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President Bush Focuses on Economic Security; Dismal Security Report from Former 9/11 Commission; Cheney Rallies Behind DeLay; Rumsfeld Lashes Out Against Media

Aired December 5, 2005 - 16:00   ET


WOLF BLITZER, CNN ANCHOR: To our viewers, you're in THE SITUATION ROOM, where new pictures and information from around the world are arriving all the time.
Happening now, America on alert about the state of homeland security. It's 4:00 p.m. here in Washington, where the former 9/11 Commissioners say President Bush and Congress are not doing enough to prevent another terror attack.

Also this hour, one Republican lightning rod helping another. Vice President Dick Cheney raising campaign cash tonight for indicted Congressman Tom DeLay. Is this high profile pairing politically smart or problematic?

And Senator Hillary Clinton's new campaign against flag burning. The darling of many Democrats takes on an issue often associated with the Republicans. What's she hoping to accomplish?

I'm Wolf Blitzer. You're in THE SITUATION ROOM.

It's a dismal report card, likely to embarrass federal officials and put many Americans on edge. The former 9/11 Commissioners are giving President Bush and Congress far more F's than A's on their efforts to keep the nation safe from terrorists. In fact, the panel handed out only one A -- an A-minus at that -- for a vigorous campaign against the financing of terrorism.

But look at this, five F's, including an F for allocating homeland security funds based on risk. Improving airline passenger pre-screening, an F. A D grade, including for checked baggage and cargo screening. Maximum efforts by the U.S. government to secure WMD, a D grade.

Only C's, nine C's in total, including for national security, strategy for transportation security and comprehensive screening system for borders.

There were 12 B's in total, including a B for the creation of a director of national intelligence and the National Counterterrorism Center. A balance between security and civil liberties, that gets a B, as well.

The Republican chairman of the commission calls the government's failure to fully act on the panel's findings scandalous.


TOM KEAN, FORMER 9/11 COMMISSION CHAIRMAN: Four years after 9/11, it is a scandal that police and firefighters in large cities still can't talk to each other reliably when they are hit with a major crisis. It's scandalous that airline passengers are still not screened against all names on a terrorist watch list. It is scandalous that we still allocate scarce homeland security dollars on the basis of pork barrel spending and not on risk.


BLITZER: Our national security correspondent David Ensor and our congressional correspondent Ed Henry are joining us in THE SITUATION ROOM.

David, first to you. The whole issue of these radio frequencies, why hadn't Congress acted on that so far?

DAVID ENSOR, CNN NATIONAL SECURITY CORRESPONDENT: My understanding, Wolf, is that some of those frequencies are still in use by television broadcasters. They're the analog frequencies that are being used as television transitions to digital. So the broadcast networks and broadcast stations are lobbying for more time, and they may be lobbying against the national interests. At least, that's the view of the 9/11 Commission.

BLITZER: And this is key because it doesn't enable the first responders to speak with themselves or with others because they really can't communicate. And this was shown very dramatically in the aftermath of Katrina.

ENSOR: That's exactly right. This is the highest priority. That's what the commission said.

BLITZER: What about this other issue that there's no single terrorist watch list for airlines?

ENSOR: Well, here you've got a whole set of issues. One is the government still doesn't have one single watch list. There are several around the government. They're trying to get all them together and crunch them into one.

There are problems with computer incompatibility within the government. Then there are issues of privacy of individuals. And there are some in the government who worry about employees of the airlines who would have these lists who might use them in various ways. So there's still a lot of issues they're ironing out on that one.

BLITZER: All right, David, thank you very much. David Ensor reporting.

The White House is defending its security record and pointing out that there hasn't been a terrorist attack on the president's watch since 9/11, at least not here in the United States. The counselor to the president, Dan Bartlett, says the administration has acted on about 70 of the 74 of the 9/11 Commission recommendations, but he says quite a few measures are waiting for congressional action. Bartlett also accused lawmakers of spending homeland security money based on what he calls pre-9/11 models.

Let's find out what members of the Congress have to say about this report card. Who's to blame for the poor marks?

Let's bring in our Ed Henry, our congressional correspondent. What are they saying on the Hill, Ed?

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT: Well, Wolf, as you said, they're dealing with blistering criticism for the Congress from the former 9/11 Commission.

In particular, a big old F for failing to pass legislation, as Dan Bartlett was referring to, that would, in fact, make sure that homeland security money was spent based on risk instead of political clout. An example of that would be the fact that a relatively smaller state like Wyoming, in terms of population, ends up getting as much or more money in security funds per capita as a hot spot like New York.

Also, Congress doing very little to make sure this money is not wasted. For example, the 9/11 Commission making a big deal out of the fact the city of Newark spent some of their security money on air- conditioned garbage trucks, as well as Columbus, Ohio, not spending money necessarily on body armor for firefighters, but body armor for fire department dogs.

As well, you mentioned with David Ensor, the fact the radio spectrum -- making sure that police officers and fire department officials can communicate with one another, getting an F. Congress getting an F from the 9/11 Commissioners for failing to pass that legislation, as well.

Democrat Ed Markey responded today. He's a key player on homeland security issues up here. And he said when you add those F's onto the fact that Republican leaders are now allowing small scissors to get back on to planes and they're not demanding that air cargo is inspected, that the grades should be even worse.


REP. ED MARKEY (D-MA), SELECT COMMITTEE ON HOMELAND SECURITY: Because they don't want to spend the money, the Bush administration is giving many of these industries a free pass, all out of their own government. So while they provided, in other words, a blank check to fight the war in Iraq, they're nickel and diming homeland security here where Mohammed Atta and the other 18 terrorists actually attacked Americans and killed 3,000 of us.


HENRY: Now, Republican leaders responded to criticism like that to say they actually have tried to fix that homeland security funding formula. It's tied up right now in a fight over reauthorizing the Patriot Act. They have also tried to fix that radio spectrum situation that David Ensor was reporting on. That's tied up in a fight over the Deficit Reduction Act.

But the 9/11 Commissioners point out that even if that spectrum legislation finally passes this week, it would not take effect until 2008 or 2009, so first responders would still not get it for about four more years.


BLITZER: Ed Henry on Capitol Hill for us. Ed, thank you very much.

How prepared is the United States against a cyber-attack? Today's report card sheds new light on that, as well.

Our Internet reporter Jacki Schechner is monitoring the "Situation Online". Jacki.

JACKI SCHECHNER, CNN INTERNET CORRESPONDENT: The full report card that we've been talking, Wolf, is available online at this Web site, 9/11 Public Discourse Project. The full report and then a one-page summary of all of the grades that have been given -- essentially, not doing well in the area of online cyber-structure, infrastructure, things like that.

Take a look. Two ones we wanted to point out to you -- critical infrastructure risks and private sector preparedness. Long words. Breaking it down, here's what we're talking about: -- power, water, utility infrastructures are still vulnerable. Private businesses still vulnerable. Not doing very well in either of those realms. That is part of the larger report. And you can read that again for yourself online at this Web site.


BLITZER: All right, Jacki, thanks very much. And to our viewers, please stay tuned to CNN day and night for the most reliable news about your security.

Other news in Washington, President Bush focusing in today on your economic security. He went to North Carolina and urged businesses to live up to their promises about workers' pensions among other subjects.

Let's bring in our White House correspondent, Dana Bash, this snowy North Lawn of the White House. Dana.

DANA BASH, CNN WHITE HOUSE CORRESPONDENT: Hi, Wolf. Well, you know, Americans' anxiety about the direction of the country is about as high as it's been since the president has been in office. Of course, that also goes for how Americans feel about the president. The disapproval of him is also as high as it has been. Many people think that the big reason for that is anxiety about Iraq.

But there is another key issue that Republican strategists say Americans are very, very concerned about, they say the White House has largely ignored lately. That is the economy. (BEGIN VIDEOTAPE)

BASH (voice-over): In a new effort to talk up pocketbook issues, the president zeroed in on a growing concern among Americans: their company pension won't be there when it's time to retire.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: My message to corporate America is you need to fulfill your promises. When you say to a worker this is what they're going to get when they retire, you better put enough money in the account to make sure the worker gets that which you said.

BASH: More than 100,000 United Airlines employees will see smaller pensions because the company defaulted on $9 billion of obligations, the biggest of nearly two dozen companies defaulting on pensions over the last three years. The president pushed lawmakers already working on pension reforms to toughen standards.

BUSH: I'm not going to sign a bill that weakens pension funding for the American workers.

BASH: This was just one part of a broader speech aimed at highlighting an improving economy.

BUSH: Our economy has added nearly four and half million news jobs. Americans are buying homes. The economy grew at 4.3 percent last quarter.

BASH: Despite those positive signs, public anxiety about the economy is high. Only 29 percent of Americans think economic conditions are good. While 66 percent say the economy is only fair or poor.



BASH: And that was a Republican pollster Dave Winston essentially saying that when people are worried about the economy, they're unsettled as voters. And that that is why what voters want to hear from their leaders, especially from the president, is talk about the economy especially when it is good -- and that's why, Wolf, especially for Republicans on the ballot next year, which of course, is the entire House of Representatives, they're very concerned about this.

And we understand for a couple of sources in the meeting last week, there was a private discussion with the House speaker, Dennis Hastert, and the Senate Republican leader, Bill Frist. They told White House Chief of Staff Andy Card and also the White House counseler Dan Bartlett that they were very concerned that the White House is largely ignoring or at least not taking advantage of some good economic signs. So this speech today is going to be a sigh of relief, especially among Republicans on Capitol Hill.

BLITZER: All right Dana, thanks very much. And the president's safety glasses, the eyeglasses he was wearing when he was touring that facility in North Carolina, I suspect that picture is going to get a lot of mileage for the president, as well. Let's show that picture to our viewers once again, if we have it. There it is, it's going to come up right now. There he is. The president's new glasses. I guess they're not the latest in eye fashion.

BASH: You never know how trends start, Wolf.

BLITZER: But maybe the president's going to start something. Thanks very much, Dana, for that.

Jack Cafferty is enjoying some time off this week. He'll be back next week.

Coming up in THE SITUATION ROOM, more on the Bush administration's take on the economy. If the outlook is so rosy, why are the president's poll numbers so low? I'll talk live with the White House budget director, Josh Bolten. He's standing by.

Also ahead, what's the thinking behind this pairing? Take a look at this -- the vice president, Dick Cheney, and the indicted congressman, Tom DeLay. They're scheduled to meet tonight at a fundraiser in Houston for DeLay. Will they help or possibly hurt one another?

And later, Senator Hillary Clinton borrows a page from her husband by embracing a traditionally Republican idea. Is this part of a new Clinton-for-president campaign?



BLITZER: Welcome back to THE SITUATION ROOM. Let's move over to the situation in Iraq. The defense secretary, Donald Rumsfeld, says the public should be optimistic about the situation there, and should not judge progress there by the death toll of U.S. troops, which now stands at 2,130.

In a speech at the Johns Hopkins University School of Advanced International Studies, here in Washington, D.C., Rumsfeld accused the news media in this country of rushing to find fault with the military and with the Iraq mission.


DONALD RUMSFELD, SECRETARY OF DEFENSE: We've arrived at a strange time in this country where the worst about America and our military seems to so quickly be taken as truth by the press, and reported and spread around the world, often with little context and little scrutiny -- let alone correction or accountability after the fact.


BLITZER: Senator John Kerry says Rumsfeld sent mixed signals about Iraq in a speech today, and the 2004 Democratic presidential nominee renewed his call for Rumsfeld to be removed as the Defense secretary. We'll have more on the politics of this situation. That's coming up later in our "Strategy Session".

Also in Iraq today, another contentious day in the trial of Saddam Hussein. The former dictator declared he's not afraid of execution. And he dismissed the testimony of a tearful witness who recalled the torture of his relatives. The witness also described seeing a grinder-like machine with hair and blood on it. Hussein repeatedly interrupted testimony and appealed to try to rally Iraqis against the U.S. occupation.

We'll have a live report from Baghdad on the trial of Hussein's testiness all coming up in the next hour of THE SITUATION ROOM.

Secretary of State Condoleezza Rice is defending U.S. terror policy as she begins a tour of Europe, amid reports of secret CIA-run prisons in Europe. Rice refused once again today to comment directly on those reports, but she acknowledged that the United States has captured and held terrorists, with the cooperation of other governments, including European nations. Rice denied the Bush administration would do that for the purpose of torture.


CONDOLEEZZA RICE, SECRETARY OF STATE: The United States does not transport and has not transported detainees from one country to another for the purpose of interrogation using torture.


BLITZER: We'll have more on U.S. policy on terror suspects and torture. What is, what is not allowed, that's coming up in the 7:00 p.m. hour -- 7:00 p.m. Eastern hour of THE SITUATION ROOM, later tonight.

Thankfully, Zain Verjee has returned from her vacation. She's ready to join us once again from the CNN Center in Atlanta, with some other stories make news. We missed you, Zain.

ZAIN VERJEE, CNN ANCHOR: I missed you, too, Wolf. It's good to be back, although I understand Jack heard I was coming back and left promptly.

BLITZER: No connection.

VERJEE: Rescue workers, Wolf, are combing through rubble and emergency officials are scrambling to assess the damage after a strong earthquake in eastern Africa. The 6.8-magnitude quake was centered near the border of Congo and Tanzania, about 600 miles southwest of the Kenyan capital, Nairobi. The quake reportedly caused the collapse of a number of buildings in rural areas. Medical officials are currently reporting at least one death.

Israeli Prime Minister Ariel Sharon has called off a meeting of his security cabinet to discuss a response to today's suicide bombing at a mall in northern Israel. The attack in the town of Netanya killed five people, 35 others were wounded. Authorities say the bomber blew himself up when he was pulled from a security screening line outside the mall. The militant group Islamic Jihad claimed responsibility.

Hurricane Epsilon is gaining in strength, but forecasters say it still poses no threat to land. The storm's loitering over the open Atlantic, some 500 miles southwest of the Azores Islands. Its sustained winds are near 80 miles-per-hour. It was briefly downgraded to a tropical storm yesterday, but unexpectedly regained hurricane status.

And hunters and animal rights activists faced off in northern New Jersey as a six-day season on black bears opened today. At least three confrontations between hunters and activists were reported, but no arrests were made. Authorities say that the hunt is needed to thin a growing black bear population. But opponents say it's cruel and it's unnecessary; 328 bears were killed during a similar hunt two years ago.


BLITZER: Zain, thanks very much. We'll see you back here soon.

Coming up, it appears to be full steam ahead for the U.S. economy. So why is President Bush getting so little credit for the boom? I'll ask one of his top economic advisers. It's coming up live here in THE SITUATION ROOM.

Plus, a winter storm making travel a mess up and down the East Coast, including right here in Washington, D.C. Our forecast only minutes away.

Stay with us. You're in THE SITUATION ROOM.


BLITZER: Welcome back. President Bush was again trying today to better convey upbeat news about the U.S. economy. New statistics may, in fact, back him up, but is the public getting the message, especially given Mr. Bush's still low job approval ratings?

We're joined now from the White House by the director of the Office of Management and Budget, the president's budget director, Josh Bolten. Josh, thanks very much for joining us.


BLITZER: The latest "TIME" magazine poll numbers show only 29 percent of the American public think the economic conditions in the country right now are good. Sixty-six percent say they're either fair or poor.

Why aren't these good numbers, generally speaking, trickling down and convincing rank and file Americans that the economy is in good shape?

BOLTEN: I'm not sure. It may be that people don't pay a lot of attention to the broader actual news on the overall economy. One interesting thing that when you ask the pollsters is they say that if people are asked about their own individual circumstances, they're much more upbeat than they tend to be about the economy overall. That's why I think it's important that the president is out there now more aggressively spreading the news that we have a good economy. And I think it's important that people appreciate that both for an understanding of what's going on in the economy and in order to make sure that people are supporting the policies that helped bring us here.

BLITZER: The Democrats say they think they know why average Americans are not happy with the economy right now. They put out a statement pointing out -- and I'll let you respond -- that wages are flat and health care costs and heating oil costs are skyrocketing right now. Is that true?

BOLTEN: Well, health care costs have been going up for a number of years actually over decades. Heating oil costs in general are up. The administration reacted rapidly to the spike that was caused in oil prices and gas prices in the immediate aftermath of Hurricane Katrina. I think we responded well on that.

But the overall energy situation requires a long-term solution. There's no quick fix. I think it's easy to understand why people when they see the prices at the pump or for their heating oil are concerned about it. We need to put in place good sustained policies to deal with our energy situation.

But when you take out energy from the equation, overall inflation is relatively low, and the economy is growing in very good strong numbers. And most important for average people, jobs are growing.

BLITZER: Well, what about wages? What about wages? Have they been flat?

BOLTEN: Our data show that real disposable income growth is actually up in the last couple of years. One of the things that people who cite those numbers about flat wage growth neglect to point out is that they're not counting the money the people are getting back from the tax cuts. The president's tax cuts, the ones that Congress has enacted over the last several years, have been critical in getting us the growth to our economy that we're seeing in the numbers now, keeping employment up and keeping the prospects for continued growth strong.

BLITZER: How much does the war in Iraq cost the American taxpayer every month?

BOLTEN: The rate of spending varies. We're probably up in the $6 billion range per month now on spending in Iraq. But the point there is, we're going to spend what we need to spend to defend this country and make sure that our fighting men and women have the resources they need. That's an absolute must.

Now we factor that into our budget situation, it means we need to restrain spending elsewhere. We're making progress on that front. And we can show a very good path of bringing the deficit down to meet the president's original target of cutting the deficit in half by 2009.

BLITZER: Well, if you take a look at the most recent Congressional Budget Office deficit projection numbers, it doesn't show that the deficit is going down. 2006 they're projecting $314 billion deficit, going up to 324 in 2007, 335 in 2008. That doesn't look like the trend is moving in the right direction.

BOLTEN: Our figures are different. The CBO uses some different assumptions, including an indefinite continuation of the war in Iraq, which I don't think is a realistic expectation.

But the important part is that we've brought the deficit down in this past year to 2.6 percent of GDP, which is lower than 15 of the last 25 years. We need to make more progress on it. It means we need to be restrained in the annual appropriated spending, and we need to dig in on entitlements.

But what I can tell you is from the budget director's perspective, the most important thing, the overwhelming factor that we need to keep our eye on, is growth in the economy. That's going to determine ultimately whether we have a strong fiscal situation.

BLITZER: At this time of holiday purchases, Christmas shopping, people going to a Wal-Mart and other stores, they see a lot of products made in China. The deficit, the trade deficit, with China this year is projected to be at $200 billion. In other words, they're going to export to this country $200 billion more than we export to China. And that number has been escalating over these years. Is that good for the U.S. economy?

BOLTEN: Well, trade overall is absolutely good for the U.S. economy. Keep in mind, Wolf, that the United States is the world's largest exporter. We have a lot of jobs tied up in that. We have a lot of revenue tied up in that.

To the extent that we can import as well, the U.S. consumer gets access and U.S. businesses get access to low priced goods that help us be competitive in the long run. There's no question in my mind and in the minds of everybody in this administration that keeping an open trading system is crucial to sustaining the growth in this economy over the long run.

BLITZER: Josh Bolten, we'll leave it there. Thanks very much for joining us.

And coming up here in THE SITUATION ROOM, Donald Rumsfeld takes on the news media involving the war of words over Iraq. Is this a smart strategy? We'll find out when we speak with our Paul Begala and Torie Clarke in today's "Strategy Session".

And a little bit later, are you looking for a stocking stuffer this holiday season? The RNC -- that would be the Republican National Committee -- has a suggestion. We'll tell you in today's "Political Radar".

Stay with us. (COMMERCIAL BREAK)

BLITZER: Welcome back. Tonight, two controversial Republicans joining forces at a time when other members of the GOP would just as soon keep their distance from both of them. The vice president Dick Cheney is rallying behind indicted Congressman Tom DeLay.

And our senior political analyst Bill Schneider has been wondering why. He's joining us live from the newsroom. Bill?

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Wolf, Dick Cheney going to Texas to speak at a fundraiser for Tom DeLay raises a question. What are they thinking?


SCHNEIDER: Vice President Cheney is showing up in Texas to help raise money for Tom DeLay's reelection just before a Texas judge decides whether DeLay has to stand trial. Why would Cheney do that?

The White House is not abandoning DeLay. He's carried water for them even at the risk of alienating his fellow conservatives, like a few months ago, when DeLay echoed the White House line that government spending is under control.

DeLay is also a prodigious fundraiser. According to the Center for Responsive Politics, since 1998, DeLay's political action committee has contributed about $3.5 million to candidates, nearly all Republicans.

President Bush wasted no time condemning representative Duke Cunningham after he pleaded guilty and resigned last week.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The idea of a congressman taking money is outrageous.

SCHNEIDER: DeLay has not gone to trial or been convicted. He has stepped down as majority leader temporarily. He sees his indictment as partisan politics.

REP. TOM DELAY (R) TEXAS: This act is the product of a coordinated premeditated campaign of political retribution.

SCHNEIDER: The White House apparently agrees. Cheney showing up to help DeLay sends two messages. The first is loud and clear. This White House does not abandon its friends. The second message is subtle, we don't expect our friends to abandon us when we're in trouble -- like, for instance, now.


SCHNEIDER: Tonight's event is a fundraiser. Fundraisers work best with figures who raise the battle flag on both sides.

John Kerry sent out his own fundraising appeal on behalf of DeLay's democratic opponent. Its title? "Don't let Cheney bail out DeLay".


BLITZER: All right, Bill, thanks very much. Bill Schneider, good report for us, as usual.

And this note to our viewers, we're out there in the field right now. We're getting public opinion about Tom DeLay. Brand new poll numbers will be related right here in THE SITUATION ROOM 7:00 p.m. Eastern hour tonight, 4:00 p.m. Pacific. You'll want to see that later tonight in THE SITUATION ROOM.

And if you've been dreaming of a White Christmas, you might want to be careful for what you've been dreaming about. Take a look at this, Washington, D.C., the nation's capital, right now. These are live pictures. The Capitol Hill, the White House -- very, very white snow coming down here in Washington, D.C. right now. We're watching this. We're watching what it could mean for a mess of things over the next several days.

Our meteorologist Chad Myers is at the CNN Weather Center in Atlanta. He's watching the weather up and down the Eastern seaboard. What are you picking up, Chad?

CHAD MYERS, CNN METEOROLOGIST: Hey, good afternoon, Wolf. When I worked in D.C. working for the weather service, an inch of snow would basically shut down the Bbeltway. By tomorrow morning, many areas could see between five and seven inches around the Beltway, and especially to the south around Fredericksburg. Some of that could even be heavier than that.

The problem really is, right now, it's been a wet day. Temperatures have been around 32 or even a little bit below 32. But because the sun has still been out -- yes, the sun's not coming through the clouds, but the sun is still warming the ground. When that warming stops right at sunset, every bridge in the metro area, every bridge on the Beltway is going to freeze up all at the same time. A lot of sand and salt trucks have been out during the day already, sanding places and salting places that aren't even frozen yet because they know as soon as sun sets, it's over.

Everything freezes up tonight all the way down to Dale City, all the way, I-95 into D.C., right up through the B.W. Parkway. This is going to be an ugly evening for a lot of folks. And the commute tomorrow morning doesn't get better. But we'll update that for you in 24 minutes.

BLITZER: All right, Chad, thanks very much. Chad Myers. We're going to have a lot more coming up here in THE SITUATION ROOM in the 5:00 p.m. Eastern hour on the weather.

Also, it's a report card that would give most parents fits. The government getting miserable grades for its efforts to prevent another terror attacks. We'll take a look in our strategy session what's going on. And she's the only Democratic sponsor of a bill to ban flag burning. Why is Hillary Clinton wrapping herself up in the good old red, white, and blue? We'll tell you.



BLITZER: Welcome back. In today's "Strategy Session", a defensive secretary of Defense -- that would be Donald Rumsfeld -- accusing the news media of wanting to find fault with the U.S. military. And more on those failing grades from the former 9/11 Commissioners.

Joining us now are CNN political analyst Paul Begala -- he's also a democratic strategist -- and Torie Clarke, a former Pentagon spokeswoman. Let's listen to a little clip from what Donald Rumsfeld said today at my alma mater, SAIS, the School of Advanced International Studies, at Johns Hopkins University.


RUMSFELD: I understand that there may be great pressure on many of them to tell a dramatic story. And while it's easy to use a bombing or terrorist attack to support that interest, it is not always the most accurate story, or at least not the full story.


BLITZER: He's talking about the news media. And he's suggesting that the American public is not getting really an accurate sense of what's going on in Iraq. Is that smart for him to lash out at the news media like that?

VICTORIA CLARKE, FORMER PENTAGON SPOKESWOMAN: If you watch the whole speech, I don't think he used the word lashing. He raises a really important point. The American people are tough. They can handle the bad news. What they need is the whole story.

There is bad news. Bad things are happening. Good things are happening in that country. And the military is having success after success after success in many instances. The American people aren't getting the whole story. That is important.

BLITZER: He was pretty tough on us in the news media.

CLARKE: You've got a thin skin.

BLITZER: We do. That's true.

PAUL BEGALA, CNN POLITICAL ANALYST: But he embarrassed himself. I mean, come on. Nobody in this administration got better press than Donald Rumsfeld when he had Torie Clarke, the best Pentagon spokesperson ever.

And for Donald Rumsfeld to be standing up, complaining about the news coverage of the war, it's like complaining that the drama critics didn't give a good review to "Our American Cousin." That was the play at Ford's Theater the night Lincoln got shot. Why? Because there's a bigger news story.

There's a bigger news story than whether they got more people on the electricity grid or satellite dishes in Iraq. It's the casualties, stupid. And we've got over 2,000 Americans killed. By the way, 462 killed since Dick Cheney said that they were in the last throes of the insurgency.

Here's what the president needs to do -- and I'm not kidding. He needs to fire Donald Rumsfeld and hire Joe Lieberman, OK? He's a Democratic senator, but the strongest supporter of the president's war in the Senate. And he's a Democrat. He supports the president's foreign policy. He would bring instant credibility because nobody thinks Joe Lieberman's a liar. And a lot of people think Donald Rumsfeld is. And it would be a breath of fresh air.

BLITZER: Sort of like when Bill Clinton picked William Cohen, a Republican, to be his Defense secretary.

CLARKE: I'm a big fan of Senator Lieberman's, but that would not be a good idea. And if you watch the entire speech, he devoted a few lines to the role of the media. He was acknowledging how important the role of the media is.

Nobody has spent more time briefing, doing interviews, talking to the media than this secretary, because he realizes how important it is. It is important for them to do their job at a level and with the sophistication that some of them aren't doing right now.

BLITZER: Well, do you think we're not paying enough attention to what's happening in Iraq, or we're simply focusing in on the negative?

CLARKE: Oh, you can look at the first five or six months of this war and then what happened afterwards. The first five or six months, there were literally hundreds, hundreds, thousands of reporters covering every aspect, the good stuff, the bad stuff, the in-between stuff. The American people had a very comprehensive, accurate picture of what was going on.

Since then, it's dropped off. There actually is less coverage. There's less space devoted to Iraq. And sure, if you're only going to devote 30 seconds to the war in Iraq, what are you going to put? The soldier dying or the schools reopening?

I'll put that soldier dying because that is more newsworthy. But the schools reopening, electricity grids going up, the most incredible example, a representative government being formed before our eyes, does not get the coverage it deserves.

BEGALA: It also needs to be said that an awful lot of heroic journalists have lost their lives covering this war. I think the journalists covering this have been stunningly brave and remarkably heroic. And for Donald Rumsfeld, who in my eyes is a complete incompetent, to be attacking the journalists right now is an embarrassment. BLITZER: Let's move on and talk about the 9/11 Commissioners. They really went after the administration and the Republican-led Congress with F's and D's for failing to implement their recommendations on some sensitive issues. Listen to Tom Kean, the former Republican governor of New Jersey, the co-chairman of this 9/11 Commission.


KEAN: We believe that the terrorists will strike again. So does every responsible expert that we have talked to. If they do, and these reforms that might have prevented such an attack have not been implemented, what will our excuses be?


BLITZER: He is really angry. I don't know if you watched the whole news conference, the statement, but he and Lee Hamilton and the other commissioners there, they seem to be not only frustrated but boiling inside four years after 9/11.

Some of these simple recommendations they made -- they claim simple -- like first responders being able to talk to each other or money going for actual threats as opposed to pork barrel politics, some of these things have not been implemented.

CLARKE: I think quite a few of them aren't as simple as it may seem. But I share their anxiety. I share their passion with which we need to move these changes forward. But nothing really big, either bad or good, happens because of one person or an agency.

There is shared responsibility here. Sure, the president and the administration, they're the ones in charge, they should get the bulk of the blame and the responsibility. But it goes all the way down to the local level. When you spend $8 billion, you give $8 billion to local first responders, firemen, policemen, et cetera, and it goes to self-improvement, to air conditioned...

BLITZER: Air conditioned garbage trucks.

CLARKE: Right. And self-improvement courses for the sanitation workers. That is ludicrous. And that means lots of people out there are not taking this seriously.

BEGALA: And God bless the 9/11 Commission for doing this. You know, I think this could be a fundamental problem for the Republicans for a generation. And that is this. The Vietnam War switched the Democratic Party, it made them look like they were weak. Before then, all the wars in the 20th century had been started by Democratic presidents, and Democrats had the rap of being too hawkish, too gun happy, too trigger happy.

Republicans now, I think, have a myth of competence on national security. I believe the mismanagement of the occupation and now the mismanagement of counter-terrorism is going to explode the myth of Republican competence. I mean, this gang looks like a gang that gang that can't shoot straight.

BLITZER: We don't have a lot of time, but a quick question on Tom DeLay -- a fundraiser for him in Houston tonight. The vice president going to Texas to tonight to participate in this fundraiser. Is that smart politics?

CLARKE: I was listening to Bill Schneider, I was thinking that song. I know what he was feeling, but what was he thinking? They're friends. They've been colleagues for years. Of course he's going to show up for a friend.

BLITZER: It does show enormous loyalty.

CLARKE: It does.

BLITZER: And you don't walk away from someone.

BEGALA: And I admire that. And you know what? They'll probably be great cellmates together too, one day. DeLay is under indictment.


BEGALA: He's a political thug. By the way, that's my hometown, my home congressional district. So any time Dick Cheney wants to visit and help elect a Democrat to replace Tom DeLay, I'm happy to do it, because his name is mud back home and all across America.

BLITZER: Both of you will be excited to hear here that at 7:00 p.m. Eastern here in THE SITUATION ROOM, we have new poll numbers coming out on Tom DeLay, this entire issue, and some of the early indications we're getting right now will be pretty startling to you political news junkies out there. Stay with us for that, 7 p.m. Eastern. Tori, Paul, thanks very much.

The Tom DeLay fundraiser in Texas featuring the vice president Dick Cheney certain to raise some serious dollars, and the money chase is going online.

Let's bring in our Internet reporter Jacki Schechner with more on that. Jacki?

SCHECHNER: Well, the bottom line, Wolf, is everybody wants your money. John Kerry's political action committee went out today, sent out a big mass emailing asking for money to support Tom DeLay's opponent in the next congressional race.

On the other side, you can give money to support DeLay's campaign at his Web site. You can contribute up to $1,000. There's also a separate Web site caused Defend DeLay that is a legal trust fund. And that maximum contribution, Wolf, is $5,000. They have raised 1.2 to $1.4 million so far, 50 grand of that online alone.

BLITZER: All right, thanks very much, Jacki, for that.

Up next, it may only be walking around money for a billionaire, but documents show the New York mayor Michael Bloomberg spent more than $77 million to win his second term. We'll tell you what he has to say about that.

Plus, he sneered, he scowled, and he shouted. At his trial today, the former Iraqi dictator Saddam Hussein acted like he was still in charge. We'll go live to Baghdad at the top of the hour, with full details.


BLITZER: And we're getting this just in from the Associated Press. In Austin, Texas, a judge there has dismissed charges against the Republican congressman Tom DeLay on conspiracy to violate Texas election codes, but has upheld money laundering charges, further jeopardizing his Tom DeLay's chances of returning as House majority leader.

In other words, the trial will go on, although there is a partial victory for Tom DeLay in that the conspiracy charge has been thrown out. But the money laundering charges remain.

Let's bring in our senior political analyst Bill Schneider who's watching all of this. I guess a mixed message. But the bottom line is, the trial will go forward. Tom DeLay's attorneys had hoped that the whole thing would be dismissed, would be thrown out of court. That has not happened.

SCHNEIDER: That's right. The judge has refused to throw all the charges out, which means there is going to be a trial. The trial is not likely to begin before January. DeLay's last hope is that the trial can get started very, very quickly and perhaps last only a couple of weeks before the United States Congress reconvenes at the end of January when the Republicans, still the majority party, select their majority leader.

If the trial has not completed by then -- and chances are the trial won't be complete -- then there's a chance that they will decide to select a new majority leader. Tom DeLay left that post temporarily and there is an acting majority leader right now. But there is some sentiment in the Republican majority in Congress that if Tom DeLay goes on trial, they may choose to a different majority leader.

BLITZER: And this comes on the day -- this ruling by the judge saying the trial will go forward on the money laundering charges even though the conspiracy charges have been dismissed comes on a day, as we've been reporting, that the vice president, Dick Cheney, will be attending a fundraiser on behalf of Tom DeLay later tonight, and new poll numbers that we're going to be releasing at 7:00 p.m. Eastern tonight.

Lots of Tom DeLay activity, but the bottom line, this has got to be bad news for Tom DeLay that the trial will go forward.

SCHNEIDER: That's right. The trial will go forward on at least one charge, that's the money laundering charge. And now he faces two problems. One is the prospect of the Republicans choosing a different majority leader. And then of course, if he chooses to run for reelection in the fall, he has to face the voters in November of 2006. And we will have a poll of his district showing exactly what his standing is among voters there now.

BLITZER: All right, we're going to continue to follow this story. Bill, thank you very much. We're going to continue to watch this story. A Texas judge has refused to throw out the money laundering charges against Tom DeLay, but he has dismissed the conspiracy charges.

Still to come here in THE SITUATION ROOM, much more on this story and other stories top of the hour, as well as in our 7:00 p.m. hour, as well. Once again, the vice president Dick Cheney will be attending a fundraiser tonight in Texas, in Houston, Texas, for Tom DeLay.

Also ahead here, Senator Hillary Clinton taking a stand. Why is the Democratic senator from New York pairing up with a conservative Senate colleague to support an issue involving the American flag? We'll tell you what's going on.

Stay with us.


BLITZER: Once again, we're watching that story developing in Austin, Texas. A judge there has refused to dismiss some money laundering charges against Congressman Tom DeLay, but has thrown out conspiracy charges. Much more coming up shortly here in THE SITUATION ROOM.

In the "Culture Wars", flag burning right now. Should it be banned? Many Republicans think so, and apparently, so does a leading Democrat who just may be running for president in a few years. We're talking about Hillary Rodham Clinton, the senator from New York.

Mary Snow is following the story for us from New York. Mary?

MARY SNOW, CNN CORRESPONDENT: Well, Wolf, the New York Democrat is cosponsoring a bill with a Utah Republican that bans flag burning. Political pundits are reading between the lines of the bill, suggesting the move is connected to the red in the red, white, and blue, and a potential run for the White House.


SNOW: Burning flags has been a hot-button issue for years. Now, Senator Hillary Rodham Clinton is smack at the center of it. She is the sole Democrat cosponsor of a bill -- not a constitutional amendment -- that would ban flag desecration. Her office released a statement saying, as Senator Clinton has said, she support a statute to make flag burning a crime, and that's what this legislation does.

Political observers say the legislation does something else for Senator Clinton as she's joining forces with conservative Republican Senator Bob Bennett.

LARRY SABATO, UNIVERSITY OF VIRGINIA: She's paired up with one of the conservative members of the Republican caucus from the very conservative state of Utah. And this allows her to say, see? I'm more moderate than you thought I was.

SNOW: Being seen as more moderate is crucial, say observers, if Senator Clinton wants to win Republican red states should she run for president in 2008.

With Senator Clinton attending fundraisers like this one in the red state of Kentucky Friday night, the speculation isn't so much on whether she'll run, but who may give her competition. And the focus is turning to outgoing Democratic governor of Virginia Mark Warner, who recently helped his lieutenant governor get elected. Some say Warner has added urgency to Senator Clinton's moves toward moderation, such as this bill.

SABATO: Mark Warner is a very serious threat. He's got just about everything you need to challenge Hillary Clinton for the nomination. He represents a southern state and he's proved that he can carry that state twice -- once for himself and once for somebody else.

SNOW (on camera): And adding to the buzz about Governor Mark Warner is his move last week to grant clemency in a death penalty case -- Wolf?

BLITZER: Mary, thank you very much. Mary Snow, reporting for us from New York.


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