debate. We're going to see the Senate Judiciary Committee tomorrow carry out these hearings. But what can they accomplish here? I mean, obviously, they're talking about alternatives, but both sides are saying we really don't have an option at this time.

BROWNSTEIN: Well, I -- you know, this is clearly an issue that is rising in visibility in Washington. Amnesty International's very explosive comments, which were very controversial, will probably move this to another level. When you Republican senators like Hagel and Martinez raising questions, that's not something we see a lot in this administration, Republicans breaking from ranks. But, it hasn't reached a critical mass yet. I think, with the public, there is a history of a lot of leeway for the president in fighting the war on terror. I think the public has shown that since 9/11.

I would say, though, that you'd have to keep an eye on this as a political for the White House because the volume is rising and the concern is rising.

MALVEAUX: We know you'll be keeping a close eye on that. Thank you very much, Ron.

BROWNSTEIN: Thank you.

MALVEAUX: Well, many Americans were riveted to their TV screens yesterday for the Michael Jackson verdict. The U.S. Senate was doing something it rarely does. It issued an apology for failing in the past to take a stand against lynchings that killed hundreds of people, most of them African Americans. CNN's Bruce Morton takes a closer look at this shameful chapter in American history and this new attempt to make amends.

(BEGIN VIDEOTAPE)

BRUCE MORTON, CNN CORRESPONDENT: Tuskegee Institute estimates between 1882 and 1950, 3,436 African Americans were lynched. That's a conservative count; not all lynchings were reported. Mississippi had the most lynchings. Georgia was second. Billie Holiday sang a song about them called "Strange Fruit."

BILLIE HOLIDAY, SINGER: Black bodies swinging in the southern breeze. Strange fruit hanging from the poplar trees.

MORTON: It was a bloody, racist time in America. Movies like "Birth of a Nation" spread the myths of blacks with insatiable sexuality who lusted for white women. The Ku Klux Klan came back to life and spread across the country. Its platform was very simple.

UNIDENTIFIED MALE: For 5,000 years, the white man has been the supreme race. We the knights of the Ku Klux Klan intend to keep it the white race.

MORTON: The Klan marched across America, marched to the capital of the United States. Some in Congress were members.

The climate changed slowly. In "To Kill a Mockingbird," Harper Lee reminisced about the South where she grew up. Her father, Gregory Peck in the movie, defends a Tom Robinson, black man wrongly accused of attacking a white woman.

GREGORY PECK, ACTOR: Will you please touch it with your left hand?

UNIDENTIFIED MALE: I can't, sir.

PECK: Why can't you?

UNIDENTIFIED MALE: I can't use my left hand at all.

MORTON: The audience sees he couldn't have done it, but the jury convicts. Blacks got convicted in the South back then; whites who killed them, didn't. And Robinson is killed by the locals before he can be sent to prison.

In 1939, 64 percent of white Southerners told a poll they thought lynching was justified in cases of sexual assault.

The NAACP was founded in part to investigate and protest lynchings. The Jackson, Mississippi, "Daily News" answered one query in 1919. The man was advanced all right (ph) from the end of a rope and in order to save burial expenses, his body was thrown in the Yazoo River.

A bloody, brutal time. Could Congress have stopped them? The House voted three times to make lynching a federal crime. But the Senate, using the filibuster, always blocks passage of a law.

Now, we have the Civil Rights Act and the Voting Rights Act and a desegregated South. And now the Senate has passed a resolution apologizing for its inaction on lynching. Louisiana's Mary Landrieu was the principal sponsor.

SEN. MARY LANDRIEU (D), LOUISIANA: These were more than crimes. This was, in some measure, domestic terrorism. American against American, citizens against citizens.

MORTON: Eighty senators co-sponsored the resolution which passed without a roll call vote. Mississippi's two senators were not among the 80.

Bruce Morton, CNN, Washington.

(END VIDEOTAPE)

MALVEAUX: Back to our developing story out of Aruba, that missing teenage girl. We go to, on the phone, our own Karl Penhaul with the latest developments on what they have found about this expanded search -- Karl?

KARL PENHAUL, CNN CORRESPONDENT: We're here at an area close to the Marriott hotel. That's about a mile and a half from the Holiday Inn where Natalee Holloway had been staying.

An area has been cordoned off, now, by the police which is approximately 500 yards long, possibly 150 yards wide. It's an area between the main highway that leads along the coast, and the beach itself. And in between the highway and the beach, is an area of mangroves. There's also a couple of drainage ditch there, as well.

What we can see from our vantage point is there has been some kind of a dog -- apparently a search dog brought in. That dog -- we've only seen one dog at this stage -- has been led by its handler around some of the mangrove bushes.

We can also see, off there in the distance, a red object connected by pipes, which looks, from here, like a fire pump. The red truck -- the red fire truck has been here, and we believe that is a pump. So, that looks like that may be pumping some of the water from one of the drainage culverts there.

It's not clear though, if two weeks ago when Natalee Holloway disappeared, whether there was this much water in the drainage culvert. It has been raining over the last few days. So, those are also elements to bear into account. Also, the police haven't said too much as to what has led them to this area.

Obviously, the three suspects still in custody. The three last seen in Natalee Holloway's company are still under interrogation. But we also believe that there may have been a tipoff from somebody that may have been searching in the area to call police into this area.

ZAHN: Thank you, very much, Karl Penhaul, of course, out of Aruba.

We will continue to bring you live updates as we get more developments on the story.

Now, the so-called Downing Street Memo concerning U.S. plans to invade Iraq continues to cause a lot of buzz in cyberspace.

Straight ahead, we'll go inside the blogs to find out the latest on this controversial issue.

(COMMERCIAL BREAK)

MALVEAUX: Well, it's an issue that won't die in cyberspace: The Downing Street memo. And it continues to be a hot topic for many bloggers. We check in now with CNN Political Producer Abbi Tatton, and Jacki Schechner, our blog reporter.

JACKI SCHECHNER, CNN BLOG REPORTER: Hi Suzanne. Yes, it's been about six weeks now since the Downing Street memo showed up in the Sunday Times. That being the memo from July of 2002, that suggested perhaps the Bush administration had plans to go to war with Saddam Hussein as early as then.

Now the bloggers pushing, especially on the left, for the mainstream media to continue to pay more attention to it, and they're doing so. Over the weekend, "The Washington Post" introduced a second memo, this one having to do with plans for post-war Iraq, or suggesting perhaps there was a lack thereof.

Then a "New York Times" article that came out yesterday saying maybe that the Downing Street memo, and memos that have since been released, maybe not the smoking gun that some people are suggesting they are.

ABBI TATTON, CNN POLITICAL PRODUCER: But the left side of the blogopshere is saying absolutely it is the smoking gun and they're determined to give you all the tools they possibly can to help you understand.

Here's DowningStreetMemo.com. Now, this was started in a conversation that was going on over at the liberal site: Daily Koz. A few bloggers were talking about, "why isn't this getting attention about 10 days after it came along?" Saying, "Why isn't there a site about this? why aren't there adds about this so people can learn more?"

They then went and registered DowningStreetMemo.com with links to all the documents involved, and also other ways to help you learn. Related here, info and documents you can look at all the different players involved. If you're not understanding who these officials are in London, you can see there the U.S. equivalents.

Now, the point of this site here is to get a congressional inquiry into the Downing Street memo and also to raise awareness, and have the mainstream media look at it more.

SCHECHNER: Another way that they are raising awareness on the left side of the blogs online -- we've told you about this before -- is BigBrassBlog.com. The is the Big Brass Alliance. They are now up to 458 blogs that are committed, and continuing to blog about the issue.

Their latest development, though, is they have a live chat scheduled for tomorrow night at 8:30 p.m. Eastern Standard Time. Anyone who wants to join in, is welcome to do so, all you do is go to the site and you click on the link, and you just talk about this issue, if you're interested in that.

TATTON: There are additional documents out there that think ThinkProgress.org is linking to. Over the weekend, "The Washington Post" was looking at the British briefing papers. Those are all online here at ThinkProgress.org -- various foreign policy officials in London looking at the buildup to the Iraq war.

These have been reported on here, as I said, over the weekend, but Think Progress pointing out that the U.S. media should have been more aggressive. That these were actually looked at in London newspapers back in September, of last year.

SCHECHNER: Now, more in keeping with line of what "The New York Times" article was saying, the right side of the blogs now picking up this issue in full force saying, "There's not much going on here."

DeanEsmay.com -- I'm sorry, "Dean's World," that is e-s-m-a-y, to fix information around a policy. Dissecting, specifically, the phrase in the Downing Street memo that says that, "the intelligence and facts were being fixed around the policy," -- "Saying that what does this mean?"

It is: "How on Earth could one statement, in one memo, from a mid-level official be proof of an enormous conspiracy?"

TATTON: Another one over here at AndrewSullivan.com. He says that he is, "Underwhelmed by all this." What does the memo show? that the British thought it was inevitable? The war was un-sellable, and that there was no post-war planning. And he says, "The only thing amazing about that, is that three government officials managed to get three things right all at once."

Suzanne.

MALVEAUX: Abbi, Jacki, thank you very much.

Now, President Bush may be the star attractions at the big Republican fundraiser dinner we told you about earlier, but porn star and former California gubernatorial candidate Mary Carey is hoping to make an impression tonight, as well. She and a porn producer each paid $5,000 for tickets to the dinner and they got to attend a lunch for big donors with Deputy White House Chief of Staff Karl Rove. Carey held a news conference to show off the outfit she plans to wear this evening, and made sure to let reporters know she wasn't wearing anything underneath. We -- cable will keep it rated G, though.

The "Strategy Session" is straight ahead. The governor of California wants voters to back his special initiatives. Arnold Schwarzenegger says the vote will bring needed reforms. Critics say it's a power grab with a very big price tag. That's coming up on INSIDE POLITICS.

(COMMERCIAL BREAK)

MALVEAUX: Welcome back to INSIDE POLITICS and our "Strategy Session" on the -- today's hottest political topics.

With us today, CNN political analyst Paul Begala, of course, as well as Republican strategist Joe Watkins. Today's topics, Arnold's election. Governor Schwarzenegger calls a special election in November that his opponents say is a vote that no one needs.

Is it time to close Gitmo? The controversy over the U.S. military prison at Guantanamo Bay, Cuba, continues, causing deep divisions over whether Gitmo should stay in business.

And, when is the right time to bring the troops home? A strong supporter of the war now wants to know when American forces will get out of Iraq.

Governor Arnold Schwarzenegger tells California voters that there's no time to lose, so he's on the road today, promoting the special election in November. Schwarzenegger wants changes in teacher tenure, redistricting rules, and a state spending cap, but critics call it a power grab, and many say he should have waited for next year's regular election instead of asking voters to pick up a $45-80 million tab for the special vote.

And the governor may have suffered from bad timing, giving his statewide address just after the Jackson verdict. Many stations were wall-to-wall with Jackson coverage while Schwarzenegger was going live.

(BEGIN VIDEO CLIP) GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: I know that some people say Arnold, why not wait until next year? Why have a special election now? But how can we just stand around while our debt grows each year by billions and billion of dollars? If you break your arm, you don't wait until your next physical. You get it fixed now.

(END VIDEO CLIP)

MALVEAUX: So, the first question I have for both of you here is how damaging was that, the Michael Jackson verdict that actually happened while he decided that he was going to go ahead and deliver this address? Was anybody paying attention?

PAUL BEGALA, CNN POLITICAL ANALYST: No, you would think an actor would have a better sense of timing than that. Schwarzenegger -- he started great. He came in popular as sort of an anti-politician. And now he seems to look like another politician, and what's worse, he's not behaving like an actor in the best sense of the word. His timing was wrong yesterday and I think his message was off, and I think he lost his first -- his only chance to make a first impression on this.

JOE WATKINS, REPUBLICAN STRATEGIST: Well, I think what Arnold is doing is he's being, I think, very smart. He realizes he doesn't have a lot of time here, that he was elected to get the state's fiscal house in order, and that's what he's moving to do, I think. He doesn't want to wait.

At the same time, he's going -- he's playing a card that has played very, very well for him, by taking it right to the people of California, and that really does serve him well. He's done this successfully in the past with these various propositions, and I think Arnold knows that this is a winning hand for him. Take it to the -- straight to the people of California, let them make the decision. Don't let the politicians as he says in Sacramento decide your fate or prolong the agony. But take it right to the people and let them decide.

MALVEAUX: There are only 33 percent, however, of the voters that actually are for this. Is this ultimately going to hurt Schwarzenegger?

BEGALA: Yes, because I think -- I don't think he was elected to put the state's fiscal house in order. I think he was elected because he wasn't a politician -- he wasn't a typical politician and now he's behaving like one. When the state's fiscal house is in trouble, you run up a $40-80 million tab for a special election? That doesn't make any sense at all. He was elected to get things done, and he would do well, actually, to follow the lead of the last actor/politician to become governor, Ronald Reagan, who was remarkably successful with the Democratic legislature in California, and did not run off and go calling special elections.

The problem is this was Schwarzenegger's hole card, that I can go to the people. Now he's going. The Democrats have called his bluff. You know what? I think that, now he's got nothing left to play. WATKINS: To me it seems like this is the move of somebody who isn't a politician. I mean, at the end of the day, he's not looking to prolong his career in politics and to play it safe. He's looking to do what's best for the people of California. So, he's saying, you know what, let's just let the cards fall where they may. Let's have a special election. Let's get these things decided and let the people talk. Let the people have their say.

MALVEAUX: But, Joe, the people are talking and they're saying that he had a 70 percent approval rating before. It's now down to 45 percent.

WATKINS: Well, I think Arnold doesn't really care about the approval ratings as much as he cares about getting things done for Californians.

BEGALA: I'm sorry to interrupt, but the two are linked. You know, the currency of public officials' ability to lead is the popularity, particularly one like Schwarzenegger who came into office from the outside, and he holds himself out as a tribune of the people. If the people are not for him now, and right now they're not, it's an awfully big gamble to say, I'm going to go to the people when it looks like the people aren't very thrilled with him.

WATKINS: But he's a lot ahead of the state legislature, far. He's way ahead of the state legislature, I mean, right now his polling numbers may be 40 percent, but the state legislature's is about 26 percent. So, he's got a 14-point lead on the politicians in Sacramento, which means that he has a good chance to win.

MALVEAUX: All right, well, we'll see how that works out. We're going to get back to another subject, as well, of course. What is going on at Gitmo? Lawmakers are split on whether the military prison at Guantanamo Bay, Cuba, is the right place for terrorism suspects. When our "Strategy Session" continues, we'll look at the controversy and the question, the time has come to shut down Gitmo.

(COMMERCIAL BREAK)

MALVEAUX: The "Strategy Session" continues on INSIDE POLITICS.

Still here, Paul Begala and Joe Watkins.

Should the U.S. stay or go? There's a split over the future of the U.S. military prison at Guantanamo Bay, Cuba. There have been reports of harsh treatment of detainees including strip searches, isolation, dripping water and standing for prolonged periods, but the secretary of defense says the U.S. has to put terrorists someplace.

(BEGIN VIDEO CLIP)

DONALD RUMSFELD, DEFENSE SECRETARY: The United States' government, let alone the U.S. military, does not want to be in the position of holding suspected terrorists any longer than is absolutely necessary. But as long as there remains a need to keep terrorists from striking again, a facility will continue to be needed. (END VIDEO CLIP)

MALVEAUX: Now, we saw the "Time" report. Everybody's been talking about it, the treatment, interrogation of this 20th -- alleged 20th hijacker. They talked about being naked and standing there and, I don't even know if you thought it was curious that they said playing Christina Aguilera's music, too. They just -- they put that with all the others and nobody seemed to have caught that.

But, obviously, it seems as if the Bush administration, the administration in general, has a problem here, an image problem to address.

BEGALA: I think the image problem is less allegations that they allegedly abused the so-called 20th hijacker. I think most Americans out in the real world are really, frankly uninterested in whether a woman interrogator stood too close to an alleged terrorist.

I think the problem is, instead, the sense that there was no plan here. And we just heard the secretary of defense say, well, as long as there is a need to hold people -- well, apparently we're not going to try them. Obviously we're not going to shoot them and we're not going to release them. So, where's the plan? What are we going to do? When you have Republicans like Senator Hagel, Senator Mel Martinez of Florida, who was in the Bush cabinet, starting to say that they have no plan here, that's the real problem. It's one more manifestation of this allegation that we went to war without a plan.

MALVEAUX: Well, Joe, I know it's interesting, too, because, actually, Vice President Dick Cheney said that, look, the people who are talking about shutting down Gitmo, they really don't support our Iraq policy to begin with, that this is partisan. But, we did hear from Mel Martinez...

WATKINS: No doubt about it, you did.

MALVEAUX: ...just this past week. Does that create a problem?

WATKINS: Well, there are some Republicans of course, who are concerned about image. I think a lot more -- most Republicans are concerned about substance, and the vice president said it so well. What do you do? This is the thing you have to consider. I mean, politics aside...

BEGALA: He just asked that question (ph). What do we do?

WATKINS: You've got these terrorist folks, or suspected terrorist folks, who are being detained right now. Do you just let them go? I mean, after all, consider the fact that some of the folks who have been freed from Guantanamo Bay have gotten back into the war, into the terror war. We don't want those folks back out on the streets, so to speak, committing actions of terror against the Americans anywhere on the globe, let alone the United States of America. So there's no need to shut Guantanamo Bay down.

MALVEAUX: So, what is the viable alternative here, or are -- just politicians using this for their own platform, for their own political gain?

BEGALA: Well, I mean, politicians use everything that they can, obviously. I mean, that doesn't shock me. But I think the question that I want the president to answer, the vice president, is one that Joe asked, which is, what do we do? Where is the plan? I think the reason that public support and Republican support for this war or even for maintaining Guantanamo, which is a rather small issue, if you ask me, the reason that's eroding is because there's no sense that the president has a plan.

As I say, what are the options? Well, we can release them. We can shoot them or we can try them. Apparently, the president doesn't want to do any of that so the fourth is we keep them forever and they die of old age? What's the plan?

WATKINS: I think the plan is a very smart one, which is that this is a brand new war, this war against terror.

BEGALA: We're three years into it.

WATKINS: (INAUDIBLE) but it's still a new war and for Americans to suppose that because we have not had a major terror event in the United States in the last, thank god, four years, that the threat is gone is foolish. These people are suspected of being terrorists, or suspected of being involved in terrorist activities. They need to be detained.

And I think that the place has been very transparent. Where there have been instances of abuse against the Koran, there've been apologies issued and it's been openly admitted to by the Pentagon.

BEGALA: I mean, you do acknowledge that there's a political problem when Republicans, and some from the president's cabinet who are now in the Senate, say that there's been no plan here, no strategy. There's a new Downing Street memo. We just heard our bloggers -- reporters talking about that, that said -- that the British said -- that the White House had no plan for winning the war, post-war, and this is proof of that. Did we not think there were going to be P.O.W.s in the war?

MALVEAUX: At the very least, though, can you both agree that there is an image problem that the Bush administration faces here?

BEGALA: Yes.

MALVEAUX: Whether you think its (INAUDIBLE) credibility...

(CROSSTALK)

WATKINS: I'm glad that, for me, the image problem is not nearly as big a thing as being safe, and I'm glad that the terrorists or suspected terrorists are being detained. I'm glad we've got these people, these 500-plus people, at least detained. If not Guantanamo Bay, somewhere else, but detained and out of the mainstream and not committing acts of terror. MALVEAUX: OK, we'll get back to you guys right after the break. When will the troops come home from Iraq? That is the question that even Republican lawmakers are asking. Is it time for a timetable for bringing the troops home? What one lawmaker thinks coming up when the "Strategy Session" continues on INSIDE POLITICS.

(COMMERCIAL BREAK)

WOLF BLITZER, CNN ANCHOR: I'm Wolf Blitzer in Washington.

Coming up at the top of the hour: Police in Aruba launch a new beachfront search two weeks after the disappearance of that Alabama teenager, Natalee Holloway.

There are new developments. We'll have details.

Dozens of civilians die in new insurgent attacks in Iraq while the U.S. military death toll climbs above 1,700.

And the aftermath of a fiery plane crash in Fort Lauderdale, Florida. We'll hear firsthand accounts from the pilot and the co- pilot.

All those stories and much more only minutes away on "Wolf Blitzer Reports."

Now back to "Inside Politics."

MALVEAUX: And CNN is following a developing story, a major breaking story in the world of broadcasting.

Our own Allan Chernoff is in New York, live with those details.

Allan, what can you tell us?

ALLAN CHERNOFF, CNN CORRESPONDENT: Well, Suzanne, what's happening is that the board of directors at Viacom has now voted to split the company up, split Viacom into two separate public companies.

On the one hand, there would be the cable television and film divisions; cable TV networks including MTV networks and Paramount Pictures.

And on the other hand is the CBS Radio and Television properties.

What's behind this is that the stock of Viacom has been a very poor performer over the past five years since Viacom acquired CBS. The problem is that CBS, particularly the radio stations, are relatively slow-growing business.

And that's really got Wall Street down on Viacom's stock. The stock is trading at half of where it was five years ago. So what's happening here is two separate public companies will be created. Shareholders will have stock in two companies. This is supposed to be finished by the first quarter of 2006. One other announcement, as well: Shari Redstone -- the daughter of Sumner Redstone, chairman of the Viacom -- is now being appointed to the position of vie chair. She is seen as the heir-apparent to Sumner Redstone who's 82 years old, but he's given no indication of giving up control. He does own stock to actually control the entire company.

Suzanne, back to you.

MALVEAUX: Allan Chernoff out of New York, live, thank you very much.

Now, the strategy session continues on "Inside Politics" with Paul Begala and Joe Watkins looking at calls for an Iraq exit strategy.

The daily violence and mounting U.S. casualties are taking a toll on support back home. Congressman Walter Jones is co-sponsoring a resolution calling on the president to set a timetable for troop withdrawal from Iraq.

Jones is the North Carolina Republican who wanted Freedom Fries to replace French Fries at the House restaurant after France failed to back the invasion of Iraq.

And fewer Americans than ever are satisfied with what's going on in Iraq. A new Gallup poll indicates a clear majority of Americans, 59 percent, want the U.S. to withdraw some or all American troops from Iraq. It is the highest percentage since the war began.

Now, we've heard of Jones before, the Freedom Fries, French Fries. I was there in Brussels when he made nice with Chirac and put the French back in the French Fries.

But clearly there seems to be this sense that he is losing support when it comes to U.S. troops inside of Iraq.

WATKINS: Did you read the account? I read the account of what kind of moved the congressman. And, in part, he was moved by some of the sad stories, some of the personal stories that took place; that is to say some of the soldier who's had lost their live fighting in Iraq. That is what caused him to change his mind or at least to call for a timetable to be set about.

I think the president has to hold fast and hard; and that is our military has to complete its mission. I mean, if you talk to the chairman of the Joint Chiefs of Staff or any key military people, they would tell you I think that the mission has to be completed. Despite some of the tragedies, the sadness of any loss of life -- because any life lost is a sad thing -- you've got to complete the mission.

MALVEAUX: But does the president here have a problem in the fact that his own supporters, those who supported him for the Iraq war are now saying bring our troops home?

BEGALA: The president cannot conclude the mission unless he carries with him the support of the Congress and the country. As you point out, Walter Jones is a Red State Republican, strong supporter of President Bush, strong supporter of the war and now he is saying we have to pull out.

MALVEAUX: Sorry, got to cut you off. We're out of time.

Thank you very much.

Of course, now they are a growing part of the had blogosphere: Straight ahead we'll find out about active military bloggers when we head back "Inside the Blogs."

(COMMERCIAL BREAK)

MALVEAUX: Bloggers in the U.S. military are a growing presence in cyberspace. So what's that all about? Check in again with CNN Political Producer Abbi Tatton and Jacki Schechner, our blog reporter.

Jacki?

SCHECHNER: Hey, Suzanne.

This is going to be a quickie so let's get right to it.

Garrett Graff over at Fish Bowl DC posted something off-topic for him but on-topic for us. He's got a memo by Lieutenant General John Vines, who is the commander of the day-to-day operations in Iraq. And it concerns what to do about soldiers' blogs and Web sites. You can click on that PDF file and download it to your computer. There's a couple of interesting points, one of them being that soldiers need to register the URLs of blogs with their commanders over in Iraq so that they can monitor what they're saying, make sure there's no private or sensitive information being leaked.

The other thing we thought was of note is that not only do you have to do that if you have a blog, you also have to do it if you're going to comment on somebody else's blog.

TATTON: This is a growing group. We wanted to just bring you one of them out there. This is tcoverride@blogspot.com. This is the site of Captain Chuck Ziegenfuss, who is a commander of a battalion in the U.S. Army out there in Iraq.

Lots of things on the site that are interesting. A day in the life here: rating houses; clearing highways; some of the frustrations of life out there; using a Port-A-John when it's 101 degrees heat; also some very touching posts; something to his 2-year-old daughter whose birthday he just missed a few days ago. Lots of interesting blogs like this out there giving a really good firsthand account of life on the ground.

Suzanne?

MALVEAUX: Thank you, Jacki, Abbi.

Of course, that is it for "Inside Politics." I'm Suzanne Malveaux.

"Wolf Blitzer Reports" starts right now.

WOLF BLITZER, CNN ANCHOR: Happening now, police in Aruba are searching an area near Natalee Holloway's hotel. The 18-year-old honor student from Alabama has been missing for two weeks. There are new developments.

END

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Aired June 14, 2005 - 15:30   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ANNOUNCER: Governor Schwarzenegger's new campaign.
GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: One way or another, with the people's help, there will be action this year.

ANNOUNCER: How is his call for a special election playing with Californians still buzzing about Michael Jackson?

Senators Bill Frist and John McCain join forces for a cause, and make news on another topic altogether.

President Bush on the fundraising circuit. We'll follow the money and tell you how a pornstar turned politician is trying to cash in.

(END VIDEO CLIP)

ANNOUNCER: Now live from Washington, CNN's INSIDE POLITICS.

SUZANNE MALVEAUX, CNN ANCHOR: Thanks for joining us. I'm Suzanne Malveaux.

There've been countless searches all over Aruba for Natalee Holloway in the last two weeks. Now, a new effort to find the missing Alabama teen is underway. The search is taking place near a beachfront hotel more than two weeks after Holloway vanished. Three men remain in custody in the case. We're keeping a close watch on developments and happenings right now on what's on the Caribbean island, and we'll go live to reporters in Aruba if the story changes.

But, now, let's move on to politics. Arnold Schwarzenegger got where he was today at least in part because he's good at promotion. But, he finds himself in an unusual position as he tries to sell voters on his reform agenda and the special election he called yesterday. It seems even the "Terminator" turned California governor can be upstaged. We begin our coverage with senior political analyst Bill Schneider.

(BEGIN VIDEOTAPE)

BILL SCHNEIDER, CNN SR POLITICAL ANALYST: Can anyone muscle out Arnold Schwarzenegger? Turns out the answer is yes. On Monday, just after 5:00 California-time, Governor Arnold Schwarzenegger went on state-wide television to make an important announcement.

SCHWARZENEGGER: Today I signed the proclamation calling for a special election.

SCHNEIDER: OK. It's 5:00 in Los Angeles. TV sets are on and where is Arnold? He's not on. He got pushed aside by this guy. No TV station in L.A., the state's biggest media market, took the governor's speech live. We know what happened to him. What is going on with him? Special elections are Governor Arnold Schwarzenegger's thing.

UNIDENTIFIED MALE: Clearly, this is a governor who came into office by special election, now seems to think it's his job to govern by special election.

SCHNEIDER: Schwarzenegger is asking Californians to vote on several measures. One would give him the authority to cut spending on his own without the legislature's approval in order to balance the budget. Californians are not demanding a special election on this or any other issue this year. They'd just as soon wait until next year's regular election. Public employee unions have been running ads against the governor. They protested his speech.

UNIDENTIFIED FEMALE: And he's ready to spend 45, $70 million or whatever, on an election that does nothing for the people of California.

SCHNEIDER: It's taken a toll on the governor's job rating which dropped to 40 percent last month. Schwarzenegger is framing the vote as a referendum on reform.

SCHWARZENEGGER: With the people's help, there will be a reform. Our broken state government will be modernized and revitalized.

SCHNEIDER: He intends to campaign against the state legislature which is considerably less popular than he is. But a Republican consultant acknowledges...

UNIDENTIFIED MALE: There's no doubt this is going to be a referendum on Arnold Schwarzenegger ability to persuade people what direction they want to see the state.

SCHNEIDER: What happens if the measures are defeated?

UNIDENTIFIED MALE: If he fails on all fronts, I don't see why he would want to seek reelection.

SCHNEIDER: It's Governor Schwarzenegger reelection campaign in a special election, a whole year ahead of time.

(END VIDEOTAPE)

SCHNEIDER (on camera): The top Democrat in the California State Senate said yesterday, quote, "this special election is about the governor wanting to star in another war movie, only this is a war he alone has started," unquote, what some might call a preemptive war.

MALVEAUX: Well, thank you very much, Bill. We look forward to more on that story. We'll have more on Schwarzenegger's political challenges ahead. We'll get the latest from a California political reporter and get dueling partisan takes on the governor's strategy.

Now, here in Washington today, Defense Secretary Donald Rumsfeld suggested the United States will need the Guantanamo Bay prison for years, until the war on terror is over. Many Democrats and even some Republicans say the prison should be closed because of alleged mistreatment of detainees. Rumsfeld defended the military's handling of the facility and the suspected terrorists held there.

(BEGIN VIDEO CLIP)

DONALD RUMSFELD, DEFENSE SECRETARY: They are not common car thieves. They are believed to be determined killers. Arguably, no detention facility in the history of warfare has been more transparent or received more scrutiny than Guantanamo.

(END VIDEO CLIP)

MALVEAUX: Also today, two prominent Senate Republicans weighed in on the debate over Guantanamo Bay. Let's now bring in our congressional correspondent Ed Henry. Ed?

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT: Good afternoon, Suzanne.

That's right. Democrats, in fact, continue to turn up the heat on the White House over the prison at Guantanamo with Senate Democratic Whip Dick Durbin charging today that he believes the administration's handling of detainees has been, quote, "as shameful as the handling of the Japanese internment camps in World War II." Some tough talk from Dick Durbin, and it may in fact be a preview of tomorrow's hearing before the Senate Judiciary Committee on detainee abuses.

We're hearing from some Democrats, privately, that this could become a real knock-down, drag-out fight. Democrats are planning to use this as a platform to beat up on the administration's policies. In fact, another senior Democrat on the judiciary panel, Joe Biden, was the first lawmaker to come out and say that Guantanamo should actually be shut down. That's a notion that, as you mentioned, picked up some bipartisan steam over the weekend when Republican Senator Mel Martinez, a former member of the Bush cabinet, said that might be a good idea. Another Republican, Chuck Hagel, has not called for it to be shut down but seemed to be leaving the door open a bit when he said over the weekend that he believes Guantanamo is adding to a difficult U.S. image abroad right now.

All of this talk led Senate Majority Leader Bill Frist today to come out hard and say the prison should not be shut down.

(BEGIN VIDEO CLIP)

SEN. BILL FRIST (R-TN), MAJORITY LEADER: I believe absolutely that we should not shut it down. That, yes, there is an image challenge that we have that centers on Guantanamo, a image challenge that we have at Abu Ghraib. Whatever the issues are, the legal issues, they do need to be addressed in a current fashion. But let's address those. Let's not cut and run because of image problems.

(END VIDEO CLIP)

HENRY: Now, Vice President Cheney yesterday warned that moving too quickly to release the over 500 prisoners at the prison in Guantanamo could be very dangerous to national security. He cited the cases of at least 10 prisoners who had been released and then turned up on various battlefields trying to kill U.S. troops. But, Democratic Senator Dick Durbin today fired back saying that he does not want to just dump these prisoners out on battlefields. What he's saying is that, in fact, these prisoners should be charged with crimes if in fact they committed crimes, if in fact, they are terrorists.

He noted that some of these prisoners have been held for three years without being charged with a crime. Durbin, saying the Democrats are not suggesting they should just be released out on to battlefields. He wants some resolution to this. And, I can tell you he mentioned a second Republican in addition to Frist coming out, Senator John McCain, the Republican from Arizona, kind of agreed with Durbin in saying, just in general, he believes the key here is getting the legal process going again. McCain said that two years ago he visited Guantanamo; he came back from there and told Defense Secretary Donald Rumsfeld it was time to get that legal process going. McCain said today, he's still waiting.

MALVEAUX: Ed, we'll be keeping a close eye on that.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R), ARIZONA: I think the key to this is to move the judicial process forward so that these individuals will be tried, brought to trial, for any crime that they are accused of rather than residing in Guantanamo facility in perpetuity.

(END VIDEO CLIP)

HENRY: Now Senator McCain was appearing with Senator Frist at a press conference where they were on a somewhat rare occasion here joining forces. In this case, trying to push Democrats to stop the opposition to the president's nominee to be the U.S. ambassador to the United Nations, John Bolton. There was a lot of laughter at this press conference because there was a question about whether or not presidential politics is playing any role in the Bolton fight.

As you know, Frist and McCain, potential rivals for the 2008 Republican nomination. They both feigned ignorance at the possibility presidential politics was playing any role, and they said it's time for the Democrats to stop their stalling, but I can tell you Democrats, like Chris Dodd, Joe Biden, insist they are going to fight on and they're continue to demand -- continue to demand more documents from the Bush administration over the Bolton case. Suzanne?

MALVEAUX: Ed, thank you very much. I'm sure we'll be following many of those fights on Capitol Hill. Ed Henry.

Now with the Senate Judiciary Committee holding a hearing on Guantanamo Bay tomorrow, who has the strongest case, the prison's defenders or its critics? I'll ask two panel members, Democrat Patrick Leahy and Republican John Cornyn.

Also ahead, President Bush is campaigning for Social Security reform in Pennsylvania. Is he doing -- is he doing Senator Rick Santorum any favors?

Later, in our "Strategy Session," calls for a troop pull-out in Iraq from the public and a congressional Republican. Is the Bush administration listening?

(COMMERCIAL BREAK)

MALVEAUX: And back to the developing story that we have been following. Our own John Zarrella in Aruba. That missing American teenager Natalee Holloway. There seems to be an expanded search that is under way. John, what can you tell us at this time?

JOHN ZARRELLA, CNN CORRESPONDENT: Suzanne, what we can tell you is that apparently acting on some new information that they have, police have been searching for about the past hour and a half to two hours an area a couple of hundred yards up the beach from the Marriott Hotel. So about a mile and a half from where we are here at the Holiday Inn, which is where Natalee Holloway was staying.

Now, there were -- there's a diver that may well be in the water. There's a boat off the shore there. Information not coming out from police as to what they are looking for, exactly, if anything. We have just been told from a videographer, Jerry Simonson (ph), who is at the Marriott shooting videophone pictures for us, that there are dog teams that are out there now as well, searching in the mangrove area, which is not far from the beach.

So, clearly indications are that police here in Aruba acting on some new fairly significant information, are searching an area where they had not searched before. So they had not searched this area before now -- Suzanne.

MALVEAUX: John, we know you'll be following those developments. We'll get back to you if you have anything later in the program.

Now returning now to the controversy over the U.S. detention center at Guantanamo Bay, Cuba. Amnesty International calls the facility the gulag of our times and critics are stepping up their calls for the Bush administration to shut it down.

Among the most vocal critics, Democratic senator Patrick Leahy of Vermont. He's a member of the judiciary committee which will hold hearings on the issue tomorrow. He spoke with me earlier today.

(BEGIN VIDEOTAPE)

SEN. PATRICK LEAHY, (D) VERMONT: Well, I think the hearing wants some straight answers to the American people. We've been holding hundreds of people there since -- well, for about three years now. And we don't know the names of all the people being held. We don't know why they're being held. We don't know if they're terrorists, if they committed crimes or they're just people turned over by bounty hunters in other countries.

You know, the United States has a well deserved reputation of being a nation that follows the rule of law. A lot of other countries rely on us as an example of following the rule of law. But now some of our own allies are asking us questions because of Guantanamo.

I was at a NATO parliamentarian meeting a couple weeks ago in Europe. These are our most fervent allies, these are closest friends, and they were all coming up to me and saying, what are you doing in Guantanamo? They're not being held according to the Geneva Convention.

They're not being held according to our own classification, where the president said we'd hold them there so they could undergo military commissions. We haven't had any military commissions. I think we're in a position -- we either better show that we have something to charge these people with, or release them.

MALVEAUX: Well, the president was asked about this and he said that really, he leaves all the options open when it comes to looking at that base, whether or not it should be closed. Secretary Rumsfeld said he wasn't aware of such options and then Vice President Dick Cheney flat out ruled this out.

From your discussions, either on the Hill or at the White House, does there seem to be some sort of doublespeak that's going on or even some wiggle room here?

LEAHY: Well, I think that a lot of people, both Republicans and Democrats on Capitol Hill, feel that Guantanamo is becoming now an embarrassment to the United States. It's a recruiting poster for terrorists. If anything, it hurts our security. It doesn't help our security. And everybody knows there's going to have to be a change.

I think what we would like and our hearing tomorrow in the judiciary committee to have both administration supporters and critics who will testify -- I hope out of that will come some way where the administration can get out of this bind. But if we simply keep the status quo at Guantanamo, it hurts America's interest. It doesn't enhance our security. And many, many experts would say it hurts our security in the long run.

MALVEAUX: Well, Senator John McCain, a Republican of Arizona, he describes it this way. He says, yes, there is an image problem here with Guantanamo Bay, the alleges of abuse and torture. But he says that it's more problem with the judicial process, not the facility itself, that it's a matter of getting these detainees to trial. Do you agree with him?

LEAHY: You imagine if 100 or so Americans were being held somewhere in exactly the same condition, basically in communicado, their names not being released, nobody saying what the charges are, can you imagine how we'd be reacting in this country? Now, I have no question that some of the people there are people who would do serious harm to the United States if they are allowed to. But take those people and charge them. But at least let us know who is there.

MALVEAUX: Very quickly, Mr. Senator, if I could bring up a quote from a Republican Senator Lindsey Graham. He puts it this way -- he says, "When you catch somebody in Afghanistan or other parts of the world that's engaged in the war on terror, you need to take them off the battlefield. Prisoners of war are released should be released when the war is over. But of course, nobody's going to sign a surrender treaty here." Is the war on terror different then conventional wars, in terms of how to treat these detainees? How do you resolve that?

LEAHY: Basically -- well, basically, what Senator Graham says is absolutely right. And this is a different situation, but the fact is, we stand so much for the rule of law. At the very least, we ought to be letting the world know who are the people we're holding and why they're holding them.

(END VIDEOTAPE)

MALVEAUX: Well, we've heard the views of one of the Democratic leaders in the Senate. When we return, Republican Senator John Cornyn of Texas weighs in on the Guantanamo controversy.

(COMMERCIAL BREAK)

MALVEAUX: Earlier we heard from Democratic Senator Patrick Leahy on the controversy swirling around the U.S. detention facility at Guantanamo Bay, Cuba. While Democrats are calling for the prison to be shut down, Republicans say that is the wrong thing to do. A short time ago Republican Senator John Cornyn of Texas, a member of the judiciary committee, spoke with me about the issue and possible alternatives to closing down the facility.

(BEGIN VIDEOTAPE)

SEN. JOHN CORNYN (R), TEXAS: Well I think the problem is there just don't seem to be very many good alternatives to the detention facility at Guantanamo Bay. If you bring it to one of the United States, I can't imagine any United States Senator or any Congressman that would want to have it in their district.

And we simply have to have a facility like that where we can gather the intelligence that's important to saving American lives. So, I think that's part of the quandary is: where else but Guantanamo Bay, if we were to move it.

MALVEAUX (on camera): Earlier today, I spoke with Senator Patrick Leahy and talked about his hearings. Tomorrow, of course, the Senate Judiciary Committee. They are going to talk about these detainees, and just why they are being held. He says that they are looking for some straight answers here. Is there any question in your mind why they are being held? and to what extent do members of Congress really know who is being held there?

CORNYN: Well, I'm on the judiciary committee and also on the armed services committee, so I participated in a number of hearings about Guantanamo Bay and our interrogation practices there. I've also visited Guantanamo Bay.

I'm one of 11 senators who's been there and seen the facility in use. And I was very impressed; favorably impressed that we are not only observing the law, but we are actually providing quite humane and indeed, pretty generous living conditions to some of the detainees there who happen to be some of the worst terrorists in the world.

These are people who we've got to get information from using every lawful means to help save American lives and protect our troops in the field. And it's been very productive, the intelligence, that I believe has in part contributed to the fact that we have not yet been hit again in the United States since September 11.

MALVEAUX: Now, you said, before, that closing Guantanamo would really be counted onto a win for the terrorists, but Republican Senator Mel Martinez of Florida has said and, of course, this is a Bush loyalist --someone who was in Bush's previous cabinet, he says, and I'm quoting here, he calls this prison, "An icon for bad stories." He goes on also to say that, "It's one of the reasons that the United States is losing the image war around the world." Is he wrong or he is just off message?

CORNYN: Well, I think part of the problem is people have not -- who have not been to Guantanamo Bay, who do not yet know what the facts are, and I think, unfortunately, some of us have been too slow to get the facts out. And leaving the field to people who for various reasons want to be critical of what's happening there, for some advantage.

But the fact is, we've got to use every lawful means within our ability to get actionable intelligence to protect our country, to protect innocent civilians against future terrorist attacks. We've got to use every legal means to interrogate, to get information from some of these worst terrorists in the world. People who finance, recruit, carry out terrorist activities, and people who would like nothing more than to continue the kinds of attacks that devastated America on September the 11th.

MALVEAUX: Now, Senator, you said before that you think that perhaps people are being critical for their own political purposes, for their own gain, but again, we are hearing from Republicans -- Senator Chuck Hagel as well as, Senator Martinez. Are you saying that they are coming out, speaking out for political gain?

CORNYN: Well, I didn't mean to suggest that my colleagues in Congress were necessarily using this as a political tool. What I'm saying is the enemies of the United States are using some of this rhetoric, that I think we have to be very careful about, to try to disparage what we are doing and try to cast it in an unfavorable light.

(END VIDEOTAPE)

MALVEAUX: Senator John Cornyn from earlier today. Now, he is usually the star, but yesterday Arnold Schwarzenegger was a supporting actor. So, will the loss of the limelight hurt the California governor's push for his proposals in a special November election?

The story when we come back.

Plus the president hits the trail to help a friend, and holds a dinner tonight to help his party. We've got our eyes on some serious campaign cash.

(COMMERCIAL BREAK)

(MARKET UPDATE)

MALVEAUX: As the markets get set to close on Wall Street, I'm joined by Kitty Pilgrim in New York with "The Dobbs Report" -- Kitty.

KITTY PILGRIM, CNN CORRESPONDENT: Hi, Suzanne, thanks.

We have stocks mixed on Wall Street. And right now the Dow, up about 27 points. The Nasdaq is slightly lower, so there's a mixed picture.

A couple snapshots on the economy we have today. Producer prices fell 6/10 of a percent in May. That's the biggest drop in two years -- it was energy. Oil prices edged lower today. They held above $55 a barrel, though, and OPEC meets tomorrow, is expected to raise the official production limit. That won't have any impact on actual production. Retail sales, also, fell slightly in May.

G.M. stock up 4 percent. The Auto Workers Union says General Motors wants cuts in healthcare benefits by the end of the month. G.M. would like the union to offer the concession, so the company doesn't have to impose the cuts. Well, G.M.'s healthcare costs are considerable. They add $1,500 to every vehicle it makes.

Morgan Stanley in the news these days. Philip Purcell, its CEO and chairman, announced yesterday he's retiring from the firm amid criticism from investors and former executives. He's not walking away empty-handed. He could get more than $62 million in stock options, pension benefits and other compensation he already earned.

Coming up on CNN, 6:00 p.m. Eastern, "LOU DOBBS TONIGHT," U.S. taxpayers pay for flights to deport illegal aliens out of this country deep into Mexico. But will that repatriation work?

(BEGIN VIDEO CLIP)

ANDREA ZORTMAN, U.S. BORDER CONTROL: It is an important program for two reasons. One, to mitigate some of the deaths that we've been having in the desert. And two, to stop the cycle of smuggling.

(END VIDEO CLIP)

PILGRIM: Also tonight, companies like Microsoft are willing to go to great lengths to do business in China. They're even rewriting software to ban words like democracy and freedom. We'll have a special report on that. And then, Los Angeles County district attorney explains his plan to extradite Mexican criminal suspects back to the United States to stand trial. We'll tell you all about that.

Plus, a new poll finds many Americans want U.S. troops withdrawn from Iraq and some in Capitol Hill are calling on the president to set a timetable to bring the troops home.

We'll have all that and more, 6:00 Eastern on "LOU DOBBS TONIGHT." But for now, back to Suzanne.

MALVEAUX: Thanks very much, Kitty.

Now back to our developing story. There have been countless searches all over Aruba for Natalee Holloway in the last two weeks. Today a new effort to find the missing Alabama teen is underway. The search is taking place near a beachfront hotel more than two weeks after she vanished. Three men remain in custody in the case. We are keeping a close watch on the developments and will continue to update you.

But now, back to "INSIDE POLITICS." Governor Arnold Schwarzenegger says if you break your arm, you don't wait to get until your next physical to get it fixed. That's his justification for calling a special election in November to put the fate of his reform agenda in the hands of voters. A day after his announcement, Schwarzenegger is out campaigning, and so are the Democrats and union forces that oppose him and his initiatives. That would cap state spending, strip lawmakers of their power to draw legislative boundaries and increase the amount of time it takes public school teachers to get tenure.

Well, let's talk about all of this, the governor's strategy and his critics' game plan, with Dan Walters of "The Sacramento Bee." Dan, thanks very much for joining us now.

DAN WALTERS, "SACRAMENTO BEE": You're welcome.

MALVEAUX: Now, Schwarzenegger announced that he would hold this special election in November to try to pass these reforms. But wasn't his speech last night also really an acknowledgement of how much his relationship with state lawmakers has eroded?

WALTERS: Well, I suppose it was, and that -- of course, that's why he's doing this. The relationship began to erode about a year ago when they got into a big squabble over the state budget and Schwarzenegger came to believe that he was being jerked around by the legislature, which they deny, of course.

And ever since then, it's pretty much been an escalating war. He vetoed a lot of the Democrats' bills, he tried to defeat a lot of them at the polls in November. And now, after that, he launched the series of ballot measures that, in total, would kind of undercut the Democratic control of the Capitol and more particularly, undercut union control of the Democratic party in the Capitol. MALVEAUX: Well, a Public Policy Institute of California poll shows that 33 percent support the governor's plan for this special election, but 61 percent would prefer that he put his reforms on the ballot in June of 2006. Now, coming a year before he's up for reelection, could this special election actually hurt him?

WALTERS: I don't think there's any question that's it's a year early referendum on Arnold Schwarzenegger. In fact, he's kind of calling an early election as if he were prime minister. And it's a referendum on him. And he wanted it to be a referendum on him when he started all this, because his popularity in those days was 65 or 70 percent.

His enemies understood there was going to be a referendum on him and spent several million dollars, maybe as much as $10 million, pulling down that popularity in a media barrage and it worked. It's got it down into 40-50 percent range somewhere. So yes, yes, that's exactly right. This is a referendum on Arnold Schwarzenegger, and if he were playing poker, you could say he's gone all in.

MALVEAUX: What is the Democrat strategy to deal with Schwarzenegger's announcement? I mean, how are they making this into an early referendum on the governor?

WALTERS: Basically, by portraying him as an enemy of dedicated public servants. Policemen, firemen, teachers and so forth. And as one Democratic leader said the other day, instead of attacking California's problems, he's attacking Californians. Schwarzenegger will respond and say, yes, he's not attacking policeman and fireman and teachers, he's attacking their unions, which have a stranglehold control on the Capitol and are preventing the state budget from being balanced -- we've run up tens of billions in debts -- and in other ways, thwarting the ability of the legislature to respond to this state.

MALVEAUX: Another interesting development here is that the California state treasurer -- he sent a press release that said Schwarzenegger has decided to launch a political agenda to bring Bush's agenda to California. Now do you think the Democrats are trying to link Schwarzenegger to Bush? You think that this is actually going to work?

WALTERS: Well, absolutely. In fact, that state treasurer, Phil Angelides, is probably the leading Democratic candidate for governor in 2006. So he has a vested interest in that, obviously. But yes, of course. Bush lost California by about 1.2 million votes in both of the previous two elections. And he's not a popular person in this state. And so trying to tie Schwarzenegger to Bush is a good tactic on the part of the Democrats.

MALVEAUX: Well, thank you very much, Dan Walters of "The Sacramento Bee." We appreciate your time.

WALTERS: You're welcome.

MALVEAUX: President Bush is also in campaign mode today. He is working to raise cash for fellow Republicans and he's continuing a more difficult task -- that, of course, selling his Social Security reform plan.

We now go to our White House correspondent, Dana Bash -- Dana, how are you?

DANA BASH, CNN WHITE HOUSE CORRESPONDENT: Hi, Suzanne.

Well, President Bush did go to Pennsylvania today and started his trip there by having a fundraiser for Rick Santorum, a Republican senator from that state, a member of the leadership, who is in a very tough race. He's got a tough race ahead against Robert Casey, Jr., his Democratic opponent.

We're told that the president raised about $1.5 million for the senator and for the state party, a lot more than expected. From there, the president took the senator off to Penn State for what was, by our account, Mr. Bush's 35th event to promote his plan for Social Security reform.

There he did what he has done time and time again, which is try to implore Democrats who refuse to offer an alternative because they say they don't want to negotiate on his idea for private accounts. He implored them at least to come to the table.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The facts are irrefutable and now we need to do something about it. I said, why don't we get rid of all the partisan bickering in Washington, D.C. and come together for the good of a generation of people coming up.

(END VIDEO CLIP)

BASH: Now, Senator Santorum was sitting in the audience. And there's no question he has been an enthusiastic supporter of President Bush and of his plan to reform Social Security. But I talked to several Republican operatives, both here in Washington and in Pennsylvania, Suzanne, who said that it might not have been the best timing for President Bush to come to Rick Santorum's state and talk about Social Security today.

This race is expected to be a tough one. Pennsylvania, they say, is the second oldest in the nation when it comes to the population, and it's no secret that in the several months that President Bush has been talking about Social Security, it really has not taken off in polls across the country and also in Pennsylvania.

As one operative I talked to said, that perhaps the senator is trying to walk very carefully on this issue now. Another I talked to was a little bit more blunt, said if the president comes back, we would like him to talk about other issues next time -- Suzanne?

MALVEAUX: But, Dana, I'm sure, as well, there is going to be a lot of thankful Republicans tonight. I understand President Bush is going to be raising very big money. BASH: Big bucks tonight, Suzanne. The president is going to be heading a fundraiser for both Republican campaign committees. He's going to raise -- it's expected to be about $23 million. And the president is going to be in campaign mode, if you will. He's going to be talking politics.

We're told from White House officials going to step up, along the lines what we heard from him on Social Security, talk about the fact that he believes Democrats are obstructing on issues across the board on his agenda, on his nominees like John Bolton. That is something, Suzanne, as you know, that has been a winning strategy, Republicans think, against Democrats over the last two cycles. And the president is going to step it up on that issue again tonight.

MALVEAUX: Dana, thank you very much.

It was another very violent day in Iraq. Coming up, how much is the daily bloodshed hurting the White House? And does the violence offer Democrats a political opportunity?

Plus, the Downing Street memo. We'll go "Inside the Blogs" as both the right and left fire away over the controversial report.

And later, it got overshadowed by the Jackson verdict, but we're not letting it pass without notice. We'll put our spotlight on the Senate's move to right a wrong.

(COMMERCIAL BREAK)

MALVEAUX: The ongoing violence in Iraq presents the Bush administration with some big political problems. CNN political analyst Ron Brownstein of the "Los Angeles Times" joins us now to take more of a look at that.

First of all, thanks for being with us. You know, we look at what's happening in Iraq today, and 30 people were killed by suicide bombers. The White House is always saying look, there's a political victory here. They're doing so well. But, if you continue to take a look at this violence, eventually, are Americans and Iraqis going to lose support in that argument?

RON BROWNSTEIN, "LOS ANGELES TIMES": Well, I think what we're seeing is a pretty clear pattern here of unrelenting violence punctuated by intermittent political progress, and I think the lesson of the past, really since the fall of Baghdad, is that the political progress is not sufficient to outweigh the concerns generated by the violence in public opinion, and so, what happens is that when we get to these moments of sort of break through -- the capture of Saddam, the formation of the interim government, the election, maybe later this summer, the writing of the constitution -- there is a momentary, short-term uptick in public support for the war, but the long-term trend, as long as the violence continues, has been growing alienation and concern whether this was the right thing to do and how it's going.

MALVEAUX: Well, Ron, let's take a look at the latest poll here. You bring up public opinion; a Gallup poll shows that 56 percent now say it was not worth it going to war in Iraq. That is the highest figure ever when it comes to that question. Do you think that Iraq essentially has become a political liability for this president? He is one who actually, when you look at the broader war on terror, that argument has scored relatively high.

BROWNSTEIN: Right, and it's been a very consistent pattern. The president's ratings on the war on terror have always been good. But on Iraq, we do see, I think, largely because of the relentlessness of the violence, a clear erosion in public support for the war, not only in your poll, Pugh, recently, ABC, "Washington Post," a lot of concern.

What's missing from this, though, Suzanne, is an alternative perspective from the political leadership. It's really striking. Usually, with the kind of numbers we're seeing on the war, on the president's approval on the war, concern about whether it was the right thing to do, you would see the opposition party kind of jumping up and down to differentiate themselves, but the Democrats have been conspicuously quiet in terms of offering alternatives.

MALVEAUX: We saw a really interesting picture yesterday, a rare picture of Saddam Hussein fielding questions from this judge and the special tribunal. Looking at the trial in the fall and if people see these kinds of images, do you really think that perhaps the United States, its image, will be bolstered in some way, that the insurgency will step back a bit, when they say that, oh, look, well, Saddam Hussein is being brought to justice.

BROWNSTEIN: I think the biggest lesson, to me anyway, of the post-full scale war period is there are no turning points in Iraq, that there are moments in which we make a short-term gain, but the insurgency exists on almost a completely opposite track. What we're having, I think, really is that there are these two different tracks going on. We have a political process which haphazardly, unevenly shows gains toward moving toward creating an independent Iraqi government, but yet, that progress doesn't seem to diminish the insurgency which it seems, from all the indications to the administration from other governments is going to be a very long-term, difficult, bloody, struggle to tamp down. And, I think as long as that violence remains in place, that is probably going to be the dominant impact on public opinion, more than any kind of political progress which I would include a trial of Saddam.

MALVEAUX: And Ron, very quickly, tell us about Gitmo here, a heated debate. We're going to see the Senate Judiciary Committee tomorrow carry out these hearings. But what can they accomplish here? I mean, obviously, they're talking about alternatives, but both sides are saying we really don't have an option at this time.

BROWNSTEIN: Well, I -- you know, this is clearly an issue that is rising in visibility in Washington. Amnesty International's very explosive comments, which were very controversial, will probably move this to another level. When you Republican senators like Hagel and Martinez raising questions, that's not something we see a lot in this administration, Republicans breaking from ranks. But, it hasn't reached a critical mass yet. I think, with the public, there is a history of a lot of leeway for the president in fighting the war on terror. I think the public has shown that since 9/11.

I would say, though, that you'd have to keep an eye on this as a political for the White House because the volume is rising and the concern is rising.

MALVEAUX: We know you'll be keeping a close eye on that. Thank you very much, Ron.

BROWNSTEIN: Thank you.

MALVEAUX: Well, many Americans were riveted to their TV screens yesterday for the Michael Jackson verdict. The U.S. Senate was doing something it rarely does. It issued an apology for failing in the past to take a stand against lynchings that killed hundreds of people, most of them African Americans. CNN's Bruce Morton takes a closer look at this shameful chapter in American history and this new attempt to make amends.

(BEGIN VIDEOTAPE)

BRUCE MORTON, CNN CORRESPONDENT: Tuskegee Institute estimates between 1882 and 1950, 3,436 African Americans were lynched. That's a conservative count; not all lynchings were reported. Mississippi had the most lynchings. Georgia was second. Billie Holiday sang a song about them called "Strange Fruit."

BILLIE HOLIDAY, SINGER: Black bodies swinging in the southern breeze. Strange fruit hanging from the poplar trees.

MORTON: It was a bloody, racist time in America. Movies like "Birth of a Nation" spread the myths of blacks with insatiable sexuality who lusted for white women. The Ku Klux Klan came back to life and spread across the country. Its platform was very simple.

UNIDENTIFIED MALE: For 5,000 years, the white man has been the supreme race. We the knights of the Ku Klux Klan intend to keep it the white race.

MORTON: The Klan marched across America, marched to the capital of the United States. Some in Congress were members.

The climate changed slowly. In "To Kill a Mockingbird," Harper Lee reminisced about the South where she grew up. Her father, Gregory Peck in the movie, defends a Tom Robinson, black man wrongly accused of attacking a white woman.

GREGORY PECK, ACTOR: Will you please touch it with your left hand?

UNIDENTIFIED MALE: I can't, sir.

PECK: Why can't you?

UNIDENTIFIED MALE: I can't use my left hand at all.

MORTON: The audience sees he couldn't have done it, but the jury convicts. Blacks got convicted in the South back then; whites who killed them, didn't. And Robinson is killed by the locals before he can be sent to prison.

In 1939, 64 percent of white Southerners told a poll they thought lynching was justified in cases of sexual assault.

The NAACP was founded in part to investigate and protest lynchings. The Jackson, Mississippi, "Daily News" answered one query in 1919. The man was advanced all right (ph) from the end of a rope and in order to save burial expenses, his body was thrown in the Yazoo River.

A bloody, brutal time. Could Congress have stopped them? The House voted three times to make lynching a federal crime. But the Senate, using the filibuster, always blocks passage of a law.

Now, we have the Civil Rights Act and the Voting Rights Act and a desegregated South. And now the Senate has passed a resolution apologizing for its inaction on lynching. Louisiana's Mary Landrieu was the principal sponsor.

SEN. MARY LANDRIEU (D), LOUISIANA: These were more than crimes. This was, in some measure, domestic terrorism. American against American, citizens against citizens.

MORTON: Eighty senators co-sponsored the resolution which passed without a roll call vote. Mississippi's two senators were not among the 80.

Bruce Morton, CNN, Washington.

(END VIDEOTAPE)

MALVEAUX: Back to our developing story out of Aruba, that missing teenage girl. We go to, on the phone, our own Karl Penhaul with the latest developments on what they have found about this expanded search -- Karl?

KARL PENHAUL, CNN CORRESPONDENT: We're here at an area close to the Marriott hotel. That's about a mile and a half from the Holiday Inn where Natalee Holloway had been staying.

An area has been cordoned off, now, by the police which is approximately 500 yards long, possibly 150 yards wide. It's an area between the main highway that leads along the coast, and the beach itself. And in between the highway and the beach, is an area of mangroves. There's also a couple of drainage ditch there, as well.

What we can see from our vantage point is there has been some kind of a dog -- apparently a search dog brought in. That dog -- we've only seen one dog at this stage -- has been led by its handler around some of the mangrove bushes.

We can also see, off there in the distance, a red object connected by pipes, which looks, from here, like a fire pump. The red truck -- the red fire truck has been here, and we believe that is a pump. So, that looks like that may be pumping some of the water from one of the drainage culverts there.

It's not clear though, if two weeks ago when Natalee Holloway disappeared, whether there was this much water in the drainage culvert. It has been raining over the last few days. So, those are also elements to bear into account. Also, the police haven't said too much as to what has led them to this area.

Obviously, the three suspects still in custody. The three last seen in Natalee Holloway's company are still under interrogation. But we also believe that there may have been a tipoff from somebody that may have been searching in the area to call police into this area.

ZAHN: Thank you, very much, Karl Penhaul, of course, out of Aruba.

We will continue to bring you live updates as we get more developments on the story.

Now, the so-called Downing Street Memo concerning U.S. plans to invade Iraq continues to cause a lot of buzz in cyberspace.

Straight ahead, we'll go inside the blogs to find out the latest on this controversial issue.

(COMMERCIAL BREAK)

MALVEAUX: Well, it's an issue that won't die in cyberspace: The Downing Street memo. And it continues to be a hot topic for many bloggers. We check in now with CNN Political Producer Abbi Tatton, and Jacki Schechner, our blog reporter.

JACKI SCHECHNER, CNN BLOG REPORTER: Hi Suzanne. Yes, it's been about six weeks now since the Downing Street memo showed up in the Sunday Times. That being the memo from July of 2002, that suggested perhaps the Bush administration had plans to go to war with Saddam Hussein as early as then.

Now the bloggers pushing, especially on the left, for the mainstream media to continue to pay more attention to it, and they're doing so. Over the weekend, "The Washington Post" introduced a second memo, this one having to do with plans for post-war Iraq, or suggesting perhaps there was a lack thereof.

Then a "New York Times" article that came out yesterday saying maybe that the Downing Street memo, and memos that have since been released, maybe not the smoking gun that some people are suggesting they are.

ABBI TATTON, CNN POLITICAL PRODUCER: But the left side of the blogopshere is saying absolutely it is the smoking gun and they're determined to give you all the tools they possibly can to help you understand.

Here's DowningStreetMemo.com. Now, this was started in a conversation that was going on over at the liberal site: Daily Koz. A few bloggers were talking about, "why isn't this getting attention about 10 days after it came along?" Saying, "Why isn't there a site about this? why aren't there adds about this so people can learn more?"

They then went and registered DowningStreetMemo.com with links to all the documents involved, and also other ways to help you learn. Related here, info and documents you can look at all the different players involved. If you're not understanding who these officials are in London, you can see there the U.S. equivalents.

Now, the point of this site here is to get a congressional inquiry into the Downing Street memo and also to raise awareness, and have the mainstream media look at it more.

SCHECHNER: Another way that they are raising awareness on the left side of the blogs online -- we've told you about this before -- is BigBrassBlog.com. The is the Big Brass Alliance. They are now up to 458 blogs that are committed, and continuing to blog about the issue.

Their latest development, though, is they have a live chat scheduled for tomorrow night at 8:30 p.m. Eastern Standard Time. Anyone who wants to join in, is welcome to do so, all you do is go to the site and you click on the link, and you just talk about this issue, if you're interested in that.

TATTON: There are additional documents out there that think ThinkProgress.org is linking to. Over the weekend, "The Washington Post" was looking at the British briefing papers. Those are all online here at ThinkProgress.org -- various foreign policy officials in London looking at the buildup to the Iraq war.

These have been reported on here, as I said, over the weekend, but Think Progress pointing out that the U.S. media should have been more aggressive. That these were actually looked at in London newspapers back in September, of last year.

SCHECHNER: Now, more in keeping with line of what "The New York Times" article was saying, the right side of the blogs now picking up this issue in full force saying, "There's not much going on here."

DeanEsmay.com -- I'm sorry, "Dean's World," that is e-s-m-a-y, to fix information around a policy. Dissecting, specifically, the phrase in the Downing Street memo that says that, "the intelligence and facts were being fixed around the policy," -- "Saying that what does this mean?"

It is: "How on Earth could one statement, in one memo, from a mid-level official be proof of an enormous conspiracy?"

TATTON: Another one over here at AndrewSullivan.com. He says that he is, "Underwhelmed by all this." What does the memo show? that the British thought it was inevitable? The war was un-sellable, and that there was no post-war planning. And he says, "The only thing amazing about that, is that three government officials managed to get three things right all at once."

Suzanne.

MALVEAUX: Abbi, Jacki, thank you very much.

Now, President Bush may be the star attractions at the big Republican fundraiser dinner we told you about earlier, but porn star and former California gubernatorial candidate Mary Carey is hoping to make an impression tonight, as well. She and a porn producer each paid $5,000 for tickets to the dinner and they got to attend a lunch for big donors with Deputy White House Chief of Staff Karl Rove. Carey held a news conference to show off the outfit she plans to wear this evening, and made sure to let reporters know she wasn't wearing anything underneath. We -- cable will keep it rated G, though.

The "Strategy Session" is straight ahead. The governor of California wants voters to back his special initiatives. Arnold Schwarzenegger says the vote will bring needed reforms. Critics say it's a power grab with a very big price tag. That's coming up on INSIDE POLITICS.

(COMMERCIAL BREAK)

MALVEAUX: Welcome back to INSIDE POLITICS and our "Strategy Session" on the -- today's hottest political topics.

With us today, CNN political analyst Paul Begala, of course, as well as Republican strategist Joe Watkins. Today's topics, Arnold's election. Governor Schwarzenegger calls a special election in November that his opponents say is a vote that no one needs.

Is it time to close Gitmo? The controversy over the U.S. military prison at Guantanamo Bay, Cuba, continues, causing deep divisions over whether Gitmo should stay in business.

And, when is the right time to bring the troops home? A strong supporter of the war now wants to know when American forces will get out of Iraq.

Governor Arnold Schwarzenegger tells California voters that there's no time to lose, so he's on the road today, promoting the special election in November. Schwarzenegger wants changes in teacher tenure, redistricting rules, and a state spending cap, but critics call it a power grab, and many say he should have waited for next year's regular election instead of asking voters to pick up a $45-80 million tab for the special vote.

And the governor may have suffered from bad timing, giving his statewide address just after the Jackson verdict. Many stations were wall-to-wall with Jackson coverage while Schwarzenegger was going live.

(BEGIN VIDEO CLIP) GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: I know that some people say Arnold, why not wait until next year? Why have a special election now? But how can we just stand around while our debt grows each year by billions and billion of dollars? If you break your arm, you don't wait until your next physical. You get it fixed now.

(END VIDEO CLIP)

MALVEAUX: So, the first question I have for both of you here is how damaging was that, the Michael Jackson verdict that actually happened while he decided that he was going to go ahead and deliver this address? Was anybody paying attention?

PAUL BEGALA, CNN POLITICAL ANALYST: No, you would think an actor would have a better sense of timing than that. Schwarzenegger -- he started great. He came in popular as sort of an anti-politician. And now he seems to look like another politician, and what's worse, he's not behaving like an actor in the best sense of the word. His timing was wrong yesterday and I think his message was off, and I think he lost his first -- his only chance to make a first impression on this.

JOE WATKINS, REPUBLICAN STRATEGIST: Well, I think what Arnold is doing is he's being, I think, very smart. He realizes he doesn't have a lot of time here, that he was elected to get the state's fiscal house in order, and that's what he's moving to do, I think. He doesn't want to wait.

At the same time, he's going -- he's playing a card that has played very, very well for him, by taking it right to the people of California, and that really does serve him well. He's done this successfully in the past with these various propositions, and I think Arnold knows that this is a winning hand for him. Take it to the -- straight to the people of California, let them make the decision. Don't let the politicians as he says in Sacramento decide your fate or prolong the agony. But take it right to the people and let them decide.

MALVEAUX: There are only 33 percent, however, of the voters that actually are for this. Is this ultimately going to hurt Schwarzenegger?

BEGALA: Yes, because I think -- I don't think he was elected to put the state's fiscal house in order. I think he was elected because he wasn't a politician -- he wasn't a typical politician and now he's behaving like one. When the state's fiscal house is in trouble, you run up a $40-80 million tab for a special election? That doesn't make any sense at all. He was elected to get things done, and he would do well, actually, to follow the lead of the last actor/politician to become governor, Ronald Reagan, who was remarkably successful with the Democratic legislature in California, and did not run off and go calling special elections.

The problem is this was Schwarzenegger's hole card, that I can go to the people. Now he's going. The Democrats have called his bluff. You know what? I think that, now he's got nothing left to play. WATKINS: To me it seems like this is the move of somebody who isn't a politician. I mean, at the end of the day, he's not looking to prolong his career in politics and to play it safe. He's looking to do what's best for the people of California. So, he's saying, you know what, let's just let the cards fall where they may. Let's have a special election. Let's get these things decided and let the people talk. Let the people have their say.

MALVEAUX: But, Joe, the people are talking and they're saying that he had a 70 percent approval rating before. It's now down to 45 percent.

WATKINS: Well, I think Arnold doesn't really care about the approval ratings as much as he cares about getting things done for Californians.

BEGALA: I'm sorry to interrupt, but the two are linked. You know, the currency of public officials' ability to lead is the popularity, particularly one like Schwarzenegger who came into office from the outside, and he holds himself out as a tribune of the people. If the people are not for him now, and right now they're not, it's an awfully big gamble to say, I'm going to go to the people when it looks like the people aren't very thrilled with him.

WATKINS: But he's a lot ahead of the state legislature, far. He's way ahead of the state legislature, I mean, right now his polling numbers may be 40 percent, but the state legislature's is about 26 percent. So, he's got a 14-point lead on the politicians in Sacramento, which means that he has a good chance to win.

MALVEAUX: All right, well, we'll see how that works out. We're going to get back to another subject, as well, of course. What is going on at Gitmo? Lawmakers are split on whether the military prison at Guantanamo Bay, Cuba, is the right place for terrorism suspects. When our "Strategy Session" continues, we'll look at the controversy and the question, the time has come to shut down Gitmo.

(COMMERCIAL BREAK)

MALVEAUX: The "Strategy Session" continues on INSIDE POLITICS.

Still here, Paul Begala and Joe Watkins.

Should the U.S. stay or go? There's a split over the future of the U.S. military prison at Guantanamo Bay, Cuba. There have been reports of harsh treatment of detainees including strip searches, isolation, dripping water and standing for prolonged periods, but the secretary of defense says the U.S. has to put terrorists someplace.

(BEGIN VIDEO CLIP)

DONALD RUMSFELD, DEFENSE SECRETARY: The United States' government, let alone the U.S. military, does not want to be in the position of holding suspected terrorists any longer than is absolutely necessary. But as long as there remains a need to keep terrorists from striking again, a facility will continue to be needed. (END VIDEO CLIP)

MALVEAUX: Now, we saw the "Time" report. Everybody's been talking about it, the treatment, interrogation of this 20th -- alleged 20th hijacker. They talked about being naked and standing there and, I don't even know if you thought it was curious that they said playing Christina Aguilera's music, too. They just -- they put that with all the others and nobody seemed to have caught that.

But, obviously, it seems as if the Bush administration, the administration in general, has a problem here, an image problem to address.

BEGALA: I think the image problem is less allegations that they allegedly abused the so-called 20th hijacker. I think most Americans out in the real world are really, frankly uninterested in whether a woman interrogator stood too close to an alleged terrorist.

I think the problem is, instead, the sense that there was no plan here. And we just heard the secretary of defense say, well, as long as there is a need to hold people -- well, apparently we're not going to try them. Obviously we're not going to shoot them and we're not going to release them. So, where's the plan? What are we going to do? When you have Republicans like Senator Hagel, Senator Mel Martinez of Florida, who was in the Bush cabinet, starting to say that they have no plan here, that's the real problem. It's one more manifestation of this allegation that we went to war without a plan.

MALVEAUX: Well, Joe, I know it's interesting, too, because, actually, Vice President Dick Cheney said that, look, the people who are talking about shutting down Gitmo, they really don't support our Iraq policy to begin with, that this is partisan. But, we did hear from Mel Martinez...

WATKINS: No doubt about it, you did.

MALVEAUX: ...just this past week. Does that create a problem?

WATKINS: Well, there are some Republicans of course, who are concerned about image. I think a lot more -- most Republicans are concerned about substance, and the vice president said it so well. What do you do? This is the thing you have to consider. I mean, politics aside...

BEGALA: He just asked that question (ph). What do we do?

WATKINS: You've got these terrorist folks, or suspected terrorist folks, who are being detained right now. Do you just let them go? I mean, after all, consider the fact that some of the folks who have been freed from Guantanamo Bay have gotten back into the war, into the terror war. We don't want those folks back out on the streets, so to speak, committing actions of terror against the Americans anywhere on the globe, let alone the United States of America. So there's no need to shut Guantanamo Bay down.

MALVEAUX: So, what is the viable alternative here, or are -- just politicians using this for their own platform, for their own political gain?

BEGALA: Well, I mean, politicians use everything that they can, obviously. I mean, that doesn't shock me. But I think the question that I want the president to answer, the vice president, is one that Joe asked, which is, what do we do? Where is the plan? I think the reason that public support and Republican support for this war or even for maintaining Guantanamo, which is a rather small issue, if you ask me, the reason that's eroding is because there's no sense that the president has a plan.

As I say, what are the options? Well, we can release them. We can shoot them or we can try them. Apparently, the president doesn't want to do any of that so the fourth is we keep them forever and they die of old age? What's the plan?

WATKINS: I think the plan is a very smart one, which is that this is a brand new war, this war against terror.

BEGALA: We're three years into it.

WATKINS: (INAUDIBLE) but it's still a new war and for Americans to suppose that because we have not had a major terror event in the United States in the last, thank god, four years, that the threat is gone is foolish. These people are suspected of being terrorists, or suspected of being involved in terrorist activities. They need to be detained.

And I think that the place has been very transparent. Where there have been instances of abuse against the Koran, there've been apologies issued and it's been openly admitted to by the Pentagon.

BEGALA: I mean, you do acknowledge that there's a political problem when Republicans, and some from the president's cabinet who are now in the Senate, say that there's been no plan here, no strategy. There's a new Downing Street memo. We just heard our bloggers -- reporters talking about that, that said -- that the British said -- that the White House had no plan for winning the war, post-war, and this is proof of that. Did we not think there were going to be P.O.W.s in the war?

MALVEAUX: At the very least, though, can you both agree that there is an image problem that the Bush administration faces here?

BEGALA: Yes.

MALVEAUX: Whether you think its (INAUDIBLE) credibility...

(CROSSTALK)

WATKINS: I'm glad that, for me, the image problem is not nearly as big a thing as being safe, and I'm glad that the terrorists or suspected terrorists are being detained. I'm glad we've got these people, these 500-plus people, at least detained. If not Guantanamo Bay, somewhere else, but detained and out of the mainstream and not committing acts of terror. MALVEAUX: OK, we'll get back to you guys right after the break. When will the troops come home from Iraq? That is the question that even Republican lawmakers are asking. Is it time for a timetable for bringing the troops home? What one lawmaker thinks coming up when the "Strategy Session" continues on INSIDE POLITICS.

(COMMERCIAL BREAK)

WOLF BLITZER, CNN ANCHOR: I'm Wolf Blitzer in Washington.

Coming up at the top of the hour: Police in Aruba launch a new beachfront search two weeks after the disappearance of that Alabama teenager, Natalee Holloway.

There are new developments. We'll have details.

Dozens of civilians die in new insurgent attacks in Iraq while the U.S. military death toll climbs above 1,700.

And the aftermath of a fiery plane crash in Fort Lauderdale, Florida. We'll hear firsthand accounts from the pilot and the co- pilot.

All those stories and much more only minutes away on "Wolf Blitzer Reports."

Now back to "Inside Politics."

MALVEAUX: And CNN is following a developing story, a major breaking story in the world of broadcasting.

Our own Allan Chernoff is in New York, live with those details.

Allan, what can you tell us?

ALLAN CHERNOFF, CNN CORRESPONDENT: Well, Suzanne, what's happening is that the board of directors at Viacom has now voted to split the company up, split Viacom into two separate public companies.

On the one hand, there would be the cable television and film divisions; cable TV networks including MTV networks and Paramount Pictures.

And on the other hand is the CBS Radio and Television properties.

What's behind this is that the stock of Viacom has been a very poor performer over the past five years since Viacom acquired CBS. The problem is that CBS, particularly the radio stations, are relatively slow-growing business.

And that's really got Wall Street down on Viacom's stock. The stock is trading at half of where it was five years ago. So what's happening here is two separate public companies will be created. Shareholders will have stock in two companies. This is supposed to be finished by the first quarter of 2006. One other announcement, as well: Shari Redstone -- the daughter of Sumner Redstone, chairman of the Viacom -- is now being appointed to the position of vie chair. She is seen as the heir-apparent to Sumner Redstone who's 82 years old, but he's given no indication of giving up control. He does own stock to actually control the entire company.

Suzanne, back to you.

MALVEAUX: Allan Chernoff out of New York, live, thank you very much.

Now, the strategy session continues on "Inside Politics" with Paul Begala and Joe Watkins looking at calls for an Iraq exit strategy.

The daily violence and mounting U.S. casualties are taking a toll on support back home. Congressman Walter Jones is co-sponsoring a resolution calling on the president to set a timetable for troop withdrawal from Iraq.

Jones is the North Carolina Republican who wanted Freedom Fries to replace French Fries at the House restaurant after France failed to back the invasion of Iraq.

And fewer Americans than ever are satisfied with what's going on in Iraq. A new Gallup poll indicates a clear majority of Americans, 59 percent, want the U.S. to withdraw some or all American troops from Iraq. It is the highest percentage since the war began.

Now, we've heard of Jones before, the Freedom Fries, French Fries. I was there in Brussels when he made nice with Chirac and put the French back in the French Fries.

But clearly there seems to be this sense that he is losing support when it comes to U.S. troops inside of Iraq.

WATKINS: Did you read the account? I read the account of what kind of moved the congressman. And, in part, he was moved by some of the sad stories, some of the personal stories that took place; that is to say some of the soldier who's had lost their live fighting in Iraq. That is what caused him to change his mind or at least to call for a timetable to be set about.

I think the president has to hold fast and hard; and that is our military has to complete its mission. I mean, if you talk to the chairman of the Joint Chiefs of Staff or any key military people, they would tell you I think that the mission has to be completed. Despite some of the tragedies, the sadness of any loss of life -- because any life lost is a sad thing -- you've got to complete the mission.

MALVEAUX: But does the president here have a problem in the fact that his own supporters, those who supported him for the Iraq war are now saying bring our troops home?

BEGALA: The president cannot conclude the mission unless he carries with him the support of the Congress and the country. As you point out, Walter Jones is a Red State Republican, strong supporter of President Bush, strong supporter of the war and now he is saying we have to pull out.

MALVEAUX: Sorry, got to cut you off. We're out of time.

Thank you very much.

Of course, now they are a growing part of the had blogosphere: Straight ahead we'll find out about active military bloggers when we head back "Inside the Blogs."

(COMMERCIAL BREAK)

MALVEAUX: Bloggers in the U.S. military are a growing presence in cyberspace. So what's that all about? Check in again with CNN Political Producer Abbi Tatton and Jacki Schechner, our blog reporter.

Jacki?

SCHECHNER: Hey, Suzanne.

This is going to be a quickie so let's get right to it.

Garrett Graff over at Fish Bowl DC posted something off-topic for him but on-topic for us. He's got a memo by Lieutenant General John Vines, who is the commander of the day-to-day operations in Iraq. And it concerns what to do about soldiers' blogs and Web sites. You can click on that PDF file and download it to your computer. There's a couple of interesting points, one of them being that soldiers need to register the URLs of blogs with their commanders over in Iraq so that they can monitor what they're saying, make sure there's no private or sensitive information being leaked.

The other thing we thought was of note is that not only do you have to do that if you have a blog, you also have to do it if you're going to comment on somebody else's blog.

TATTON: This is a growing group. We wanted to just bring you one of them out there. This is tcoverride@blogspot.com. This is the site of Captain Chuck Ziegenfuss, who is a commander of a battalion in the U.S. Army out there in Iraq.

Lots of things on the site that are interesting. A day in the life here: rating houses; clearing highways; some of the frustrations of life out there; using a Port-A-John when it's 101 degrees heat; also some very touching posts; something to his 2-year-old daughter whose birthday he just missed a few days ago. Lots of interesting blogs like this out there giving a really good firsthand account of life on the ground.

Suzanne?

MALVEAUX: Thank you, Jacki, Abbi.

Of course, that is it for "Inside Politics." I'm Suzanne Malveaux.

"Wolf Blitzer Reports" starts right now.

WOLF BLITZER, CNN ANCHOR: Happening now, police in Aruba are searching an area near Natalee Holloway's hotel. The 18-year-old honor student from Alabama has been missing for two weeks. There are new developments.

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