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THE SITUATION ROOM

Condoleezza Rice, Key Counterparts Holding Talks At United Nations On How To Stop Iran's Nuclear Program; Michael Hayden Nomination Might Fare Better If He Gives Up His Day Job; Dianne Feinstein Interview; Iranian-Americans Respond to Iranian President's Letter; GOP Hopes to Extend Tax Cuts; Wal-Mart in Trademark Battle Over Smiley Face; Mary Cheney Weighs in on Gay Marriage Debate in New Book

Aired May 9, 2006 - 16:59   ET

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


JOHN ROBERTS, CNN ANCHOR: To our viewers, you're in THE SITUATION ROOM, where new pictures and information are arriving all the time.
Standing by, CNN reporters across the United States and around the world to bring you today's top stories.

Happening now, it's 5:00 p.m. in Washington, where the Bush administration stamps "return to sender" on a letter from Iran's president.

The president's choice for CIA chief is challenged on Capitol Hill, where some people say his nomination would fare better if he hangs up his Air Force uniform. Is the Pentagon already playing too big a role in U.S. intelligence.

And she's out with a new book. Mary Cheney gets her turn to sound off on gay rights, her father, and her father's boss.

I'm John Roberts, in for Wolf Blitzer today. You're in THE SITUATION ROOM.

Will it be the carrot or the stick? Secretary of State Condoleezza Rice and key counterparts are holding urgent talks at the United Nations today on how to stop Iran's nuclear program. President Bush says diplomacy is the first option, but his administration is dismissing a personal letter from Iran's president.

CNN's Richard Roth is standing by at the United Nations, and our Brian Todd is going to give us a closer look at the letter. But we begin this hour with CNN White House Correspondent Suzanne Malveaux -- Suzanne.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well, John, many here at the White House see this as a publicity stunt by Iranian president Mahmoud Ahmadinejad. They are not taking this seriously as any kind of effort for open dialogue. As a matter of fact, they see it as an effort to undermine the international community's ability to look at Iran and basically hold it accountable to its nuclear or alleged nuclear weapons program. Secretary of State Condoleezza Rice is in New York. She is meeting with her counterparts to try to put forward a U.N. resolution to hold Iran to account. In the meantime, President Bush is standing very firm today, saying that he believes it's this international effort that ultimately will succeed.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Obviously, part of making the diplomacy work is what will be the consequences if the Iranians decide maybe not to listen to the rational demands of the world. And you mentioned some -- you mentioned one -- you know, economic sanctions. But we're -- and I'm not going to comment on that, because I think it's very important for good negotiators to keep their cards close to the vest and at the appropriate time make it clear what our intentions are.

(END VIDEO CLIP)

MALVEAUX: John, of course, that is certainly one of the considerations, is economic sanctions. President Bush didn't deal with the issue of the letter in particular, but administration officials making it very clear they do not support this idea of the U.S. talking directly with Iran, one-on-one talks, but rather in this kind of community setting, in this international setting, the United Nations or European Union.

And I also spoke with Middle East experts who are really quite divided over what all of this means, whether or not it is going to be a backlash to the United States for not reaching out, and some others believe that this letter really is not a serious attempt at all to get the president's attention.

(BEGIN VIDEO CLIP)

TRITA PARSI, JOHN HOPKINS UNIVERSITY: The most important audience, perhaps, may be the international community, because the more the Iranians are showing themselves willing to talk, the more difficult it's going to be for the United States to convince its allies to agree to punitive and very costly sanction, because they're going to go back to the United States and say, hold on, if we're going to agree to sanctions, you have to agree to try diplomacy first.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

KEN POLLACK, BROOKINGS INSTITUTION: The letter that Mr. Ahmadinejad sent to President Bush is full of claims and questions which, whether you like Mr. Bush or don't like him, you have to recognize are going -- are calculated to insult him. There is nothing in that letter that think the White House would look at and see as anything other than deeply offensive.

(END VIDEO CLIP) MALVEAUX: And john, international scholars also say that there have been occasions in the past where the Iranian government has reached out to the United States in kind of a secret way, sent these letters to U.S. officials without this kind of insulting language, and they say that they believe this is not really meant for President Bush but rather for public consumption -- John.

ROBERTS: Suzanne, we should point out that there seems to be a truck backing up in your -- in your neighborhood there and that's what the noise is. Timing is everything.

I talked to Condoleezza Rice about Ahmadinejad, oh, probably about three months ago. And she said he's a dangerous man. Is there just a sense there at the White House that this guy isn't to be trusted and that this letter changes none of that?

MALVEAUX: Well, you know, this is really -- they have heard this kind of what they refer to as bluster before, the kind of very dramatic language by the president -- and rather the insulting language as well. It's not to be unexpected.

What is interesting is that the Iranian government leaked this to the public. This was very clearly set up for the timing, meant at the time that she, of course, is meeting with her counterparts in the United Nations. And they believe it is meant to undermine those talks that are moving forward.

ROBERTS: Yes. We should point out that a French newspaper was the first one to have the full English text to this.

Suzanne Malveaux, thanks very much.

It may not be what the Bush administration wanted to read, but that 17-page letter from Iran's president is a fascinating document. CNN's Brian Todd has been studying it and he joins us now.

What did you find out, Brian?

BRIAN TODD, CNN CORRESPONDENT: Well, John, it's got a little bit of everything: accusation, lecture, conciliation, and, of course, plenty of hidden agenda.

(BEGIN VIDEOTAPE)

TODD (voice over): Mahmoud Ahmadinejad starts right in on George Bush's Christian beliefs, all but accusing his American counterpart of being a hypocrite. "Can one be a follower of Jesus Christ, feel obliged to respect human rights, announce one's opposition to the proliferation of nuclear weapons and WMDs, make war on terror his slogan, but at the same time, have countries attacked, the lives, reputations and possessions of people destroyed?"

PARSI: He's basically trying to show that he is not in a morally inferior position vis-a-vis the United States and vis-a-vis President Bush. TODD: Ahmadinejad mentions Jesus Christ 10 times, Saddam Hussein three times, calling him a murderous dictator. But he doesn't mention his own nuclear program by name. Instead, writing, "In what other point in history has scientific and technical progress been a crime? Can the possibility of scientific achievements being utilized for purposes be reason enough to oppose science and technology altogether?"

AZAR NAFISI, JOHNS HOPKINS UNIVERSITY: This letter is very timely. It comes right on the eve of when the U.N. is going to make decisions about Iran. And this is to delay those decision or to confuse.

TODD: Later, a reference to September 11th, calling it a horrendous incident, but then implying that unnamed governments might have sponsored the attacks. Throughout the letter, references to a belief in one god. Analysts say this is to establish common ground with Bush and their faiths.

And...

NAFISI: He's obviously also targeting the audiences in Muslim countries and coming out as the leader of the faith.

(END VIDEOTAPE)

TODD: President Ahmadinejad signs off with the phrase in Arabic, "Peace be upon the one who follows god's guidance," but at no time does he directly or indirectly invite President Bush to talk. Why not? Analysts say that was not the Iranian's intent. This letter, they say, was to preach to President Bush, to play to audiences back home, and to not be seen as begging for negotiations -- John.

ROBERTS: Fascinating stuff. Brian Todd, thanks very much.

The United States and other key members of the United Nations are trying to find common ground on a response to Iran's nuclear program.

Let's turn now to our senior U.N. correspondent, Richard Roth.

How did the day shape up, Richard?

RICHARD ROTH, CNN SR. U.N. CORRESPONDENT: Well, John, at the top of the show you mentioned carrots and sticks. Time to get the vegetables ready again. The United States and the Europeans are reviving again an incentive or sanctions, either/or options for Iran.

Secretary of State Rice seems to back the idea. This would be incentives to talk about Iran's use of civil nuclear power and energy security. Secretary of State Rice also reiterated the bottom line to Tehran.

(BEGIN VIDEO CLIP)

CONDOLEEZZA RICE, SECRETARY OF STATE: We have considerable agreement on -- I would say total agreement on the view that Iran cannot be allowed to have a nuclear weapon, that Iran must accede to the requirements put forward in the IAEA board of governors resolution and memorialized in a presidential statement, and that Iran needs now to suspend its programs and go back to the negotiating table.

(END VIDEO CLIP)

ROTH: They're coming up with this incentive, either/or, or penalties, because, John, they're stuck on that resolution, with China and Russia still having major concerns about what the language says, about whether it opens the door to sanctions or maybe military force. Secretary Rice will join the Russian foreign minister and other players in the Middle East muddle at a press conference. You're looking at the room they'll be filing into shortly -- John.

ROBERTS: Was there a sense, Richard, that this recent language or recent talk by Iran just in the last 24 hours, that, hey, maybe the Russian idea to enrich uranium on Russian soil is still a pretty good one?

ROTH: Well, that idea has also been in and out over the last few months. They worked on it last night, not the letter, but they worked on compromised language. So they're going to go to Brussels on Monday and try to come up with the carrots and sticks again for Iran.

ROBERTS: All right. Richard Roth at the United Nations. Thanks very much.

Time now for another edition of "The Cafferty File." Our Jack Cafferty joins us now from New York -- Jack.

JACK CAFFERTY, CNN ANCHOR: John, you're probably old enough to remember this. I know I am.

Three years into the war in Iraq, and more Americans say it was a mistake to send troops there than those who felt that way about the Vietnam War at the same stage. A Gallup poll showed that 57 percent of those polls now say Iraq was a mistake. That compares to 48 percent who said Vietnam was a mistake in April of 1968.

It's an interesting comparison when you consider that at this point, 28,500 servicemen had died in Vietnam. Millions were worried about the draft. I was one of those. And antiwar protesters had spread to dozens of college campuses. Some of those protests became violent.

Today, about 2,400 American soldiers have died. The military is an all-volunteer force. And public dissent is sporadic and much more diluted and muted. One historian says it's because people value the stakes much lower in Iraq than they did in Vietnam. We were terrified of the spread of communism back then.

So here's the question: What does it mean when the Iraq war is more unpopular than the Vietnam War was at this point in time?

E-mail us at caffertyfile@CNN.com or go to CNN.com/caffertyfile.

Pretty startling comparison -- John.

ROBERTS: It is. It's amazing to see. And I am old enough to remember that, Jack. And thanks for pointing that out.

CAFFERTY: You're welcome.

ROBERTS: And if you want a sneak preview of Jack's questions, plus an early read in the day's political news and what's ahead in THE SITUATION ROOM, sign up for our daily e-mail alert. Just go to CNN.com/situationroom.

And up ahead, Hayden on the Hill. The president's pick to lead the CIA courts Congress. Will he give in to pressure to step down from his military position?

Also, Mary Cheney, the vice president's daughter, speaks out on being a lesbian and an aide to her father's campaign.

Plus, President Bush makes an unscheduled stop in Florida. We'll show you where and why.

(COMMERCIAL BREAK)

ROBERTS: Our Zain Verjee joins us now live from the CNN Center in Atlanta with a look at some of the other stories that are making news..

Good afternoon, Zain.

ZAIN VERJEE, CNN ANCHOR: Hi, John.

In Iraq, at least 17 people are dead and 35 hurt after a suicide car bomber unleashes a fresh episode of terror. It happened in a crowded public market in the northern city of Tal Afar. Officials say the unexpected attack happened as people were shopping and that women and children are among the dead.

President Bush recently pointed to Tal Afar as an anti-insurgency success story.

(BEGIN VIDEO CLIP)

BUSH: The military success against the terrorists helped give the citizens of Tal Afar security. And this allowed them to vote in the elections and begin to rebuild their city. And the economic rebuilding that is beginning to take place is giving Tal Afar's residents a real stake in the success of a free Iraq. And as all of this happens, the terrorists, those who offer nothing but destruction and death, are becoming marginalized.

(END VIDEO CLIP)

VERJEE: In Gaza City, another day of clashes between members of the Hamas and Fatah militant groups. Palestinian security sources say the violence started after Hamas abducted a member of Fatah. Fatah is then said to have kidnapped five members of Hamas. Officials say 10 people, including five children, have been hurt. Both groups have been fighting since Hamas won parliamentary elections back in January.

And beating back the blazes. It's man versus fire as crews battle nagging wildfires that have scorched parts of central Florida. Thick plumes of smoke had choked highways and have partly caused car accidents that have killed four people. About 9,000 acres have burned and so have three homes.

President Bush made a surprise visit to the region today. Florida Governor Jeb Bush has declared a state of emergency.

Back to you, John.

ROBERTS: Thanks, Zain. We'll see you back here soon.

The president's pick for CIA director was seeking support on Capitol Hill today, where critics on both sides of the aisle say the nomination would fare better if Michael Hayden gives up his day job as an Air Force general. But Defense Secretary Donald Rumsfeld says the military is not involved in a Washington power play.

CNN's Jamie McIntyre is standing by for us at the Pentagon, but we begin with our congressional correspondent, Andrea Koppel, who's on the Hill -- Andrea.

ANDREA KOPPEL, CNN CONGRESSIONAL CORRESPONDENT: Well, the speaker -- the defense secretary, Cheney (sic), rather, may not think it's a power play, John, but certainly the speaker of the House, Dennis Hastert, does. In fact, in an interview, in a television interview, he came right out and said that he thought that it was wrong for Porter Goss to have been forced to resign, and he viewed it, in his words, as a power play by the director of National Intelligence, John Negroponte.

(BEGIN VIDEO CLIP)

REP. DENNIS HASTERT (R), HOUSE SPEAKER: I was very happy with Porter Goss. I think he was doing a great job. He's a civilian. He knows intelligence. He was in the CIA. He knows what it takes. I don't think a military guy should be the head of the CIA, personally.

(END VIDEO CLIP)

KOPPEL: Now, while significant that you would have the speaker of the House come out as publicly as he has, General Hayden's fate doesn't lie over in the House. It is over here in the Senate, before the Senate Intelligence Committee. And the chairman of the Intelligence Committee, Pat Roberts, today said that he expects that these hearings could begin as soon as next week.

Now, that said, in the meantime, Hayden is going to have to continue doing what he spent all day doing today, and that was knocking on doors in the Senate, both in the House -- excuse me, both on the Republicans and the Democrats. Knocking on doors and trying to persuade some of these senators that he is not going to be, as the head of the CIA, somebody who would let the military have undue influence, one of the key concerns that we have heard expressed in coming days.

Another concern has been the role that we see General Hayden play when he was the head of the National Security Administration in developing that warrantless wiretapping surveillance program. We heard just after the meeting that Senator John Warner had, another member of the Senate Intelligence Committee, we heard him say that he didn't think this was something that would be a major deal-breaker in his eyes.

(BEGIN VIDEO CLIP)

SEN. JOHN WARNER (R), ARMED SERVICES CHAIRMAN: I feel that the program has made a very positive contribution to our intelligence and indeed the security of the United States. The general, in pursuing that program, was relying upon legal opinions given by the top government lawyers, be they White House, attorney general, and the like.

(END VIDEO CLIP)

KOPPEL: Now, as far as the White House is concerned, I spoke to a senior administration official this afternoon who said that they believe that the rounds today on the Hill have gone pretty well, and they don't see this whole issue of General Hayden's military background as being something that would keep him from getting confirmed. But of course, John, we won't know until the confirmation process gets under way, because a number of senators have still been holding their cards close to their chests as to which way they would vote.

ROBERTS: Right. A lot of different opinions on that. Andrea Koppel on Capitol Hill, tanks very much.

Does General Hayden need to hang up his Air Force uniform to get confirmed by the Senate? I'll ask a key member of the Intelligence Committee, Democrat Dianne Feinstein, coming up in just a few minutes' time.

Now, what about those congressional concerns that the Pentagon is playing too big a role in U.S. intelligence?

Let's turn to our senior Pentagon correspondent, Jamie McIntyre, who's got more on that.

Hey, Jamie.

JAMIE MCINTYRE, CNN SR. PENTAGON CORRESPONDENT: Well, John, if the charges that the Pentagon bureaucrats are involved in a petty turf war with the intelligence agencies, Defense Secretary Donald Rumsfeld said today that he pleads not guilty.

(BEGIN VIDEOTAPE) MCINTYRE (voice over): The Pentagon in a turf battle with the CIA, setting up its own rival spy operation while jealously guarding its 80 percent of the national intelligence budget? Let's see, how many ways can Defense Secretary Donald Rumsfeld deny that?

DONALD RUMSFELD, SECRETARY OF DEFENSE: The short answer is, no, we're not. The quality of the debate on this subject is pedestrian and unimpressive.

If you look at the debate and the articles in the newspaper and the comments that are being made, they are about theoretical conspiracies, they're about theoretical bureaucratic turf fights. They're all off the mark.

There's no power play taking place in Washington. It is a collegial and open process.

There isn't anything we're doing in the Department of Defense on intelligence that has not been working out with the Department of State, that has not been worked out with the White House, that has not been worked out with the Central Intelligence Agency, that has not been worked out with the director of National Intelligence.

MCINTYRE: But what about the story that Rumsfeld had to reign in General Mike Hayden after his 2004 congressional testimony advocating that some Pentagon spy agencies, like his own NSA, be placed under the new National Intelligence director, John Negroponte, something Rumsfeld opposed and President Bush rejected?

RUMSFELD: Now, is that a big deal?

UNIDENTIFIED MALE: You tell me.

RUMSFELD: Not that I know of. Nor was it then.

(END VIDEOTAPE)

MCINTYRE: Rumsfeld did drop one bombshell, almost as a parting shot. Asked if the American public had confidence in the intelligence about Iran's nuclear ambitions, given how far off the mark the prewar intelligence on Iraq was, Rumsfeld essentially conceded the point. "Does it give one pause?" he said. "You bet" -- John.

ROBERTS: That was a real podium-thumper today.

Jamie McIntyre, thanks very much.

Coming up, she found herself in the political spotlight in the last election. Now Mary Cheney talks about her life as a lesbian and daughter of the conservative vice president.

Plus, why a battle over the smiley face has some people frowning today. We'll show you who wants to get exclusive rights to an iconic image.

(COMMERCIAL BREAK) ROBERTS: Should the president's choice to head the CIA, General Michael Hayden, retire from the Air Force before he takes the job? Does the Pentagon already hold too much power in the intelligence community?

Joining me now from Capitol Hill, a key member of the Senate Intelligence Committee. That's Democrat Dianne Feinstein of California.

Good afternoon to you, Senator. Thanks for being with us.

SEN. DIANNE FEINSTEIN (D), CALIFORNIA: Good afternoon, John.

ROBERTS: In your estimation, is General Hayden the most qualified man to lead the CIA at this time?

FEINSTEIN: Well, I would say this, I think on virtually everyone's list that understands the arena, he would be either number one, two, or three. He'd certainly be in the top three candidates.

And I think this: this is no ordinary time. And we need someone who is a skilled professional, somebody that knows the entire intelligence community, that can lead the CIA in this world of asymmetric terror.

And so I don't think we ought to monkey around with this. I think the hearing ought to be as soon as possible, and we ought to get on with it.

We need to have permanent leadership at the CIA. And as you know, and I think is becoming increasingly clear, some of the top positions there are going to change. And they will be subject to Mike Hayden's bringing in professionals from the agency. And I think that's really important.

ROBERTS: Senator, your position on Mike Hayden puts you a bit at odds with some of your colleagues on the Democratic side there. Senator Edward Kennedy, for instance, a Democrat of Massachusetts who says, "The last thing America needs is a 'yes man' at the helm of the Central Intelligence Agency."

You met with him today in your offices. Is that a good way to characterize him, a "yes man"?

FEINSTEIN: No, I don't think it is a good way to characterize him. I think there's concern on our side. And the concern really resolves around the domestic surveillance program and the role that Mike Hayden played.

I talked about it in a classified setting with him this morning. And I'm sure it will be brought up at the Senate Intelligence Committee hearings.

We usually hold two. One is an open hearing, and the other is a closed hearing. And many of us on the Democratic side have a very strong and pronounced belief that the Foreign Intelligence Surveillance Act which set up this special court is the explosive means for the surveillance of any American. And, therefore, that surveillance should be with warrant, secured through this special court.

In this case, General Hayden was connected with the program. It was set up through his agency that circumvented that process. And I think that causes a lot of concern. And it's well placed concern, in my view. So General Hayden is going to have to answer these questions.

ROBERTS: Right. Are you concerned, though, Senator Feinstein, that his confirmation hearings are going to turn into a debate over this NSA spying program, that we're going to hear much more about that than we're going to hear about his qualifications? Because Senator John Cornyn of Texas said this: "We welcome that debate over the NSA wiretapping if the president's opponents help to argue that we're doing too much to prevent terrorism, that the intelligence agencies are fighting too hard against terrorists around the world, then we look forward to taking that debate to the American people."

I mean, is there not a chance that if Democrats go too far down that road that it's going to backfire on you?

FEINSTEIN: Democrats aren't going to go too far down that road. I mean, we -- we have read the Fourth Amendment of the Constitution, we've read the law that is the exclusive law for all domestic surveillance.

Let me say this: this is a big debate to have. It's an important debate, because what happens here will condition events for all time. And, therefore, there is a very big question at issue. It is -- it is what the United States Senate should be doing.

Now, General Hayden, I think you have to also consider him as someone, is he qualified? Is he well credentialed? Is he is a leader? Can he lead this agency? Can he take the agency into this asymmetric terror world?

I think he can because he's had that experience at NSA with satellite intelligence and because he's well advised of what the rest of the community is doing in this regard.

ROBERTS: But...

FEINSTEIN: Can he correct some of the problems that have taken place in the agency? A, he knows what they are. And B, I think he can correct them.

ROBERTS: Senator, let me make sure that I'm clear on your position on this, though. While you think that Hayden's qualified for the job, you're still uncomfortable with the uniform?

FEINSTEIN: Well, I think the uniform is a problem in that this is meant to be the civilian intelligence agency. I've recommended, others have recommended that he take off the uniform, that he become a civilian. That's not necessarily dispositive, in my view, whether he does or doesn't.

ROBERTS: Right.

FEINSTEIN: It is to say there is that concern.

ROBERTS: Senator, I've got one more quick question for you on the issue of Iran and this letter that Mahmoud Ahmadinejad sent to President Bush. The White House is basically dismissing the whole thing. Should this be an opportunity for dialogue, or do you think they're right to dismiss it?

FEINSTEIN: Well, I think we have to be very careful. Iran has a history of being very tricky and not trustworthy.

However, I don't think we can turn down any overture. I think bluster and arrogant does not befit the United States. I think a willingness to talk and to negotiate. You know when you negotiate, you negotiate with people who aren't necessarily your friends. They're your friends, there's often not the need for negotiation.

ROBERTS: Right, right.

FEINSTEIN: But I think to go at Iran without sitting down directly is a mistake. And I think as you get further down the road and if, in fact, they are developing a nuclear weapons program, there's three to five years. What if we come to the end of the time and no one has set down with Iran directly? How do you reconcile that with the American people?

ROBERTS: Interesting to note. Senator Dianne Feinstein, thanks very much. Appreciate your being with us today.

FEINSTEIN: You're welcome. Thank you.

ROBERTS: More now on the tension over Iran's nuclear program and the historic letter from Iran's president to President Bush. Many Iranians are following the story from right here in the United States, especially in Los Angeles, which has one of the largest Iranian exile communities in the country.

Chris Lawrence is there live for us now.

Chris, what are you finding out?

CHRIS LAWRENCE, CNN CORRESPONDENT: Well, John, it's probably -- right here is probably the largest Iranian exile community anywhere outside the Middle East, possibly more than half a million people.

And they're split on whether this letter will do anything to repair relations between their old home and their new one.

(BEGIN VIDEOTAPE)

LAWRENCE (voice-over): It's a slice of the Middle East in the middle of Los Angeles: Persian sounds and signs, the heart of what Iranian exiles call "Tehrangelos." Right now, it's a community caught in the middle.

SATAREH EGHBAL, IRANIAN-AMERICAN: I'm American right now. I'm proud to be American, but I have my Iranian citizenship, too.

LAWRENCE: Satareh Eghbal left her country just before the revolution in 1979. She read parts of President Mahmoud Ahmadinejad's letter to President Bush.

EGHBAL: I was very surprised, because he is a very stubborn person.

LAWRENCE: Eghbal thinks it's an opening, and she's urging Mr. Bush to give diplomacy a chance.

EGHBAL: We have to solve the problem with talking, not ignoring the people.

UNIDENTIFIED MALE: But never -- doesn't have to (UNINTELLIGIBLE)

LAWRENCE: Some weren't sure to take the letter at face value and wondered if it's truly an invitation to open negotiations.

UNIDENTIFIED MALE: I hope he's serious about that.

LAWRENCE: This man runs his own flower shop, and he's skeptical about this olive branch from Iran's president.

UNIDENTIFIED MALE: It's hard to believe all of a sudden he wants to come and talk to President Bush and send a letter to President Bush. I think that because he was totally against everything, and now all of a sudden I don't know what's in his mind, but I hope that he's honest about it.

(END VIDEOTAPE)

LAWRENCE: Yes, but for many, it's more of a hope than any kind of realistic expectation. While many were impressed with the length of the letter, they say it never gets specific about how Iran would find common ground on the issues that still divide the two countries -- John.

ROBERTS: Chris, thanks very much. Appreciate it.

Looks like Republicans are trying to get one on the scoreboard in 2006, and they might have done it. Just in to CNN, there's been a important agreement in Congress on a $70 billion tax cut. Our Dana Bash joins us now on Capitol Hill with the breaking news -- Dana.

DANA BASH, CNN CORRESPONDENT: Hi, John.

Well, you know, lawmakers have been talking about this, negotiating about this for months. And today, Republicans as you said, have agreed to spend about $70 billion to extend some of President Bush's tax cuts. And I'll give you just a couple of the highlights. First of all, tax cuts on capital gains and dividends that were set to expire in 2008 will be pushed back two years. They will now expire, if this passes, in 2010.

Also this is aimed as preventing the alternative minimum tax from hurting middle class tax payers that it wasn't designed to reach in the first place. The so-called AMT was designed initially to make sure the wealthy paid their taxes. But as millions of middle class Americans, who just filed last month know, it made their taxes go up. So that is the other aim.

Now House Republicans and Senate Republicans are already issuing statements saying that this is a victory for the American people, that it will make sure that taxes don't go up. They say that it will make the economy continue to move along, to chug along.

Democrats, however, are already voicing their concern, saying that this is nothing more than more taxes -- tax breaks, I should say, for the wealthy. And for example, the ranking Democrat on the Senate Finance Committee just issued a statement saying that what Congress should have done, they should be focusing on are things like tax cuts for college tuition and also tax credits for teachers.

House -- the House will likely vote on this tomorrow. The Senate will probably follow suit. And John, as you alluded to, President Bush will no doubt tout this as a much needed victory at a time where they really need to gin up the Republican base. And nothing like a tax cut to do that.

ROBERTS: Yes, beginning to kindle that fire. Dana Bash on Capitol Hill, thanks.

BASH: OK.

ROBERTS: Coming up, it's what Wal-Mart uses to put a happy face on its prices. Now the retailing giant wants to own it outright. Why is that a problem? We'll explain to you.

And in our 7 p.m. hour, one day after Iran's president sent a letter to President Bush, how is the Bush administration responding? I'll ask the president's national security advisor, Stephen Hadley, here in our SITUATION ROOM.

(COMMERCIAL BREAK)

ROBERTS: Time now for "The Bottom Line". Our Ali Velshi is live in New York for us.

And Ali, all that glitters today, huh? There it is.

ALI VELSHI, CNN ANCHOR: Today, if it glitters it's gold. This is more than $700 an ounce now. This is a fresh 25-year high. As you know, a lot of highs were set 25 years ago. So you're going to keep hearing that. But as long as gold continues to be the safe bet for investors, you can look for gold to keep surging. The jumps have been big. This all-time high -- the all-time high, which is $850, was set back in 1980. Of course, if you adjust for inflation, it's a lot higher than that, but that's the number we're looking for.

Now, John, parents are going to have to shell out a lot more money for the next version of Sony's PlayStation. It's announced the PS3 will sell for $499 when it hits shelves in November. It's late. It should have been out now, but it will be the big Christmas seller.

The 20 gig hard drive is $100 more expensive than Microsoft's Xbox. Sony is trying to extend its dominance in the $30 billion a year video game market. It currently accounts for two-thirds of all video came console sales.

Have a look at the markets, John. I'm waiting for that 11,722 on the Dow to be broken. It didn't happen today. So we're looking at a Dow that closed 55 higher to 11,639. That's just 83 points shy of the all-time high. The NASDAQ went the other way, giving up almost seven points to 2,338 -- John.

ROBERTS: Not quite a record, but still a pretty remarkable number, yes.

VELSHI: We'll be there.

ROBERTS: Ali Velshi, thanks very much.

Lou Dobbs is getting ready for his show right at the top of the hour. He joins us now. Lou, what are you working on?

LOU DOBBS, CNN ANCHOR: John, thank you very much.

Coming up at 6 Eastern, we'll be reporting on President Bush's struggles to come up with solutions to some of the biggest challenges facing this nation. Are the president's political opponents taking advantage of his collapsing poll numbers and political weakness? We'll have complete coverage for you tonight.

And among my guests, three of the country's top radio talk show hosts and outrage over reports the border patrol is tipping off Mexican government officials about American civilian volunteers monitoring our southern border. We'll have that report. And I'll have commentary on what I think of this administration and this Congress and their efforts to enforce our immigration and border laws.

We'll also hear from opposite sides of the controversy over whether or not illegal aliens are, in fact, stealing congressional seats from U.S. citizens. All of that and a great deal more coming up here at the top of the hour on CNN. We hope you'll be with us -- John.

ROBERTS: We certainly will, Lou. Looking forward to it. Thanks very much.

What if every time you made one of those yellow smiley faces, you had to pay someone else a licensing fee? Two companies want the exclusive rights over certain uses of that iconic image. But is that even possible? We'll have that answer in a moment.

First, let's get some background on the story from our Internet reporter Abbi Tatton -- Abbi.

ABBI TATTON, CNN INTERNET REPORTER: John, it's a symbol that we see all over the place. Two companies fighting for control over it. One of them going to be very familiar to viewers. It's Wal-Mart.

For the last decade, Wal-Mart has been using the smiley face symbol on its advertisements. It's all over their web site. It's on credit carts. It's become so synonymous with the retail giant that even anti-Wal-Mart sites like this union bash (ph) site have been using it as well.

Now, Wal-Mart wants exclusive rights to use this symbol in the retail market. But they're facing competition from, well, who else? Smiley World. Smiley World is a company that was set up about three decades ago by a Frenchman, Franklin Loufrani. He's been registering these all over the world. They're all taking this fight now to the U.S. Patent and Trademark Office -- John.

ROBERTS: Now, of course, anybody who's ever seen the movies knows that this was invented by Forrest Gump way back when.

Our senior Internet producer, Alex Wellen, is standing by now to help sort this all out.

Alex, you're a lawyer. You've practiced trademark law. Seriously, can either of these companies really own the rights to the smiley face, such a ubiquitous image?

ALEX WELLEN, CNN INTERNET PRODUCER: It seems silly to us. It does. But it's big business for Wal-Mart. Wal-Mart says, and they told me they spend billions of dollars linking up this smiley face to the retail market.

And then you have Franklin Loufrani, who is out there for decades associating its trademark all over the world. So they're fighting about it.

Here's a way to think about it. You know Apple computers. You see that apple, that little chunk out of the apple. When you see that and you think computers, you immediately think Apple. That's what Wal-Mart wants to happen when you see that smiley face. They say that you immediately think of them in the retail market. So they're fighting it back and forth.

ROBERTS: Walk us through the images behind you. What do they represent?

WELLEN: Right. So the first one is the Wal-Mart image. And that's like a stylized version of it. It has the two dots that are in the third -- upper third and the smile, they call it a parabola turned upwards. It may have lines, may not have the lines. The second image is closer to what Loufrani has. He has that on his web site.

But what Wal-Mart wants is the generic version, and they're very similar. Even this last image, the emoticon, the one we see in e- mails, that image there, that one could conceivably be protected if it had some sort of association with the retail market. Actually, Wal- Mart could say, "Hey, we have that emoticon, because it's in the retail market."

ROBERTS: Well, it just goes to show how much I know. I'm surprised at all this, because I thought that was trademarked a long time ago.

WELLEN: Yes, that's right. We'll continue to follow it.

ROBERTS: Thanks. All right. Do that for us, thanks.

Still to come, she is the lesbian daughter of the conservative vice president. Now, Mary Cheney tells her story and how she differs with her dad's boss.

And coming up in our 7 p.m. Eastern hour, national security advisor Stephen Hadley leaves his situation room to join us in our SITUATION ROOM. We'll talk about Iran, the Hayden nomination and more.

(COMMERCIAL BREAK)

ROBERTS: She's the daughter of the vice president, a woman whose private life became a public issue in the last election. Now she's speaking out about being out, as a lesbian in the political spotlight.

CNN's Mary Snow is in New York with the story. And Mary Cheney is saying now it's my turn.

MARY SNOW, CNN CORRESPONDENT: That's right, John. And that is the name of her new book. She has come under fire in the past from some gay activists for not being vocal about gay issues. But now she's speaking out in her new book. And in it, she calls the president's support of an amendment to ban same-sex marriage, in her words, fundamentally wrong, calling it a gross affront to gays and lesbians everywhere.

(BEGIN VIDEOTAPE)

DICK CHENEY, VICE PRESIDENT OF THE UNITED STATES: I, Richard Cheney, do sole solemnly swear...

SNOW (voice-over): Since Dick Cheney's first election as vice president, Mary Cheney has been very visible but largely silent about being gay, while serving as a top campaign aid to her father in both the 2000 and 2004 elections.

In "Now It's My Turn", for the first time, she gives her behind the scenes account of working to get the Bush-Cheney team elected, a team that opposes same sex marriage. Gay Republicans are applauding the move.

PATRICK GUERRIERO, LOG CABIN REPUBLICANS: We always hope and wish that people would come out in the midst of a culture war. But Log Cabin Republicans have always respected that Mary Cheney had a loyalty to her dad.

SNOW: In the book, Cheney writes that she almost quit the 2004 campaign when President Bush came out in favor of a constitutional amendment that would ban gay marriage. She decided to stay on, but the issue didn't go away and came up during key debates.

CHENEY: Four years ago in this debate, the subject came up, and I said then and believe today that freedom does mean freedom for everybody.

SNOW: And in the presidential debates?

SEN. JOHN KERRY (D-MA), FORMER PRESIDENTIAL CANDIDATE: We're all God's children. And I think if you were to talk to Dick Cheney's daughter, who is a lesbian, she would tell you that she's being who she was. She's being who she was born as.

SNOW: Mary Cheney's family came to her defense.

LYNN CHENEY, VICE PRESIDENT CHENEY'S WIFE: I'm speaking as a mom and a pretty indignant mom. This is not a good man. What a cheap and tawdry political trick.

SNOW: While Mary Cheney said her father always supported her, she chose not to join him on stage at the 2004 Republican convention, a convention where gay marriage turned out to be a big issue.

LARRY SABATO, UNIVERSITY OF VIRGINIA CENTER FOR POLITICS: You can argue that George W. Bush wouldn't have been elected to a second term without a gay marriage referendum in Ohio that increased Republican turnout just enough so that Bush could carry Ohio.

SNOW: Political observers expect Cheney's book to spark much discussion about gay marriage, but conservatives say it won't soften their strong opposition.

BOB KNIGHT, CONCERNED WOMEN FOR AMERICA: I don't think it will change the political debate in this country on marriage. People know that marriage needs protecting at the state and federal level, and I think the campaign is just beginning.

(END VIDEOTAPE)

SNOW: A long-time Republican advisor, Mary Matalin, held back the book. She says that Cheney's book shows the breadth and depth of conservatism -- conservatism -- John.

ROBERTS: Fascinating story. Mary Snow in New York, thanks very much.

Up ahead, your answers to our question of the hour. What does it mean when the Iraq war is more unpopular than the Vietnam War was at this point? Plus, national security advisor Stephen Hadley joins us in THE SITUATION ROOM. That's coming up in our 7 p.m. Eastern hour.

(COMMERCIAL BREAK)

ROBERTS: Here's a look at some of the hot shots coming in from the associated press, pictures likely to be in your newspaper tomorrow.

In Bangladesh, riot police use batons and tear gas to disperse crowds of young people, protesting against power outages in that nation's capital. Several people were injured.

In China, a cloning experiment. This female goat bonds with her new cloned -- her cloned newborn minutes after giving birth to it. However, the baby goat died about eight hours later.

In Pakistan, a heat wave. A nightingale tries to quench its thirst from a leaking tap. Temperatures have hit as high as 120 degrees in some areas, killing at least 25 people.

And in Russia, Victory Day. World War II vets celebrate the defeat of Nazi Germany.

And that's today's "Hot Shots", pictures often worth a thousand words.

The World Trade Center Memorial Foundation is suspending fundraising efforts until it can tell donors exactly what their money will build. Our Internet reporter, Jacki Schechner joins us now with details -- Jacki.

JACKI SCHECHNER, CNN INTERNET REPORTER: John, the memorial is called Remembering Absence, and you can see it behind me. This design was picked from some 5,200 entries.

The budget is $500 million. And it includes some 30-foot waterfalls and then some underground remembrances and memorials. But a recent budget estimate puts the cost closer to $972 million. This document now linked off the World Trade Center Memorial web site.

We spoke to them today. They said they're not going to do any more fundraising until they know exactly what that money is going to go towards. They're afraid that some features of this memorial might be cut.

We spoke to the governor's office today. They say they're just going to try to and reconcile these numbers. Everything, John, is still very much on track.

ROBERTS: Well, arguing so much about 9/11. Thanks very much, Jacki.

Coming up next, Jack Cafferty has your answers to our question of the hour. What does it mean when the Iraq war is more unpopular than the Vietnam War was at this point? (COMMERCIAL BREAK)

ROBERTS: Time now to check back in with Jack Cafferty and see what people are saying this afternoon -- Jack.

CAFFERTY: Thank you, John.

Three years into the war in Iraq, more Americans say it was a mistake to send our troops there than those who felt that way about the war in Vietnam at about the same stage. The question is, what does it mean when the Iraq war in more unpopular than the Vietnam War at this point?

Here's some of what you've written. We got a lot of mail.

Christine in Carol Stream, Illinois: "It's easy, Jack. It means the Republicans better pack their bags and book their vacations, because after November, they'll be leaving D.C. After all, if it weren't for these idiots letting Bush walk all over them, our young men and women wouldn't be in Iraq. In order to bring our troops home, we need to send Congress home."

Cliff in Amityville, New York: "Jack, during the Vietnam War, we had a draft. Now it's all volunteer. The Iraq war doesn't directly affect very many of us. Who's going to protest the war if it doesn't impact us directly?"

Kevin in Annapolis, Maryland: "If the American people had known that the Gulf of Tonkin incident was a lie, perhaps the numbers would have been more like today's. We're all looking at Iraq through the experiences and lessons learned from Vietnam."

Don in Ohio writes, "It's the Internet. We've practically every newspaper in the world at our fingertips, and we can get personal views from all over the world. If we had the Net back then, it would have all been over much sooner."

And Bob, a combat veteran in Vietnam in Dade City, Florida, writes, "A majority of folks remember the death toll of Vietnam and the ultimate, inevitable outcome and don't want the same numbers and same outcome in Iraq. People aren't buying into the Bush crap of 'God is on our side', because Buddha beat God in Vietnam, and Allah is kicking ass in Iraq. Other than that, very few people with the last name of Bush put any trust in the current cereal mix being put forward by the crew in Washington" -- John.

ROBERTS: Colorful e-mails out there today. Jack Cafferty, thanks very much. We'll see you again soon.

CAFFERTY: Did they do this kind of stuff on CBS?

ROBERTS: Once in awhile, Jack. Once in awhile.

CAFFERTY: OK.

ROBERTS: Thanks. We're back at 7 p.m. Eastern, just one hour from now. U.S. national security advisor Stephen Hadley is going to join us live to talk about Iran, General Hayden and more.

Until then, for Wolf Blitzer, I'm John Roberts in THE SITUATION ROOM. "LOU DOBBS TONIGHT" starts right now -- Lou.

DOBBS: John, thank you.

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