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The Situation Room

New Threat From North Korea; Will NASA Scrub Discovery Launch?

Aired July 03, 2006 - 19:00   ET

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


JOHN KING, CNN HOST: Kitty, thank you. And to our viewers, you're in THE SITUATION ROOM where new pictures and information are arriving all of the time. Standing by, CNN reporters across the United States and around the world to bring you tonight's top stories.
Happening now, a new threat from North Korea. Nuclear war and annihilation. It's 8:00 a.m. Tuesday in Pyongyang. The communist government is sounding even more provocative and more dangerous. Is the Bush White House ready to fight fire with fire?

Also this hour, the crack in the Discovery's flight plans. It's 7:00 p.m. at Kennedy Space Center. Where NASA officials are deciding whether it is safe to launch on the Fourth of July. An announcement could come any moment.

And dramatic new evidence of a senator's Iraq problem. Democrat Joe Lieberman has a new plan for political survival. It's 7:00 p.m. in Hartford, Connecticut, where Lieberman drops a bombshell on his party. I will ask him about the fallout that traces back his support for the war. Wolf Blitzer is off today. I'm John King. You're in THE SITUATION ROOM.

We begin tonight with a disturbing threat of nuclear war. North Korea says it has its finger on the nuclear button and is promising to push should it find itself the target of an American attack. Our Brian Todd is here now live with details. Brian?

BRIAN TODD, CNN CORRESPONDENT: John, the nuclear element here along with the unpredictable nature of this regime adds a more ominous tone to North Korea's message.

(BEGIN VIDEOTAPE)

TODD (voice-over): Even from an erratic hostile government, prone to exaggeration, the latest threat from North Korea is provocative and comes at a time of heightened tension. Through one of its newspapers, the regime of Kim Jong-Il says it's prepared to answer a preemptive attack with relentless annihilating strike and a nuclear war.

The newspaper says this is in response to recent U.S. military exercises in the region. Asked about the threat, a White House official said he wouldn't respond to a hypothetical situation. But the White House is concerned with North Korea's preparations to test a long-range ballistic missile that some analysts believe has the capability to reach the U.S. GEORGE W. BUSH, PRESIDENT: The launching of the missile is unacceptable. There's been no briefings as to what's on top of the missile. He hadn't told anybody where the missile's going.

TODD: U.S. intelligence officials believe North Korea has nuclear devices. But they don't believe the regime can deploy a nuclear warhead on a missile yet. Still, two former top Clinton administration officials say the president should be prepared to order a strike on the long-range missile site.

JAMES WOOLSEY, FORMER CIA DIRECTOR: It would be relatively easy to do. A few submarine launched cruise missiles, not nuclear, simply high explosive, could take this out very easily.

TODD: But the White House cautions about North Korea's response capability.

RICHARD CHENEY, VICE PRESIDENT: If you're going to launch strikes at another nation you better be prepared to not just fire one shot.

TODD: Weapons tests, war-like rhetoric, we've seen it before from Kim Jong-Il, who experts say is a master at forcing the world's only super power to worry, calculate, react.

DR. JERROLD POST, FORMER CIA PROFILER: And brinksmanship, really for the most part, has worked for him. He's crossed red line after red line.

(END VIDEOTAPE)

TODD (on camera): How far will he go this time? Unclear as always. But North Korea's top ally, China, has urged Kim Jong-Il not to go ahead with the missile test. And analysts say this could be an exercise designed to extract political concessions or to steal attention on the nuclear issue away from Iran. John?

KING: Safe to say, he has our attention. Brian Todd, thank you very much.

And right now, Israel is pounding away at sites in Gaza, making clear it wants a kidnapped Israeli soldier returned and that it is not willing to accept an ultimatum from Palestinian militants. Our John Vause is in Gaza City with the latest. John?

JOHN VAUSE, CNN CORRESPONDENT: John, right now, we can still hear the Israeli drones and helicopters over the skies over Gaza City. In a short time ago in the past hour, an air strike was hit the Islamic University here in particular, a conference hall there. It happened about 20 past 1:00 in the morning local time so the campus would have been deserted and for now there are no reports of injuries in that attack.

And to the north, Palestinian security sources say that some 30 Israeli tanks and armored personnel carriers have crossed the border from Israel into Gaza, around the town of Beit Hanoun. According to these witnesses, armored bulldozer are digging sand berms. If that's true, those sand berms are used as protective cover to ground forces.

Also there was an Israeli air strike in Beit Hanoun around the same time as those tanks were coming across the border. At least one person was killed in that air strike. And three others were wounded.

All of this comes as countdown to the deadline being set by the Palestinian militants currently holding the 19-year-old corporal Gilad Shalit. Less than four hours to go. Palestinian militants demanding an end to this military defensive and also want some 1,500 Palestinian prisoners currently being held by Israel to be set free and they warn if these demands are not met that they will consider this case closed but Israeli prime minister says there will be no negotiations for Palestinian prisoners. Israel, he says, will not be blackmailed.

John?

KING: John Vause for us in the early morning hours Tuesday in Gaza City, tracking this developing story. Thank you very much, John.

Also happening now, NASA officials weighing whether or not to launch space shuttle Discovery tomorrow. The decision could come this hour. The cause for concern is a small crack found on the same foam insulation blamed for the Columbia disaster. CNN's John Zarrella is live for us at the Kennedy Space Center with the latest. Hello, John.

JOHN ZARRELLA, CNN CORRESPONDENT: Hi, John. That's right. The mission management team got under way meeting about half an hour ago to decide what they're going to do, whether there will be a July 4th launch here tomorrow afternoon. At issue?

A crack that they found during a routine inspection in the overnight hours. Up at the top of the external fuel tank on a bracket that connects a pipe to that external fuel tank up around liquid oxygen area.

Now this crack is very small. It's about five inches long and only about 1/8th of an inch deep. But NASA management team decided you're going to see on that graphic there, exactly where that crack is. The management team decided they would send out their team of engineers. Decide whether they can fly as is, or if they are going to have to try to fix it. And that's what they're meeting now determine. The engineering teams have reported back. We also understand that the astronauts are involved and have probably by teleconference been talking with the engineers about what their feelings are about what the engineers have found, and what mission management team is deciding.

The astronauts' opinions carry great weight and certainly if they feel uncomfortable with flying tomorrow, that will be given great importance. John?

KING: John Zarrella for us at the Kennedy space station. John, we will of course check back with you if there are developments later in this hour. John, thank you very much.

And for a closer look online at that crack on the Discovery fuel tank, let's bring in our Internet reporter Abbi Tatton. Abbi?

ABBI TATTON, CNN CORRESPONDENT: John, that small piece of foam was lost from the external fuel tank here. This is a tank that stands 15 stories high. It acts as a backbone for the launch when that goes into effect shown here. Now this is all from the NASA Web site which has been constantly updated with these images of that crack and the piece of foam today. If the launch does go ahead tomorrow morning -- tomorrow, this site will be updated minute by minute from 8:30 a.m. at the virtual launch control center. Minute by minute updates there from early morning. John?

KING: Thank you very much for that update, Abbi and of course again we will continue to follow the developments on the shuttle launch this hour if there are new developments. Jack Cafferty, though, in the meantime, joins us from New York. Hi, Jack.

JACK CAFFERTY, CNN ANCHOR: I can't imagine they are going to let that thing go up with the crack in the foam unless they can figure out a way to fix it, can you?

KING: A lot of pressure to get this shuttle up. Only a few launches left to go up to the space station and do the work on that so a lot of pressure.

CAFFERTY: Remember the foam that came off of the last one?

KING: I do.

CAFFERTY: Huh?

KING: I do.

CAFFERTY: Yeah, well -- how much does religion matter when it comes to your vote for president? Well, according to a new poll it matters a lot. Fifty-four percent of those polled say they would not vote for a Muslim candidate for the White House, 37 percent would say no to Mormon, 21 percent wouldn't vote for an evangelical Christian, 15 percent said they wouldn't support a Jewish candidate and 10 percent said they wouldn't vote for a Roman Catholic.

Although there are no Muslims who are likely to run for president in 2008, Massachusetts Governor Mitt Romney who is considering running for the Republican nomination is a member of the Church of Jesus Christ of Latter Day Saints. The Mormon Romney cites privacy when it comes to his religions and says candidate should not be judged on their brand of faith. So here is the question, would a candidate's religion affect your vote for the White House? E-mail us your thoughts, caffertyfile@cnn.com or go to cnn.com/caffertyfile. John?

KING: Jack, we'll check in a bit later. Thank you very much. An interesting question, Governor Romney has been working hard. And if you want a sneak preview of jack's questions plus an early read on the day's political news and what's ahead here on THE SITUATION ROOM, sign up for our daily e-mail alert. Just go to cnn.com/situation room. Coming up, she says she was her father's favorite. Now Saddam Hussein's oldest daughter is on Iraq's most wanted list. So is her mother. Tonight, the story of Saddam's women targeted.

Also ahead, Senator Joe Lieberman's plan N, the former vice presidential nominee lays the groundwork for a possible primary loss. I will ask him about his fight to keep his job, the Iraq connection and the big jolt to his party.

And a cross to bear. We'll tell you about a new ruling in the culture war over religious symbols on public property. Stay right there. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

KING: A former U.S. soldier with the 101st Airborne Division is now charge with the rape of an Iraqi women and the killing of her and her family. CNN Pentagon correspondent Barbara Starr is following this troubling story for us.

BARBARA STARR, CNN CORRESPONDENT: John, disturbing allegations that U.S. soldiers murdered an Iraqi family month ago and then tried to cover it up.

(BEGIN VIDEOTAPE)

STARR (voice-over): Twenty-one-year-old Steven Green appeared in federal court in North Carolina on charges he raped and murder a young girl and murdered her family in March while he served on active duty with 101st Airborne Division in Mahmodiya, Iraq.

According to an FBI affidavit he was recently discharged due to a personality disorder. Federal prosecutors detailed the case that came to light only after soldiers from the unit had a stress counseling session following the recent murder of Privates Kristian Menchaca and Thomas Tucker. One soldier told investigators, four soldiers went to a house to rape an Iraqi woman on March 12th. But first, they drank alcohol and some of them changed into dark clothing, according to the affidavit.

Court documents also allege that when they got to the house, three of the family members were taken by Green into a bedroom and shot. One was a girl estimated to be 5 years old. And her parents.

According to the criminal complaint, witnesses told investigators that Green said, quote, "I just killed them, all are dead."

Witnesses told investigators that, then, Green and another soldier raped the family's older daughter. The same witnesses told investigators they saw Green shoot her in the head at least two times.

(END VIDEOTAPE)

STARR: (on camera): So far, Green has not entered a plea. And his attorney did not return a phone call from CNN seeking a comment. This is the fifth case in recent weeks in which U.S. troops are said to be involved in the killing of Iraqi civilians. John?

KING: Barbara Starr at Pentagon.

They have notable names, notorious connections and now they're in very bad company. A daughter and a wife now sought after. And the father/husband can only watch what happens. Our Zain Verjee is here now to explain.

Zain?

ZAIN VERJEE, CNN ANCHOR: John, Saddam is in jail. His sons Uday and Qusay are dead. Target now, his first wife and his daughter. They're on an Iraqi list of the 41 most wanted in Iraq. A list that includes al Qaeda's new leader in Iraq.

(BEGIN VIDEOTAPE)

VERJEE (voice-over): They were among the most important women in Saddam Hussein's life. His wife, Sajidah (ph) and his oldest daughter, Ragad (ph).

UNIDENTIFIED MALE: Good-bye, Saddam.

VERJEE: When the U.S. invaded Iraq in 2003, Ragad fled to Jordan with her sister and Sajidah to Qatar.

After Saddam's capture, CNN interviewed Raged Hussein who insisted her father remain the legal and elected president of Iraq.

Saddam is behind bars now and on trial. But Iraq's government says his family is trying to destabilize Iraq. Iraq's national security adviser, Mowaffak al-Rubaie, tells CNN that there is a mountain of evidence to prove the women are funding Sunni insurgents in Iraq.

Ragad Hussein, he says, meets with former Baathists and intelligence officers, has donated money to help set up a new Baath Party, has written letter to terrorists in Iraq and has transferred money to one terrorist organization in Iraq.

Saddam's first wife Sajidah Hussein is believed to still be in Qatar and al-Rubaie says is funding the insurgents with Saddam's money.

One of Saddam Hussein's lawyers says the Iraqi government has no evidence to prove his first wife and daughter are involved in the Iraqi insurgency. And Jordan says Saddam's daughter Ragad is a guest of the royal family.

NASSER JOUDEH, JORDANIAN SPOKESMAN: She and her children are here for humanitarian reasons. She was asked not to pursue any political activities.

(END VIDEOTAPE)

VERJEE: Ragad has taken a lead role in organizing Saddam's legal defense. Iraq's national security adviser also added that Iraq has started the process for a formal extradition for Ragad and Sajidah as well as the others on the list not in Iraq. John?

KING: Fascinating story. Zain Verjee, thank you very much.

And still to come tonight, in THE SITUATION ROOM, the New Jersey governor's big gamble. State government shut down. And lawmakers giving marching orders. Will casinos be caught in the crossfire?

And are carmakers adding to your pain at pump or are they part of the solution? CNN received unprecedented access to one company's testing facilities. A special report coming up right here on THE SITUATION ROOM.

(COMMERCIAL BREAK)

KING: There are new developments tonight in an ongoing battle over a cross at a San Diego war memorial with the Supreme Court now stepping in. CNN's Chris Lawrence is live for us in Los Angeles with the latest. Hi, Chris.

CHRIS LAWRENCE, CNN CORRESPONDENT: John, the city of San Diego was all set to start dismantling this huge Christian cross as soon as Wednesday. But a last-minute Supreme Court decision will give them a few more months to make their case.

Take a look. This cross is 43 feet high. And it has overlooked the city of San Diego now for more than 50 years. It's part of a veteran's war memorial that sits on public land. And that's the problem. One veteran who is an atheist sued the city on the grounds that it crossed the lines separating church and state.

More than one federal court agreed. In order for the city to move the cross by August or start paying fines of $5,000 day. City officials and California Congressmen Duke Cunningham and Duncan Hunter fought back and got a deal done to transfer the cross to the federal government.

Now that would clear the state of any liability but that transfer may not be legal. So what the Supreme Court did was give the city of San Diego more time to file legal appeals without having to take down the cross.

(BEGIN VIDEO CLIP)

MAYOR JERRY SANDERS, (R) SAN DIEGO: Today by no stretch of the imaginations a victory in this case. It is merely an opportunity to retain the integrity of our memorial and hopefully the high court will allow us to make our case.

TONY GALVIN, VETERAN: It gives us a little more time to work this out. This monument to stay as is. It's been here for a long time. This is what 75 percent of the people of San Diego want. They want this monument it stay here as is.

(END VIDEO CLIP) LAWRENCE: Now, today's decision is no guarantee that the Supreme Court will hear the case. But it gives city officials more hope than they had this time yesterday. John?

Chris Lawrence, an interesting story. The intersection of God and politics, always emotional. Chris, thank you very much. And Zain Verjee joins with a look at other news making headlines.

Hi, Zain.

VERJEE: Hi, John. A government spokesman in Spain says investigators believe today's deadly subway train crash was probably due to speed and a broken wheel and not terrorism. Dozens of people died when the train derailed and overturned in a tunnel in Valencia. The accident happened just days before Pope Benedict is due to visit Valencia. Pilgrims are already arriving to the city by sea.

Mexico's presidential election comes town a recount. Election officials say the race is too close to call and will begin reviewing ballot boxes on Wednesday. Unofficial counts give the ruling party candidate Felipe Calderon a razor advantage of 380,000 votes. His leftist opponent Andres Manuel Lopez Obrador vows to scrutinize every last ballot.

New Jersey's closed for business, more specifically, much of the state's government shut down. Governor Jon Corzine has called a special session the state's assembly tomorrow morning to resolve the budget impasse that caused the shutdown. His executive order says the session will not end until the matter's settled.

And you might like to be there, John. A spectacular view for passengers aboard China's first train from China to Tibet. The Beijing-to-Lhasa train arrived today on the final leg of its two day maiden journey on the world's highest railway. It's so high, almost 17,000 feet that many passenger had to use extra oxygen. The project took 40 years from inception and cost $4.2 billion and involved about 100,000 workers. John.

KING: Four point two billion dollars. Still looks like a train ride worth taking. Do you like trains?

VERJEE: I do, I like trains, planes and automobiles.

KING: Maybe when Wolf is back, we can give you an assignment to the Tibet train ride.

VERJEE: OK.

KING: Zain Verjee, thank you very much.

Just ahead, he's facing a tough primary battle to keep his Senate seat. Now, a controversial move that he calls an insurance policy. Senator Joe Lieberman will join us right here in THE SITUATION ROOM.

Plus, we'll show you what one U.S. automaker is doing, that may help, may help reduce your pain at the pump. Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

KING: You're in THE SITUATION ROOM. Wolf Blitzer's off today. I'm John King.

Tonight, Senator Joe Lieberman is taking no chances. He's got a new plan to get on the November ballot in Connecticut if he loses the Democratic primary next month. It's a fresh sign of the political price he's been paying for supporting the Iraq War.

Our Mary Snow is in Hartford for us tonight. She joins us now with the very latest. Mary?

MARY SNOW, CNN CORRESPONDENT: Well, John it is an extraordinary move and Senator Joseph Lieberman has served 18 years in the Senate. He has never even faced a primary in that time, let alone have to come up with the plan B.

(BEGIN VIDEOTAPE)

SNOW (voice-over): In political circle, it's considered unprecedented. Veteran Democrat Joseph Lieberman, Al Gore's 2000 presidential running mate who even made a failed budget to 2004, announcing today a backup plan should he lose to his Democratic challenger, political novice Ned Lamont, in next month's primary.

SEN. JOSEPH LIEBERMAN, (D) CT: I have made a decision it allow signatures to be collected that will enable me to appear on the November ballot as an individual Democratic candidate for re-election to the United States Senate.

SNOW: Lieberman says, if he loses, he will run as a petitioning democrat. It avoids a potential political crisis if he broke with the party brass and ran as an independent. Democratic challenger Lamont slammed the move.

NED LAMONT, (D) CONNECTICUT SEN. CANDIDATE: If he wants to run as a Democrat, stay as a Democrat and go through the primary and stop gaming the system.

SNOW: Lieberman insists he'll win primary but admits the support of the Iraq War has cost him politically in this very blue state. In May a former supporter confronted him on the issue during our interview with him.

UNIDENTIFIED FEMALE: Why you are betraying your voters?

LIEBERMAN: I'm not.

UNIDENTIFIED FEMALE: Yes you are.

LIEBERMAN: Look at my record.

SNOW: Lamont's supporters have used President Bush's embrace of Lieberman in 2005 is ammunition against him, claiming he is a Bush Democrat.

LIEBERMAN: My opponent is running more against George Bush and the Iraq War than he is running against me and against my record.

SNOW: Not true says Lamont's camp. They point to his vocal stance on issues like healthcare and energy.

LAMONT: I got into this race because are there issues they really care strongly about and Joe and I are on different sides of those issues and I plan it take that message down to Washington.

(END VIDEOTAPE)

SNOW (on camera): And this Thursday, the candidates will have their first chance to discuss those issues in their first debate here in Hartford. John?

KING: Mary snow on the ground for us tonight. The day's most fascinating political story, Mary, thank you very much. And Mary Snow, of course is part of the best political team on television, CNN, America's campaign headquarters.

Now, let's hear more from Senator Joe Lieberman in an interview you will only see here on CNN.

(BEGIN VIDEOTAPE)

KING: Sir, as you know, you have created quite a stir not only in your home state of Connecticut but across the Democratic Party with this announcement today. How would you answer critics, especially from the left of the party, who are accusing you of blind arrogance, saying you are putting self preservation over your loyalty to a Democratic Party that has not only supported you in Connecticut, but supported you nationally as its vice presidential nominee just six years ago?

LIEBERMAN: Well, John, I would definitely put my loyalty to the Democratic Party and my service to the Democratic Party up against most of those who are saying those things. I am a loyal Democrat and I am going to work my heart out to get the Democratic nomination for the U.S. Senate this year and the primary on August 8th.

KING: Senator, let me jump in -- these critics are saying if you are a loyal Democrat and you're running in the Democratic primary, then why won't you be bound by the results? Why won't you honor the votes of the Democrats if you lose and just support your opponent?

LIEBERMAN: Let me give you two reasons. The first is I am very loyal to the Democratic Party, but I have a loyalty higher than that to my party. That is to my state and my country. And I feel so deeply that I can do a better job for my state and my country than either the Democratic or Republican opponents against me that I'm prepared, if necessary, to take my fight to November as a petitioning Democratic candidate.

KING: You say a petitioning Democratic candidate, but as you know, you would be on the ballot as unaffiliated. I want you to help me through the positions you have put some of your friends in. The leadership, Chuck Schumer, who runs the Democratic senatorial committee, Harry Reid, who of course is the Democratic leader -- they are supporting you in the primary.

Should you lose that primary, they won't answer the question right now, they say we will get there if that happens. But sources are telling our Dana Bash that they would feel most likely that they would have no choice but to support your opponent as the Democratic nominee in the primary.

Would you expect that to happen? And have they told you they would have to do that, sir?

LIEBERMAN: No. John, let me make clear that I am a Democrat and I will remain a Democrat. I am not going to be unaffiliated if I have to petition my way onto the ballot. I'm going to be a Democrat and I will caucus with the Democrats and look forward to caucusing with the Senate Democratic majority.

I spoke to Harry Reid this morning, I told him about it. I spoke to Chuck Schumer yesterday. They expected this, they understand. I am doing it early to get it out of the way and then I hope I never have to file these petitions, which are due the day after the primary. And they are working their heart out, as are all my colleagues in the Senate Democratic caucus to return me as the Democratic nominee to the Senate next year.

KING: But I assume you are going this petition route as a backup option because you have a fairly decent sense that you might lose this primary?

LIEBERMAN: Well here's what I feel. I'm in a competitive race and I'm running against a person who by his own calculation is worth as much as $300 million.

One, who knows who will turn out on a hot August day in a primary here? Second, who knows how many big checks my opponent will write between now and then. So I am saying that I want to win the Democratic primary. I am working my heart out for it. I am actually upping my commitment to the primary in every way.

But if I don't, I want to put my case before all the voters of Connecticut in November because they are the ones who have served for 18 years, and they are the ones who have elected me on three previous Novembers.

KING: Why have parties and why have primaries if the candidates who may be backed by the establishment, but perhaps not win the votes of the people who turn out on primary day can just take out insurance policies and stay on the ballot even if they lose the primary? Why have a party then?

LIEBERMAN: Right this is a very important question. And I would answer it this way, John. This challenge to me is obviously a challenge to my record of serving the state of Connecticut and the United States of America, and it asks the voters of Connecticut to decide which one of us, my challenger or I, could do a better job for them in the six years ahead.

But it also raises questions about what do we mean by political parties? And what kind of politics do we want to have? And when I say that, here's what I mean. The Democratic Party has always been at its strongest when it welcomed a diversity of opinions.

My opponent is campaigning against me on one issue: Iraq. I have the support of a host of progressive groups: the labor movement, the environmental movement, the Human Rights Political Action Fund, which is the advocacy group for gay and lesbian Americans, Planned Parenthood. I could go on and on.

I am a committed, loyal Democrat. And the question that is being asked of the Democrats here in Connecticut is: will we impose a litmus test? The same kind of litmus test that we criticized the Republicans for imposing, particularly on one issue on which I have taken a principal stand, clearly not one that is to my political advantage, which is the war against terrorism.

And I'm taking it because I believe that it is best for the safety and security of our country and our families. So that's what's on the line here.

KING: Senator Lieberman of Connecticut, Joe Lieberman of Connecticut, I could go on for another hour sir, but we are out of time. I suspect this debate that you have started in your state and across the Democratic Party will continue in the weeks to come. Sir, thank you very much for your time today.

LIEBERMAN: Thank you John, happy Fourth.

(END VIDEOTAPE)

KING: For more now on the dramatic stir caused by the senator, let's bring in our Internet reporter Jacki Schechner for reaction to this story online. Jacki?

JACKI SCHECHNER, CNN INTERNET REPORTER: Well John, liberal bloggers have been unhappy with Senator Lieberman for some time. And today's announcement doesn't help matters. You can take a look at this guy here. This is Marcos Melitas (ph) and he appeared in an ad for Ned Lamont, Lieberman's primary challenger in May. He runs the biggest liberal blog, DailyKos.com. They're also raising a tremendous amount of money online for Ned Lamont. You can see here, a little over a quarter million dollars raised online.

As for liberal blog reaction locally, we're seeing headlines like this today, "Joe Jumps Ship." There's discussion of Lieberman not speaking for the Democratic Party. If primary voters are going to vote against him, why would he then go ahead and continue to run? Also conversation about how he can't use the name Democrat, if he becomes an Independent, he can't take the name with him. Now that's resonating nationally as well. We're also seeing a lot of conversations about what now? What is Senator Chuck Schumer going to did as head of the DSCC? This is a conversation that continues to grow, John, as the day goes on and we're going to continue to keep an eye on it.

KING: Well I suspect it will grow and grow. Jacki Schechner, thank you very much.

And up ahead tonight, a veteran journalist's unique insight into the Iran nuclear standoff and the looming deadline. I will talk to Seymour Hersh of the "New Yorker." Plus, skyrocketing gas prices prompt new thinking among automakers. We'll show you what they are doing to try to help you save money.

(COMMERCIAL BREAK)

KING: The Bush administration and United Nations' diplomats are warning Iran to make a decision on the incentive package being offered to Tehran to stop enriching uranium. They say Iran could face sanctions unless it accepts that offer by July 12th. But does the Bush administration have much more in its pockets than just sanctions?

The "New Yorker's" Seymour Hersh has written extensively about planning for military action in Iraq and now he says, Iran.

(BEGIN VIDEOTAPE)

KING: Sy Hersh, as you know, the administration is already trying to respond to your article, although it is interesting that the official line at the Pentagon is no comment. The White House, we're still waiting for official comment there as well.

But you make some pretty weighty allegations. I want to start with one by quoting from the article about the nuclear option, that you say the administration has been bent on in this.

I want to read from the article. "In late April the military leadership, headed by General Pace, achieved a major victory when the White House dropped its insistence that the plan for bombing campaign include the possible use of a nuclear device to destroy Iran's uranium enrichment plant at Natanz, nearly 200 miles south of Tehran. The huge complex includes large underground facilities built into 75-foot deep holes in the ground, designed to hold as many as 50,000 centrifuges. Bush and Cheney were dead serious about the nuclear planning."

A former senior intelligence official told you, according to the article, "And General Pace stood up to them." Then the word came back, "OK, the nuclear option is politically unacceptable."

That's a pretty weighty allegation to lay out in this article, that you have the president and the vice president of the United States leaning in favor of a nuclear option at a time, when as you well know and discuss in the article, it would have interesting geopolitics having any military action at all. SEYMOUR HERSH, THE NEW YORKER: It's an option. They tell the military planners we want a decisive plan, we want to go from certainty to uncertainty. And the one way you come up with a plan that can guarantee knocking out an underground facility that is buried pretty deep in hard rock as deep as 75 feet, as the story said, is one way you come up with a plan that says let's use a low-yield technical nuke.

And then you go back to the White House and you say, well look, we put that in the plan. This is this winter. Nobody's going to use it, let's take it off. And the White House refuses.

And then the senior generals go to the president and say, look, if you don't get this out of the plan, I'm going to lose some people, I am going to have some resignations in my staff. Some senior guys are morally appalled by this. And nobody is going to quit publicly; they're just going to retire early, some of the generals.

And so then the White House says, OK, take it off. And instead, now we have, as I was writing about this week, the Air Force has come up with a very strong sort of concentrated plan. And these are just plans for taking action in case Iran doesn't come through in the talks.

KING: Just plans. But as you discussed these plans, according to your sources, you're going through some of the arguments we went through with the Iraq deployment as well.

And I want to read from your article. "Secretary of Defense Rumsfeld and his senior aides really think they can do this on the cheap, and they underestimate the capability of the adversary." So once again, we're talking about civil war within the Pentagon, if you will, over Secretary Rumsfeld trying to do things on the cheap, as you put it?

HERSH: There is a lot of anxiety and a lot of hostility towards Rumsfeld, as everybody knows. We've seen it. We had a bunch of generals going public just three or four months ago, two months ago actually in April.

And so there is a lot of people who don't like his style, don't like his management style, and certainly there was a lot of objections before the Iraq war. The military wanted more troops. We know about it. General Shinseki, the former chief of staff of the Army, asked for a couple hundred thousand, and he was sort of slapped around.

I think they don't want to do again -- they don't want to fail this time like they did before. This time, they're making it clear, they're going to tell the command authorities, if you want to go and you want to bomb, you are going to have to be prepared that it won't work and we're going to need boots on ground. We don't have the Marines and the soldiers.

The real issue, John, the real underlying issue in all of this that's got everybody on edge in the Pentagon, many of them, is simply that there is no intelligence that Iran is actually going ahead and has a secret nuclear weapons facility.

KING: You say there is no intelligence they have this facility, and yet you also write this about the president, who has of course told the American people for months and months and months that he wants diplomacy to work.

But you write, "several current and former officials I spoke to express doubt that President Bush would settle for a negotiated resolution of the nuclear crisis. A former high level Pentagon civilian official, who still deals with sensitive issues for the government, said that Bush remains confident in his military decisions."

I sat down with the vice president just a week ago, and he said, no, diplomacy, diplomacy, diplomacy. You think the president and the vice president are being disingenuous?

HERSH: No, what I think is -- it is a little more complicated than that. I think what the president has done in the current negotiations, the reason why the Iranians are not running to the table -- the Iranians, like the rest of the world, were delighted when the White House announced -- Condoleezza Rice announced I think May 31st, the secretary of state, that we're joining the talks, we're willing to, but there is a precondition. And the precondition, it turns out to be a stopper.

The precondition is that Iran stop all of its nuclear weapons development or its nuclear development. Iran says they're only doing peaceful use. Iran stop all enrichment of uranium right now, even though they're doing low-level stuff. They're not enriching to a weapons grade; they're enriching to enough -- of a high enough concentration to run a commercial power reactor.

But the president says they have to stop everything, and it has to be verified. And this has to be absolutely definitively done before he's going to come to the table.

This is a stopper. And that's what I meant when there are some people -- the context of that, there were some people who believed that he's setting such a high threshold, he's never going to get them to the table. And then sort of, you know, deja vu Iraq all over again, he can say, look, I've tried, we've gone to the U.N. This didn't happen. That's what their fear is, that there is some sort of a repeat pattern here.

KING: And we'll note for the record, no comment from the Pentagon. We're unfortunately out of time, but Seymour Hersh, thank you for joining us in THE SITUATION ROOM.

(END VIDEOTAPE)

KING: Up ahead, in an era of acute pain at the pump, one of the nation's biggest carmakers is shifting gears in a big way. General Motors goes back to the drawing board to find real fuel-saving alternatives. Have they done it? It's a story you'll see only here on CNN. And later, your e-mail to Jack Cafferty's question of the hour. Would a candidate's religion affect your vote for the White House? You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

KING: Are food, festivities and fireworks your destination for July 4th? It's going to cost you. Right now the cost of a gallon of regular unleaded is $2.93. That's up almost 10 cents from a month ago. And if you thought that would make more people stay home, well, think again. AAA says more than 40 million people will be traveling for the holiday, and that's a record.

So how much do car companies then care about your gas grievances? At least one of them wants you to know, we feel your pain. It is a story you'll see only on CNN.

(BEGIN VIDEOTAPE)

KING (voice-over): The Chevy Impala, a household name from the glory days of General Motors, and a test case now as the struggling automaker tries to remake its image and adapt to a market reshaped by high gas prices.

At first glance, this 2007 model looks the same as the 2006. But watch the dashboard. Six cylinders of engine strength as it accelerates, but a seamless shift to just three cylinders and dramatically better mileage as the car reaches coasting speed.

(on camera): For my July 4th family trip, and I'm driving a few hundred miles on the highway, with this as opposed to the standard V6 that's available today, what am I going to save in terms of fuel?

GARY HORVAT, GENERAL MOTORS ASSISTANT CHIEF ENGINEER: For every 11 gallons, you get one free.

KING (voice-over): G.M. calls its cylinder deactivation technology active fuel management, and hopes to sell two million cars with this efficiency over the next two years, just one piece of its effort to reach consumers looking to save at the pump, and of its broader, urgent effort to convince those who equate G.M. with gas- guzzling clunkers to take a fresh look.

The stakes for the world's largest automaker are enormous. G.M. lost nearly $11 billion last year, and is confronting a long list of critics who say when it comes it cutting America's dependence on foreign oil, G.M. is the problem, not the solution.

BRENDAN BELL, SIERRA CLUB: They sell some of the worst gas- guzzlers on the road, like the Hummer H-2, like some of the GMC Yukons. And they're very specifically going out and trying to delude the American public that they are making progress when they are actually taking us backwards.

KING: G.M.'s aggressive market of SUVs led "New York Times" columnist Tom Friedman to label the company "dangerous to America's future."

(on camera): We're at the July 4th holiday period where Americans are getting in their cars, they're driving to the beach, they're driving to their vacation, and you have people like him who say you are part of the problem.

RICK WAGONER, GENERAL MOTORS CEO: We have more vehicles that get more than 30 miles per gallon on the highway than any other manufacturer, or our commitment to ethanol, or the upcoming launch of several new hybrids. If we get that story out and tell it, than I think any perception issues will be handled in the right way.

KING (voice-over): G.M. granted CNN unprecedented access to its testing facilities as part of an effort to prove its critics wrong, show off a 2007 product line the company says offers a number of options for consumers looking to save at the pump.

This yellow gas cap means the vehicle can run on E85, ethanol. G.M. and other U.S. automakers last week promised to double annual production of these flex fuel cars, the most high-profile option for those looking to reduce U.S. dependence on foreign oil. But of the 170,000 gas stations in the United States, only about 700 sell E85.

BELL: Ninety-nine percent of those vehicles never run on a drop of ethanol. These vehicles don't actually cut our dependence on oil. What can make a difference is investing in fuel economy.

KING: For all the attention on ethanol and talk of new fuel sources like next-generation batteries or hydrogen, to visit G.M. is to reminded gas is the fuel of the foreseeable future.

So as they oppose new mileage mandates from Washington, carmakers are highlighting new technologies like direct fuel injection, an efficiency already common in diesel engines, to make modest improvements in fuel efficiency. Six speed transmissions instead of the usual four means about an extra mile per gallon.

BOB VARGO, GENERAL MOTORS: So that's about three million gallons of gas that we could save for the model year 2010.

KING: And after lagging behind Toyota and Ford, G.M. is making a major investment in hybrids.

(on camera): This is the first G.M. ...

UNIDENTIFIED MALE: This is the first high-volume hybrid that we'll have on the market.

KING: (voice-over): The Saturn VUE hybrid will be available in a few weeks.

(on camera): And how does that stack up the competition?

UNIDENTIFIED MALE: We will be the lowest sticker price hybrid in the marketplace.

(voice-over): The green eco light means the VUE is performing at above average fuel efficiency.

UNIDENTIFIED MALE: The engine is now off. You're running purely on electric mode now, so you're sitting here as long as you want with electric mode. And then if you lift your foot off the brake, it will start the engine up and ready to go.

KING: New hybrid sedans will follow the VUE, and the bigger Tahoe hybrid debuts next year, as a company that admits it is late to this growing market hopes its new entries can create a buzz, to help G.M. gain a better footing with consumers and to make an environmental statement or at least looking to make their gas money go a little further.

(END VIDEOTAPE)

KING: And tomorrow, we'll show you a sneak peek at a car that's a very big deal for General Motors. I got an exclusive look at GM's new hydrogen-powered crossover vehicle. They call it the Sequel. G.M. says it can run 300 miles per hydrogen supply and it only emits water. I was not only the first journalist to test drive it, but the first non-G.M. employee to drive it. More on that treat tomorrow.

Still ahead, Jack Cafferty with the question of the hour. Would a candidate's religion affect your vote for the White House? We'll hear your e-mails. And you're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

KING: Here's a look at some of the hot shots coming in from the "Associated Press," pictures likely to be in your newspaper tomorrow.

Nablus in the West Bank. Israeli army elite troops raid Hamas officers -- offices, part of an overnight operation.

Livingston, Montana. Two-year-old Gracie Dunlap (ph) participates in a parade. Attached to the wagon, a photo of her uncle, who's serving in the U.S. Army in Afghanistan.

Pope Air Force Base, North Carolina, a joyous reunion captured by the "Fayetteville Observer" newspaper. Air Force lieutenant Scott Dwzyer (ph) and his wife Amy (ph) embrace after his return from duty in southwest Asia.

And here in Washington at the National Zoo, Tai Shan, whose name means peaceful mountain, enjoys the afternoon in his favorite tree. His first birthday is next weekend. And that's today's Hot Shots, pictures worth a thousand words.

And Jack's in New York with "The Cafferty File." Hello, Jack.

CAFFERTY: That panda looks like he got hold of a little bad bamboo there.

According to a "Los Angeles Times"/Bloomberg poll John, 54 percent of Americans said they would not vote for a Muslim presidential candidate. Thirty-seven percent of those interviewed would say no to a Mormon and similar but smaller percentages apply to Jews, Catholics, other conventional organized religions.

So the question we're asking is, would a candidate's religion affect your vote for the White House?

Judith in Clinton, Tennessee, writes: "If a candidate will increase border security, decrease excess spending, and work to keep American jobs from becoming an endangered species, I would vote for such a person regardless of his religious beliefs. If such a person even exists."

Carol in Cedar City, Utah: "I live in Utah. I have Mormon relatives. I would not vote for a Mormon. I'm incensed that the Latter Day Saints church tells their members how to vote, urges them to write and/or e-mail their congressman and push the Mormon positions on issues. I don't know why they are allowed tax-exempt status with their constant meddling in political affairs."

Reid, a fifth generation Mormon in Saratoga, California: "Being a Mormon as a presidential candidate would not bother me at all. Being a Republican would."

Roger in Palm Harbor, Florida: "Yes, a Jew might support Israel, a Mormon might call on God to advise him, a Christian might try to stop abortions. Thank God we have a man like Bush as president."

Aaron in Watertown, Wisconsin: "Religion's probably one of my lowest priorities when picking a candidate. They can be Jewish or Muslim or Buddhist or Scientologist or one of those indigenous Amazonian tribal faiths. If they can have the best policy, they can expect my vote."

John in Baltimore: "The core values of most religions are something I would find attractive in a candidate in judging his or her morality. People that believe in nothing are the ones we should worry about."

Karen (ph) in Eugene, Oregon: "Only if he makes it a political issue by mentioning it. It should have nothing to do with his ability to run this country."

And Christian of Huron, Ohio writes this: "No. Morals and fairness and the ability to tell write from wrong are what's important. There is presently clear evidence that these traits are not always associated with claims of being religious."

John?

KING: A pretty open area there. I thought some people might pull their punches.

CAFFERTY: No, they're pretty straight up. They don't try and get around this because we don't read their letters if they get to be squirrely with us.

KING: There you have it. Provocative e-mails from Jack Cafferty. Jack, have a great night. I hope we see you tomorrow? CAFFERTY: All right sir, I'll be here.

KING: See you on the fourth. And thank you for joining us. I'm John King. Up next, "PAULA ZAHN NOW."

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