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AMERICAN MORNING

Democrats Win Two Governors Races; Wheels Turning on Another CIA Leak Investigation

Aired November 9, 2005 - 07:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


MILES O'BRIEN, CNN ANCHOR: I'm Miles O'Brien. The votes are in, and hopes are dashed at the White House. Democrats winning two governors races, and Arnold going 0 for 4. Not so grand for the Grand Ole Party. We'll assess the implications for the Bush administration.
SOLEDAD O'BRIEN, CNN ANCHOR: I'm Soledad O'Brien. Were consumers gouged at the pumps by big oil companies? Top executives being called to the Senate today to justify record profits.

M. O'BRIEN: France still burning, but not quite as hot, the thirteenth night of riots. Authorities there may be turning the tide, on this AMERICAN MORNING.

Well, did you vote?

S. O'BRIEN: Yes, I did.

M. O'BRIEN: Which is more than I can say.

S. O'BRIEN: And, boy, it was interesting to see what happened. Did you see the concession speech by Doug Forrester? He, of course, was in a tightly contested race with Jon Corzine.

M. O'BRIEN: I missed the speech.

S. O'BRIEN: Well, it wasn't really so much was said, but his wife looked utterly defeated, and his teenaged daughter was absolutely sobbing, as he actually, you know, declared that he was ready to accept his loss.

And of course, Jon Corzine had the opposite story, because walked away with the victory, as you saw the big winner of the night in New Jersey after what was a pretty nasty battle. And of course, today, we're talking implications.

M. O'BRIEN: Yes, split decision for Darwin, too. In Pennsylvania, they ousted a school board that is pushing intelligent design. In Kansas, the board there voted to perhaps teach intelligent design of science. So that's another thing we'll get into a little bit later.

In any case, a rough night for Republicans, could mean rough days ahead for President Bush and California Governor Arnold Schwarzenegger. AMERICAN MORNING's Bob Franken live in Washington with more on that. Good morning, Bob.

BOB FRANKEN, CNN CORRESPONDENT: Good morning.

And it's a good thing that Arnold Schwarzenegger was not a baseball player, because he's apparently gone 0 for 4 as far as the ballot initiatives that he favored in California. But as is so often the case in these off-year elections, the story is really about the governor, and the president, the people who are not running.

(BEGIN VIDEOTAPE)

JERRY KILGORE (R), DEFEATED CANDIDATE: The president of the United States, George W. Bush!

FRANKEN: On election eve in closely watched Virginia, the Republican candidate for governor, Jerry Kilgore, called in President Bush for a last-minute appearance. On election night, Kilgore lost.

KILGORE: Tonight, we may have lost a battle, but we have not and will not lose this war.

FRANKEN: It was a similar story in New Jersey, a Democrat won, pulling the president's coattails out from under the Republicans.

SEN. JON CORZINE (D), NEW JERSEY GOVERNOR-ELECT: Tonight, I want to thank the people of New Jersey for rejecting the Bush/Rove tactics that we see in politics.

FRANKEN: It was not a shutout. In overwhelmingly Democratic New York City, the GOP's Michael Bloomberg won in a landslide, but Bloomberg is not considered a prototype Republican.

UNIDENTIFIED FEMALE: Governor Arnold Schwarzenegger and first lady Maria Shriver!

FRANKEN: Arnold Schwarzenegger is not really a prototype anything in politics.

GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: Believe or not, I even want to thank the people who were so passionately vocal against us. I guess it didn't do a good enough job to convince them otherwise.

FRANKEN: Since taking over the statehouse two years ago in California, Schwarzenegger has been overtaken by the realities of governing, and is now facing the reality of losing his fight for signature ballot initiatives. It was not the best of nights for Republicans nationwide. Expect Democrats to declare this a preview of coming attractions.

(END VIDEOTAPE)

FRANKEN: The next attraction, the midterm elections next year, but as anyone can tell you, a year can be a long time in politics. Just ask President Bush -- Miles. M. O'BRIEN: I should say. The way things change, we'll just have to stay tuned. Thank you, Bob Franken.

A few other races to tell you about this morning. In Detroit, you've got Democratic incumbent Kwame Kilpatrick. He scored a come- from-behind victory. Republican Jerry Sanders won in San Diego, beating that surf shop owner. And Boston's Democratic Mayor Tom Menino winning a fourth term. If he completes that term he will become Boston's longest serve mayor ever.

Gay rights now. In Texas, voters overwhelmingly passed a constitutional amendment banning same-sex marriage. But in Maine, voters said no thanks to a measure which would have repealed a state law banning sexual discrimination.

The evolution debate has cost eight Republican school-board members their seats in Dover, Pennsylvania. All eight had ordered a statement on intelligent design be read in biology classes. Eight Democrats opposing the policy were elected -- Soledad.

S. O'BRIEN: Big question of course today, the day after, what's the impact on Republicans and the White House? Let's get right to Suzanne Malveaux. She's at the White House for us this morning.

Suzanne, good morning to you.

SUZANNE MALVEAUX, CNN CORRESPONDENT: Good morning.

S. O'BRIEN: How is it the day after?

MALVEAUX: Soledad, as you know, of course, a lot of Republicans were looking very closely at those races, particularly Virginia and New Jersey. It was really seen as a big test for President Bush, whether or not, despite his political problems -- the CIA leak investigation, the high gas numbers, the low poll numbers -- whether or not he could get over that and really have some outside-the-beltway appeal.

It was considered a risky and bold move on Kilgore's part. President Bush on the election eve actually rallying, campaigning with him. And clearly it was one that did not pay off.

Now, what this means in the big picture, we're not exactly sure. The White House is not commenting yet, but we did hear from the RNC chair Ken Mehlman. He said of this, downplaying the significance, saying "Jerry Kilgore ran a tough, focused campaign for governor of Virginia going into election. Republicans understood that the Commonwealth had a popular Democrat governor with high approval numbers."

Also New Jersey, he talked about condolences from Republican Doug Forrester, saying "Doug Forrester ran a strong and spirited campaign for governor of New Jersey. His efforts to speak to local issues, such as corruption and property taxes, directly impacted Garden State citizens and garnered the support of many voters." Notice the emphasis on local issues, saying that this does not portend particularly for those national elections, but of course everybody looking very carefully and weighing their options whether or not President Bush is indeed a political liability in 2006 -- Soledad.

S. O'BRIEN: Yes, very -- not so subtle -- local, local, local, our condolences, but it was all really local.

What's the strategy now, though, as people tried to decide what the president's role should be for Republicans that he supports as they go into 2006? What's the plan?

MALVEAUX: Well, they are certainly weighing their options now. The White House is not going to push the president on particular candidates, and the candidates themselves, the Republicans, are closely looking at their districts. They want to see essentially whether or not the national agenda comports with their local agenda. What you're going to see is many Republicans sticking to the local issues and focusing on their own records, not necessarily aligning themselves with this administration.

S. O'BRIEN: Interesting. And of course we all know that can all change very fast, can't it? Suzanne Malveaux at the White House for us this morning. Suzanne, thanks -- Miles.

M. O'BRIEN: Well, the wheels are turning on another CIA leak investigation. This one, if it becomes official, is about that "Washington Post" report, the one claiming the CIA has a network of secret prisons. Congressional correspondent Ed Henry is live on Capitol Hill.

Ed, who is pushing for this one some.

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT: Well, so far, CNN has learned that the Central Intelligence Agency has actually reported to the Justice Department that they believe classified that, in fact, classified information was leaked, and as they did in the Valerie Plame case, it's likely that justice will launch a criminal investigation here.

Meanwhile, up on the Hill, House Speaker Dennis Hastert and Senate Majority Leader Bill Frist announcing yesterday they want a joint investigation, a special investigation up here of their own. They want to assess how much national security was damaged by this leak.

The suspicion here and elsewhere is in fact it was leaked by current and former CIA officials who were quoted without using their names in the story.

But there's a twist here. Republican Senator Trent Lott said yesterday, surprised a lot of people, that he thinks a Republican senator may have been involved in this leak as well. The reason Lott revealed that at a private closed-door luncheon last week here in the Capitol among Republican senators and Vice President Cheney some of the secret prison information was discussed. And Lott said, point blank, quote, "A lot of it came out of that room last Tuesday. We can't keep our mouths shut." He was pointing to where that meeting with Vice President Cheney took place. And then he added of the vice president, quote, "He was up here last week, and he talked up here in that room in a room right there, in a room full of nothing but senators, and every word that was said in there went right to the newspapers."

Now others Republicans are saying Lott is confused, and that in fact classified information did not leak from that meeting. Democrats, though, find it curious, the back and forth here. And also lawmakers in both parties starting to say not just -- there shouldn't just be investigation of the leak of secret prison, how about a probe of whether or not these secret prisons exist and whether they should stay open -- Miles.

M. O'BRIEN: Yes, let's not forget we're talking about a network of secret prisons which ignores all the civil rights we hold dear to us. And perhaps an investigation should be focused there.

HENRY: Absolutely. And in fact there's debate in the Senate this very week, because Senator John McCain, as you know, has been pushing to make sure that the torture standards, the anti-torture standards, are strengthened in the United States to make sure these terror suspects are not actually tortured at secret prisons or elsewhere -- Miles.

M. O'BRIEN: Ed Henry, ON Capitol Hill, thanks much.

Also this morning on the Hill, executives from five giant oil companies will be grilled by members of the Senate about record profits. That is about 9:30 a.m. Eastern Time. We'll go live to it, of course. And a few minutes from now, we'll talk to an oil industry representative, and we'll ask him if Americans are being gouged at the pump -- Soledad.

S. O'BRIEN: A terrible story to update for you from Jacksboro, Tennessee, where police are trying to figure out a motive in a school shooting. They say a 15-year-old boy shot his high school principal and two assistant principals. One is dead. Another is critically wounded. David Mattingly is live for us in Jacksboro. It's about 35 miles northwest of Knoxville.

David, good morning to you.

It's a small town. I've got to imagine, people there are just reeling with this news.

MATTINGLY: That's right, Soledad.

This town is small enough that it's hard to find someone who doesn't have a connection to someone either on the staff or in the student body at this high school. So this tragedy hitting this town very hard right now.

In fact, overnight, we're going to show you what was happening here at the gates of the school. Signs have been posted and flowers have been put up. Students and well-wishers coming by to offer whatever remembrances they have of their fallen assistant principal, Ken Bruce. He was gunned down, according to witnesses, by a 15-year- old student carrying a handgun at the office about a little bit after 2:00 yesterday. The youth was then subdued by staff at the high school. He was taken into custody. He was then treated for what appeared to be a gunshot wound to his hand before he was taken to a juvenile-detention center here in the county.

For about two hours, the entire school was in lockdown. Very anxious parents outside the gates finally were able to get to their students. Fortunately, not a single student was injured in this incident, but it certainly, for those who witnessed the event, was truly a life-shaking event.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: We had the gun hid over a piece of paper, like tissue, and he grabbed it out, and he was kind of like saying, well, you know, all this kind of stuff, being just big and bad. And then he took it out and just shoot Mr. Pierce like around here. And then after that, blood and -- like, it looked like he was dying. And then after that, Mr. Pierce and Mr. Seal tried to stop him, and they both got shot as well.

(END VIDEO CLIP)

MATTINGLY: The two survivors of this shooting, principal Gary Seal and assistant principal Gary Pierce were both taken to a Knoxville hospital. They went into surgery last night and came out what doctors were describing as well as could be expected, listed in serious condition. That was actually an upgrade from the condition of assistant principal Jim Pierce, who at one time was in critical, so some good news there as well, Soledad. We are expecting investigators to come out today sometime and tell us exactly what they believe happened here and possibly see some charges filed against this teenager.

S. O'BRIEN: All right, we'll wait for an update on that. David Mattingly for us this morning. David, thanks -- Miles.

M. O'BRIEN: Overnight, more violence and mayhem all across France. For the 13th consecutive night, rioters hit the streets, despite curfews. More than 500 cars torched. The subway system in Leon (ph) was shutdown after a gasoline bomb was thrown at a train station. Still, bad as all this sounds, things were not nearly as bad as on previous nights. All relative, I guess.

(WEATHER REPORT)

M. O'BRIEN: Let's take a break. When we come back, we'll give you a little bit more on last night's election results. What are you going to do if you're in the White House this morning? What's the plan? We'll ask a veteran GOP strategist what he thinks lies ahead for his party.

S. O'BRIEN: Sounds like some of the plan is local, local, local issues lead the day. Also, the oil executives, they're going to be grilled in Congress today. Are Americans being gouged at the pump? We're going to talk to an industry insider. That's just ahead on AMERICAN MORNING.

(COMMERCIAL BREAK)

M. O'BRIEN: A beautiful day, definitely, for Jon Corzine and some other Democrats. Not so great if you're a member of the GOP. Card-carrying GOP members this morning wondering what is next for their party and for the Bush administration in general. Joining us now, Republican political strategist Ed Rollins.

It's not so beautiful a day, is it?

ED ROLLINS, REPUBLICAN STRATEGIST: No, it's not a good day. And it's probably even worse for Governor Schwarzenegger when he gets up in California after he lost his four big initiatives.

M. O'BRIEN: Yes, let's get to that in a second. Let's talk about Corzine, first. What are your thoughts on that one? That particular race surprise you at all?

ROLLINS: No, it's a Democrat state. He had unlimited money. He's a senator.

M. O'BRIEN: Well, they both spent a lot of money.

ROLLINS: Both spent a lot of money. At the end of the day, it's state that's very difficult for Republicans to win.

Virginia was a bigger disappointment.

M. O'BRIEN: All right, let's talk about Virginia then. What do you think about that? The president came in there, eleventh-hour appeal. That raised the stakes for him, didn't it?

ROLLINS: A little bit. At the end of the day, these are personality contests. And I think Mark Warner who's been the governor, he's still got a 70 percent approval rating. We won the attorney general and the lieutenant governor, and so it was one that we could have won and didn't win.

M. O'BRIEN: Is it simple as that, a personality contest, or was there a message that voters are sending there?

ROLLINS: I don't find messages in these particular elections. I think the message to all Republicans, we better get our act together and we better straighten out Washington and we better get ready for voters next November. That's the message. It's not going to a status-quo election; it's going to be an election in which every person has to go out and fight hard.

M. O'BRIEN: So how do you -- how does that change strategy with that in mind? What do you do differently right now?

ROLLINS: I think you basically get very intense. You begin -- if I was a member of Congress today or a senator who thought I was in a safe seat, I'd start polling, I'd start getting ready, I'd start testing that water, want to get my leadership to start focusing on important things so I have something to run on a year from now.

M. O'BRIEN: Do you put distance between yourself and the president?

ROLLINS: No, you can't. At the end of the day, the president is still is the leader of this party, and he has to get himself healthy or you're not going to basically be as victorious as you may be. He's to raise the water level here.

M. O'BRIEN: How does he do that?

ROLLINS: Well, he's got to focused on agenda that he can get 218 votes in the House and 51 votes in the Senate, and he's not done that. I mean, at this point, there are no Democrats going to vote for this president or this president's agenda, so it's becomes very important he take the majority and prove to the American public that we can govern effectively and we can make some differences.

M. O'BRIEN: You were there when President Reagan had the terrible second-term difficulties, Iran-Contra. What was interesting about was he actually came clean, apologized for the whole thing, cleaned house. There was very swift action taken. Would you go along with that as a strategy now?

ROLLINS: Yes, I would, absolutely. You know, I'm not saying clean everybody out. What I'd say is get some new people, some new energy, but the president needs to focus on these are the things -- I got 39 months, these are the things I want to get accomplished. I've got to defend the war. I'm not going to pull out of that, I've got to defend that. I've got to convince people that we're doing the right thing and have done the right thing.

M. O'BRIEN: But he hasn't done that?

ROLLINS: No.

M. O'BRIEN: All right, let's finish up with Arnold Schwarzenegger. What an amazing turn of events out there, 0 for four on his initiatives. now it looks as if he'd have a very hard time being re-elected out there.

ROLLINS: He's definitely the underdog today. You know, he was a guy who came in, was going to do things differently, and obviously didn't quite understand the political process, tried to change the political process, and got his clocked cleaned yesterday. I mean, it was probably the biggest defeat anywhere.

M. O'BRIEN: Did he try to change the political process, or did he, himself, change? That's what some would suggest.

ROLLINS: I think he didn't -- in the political game you have to have a base. You have to understand where your 51 percent is at all times. And I think the governor tried to be all things to all people, and I think he was a big personality, but not a very effective politician.

M. O'BRIEN: So what's the moral of that story then?

ROLLINS: The moral he's got a year. He;s decided to run for reelection, and he better shake up his team and focus on what people want and get some accomplishments with a Democratic legislature that's very opposed to him at this point in time.

M. O'BRIEN: The late, great Tip O'Neill said, "All politics is local." Do you buy that?

ROLLINS: I totally buy that.

M. O'BRIEN: And that's what the...

ROLLINS: And certainly that's what this midterm election in 2006 is going to do. If it's nationalized, it's not going to work to Republicans benefit, so they've got to go back, convince people they can bring home the bacon and do what people want and what's on their agenda.

M. O'BRIEN: All right, Ed Rollins, always a pleasure. Thanks for dropping by -- Soledad.

ROLLINS: My pleasure. Thank you very much.

S. O'BRIEN: Ahead this morning, a new warning that a estate housing boom could soon go bust. Andy's "Minding Your Business." That's coming up next on AMERICAN MORNING. Stay with us.

(COMMERCIAL BREAK)

S. O'BRIEN: A pretty serious warning about the future of the housing market is out today. Andy Serwer is "Minding Your Business." Who is this coming from?

Good morning.

ANDY SERWER, "FORTUNE" MAGAZINE: Good morning.

It's coming from Toll Brothers, which is a manufacturer of luxury homes. You know, Soledad, we've been watching for this for a long time. Housing prices have been so strong for so long, even in the face of rising interest rates that many experts say there's nowhere to go but down. Yesterday. Toll Brothers, which make homes that average $700,000, so we're talking about high-end houses. Some pretty pictures of them there.

S. O'BRIEN: They look nice.

SERWER: Yes, warned yesterday that demand for its homes was flagging seriously, and they blame this on consumer confidence being down and also on the hurricanes, but at some point, even wealthy homeowners are going to stop trading up and trading up and trading up forever. S. O'BRIEN: How much can you read into that? Because of course, as you point out, the average is $700,000. It's not necessarily a good gauge for the nation, and also in some places where there's not new construction like New York City, does that mean we're in a bubble? Can you tell I have a personal stake in this?

SERWER: Yes, I can tell somehow. Housing is a very regional business, of course. And you're right, Toll Brothers is very high- end, and it's also on the east coast primarily. Still, this was a pretty dramatic slowdown that they talked about. So I think the implications are there. In fact, other home builders fell yesterday as well, stocks across the board, and that dragged down the overall stock market. As you can see here, that's OK, because we've been up four days previous, so we need a little bit of a breather here, and the futures this morning are flat.

S. O'BRIEN: All right, well, I guess everyone will continue to watch it. Thanks, Andy -- Miles.

SERWER: Indeed.

M. O'BRIEN: All right, thank you, Soledad.

Coming up, we're going to check in on the election that we saw unfold last night. Arnold Schwarzenegger 0 for four, putting on a brave face there. You might say he's doing a little acting there, possibly, because he had a grim day there, and what seemed so good for him now, suddenly seems so bleak. We will put that all in the big picture for you in just a bit.

(COMMERCIAL BREAK)

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