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The Situation Room
President Bush Rejects Showdown With North Korea over Missile Defiance; Dueling Hearings in San Diego over Border Security; Casinos are Latest Target of New Jersey Government Shutdown
Aired July 05, 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: Thank you, Lou, and 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 bring you tonight's top stories.
Happening now, President Bush rejects a one on one showdown with North Korea over its missile defiance.
It's 7:00 p.m. here in Washington where the White House is trying not to appear rattled by the saber rattling. We're trying to follow all the diplomatic fallout and scenarios for military action, if it ever it comes to that.
Also this hour, road warriors over immigration. It's 4:00 p.m. in San Diego, one of the sites of dueling hearings driving home the great divide over border security. And anger by some top officials, including the mayor of New York.
And all bets are off. It's 7:00 p.m. in Atlantic City where casinos are the latest target of a New Jersey government shutdown. Will it pay off for the state or break the bank. Wolf Blitzer is off today, I'm John King. You're in THE SITUATION ROOM.
Tonight, the Bush administration says the United States and its allies are united in their goal to keep North Korea's nuclear program bottled up. Military and intelligence experts are poring over every bit of information about the volley of missiles launched by North Korea yesterday. The communist government may not have threatened the United States this time but what about next time?
Our national security correspondent David Ensor reports.
DAVID ENSOR, CNN CORRESPONDENT: John, no question about it, North Korea has been one of most closely watched places on earth by U.S. intelligence in the past days. And now they're also watching what the North Korean media is saying or not saying.
(BEGIN VIDEOTAPE)
ENSOR (voice-over): On North Korean television the announcer said nothing about the missile firings and nothing about the failure of the Taepodong-2 long-range missile within 40 seconds of launch.
JOSEPH CIRINCIONE, CENTER FOR AMERICAN PROGRESS: This backfired. This blew up in Kim Jong-il's face.
ENSOR: Said one U.S. official, it sounds like they're thinking about how to play this.
BUSH: One thing we have learned is that the rocket didn't stay up very long and tumbled into the sea.
ENSOR: U.S. officials and analysts say it clearly did not go as planned.
CIRINCIONE: We had six scuds and one dud fired. All of them landed in the Sea of Japan. All of them thousands of miles away from America's shores.
ENSOR: U.S. intelligence and the Pentagon have been watching the Taepodong launch pad for weeks, with spy satellites, aircraft, and surveillance ships. Officials say North Korea has more Taepodongs, though their reliability is now in question.
DAVID KAY, FORMER UN WEAPONS INSPECTOR: I think the most interesting side bar story is going to be what happens in Pyongyang? Who vouched for the reliability of this missile, and what are the consequences now that it failed?
ENSOR: Some analysts say the goal was less to test, more to make a statement.
JIM WALSH, INTERNATIONAL SECURITY ANALYST, MIT: The fact that they shot off another, what, six other short-range missiles that have nothing to do with sort of verifying or collecting data shows that it really is about politics, less about security.
ENSOR: But other analysts and intelligence officers say don't assume Kim Jong-Il missile launches were foolish from his point of view.
(END VIDEOTAPE)
ENSOR (on camera): North Korean scientists will learn from the failure of the Taepodong and the other tests. And Kim has reminded the world how serious the risks of war with North Korea could be and how limited the military options are. John?
KING: Thank you, David, and now to the White House's response to North Korea's missile taunt. There's been a clear emphasis or measured words and international diplomacy. Here's out White House correspondent Ed Henry. Ed?
ED HENRY, CNN CORRESPONDENT: That's right, John. From the president on down the White House has been all about trying to calm the situation down. Tamp down the rhetoric. They're playing down also the threat from North Korea militarily and trying to play up the support they're getting from their allies all around the world. In short, that's just the opposite of what we saw leading up to the war in Iraq, once accused as well of thumbing its nose at the United Nations. Today the White House was embracing the United Nations Security Council emergency session where they were considering a resolution denouncing North Korea.
And the president himself stressed that the U.S. is not going it alone. Talking about diplomacy, diplomacy, diplomacy and putting the onus squarely on North Korean dictator Kim Jong-Il.
(BEGIN VIDEO CLIP)
GEORGE W. BUSH, PRESIDENT: Yesterday, as you know, they fired off a series of rockets. The world, particularly those of us in the six-party talks has asked for that not to happen as a matter of good faith. The government made a different decision and so it is their choice to make. What the firing of the rockets have done is they have isolated themselves further. And that's sad for the people of North Korea.
(END VIDEO CLIP)
HENRY: Now, the president is also insisting that the North Korea come back to the table for those six-party talks, not wanting to be drawn into a direct conflict or direct negotiations with Pyongyang. Here is White House press secretary Tony Snow.
(BEGIN VIDEO CLIP)
TONY SNOW, WHITE HOUSE PRESS SECRETARY: If it was the desire of Kim Jong-Il to turn this into a two-party negotiation or standoff between the United States and North Korea, he blew it.
(END VIDEO CLIP)
HENRY: But former Clinton official Wendy Sherman is charging it's not enough for the White House to simply fall back on these six- party talks which in reality have really yielded very little over the last years. She says the White House failed by not having direct involvement in these talks one on one with North Korea sooner in the process and at some point the White House is going to have to get more directly, John.
KING: Ed Henry for us at the White House. Ed, thank you very much.
The United Nations Security Council is considering sanctions against North Korea. Members met in emergency session in New York today. They discussed a draft resolution designed to choke off funding and resources from North Korea's missile program.
It also condemned Pyongyang's test launches and it urges the government to stop its missile activity and return to the negotiating table.
The United States, of course, has been prepared for another war in the Korean Peninsula since the last one ended. And while military action remains very unlikely, the scenarios are worth examining.
CNN's Brian Todd is here with that, Brian? BRIAN TODD, CNN CORRESPONDENT: And when you look at those scenarios, John, you can clear understand why everyone who knows about the military possibilities says all other means have to be exhausted first.
(BEGIN VIDEOTAPE)
TODD (voice over): On a peninsula that's been heavily militarized and preparing for confrontation for more than 50 years, scenarios for war are detailed and frightening. We discussed them with a former senior U.S. Army intelligence officer assigned to Korea, a former Delta Force commander who also has a CIA background, and a former strategic planner at the National War College who developed a war game on Korea.
They all make clear war is a very remote possibility. So is the prospect of a U.S. pre-emptive strike.
MAJ. JEFFREY BEATTY, FMR. DELTA FORCE COMMANDER: If you're going to do a pre-emptive strike, you have got to make sure you get everything, because if you don't, they're going to launch what they have left, and they're going to probably launch a full-scale attack against the South.
TODD: Our experts say if America struck first the best case scenario is casualties in the tens of thousands on both sides. If North Korea attacked first, they say, thousands of its special operations commandos would likely swarm into the south from the air and sea, linking up with sleeper agents who've already infiltrated through tunnels.
Then ...
BRIG. GEN. JAMES MARKS (RET.), CNN MILITARY ANALYST: Step two would be they have to secure the demilitarized zone that separates North from South. And they would do that with light infantry, simply to hold the shoulders of the penetration. Not go very deep, but to hold the door open, if you will.
TODD: Holding the door for North Korea's heavily armored million-man army to push toward Seoul and points south. At the same time, the North Koreans would launch missiles.
MARKS: They would be conventionally tipped. We have to assume they would be chemically tipped.
TODD: Prompting U.S. forces to launch air strikes on North Korean artillery positions, many of which can be hidden in deep underground bunkers. And inevitably, experts say, U.S. and North Korean ground forces would engage, likely on very difficult terrain.
(END VIDEOTAPE)
TODD: Difficult terrain And what has turned into a very urbanized region in the past years. That means possibly hundreds of thousands of casualties, military and civilian on both sides and that's leaving out North Korea's nuclear capability which our experts say is too crude to be used effectively for the moment. John?
KING: Sober scenarios. Brian Todd, thank you very much.
We will have much more on the fallout from North Korea's missile launches this hour. Former CIA director James Woolsey will join us right here in THE SITUATION ROOM. Find out why he thinks a North Korea could lead three other countries to acquire nuclear weapons.
Jack Cafferty joins us now from New York. Hi, Jack.
JACK CAFFERTY, CNN ANCHOR: How are you doing, John.
Politics, Senator Hillary Clinton says she will not support fellow Democratic Senator Joe Lieberman if he loses the Connecticut primary, and he might. Clinton says she hopes Lieberman wins, but she will support whoever the state's Democratic voters choose.
Now Lieberman announced earlier this week that he will launch a petition drive to get on the November ballot as an independent if he loses the primary. Thus potentially splitting the Democratic vote in Connecticut and allowing a Republican to win the Connecticut Senate seat. That's a good idea.
Lieberman is facing a tough challenge from millionaire businessman Ned Lamont, partially because of Liberman's support for the war in Iraq. Lieberman's office says this, quote, "We are completely focused on winning the Democratic primary. We will be the Democratic nominee and we will be pleased to have Hillary's support," unquote. Here's the question. Senator Hillary Clinton says she won't support Senator Joe Lieberman if he loses the Democratic primary. Is she right?
E-mail your thoughts to caffertyfile@cnn.com or go to cnn.com/caffertyfile. John?
KING: Interesting question. We shall see the responses. Jack, thank you very much. If you want a sneak preview of the Jack's questions plus an early read on the day's political news and what's ahead on THE SITUATION ROOM, sign up for our daily e-mail alert. Just go to cnn.com/situation room.
Coming up, immigration divide. Battling Republicans take their show on the road while the president hits Dunkin Donuts. But is it all talk and no real action on reform? Plus, election recount, a tight presidential vote threatens to plunge Mexico into chaos.
And on a mission in New Orleans, country superstars Faith Hill and Tim McGraw take up the cause for the Gulf Coast. Anderson Cooper joins us live with his exclusive interview.
(COMMERCIAL BREAK)
KING: It was a friendly chat complete with coffee and doughnuts. A suburban Washington doughnut shop, that's where the president was today pushing his views on immigration reform. The president reiterated calls for a guest worker program. Meanwhile, other Republicans went on a road show to chat up the issue. Our Chris Lawrence is in San Diego with more on that. Hey, Chris.
CHRIS LAWRENCE, CNN CORRESPONDENT: Hey, John.
These kinds of field hearings are normally held to study an issue or look for solutions. These are more about staking out a clear political position.
(BEGIN VIDEOTAPE)
LAWRENCE (voice-over): Like the wall that is separates California and Mexico, the house and senate showed their division during two immigration hearings. In San Diego a few dozen members of the public squeezed into a room packed with politicians, media and the Border Patrol. Republican Representative Dana Rohrabacher criticized policy while questioning a Border Patrol official.
REP. DANA ROHRABACHER, (R) CA: When you give someone free healthcare and free education and education, free food for their kids when they're in our schools, you could double the number of agents, we still couldn't get this invasion turned around, could you?
DARYL GRIFFIN, U.S. BORDER PATROL: No, but it would certainly be a step in the right direction.
LAWRENCE: At a similar hearing in Pennsylvania, Senator Arlen Specter said the Senate bill offers a path for citizenship, while the House bill criminalizes millions of people who came here illegally.
SEN. ARLEN SPECTER, (R) PA: It is it is view of the Senate that you cannot sensibly create an underclass of fugitives who pose problems for national security.
LAWRENCE: President Bush reiterated his support for a guest worker program with one caveat.
BUSH: It's against the law to hire somewhere who is here illegally and we intend to force that law.
LAWRENCE: Mayor Michael Bloomberg told the Pennsylvania hearing, New York City has half a million undocumented workers whose employers broke the law when they hired them.
MICHAEL BLOOMBERG, (R) MAYOR, NYC: Our city's economy would be a shell of itself had they - and it would collapse if they were deported.
LAWRENCE: Republican Governor Arnold Schwarzenegger called the hearings a road show and a Democratic panelist criticized his Republican colleagues for holding them.
REP. BRAD SHERMAN, (D) CA: These hearings are not designed to legislate, they're designed to whip up public opinion.
(END VIDEOTAPE)
LAWRENCE (on camera): Now one that that came out of the hearings, the Border Patrol says it needs more than just additional agents. They're asking for new technology to detect tunnels and electronically monitor the border. John?
KING: To get that new technology and to get more agents, Chris, they'd have to get a compromise. The Congress would have to pass something. Any indications today that these aren't just road shows, as the governor said? That they're actually an honest effort to get to a middle ground?
LAWRENCE: Not really. It was contentious and confrontational. Didn't seem to be a lot of compromising going on today. It seemed to be more about politicians staking out their claim, trying to sway public opinion so when the time does come to actually have to cut some kind of deal, each side wants to get more of their bill into the final legislation.
KING: Four months and counseling to the election. I suspect the pressure will only increase. Chris Lawrence for us live in San Diego, Chris, thank you very much.
Now to the killings of Iraqi civilians. Including the rape/murder of an Iraqi woman allegedly at the hands of an American soldier.
Reuters reports that the United States Army has restricted the activities of as many as four soldiers suspected in the incidents. But Reuters is also reporting charges are not imminent. One former American soldier has already been charged. Key to what happened, an examination of the crime scene.
CNN's Arwa Damon is in Baghdad.
ARWA DAMON, CNN CORRESPONDENT: John, outage on the streets from Iraq from average citizens all the way up to the prime minister as more information comes out to the Iraqis about the killings of four family members in Mahmoudiya.
(BEGIN VIDEOTAPE)
DAMON (voice over): This plain concrete house may have been the scene of a gruesome crime. A crime the U.S. government says was committed by U.S. soldiers. Almost four months later, despite the house being cleaned out, blood stains and evidence of burning can still be seen in these Associated Press pictures.
The crime, the alleged rape of a young woman, identified as Ibir Kasam Hamza (ph), believed to be barely in her 20s. She, her little sister, and her parents murdered, their bodies burned in what authorities say was an attempted cover-up.
"We found them dead in the house," the girl's brother, Ahmed Kasam (ph), says. "We also found the house blackened and smoke erupting from it."
Her uncle, Ahmed Taha (ph), says, "The Americans are behind this incident. People in the area saw the Americans, but they are afraid." The bodies were buried quickly back in mid-March, but the story of what happened here is only now being told, following the arrest in the United States of Steven D. Green, a former army private first class, accused by the U.S. government of being one of those responsible for the rape and killings.
And now the Iraqi government is investigating, and the Iraqi prime minister expressing outrage, blaming a system in which U.S. forces in Iraq are immune to Iraqi prosecution, accountable only to the U.S. government.
NURI AL-MALIKI, IRAQI PRIME MINISTER (through translator): We believe that the immunity given to international forces is what emboldened them to commit such crimes in cold blood. This requires that such immunity should be reconsidered. We affirm that we should participate in investigating crimes committed against the Iraqi people.
DAMON: The U.S. military says it will engage with the prime minister on the issue of immunity.
(END VIDEOTAPE)
DAMON (voice-over): But with emotions already running high in Iraq, what is alleged to have happened in this house will likely make the job of U.S. forces here even more difficult. John?
KING: Arwa Damon in Baghdad and still to come, war games and missile tests and diplomacy. What can be done to get North Korea to give up its weapons? Could it lead to war? I'll ask the former CIA director James Woolsey.
Plus, sudden death. Ken Lay avoids jail time. Find out why authorities are ruling out foul play. Sty with us.
(COMMERCIAL BREAK)
KING: Word just in to CNN. Israeli troops on the move in northern Gaza. A new development in the increasing escalating standoff between the Israel and the Palestinians. We are trying to get more information on that. We will bring it to you as soon as we have it here in THE SITUATION ROOM. Again, Israeli troops on the move in northern Gaza. In the meantime, Zain Verjee join us with other news making headlines right now. Hi, Zain.
ZAIN VERJEE, CNN ANCHOR: Hi, John.
Oil prices are at record levels this hour. U.S. crude closed at more than $75 a barrel this afternoon, the highest closing price ever. Analysts say strong U.S. demand and tensions with North Korea are helping to drive surge. Some analysts predicting that average prices for gas in the U.S. could rise above $3 a gallon by the weekend.
A Colorado pathologist says severe coronary artery disease killed Enron founder Kenneth Lay. The doctor who performed the autopsy found no evidence of foul play. Lay died earlier today in Aspen, Colorado. He was awaiting sentencing after being convicted of 10 counts of fraud and conspiracy related to the Enron collapse. The company's downfall cost 4,000 employees their jobs any many lost their lifesavings as well.
It's the mother of all trade secrets. Federal prosecutors saying three people have been arrested for allegedly stealing soft drink recipes from the Coca-Cola Company and trying to peddle them to PepsiCo. Prosecutors say Pepsi contacted Coke after it was allegedly offered the confidential information. Coca-Cola then contacted the FBI which began an undercover operation.
Rush Limbaugh will not face charges in Palm County, Florida, for possessing Viagra that was issued under his psychologist's name. Prosecutors say Limbaugh didn't break any laws. A memo from the prosecutor's office says the psychologist allowed the Viagra to be prescribed under his name to avoid potentially embarrassing publicity for Limbaugh, who recently entered a plea deal on charges relating to painkillers.
John?
KING: Thank you, Zain.
And just ahead, an update on escalating tensions between Israel and the Palestinians. Israeli troops on the move in northern Gaza. We will have a live report from Gaza City just ahead.
Also ahead, he says a nuclear North Korea could lead to three other countries acquiring nuclear weapons. Former CIA director James Woolsey will join us to talk about the fallout from these latest launches.
And country superstars Tim McGraw and Faith Hill on a mission in new Orleans. Anderson Cooper joins us live with an exclusive interview.
(COMMERCIAL BREAK)
KING: Breaking news right now from the Middle East. Another major move by Israel stepping up pressure on Palestinian militants and the Hamas led government in Gaza. CNN's Paula Newton is live for us in Gaza City.
Paula?
PAULA NEWTON, CNN CORRESPONDENT: John, what seems to be going on here is this is the long-promised incursion into Gaza by the Israeli military. I was actually coming in off the northern crossing in Gaza. And when we got to the other side, crossing from Israel into Gaza, all of a sudden, this is about three or four hours ago now, there were tanks on either side of us.
It was nightfall, we couldn't see too much. But those who had been there as the sun was coming down told us -- we saw about six tanks to our left and seven to our right. What was going on, John, is that the Palestinian militants have moved up and there was a lot of small arms fire. What the Israelis are trying to do here, John, is create some type of a buffer zone.
And the reason is that those Palestinian militants had moved into northern Gaza and were launching the Qassam, those homemade rocks into Israel. I was also in a town called Ashkelon which is just on the other side, about 10 miles away from that northern Gaza border and I was at a high school today where one of those rocks had landed.
The problem here, John, is that those rockets are going further and further into Israel. And I think Israel at this point feels that this is what they want to do. They will create that buffer zone in northern Gaza and push the militants right back now the rockets will have a harder time of crossing into Israel where they can do damage.
John?
KING: But Paula, of course, the Hamas-led government has said that if Israeli troops return to Gaza, there will be repercussions. What is the expectation of the response now?
NEWTONS: Well, we are waiting right now. It's been a very quiet night now here in Gaza City here we are. We know that there's a lot going on there right now. In that buffer zone, it's a bit of a no man's land right now, John. There aren't that many civilians and it really is a bit of industrial park. The length runs about a mile. And we're not exactly sure at what point Hamas is going to say, OK, enough is enough. The other problem here, John, is that Hamas has been trying to do what it can do. When we were out there on the border, they were doing what they can do and all they managed, really, from what I heard, was small arms fire.
There really isn't much they are able to do right now at this moment.
And as I said, that Qassam rocket today traveled about 12 kilometers. If they're pushed further back - 12 kilometers, let's say about seven miles. If they're pushed further in another mile it's going to be even more difficult. They've only been able to get one that far, so really it will, the Israelis feel, that this will be a solution for those homemade rockets going into Israel.
KING: Paula Newton for us in the early morning hours in Gaza tracking the latest escalation of tensions in Israeli military incursion. Paula, thank you very much and we will check back in if there are new developments. Thank you.
And more now on tonight's top story, the fallout from North Korea's missile launches. Less than two weeks ago, right here in THE SITUATION ROOM, he advocated a preemptive strike by the United States to take out that long-range missile.
(BEGIN VIDEOTAPE)
KING: ... Woolsey, the former director of the Central Intelligence Agency, thank you for joining us in THE SITUATION ROOM.
JAMES WOOLSEY, V.P. BOOZ ALLEN HAMILTON:: Good to be with you, John.
KING: Last week, you had advocated using cruise missiles, some sort of a missile strike, to knock out that missile, knock out the launch pad. Obviously, that didn't happen. North Korea has gone ahead with these provocative launches. What now? Do you think there should be some military response, some military price Kim Jong-il should pay?
WOOLSEY: Well, I supported former secretary Bill Perry and Nash Carter of Harvard when they wrote that we, yes, should take it out on the launch pad. Now that that didn't happen, and there's a launch failure, no, I don't think that an immediate military response is called for, but I do think a very vigorous effort to get China to put the squeeze on North Korea, because it's really the only country who can, is in order.
And I think a lot more work and different kind of work on ballistic missile defense for the United States is in order, both of those.
KING: But let's deal with those issues one at a time. Let's deal with China first. A foreign ministry statement issued today, the Chinese Foreign Ministry saying, "For a long time, China has been working hard, taking steps to ease the Korean Peninsula situation." That statement goes onto say, "We will work with all sides and relentlessly take constructive efforts."
Is that a true accounting in your view? Have the Chinese been relentlessly pushing the North Koreans?
WOOLSEY: Not even close. The Chinese are really the only country that has the leverage over North Korea, both because of food that they control and because of the energy that they control, to affect North Korea's behavior.
And I think the Chinese really take some pleasure -- the Chinese government does, in the United States being at a difficulty here. And I don't think they're doing much at all except perhaps for public consumption to try to turn down North Korea's nuclear weapons and ballistic missile efforts.
KING: Well, the State Department is sending Chris Hill to Beijing, among other stops in the region to talk to other partners in the six-party talks. What would you say if you were the State Department, if you were the president of the United States right now, to the Chinese? What one thing would you say, you must do this, and you must do it now?
WOOLSEY: You need to cut off North Korea's supplies of food, other than a bare humanitarian shipment if we could get it to the people rather than to the military, and you need to cut off their energy because this has to stop.
North Korea is a threat to all of its neighbors, and it is leading the way to their being probably four new nuclear powers in northeast Asia: North Korea, in time South Korea will follow, in time Japan will follow, in time Taiwan might follow. And this is really China's fault that they've not been willing to lean on North Korea.
KING: Pretty grave outlook you present there. I want you to listen to the president of the United States today, a much more low- key approach at the White House by design. Let's listen to the president.
(BEGIN VIDEO CLIP)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I view this as an opportunity to remind the international community that we must work together to continue to work hard to convince the North Korean leader to give up any weapons programs.
(END VIDEO CLIP)
KING: A fairly bland statement there from President Bush and obviously advocated more multi-lateral talks. Does the United States need to be more assertive in a unilateral way right now?
WOOLSEY: Well, China is the country that can have the affect. I don't think the six-party talks are going to go anywhere. The North Koreans have evaded their responsibilities under the 1994 agreement now for 12 years, and I think it's quite demonstrable they will continue to.
It's an added risk that they might take some of this nuclear material that they're enriching and give the to terrorist groups, or sell it to them, rather. So it's an extremely serious problem.
And I think that the decisive military thing that the United States ought to do is to work hard on ballistic missile defense and of a somewhat different type than we have now begun to deploy. I think it ought to be sea-based in the first instance, and it ought to be focused on what's called boost phase, that is on missiles just after they take off.
KING: Take us inside the mind of Kim Jong-il. You once ran the Central Intelligence Agency. He just had a missile test of his new, long-range missile. By all accounts, that test -- at least from U.S. and western accounts, that test was a failure. Some say that's a humiliation. But others say this is a very unpredictable man who might do rash things because he had a failure. What do you think?
WOOLSEY: Well, you always learn something from a failure. The United States had a number of failures of particularly its ICBMs and to some extent its sea-based missiles as it was starting to get into the business of being able to launch long-range missiles.
I think that Kim Jong-il probably feels that he accomplished something by trying to launch and successfully launching some shorter- range missiles on the Fourth of July. It was a direct affront, political affront to the United States, as well being a dangerous thing to do.
And I don't think we should stand idle, but I think our main response now ought to be double and redouble our efforts in ballistic missile defense. And to push China to take the steps I said.
KING: And if the Chinese will not take those steps, does the United States have to do nothing to put Kim Jong-il in his place, do something to show him behavior like this will not only not be rewarded, but it will be punished?
WOOLSEY: Well, if China will not put the clamps on North Korea and get these steps moving in the right direction -- and as I said, I think they're the only ones that can -- then we have to at least start thinking about military options.
I'm not saying yet that we should exercise them, but it would be a terrible thing. It would be a war in which a lot of people would die. But we simply can't afford to let this crazed demagogue have nuclear weapons. He's sort of a cross between Caligula and Baby Doc Duvalier.
This is not a good idea for us to continue to permit this to happen. We had a stab at stopping things in 1994. We failed, North Korea cheated on the agreement. They will continue to cheat, I'm quite confident.
KING: He just failed in one test of his premiere missile, the Taepodong-2. Do you assume he will test again soon, or will he wait because of that failure?
WOOLSEY: He will work on the technology and will test again at some point. He has been a master of throwing up smokescreens and buying time for both his nuclear weapons program and his ballistic missile program with these things like these six-party talks which have not succeeded and I don't think they will succeed.
KING: James Woolsey, the former director of the Central Intelligence Agency. Thank you for joining us, sir, in THE SITUATION ROOM.
WOOLSEY: Good to be with you, John.
KING: Thank you and good night.
(END VIDEOTAPE)
KING: Up ahead tonight, shutting down the slots. Casinos close down over money and angry gamblers pointing fingers at the politicians. We'll take you to Atlantic City where you might say they're playing Russian roulette with tourism.
Plus, counted ballots and accusations of election fraud. Find out why a disputed vote could create chaos in Mexico. You're in THE SITUATION ROOM.
(COMMERCIAL BREAK)
KING: In New Jersey today, Governor Jon Corzine's budget showdown with state lawmakers is being felt in a costly new way. Atlantic City casinos now are dark, the latest targets of a government shutdown now in its fifth day. Corzine went before the state legislature today to again defend his high stakes push for a sales tax hike that law makers so far aren't buying. Our Mary Snow is Atlantic City with the impact of the shutdown.
MARY SNOW, CNN CORRESPONDENT: John, Gamblers aren't spending money, casinos aren't making it and the only game being play is a waiting game.
(BEGIN VIDEOTAPE)
SNOW (voice-over): This time it was the state and not the dealers calling the last bet at Atlantic City casinos, ordering the gambling to stop. A budget standoff forced their hand and holdouts who thought the shutdown threat was only a bluff were down right angry.
UNIDENTIFIED MALE: Yes, I live in Washington, DC and I won't be coming back any time soon.
UNIDENTIFIED FEMALE: This is like, I totally outrageous. I don't understand what the budget has to do with the casinos.
SNOW: New Jersey's twelve casinos are only allowed to operate with state monitors on site because those monitors are considered nonessential state workers, they're temporarily out of work, as part of a government shutdown ordered by Governor John Corzine.
GOV. JOHN CORZINE (D), NEW JERSEY: My hands are tied. This is exactly what's wrong with this entire debate. We can't make things up because we don't like the consequences of laws we created.
SNOW: That debate has focused on how to narrow a $4.5 billion deficit. Many question the logic of closing casinos since they are cash cows, generating at least $1.2 million a day in tax revenue.
UNIDENTIFIED MALE: Self inflicting this kind of pain in ourselves, I think it's an embarrassment.
SNOW: Some blame first time governor, Democrat John Corzine, others blame assembly Democrats who don't see eye-to-eye with him. Some in the industry bet this casino shutdown could deal its only hand down the road.
JOSEPH WEINERT, SPECTRUM GAMING GROUP: If this shutdown becomes prolonged, people will remember come the next election.
SNOW (on camera): Now casinos are only one part in this latest phase of the New Jersey government shutdown. Also closed are state parks, state beaches, historic sites and the state's racing tracks, John.
(END VIDEOTAPE)
KING: Mary Snow in Atlantic City, thank you Mary.
In Mexico, a marathon recount in underway in the closest presidential election in that nation's history. The main leftist candidate is accusing the conservative ruling party of fraud and is refusing to concede without a ballot by ballot review. It's all stirring fears of political chaos and possible violence. Let's go back to CNN's Chris Lawrence, live in San Diego, Chris.
CHRIS LAWRENCE, CNN CORRESPONDENT: Well John, just over the hill behind me, there is a lot of anger in Mexico tonight after the leftist party said it was flat out robbed.
(BEGIN VIDEOTAPE)
LAWRENCE: It's been one of the closest, fiercest political battles in Mexico's history. If the leftist candidate loses Andres Manuel Lopez Obrador's accusations of voter fraud could cause his voter's resentment to spill out in the street.
DR. OCTAVIO PESCADOR, UCLA PROFESSOR: If that were the case, there were already four locations in Mexico with strong violent problems. Two of them on the border, accessing California, and that should be something for the U.S. to worry.
LAWRENCE: Lopez Obrador claims well over 2 million votes are missing. Also, Mexican citizens living in the United States crossed the border by the bus load. Hundreds said they were turned away without voting because polling stations didn't have enough ballots.
ALBERTO AVILES, VOTED IN MEXICO: They're saying now that there's no interest in the Mexicans living in the United States to vote, but there is interest.
LAWRENCE: Dr. Octavio Pesador says the U.S. government also had an unspoken interest.
PESCADOR: No doubt that President Bush will have a closer relationship with Felipe Calderon.
LAWRENCE: He earned a Masters degree at Harvard, sharing an Ivy League connection with Bush, the Yale graduate. Having worked in President Vicente Fox's cabinet, Calderon is familiar with negotiations to curb illegal immigration.
PESCADOR: He would say, and this is hypothetical, yes, we will collaborate but let's engage in a fairer guest worker program.
LAWRENCE: But there's a limit to what any president can do. Mexico's constitution prevents officials from restricting immigration.
(END VIDEOTAPE)
LAWRENCE: Right now it looks like a federal court will have to step in and could take up to two months to declare a winner. If it rules in favor of Calderon, Lopez Obrador's party is threatening to take their case to international tribunals, John.
KING: Interesting and difficult situation. Chris Lawrence live for us, Chris thank you very much. Construction near ground zero in New York City will take years to complete. But politicians spearheading the development of lower Manhattan want the public to know the changes, in their view, will be well worth the wait. They're getting that message out with a new web site. Our internet reporter Abbi Tatton has the details, Abbi.
ABBI TATTON, CNN INTERNET REPORTER: John, This web site aims to help people navigate the construction in lower Manhattan and reassure them that it will all pay off. Launched as part of a campaign by New York Governor George Pataki and Mayor Michael Bloomberg, the maps, that are interactive, take you right inside the construction zones, like the Freedom Tower here, showing you the latest designs that were just unveiled last week along with videos, fly-bis of what it might look like when it's substantially completed in 2010. The 1,776 foot tower there shown in the New York City skyline. The construction on the Freedom Tower is already under way. It started in April. If you want to see how it is going, there are webcams of the rebuilding there on the site.
KING: That's pretty cool. Thank you Abbi.
Up ahead, Mission New Orleans, Faith Hill and Tim McGraw take to the stage for the gulf coast. Anderson Cooper joins us live with an exclusive interview.
Plus, a bird's eye view from space. Find out how to track the space shuttle from your own home. We will take you literally out of this world. You're in THE SITUATION ROOM.
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KING: Tonight in New Orleans, a very special benefit benefiting some very special Hurricane Katrina victims. CNN's Anderson Cooper is in New Orleans to fill us in. Hey Anderson.
ANDERSON COOPER, CNN ANCHOR: Hey John, yes, Faith Hill and Tim McGraw are in New Orleans tonight. They will give a concert that will start in 45 minutes or so. It's part of their record-breaking sold out tour. But tonight is a benefit concert. A lot of tickets have been given away to first responders, New Orleans police officers, fire fighters, volunteers, the people who are helping rebuild the Gulf and New Orleans. Today I toured the lower ninth ward and St. Bernard's Parrish with Faith Hill and Tim McGraw and really surprise, I think, they were by the lack of progress they were seeing on the ground.
They have been very much in the forefront of raising money for this region and also raising awareness and attention early on. They got criticism from being very vocal in their criticism of relief efforts. I talked to them about that today?
(BEGIN VIDEOTAPE)
COOPER: Do people get mad at you when you spoke out?
FAITH HILL, COUNTRY SINGER: Well, I think when there is a personal connection to anything, to an area, to anything in life, you have a different experience to the person who is not connected, but I think for all of us as a country, we're certainly affected by what happened down here.
But not until you have seen it and not until you come face-to- face with a family that has been struggling in so many ways to try and get an answer, to try to do duty as far as getting their property back on track.
TIM MCGRAW, SINGER: Being critical on an emotional level is a lot different than being critical on a, you know what to do level.
COOPER: Right.
MCGRAW: You know, we don't know what to do. We don't know how to make a plan to do this stuff. Our criticism -- and it's not really criticism, it comes from an emotional level. It comes from a level of being frustrated about what you see. It's not like saying, you could do this or you could do this. I don't know what to tell anybody to do. All I know is I wish that things could move faster, I wish these people could get their lives together quicker.
(END VIDEOTAPE)
COOPER: And they are trying to do their part tonight with their concert, raising money for the rebuilding of the Gulf. We will be covering that concert live. We'll have some inside shots of it. We'll also show you my tour of the lower Ninth Ward with Faith Hill and Tim McGraw a little bit later on on "360," John.
KING: And before I let you go, Anderson, you took that tour with them. You hear their frustrations, you've been there many times before. What's your assessment, taking a look. Progress or not?
COOPER: You know, there's certainly progress, no doubt about it. I mean, I've actually spent the Fourth of July weekend here on vacation. You know, restaurants were open, businesses are open. You can spend days here and not realize what happened here in New Orleans. But you go to the lower Ninth Ward and you go to St. Bernard Parish and it is still all out there, the devastation remains. And there's not really a clear plan for where it's going to get rebuilt and when it's going to get rebuilt and how. And that's what that people here say is the cause of their biggest frustration, John.
KING: Anderson Cooper, live for us in New Orleans and back in New Orleans and watch tonight, "A.C. 360," Anderson's tour of the Ninth Ward, other reports from the area and his exclusive interview with Tim McGraw and Faith Hill, giving back to the Gulf. That's tonight on "A.C 360." Make sure you watch it.
Astronauts onboard the space shuttle Discovery falling asleep in orbit as we speak, as least we think they are. That after a long day inspecting for damage, which officials say does not appear to be a cause for concern. So what's next for Discovery? Let's bring in our Internet reporter Jacki Schechner for more. Jacki?
JACKI SCHECHNER, CNN INTERNET REPORTER: Well John, they're going to bed early because they've got to get up at 3:38 in the morning. They have a long day today, the shuttle is going to dock at the International Space Station. You can track the shuttle online, I'll give you a close-up look here.
Let's see if I can zoom out on here. This is NASA's flight tracker. And you can zoom out and see it in regard, if I can get the button going there, in relation, there you go, to the International Space Station.
Let me pull up a larger view so you can see it. There you go, there's the shuttle there in the International Space Station. Now they've spent the day of course examining the shuttle to make sure there wasn't any damage. They thought perhaps they had to take a look for this, it's a piece of foam that fell off and they wanted to make sure that when it did, it didn't damage anything on the shuttle. But of course, all the reports are that everything is A-OK. And tomorrow again, they're going to dock at the International Space Station, the designated time is 10:52 a.m. John?
KING: Jacki Schechner, keeping a very close watch on the shuttle, thank you very much, Jacki.
And let's find out now what's coming up at the top of the hour. John Roberts sitting in for Paula Zahn. Hey, John.
JOHN ROBERTS, CNN CORRESPONDENT: Hey, thanks John. Coming up at the top of the hour, the man behind the world's new missile crisis. What do we really know about North Korean dictator Kim Jong-il and about life in his closed, secretive country? Also the saga of an escaped killer who seems to have made it from a Louisiana prison all the way to Canada. The police have seen him many times, but why can't they seem to catch him? His story and more, all coming up at the top of the hour. John?
KING: Thank you John, and we'll be watching. Thank you very much.
And still ahead here in THE SITUATION ROOM, Hillary Clinton sounding, get this, like a presidential candidate. Find out why an old ally may be on the losing end. You're in THE SITUATION ROOM.
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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.
Tal-Afar, Iraq: This U.S. Air Force photo shows soldiers exiting a Black Hawk helicopter during a mission.
In El Salvador, deadly clashes. Two police officers were shot dead when they dispersed a protest against public transportation price hikes. The country's president says police fired rubber bullets. The protesters fired back with real bullets.
In south central Los Angeles, 10 people arrested as workers begin bulldozing what was once a 14-acre garden. The owner plans to build a warehouse on the land.
And in Montana, holding on for dear life. Jeremy Cook (ph) competes in the bareback event at the Livingston Round-Up Rodeo. He was bucked off for no score. And that's today's hot shots, pictures worth 1,000 words.
And Jack's in New York with "The Cafferty File." You don't rodeo, do you, Jack?
CAFFERTY: No, but I used to go to a lot of them when I was a kid out in Nevada. That's just what Los Angeles needs, is another warehouse, right? I mean, that will finish off that city quite nicely. Tear down a 14-acre garden and put another warehouse up.
The question is this: Senator Hillary Clinton says that she's not going to support Senator Joe Lieberman if he loses the Democratic primary. Is she right?
Shawn writes from Oakdale, Connecticut: "Lieberman wouldn't get my vote if he was running against Daffy Duck. As a Connecticut Democrat, I couldn't care less who Hillary endorses. She won't be getting my vote either."
Alice in Grand Rapids, Michigan: "Of course she's right. He's supposed to be representing his state, not his own feelings on the war. If the majority of the people in Connecticut are against the war, the people will vote against him. He should walk away."
Steve in State College, Pennsylvania: "The real question to ask is why is Hillary Clinton commenting in this way. It's designed to portray Lieberman as weak in the media, and it worked. It was a pre- emptive strike."
Joe writes from Brooklyn: "This is the problem with politics." I like this letter. "Party loyalty is more important to them than sending the best qualified people to do the job. She either thinks Senator Lieberman is the best qualified or not. She can't have it both ways and still retain her credibility. It's time to send Mrs. Clinton back to Arkansas."
Caroline in Elk Grove, California: "After all the photos ops Joe Lieberman has had with George Bush, including the one where George kissed him, it's lucky anyone in the Democratic Party is still talking to him, let alone hoping he wins the primary election. He has a lot of nerve expecting any Democrat to support him if he loses the primary."
Jenny writes from New York: "Yes, Hillary's right. Not as far right as Joe Lieberman."
And Gail in Drakes Branch, Virginia: "Oh, my. You mean there's still a D.C. Democrat who thinks the actual voters should have some say in who represents them? How very quaint."
John? KING: Help me out though, Jack. I thought she said her focus this year was on getting re-elected as the junior Senator from the state from New York. Why would she get involved in Joe Lieberman's race or what has become a debate in the national Democratic Party?
CAFFERTY: Golly, I don't know, John. It couldn't have anything to do with her aspirations to be the president of the United States one day, or maybe having something to do with quelching his aspirations to be president of the United States, do you think?
KING: Perhaps a question for another day. Jack Cafferty in New York, thank you very much. Thanks for joining us here in THE SITUATION ROOM. I'm John King. Up next, "PAULA ZAHN NOW" with John Roberts. John?
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