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THE SITUATION ROOM

Iran's President Calls for Debate with President Bush; Tropical Storm Ernesto Moves Toward Florida Keys; Unidentified Senator Puts Hold on Government Contract Legislation; Polygamist Fugitive Warren Jeffs Nabbed in Nevada

Aired August 29, 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 ANCHOR: And thank you, Kitty. 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 to bring you tonight's top stories.
Happening now, can two world leaders argue their way through a nuclear crisis? It's 2:20 a.m. in Tehran where Iran's president is challenging President Bush to an uncensored televised debate.

Tropical Storm Ernesto is drenching Miami and Hurricane John is threatening Acapulco. It's 7:00 p.m. in Miami where we'll be taking you live to the National Hurricane Center.

And it's 7:00 p.m. in Washington where one secret senator may be stopping you from finding out the truth about back room deals.

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

A startling challenge tonight from Iran's leader. Shrugging off the United Nations deadline and possible sanction over its nuclear program, President Mahmoud Ahmadinejad is daring President Bush to settle it all one on one before a world wide audience.

Let's turn to CNN's Aneesh Raman in Tehran.

ANEESH RAMAN, CNN CORRESPONDENT: John, for only the third time since taking office, the Iranian president today met with reporters and he had no shortage of defiant messages.

(BEGIN VIDEOTAPE)

RAMAN (voice-over): Hours ahead of a U.N. deadline, Iran's president reveling in the flash of cameras was from the start eager to change the subject and within minutes he issued a challenge to the U.S. president.

PRES. MAHMOUD AHMADINEJAD, IRAN (through translator): Mr. Bush, the president of the United States should participate in a direct television debate with us. Discussing world affairs, how to end world predicament so that we can voice our point of view and they, too, can voice their point of view. But the condition is that there should be no censorship, especially for the American nation. RAMAN: An unlikely prospect but a sign that Iran sees itself as the balancing power to the United States. Its president the leading voice for disenfranchised Muslims worldwide. A key reason Iran will not back down in the nuclear dispute and calls for suspension of its nuclear program.

UNIDENTIFIED MALE: Is suspension of the nuclear program at all on the table for any talks that might take place?

UNIDENTIFIED MALE (through translator): Access to peaceful nuclear energy and power is the right of the Iranian people. We have chosen our right and under international law, we want to use our right. Nobody can prevent us from it.

RAMAN: And that is what the U.N. will now have to decide. Will it involve sanctions in an effort to prevent Iran from having a nuclear program or will Iran's calls for a peaceful negotiation give enough reason for the U.N. to avoid confrontation and embark on a new round of talks?

(END VIDEOTAPE)

RAMAN: The Iranian president made it clear throughout that he sees his country not just as a rising power in the region, but now an indisputable power in the world -- John.

KING: Aneesh Raman in Tehran. So what does the Bush administration think of all this? The White House calls the Iranian's president proposal a diversion. It says the world community has concerns about Iran's behavior. The who citing what it calls support for terrorism to a pursuit of a nuclear weapons capability.

To the war in Iraq now. The Bush Administration is trying to build up government security forces so they can take over from American troops, but the new Iraqi military this week fell into a death trap as forces were battered by die hard Shiite militia forces. The real winner may be a powerful Shiite cleric as CNN's Brian Todd tells us -- Brian.

BRIAN TODD, CNN CORRESPONDENT: John, Muqtada Al-Sadr's exact role in that deadly exchange this week is a point of debate, but al- Sadr's power is on the rise at the very same time new questions are being raised about the real strength of the Iraqi army.

(BEGIN VIDEOTAPE)

(SOUNDS)

TODD (voice-over): Iraqi forces are now reeling from a battle that's left them exposed. A senior Iraqi Defense Ministry officials tells CNN some Iraqi soldiers battling Shia militants in the southern city of (INAUDIBLE) this week ran out of ammunition. The official said some of them were then captured and executed. Still a U.S. military spokesman says other Iraqis reacted swiftly and decisively and brought the situation under control. But who were they up against? Iraqi defense sources tell CNN the militias in (INAUDIBLE) were followers of Muqtada Al-Sadr, a popular anti-American Shiite cleric. Iraq's deputy prime minister was asked about that on THE SITUATION ROOM.

BARHAM SALIH, IRAQI DEPUTY PRIME MINISTER: Muqtada al-Sadr (INAUDIBLE) those people and this is what some of his close associates (INAUDIBLE) from the prime minister that these groups were operating outside his control.

TODD: But analysts say even if that's true, al-Sadr is emerging as a major power in Iraq, controlling more than two dozen seats in Parliament, four government ministries and a deadly militia called the Mehdi Army.

UNIDENTIFIED MALE: Muqtada al-Sadr is building his organization on the (INAUDIBLE) Hezbollah. Militia plus political control state within a state.

TODD: Senator John McCain says U.S. forces should take out Al- Sadr and his militia. Analysts caution with his millions of followers that kind of move might start another more dangerous insurgency. Saddam Hussein once took out al-Sadr's father, who was an Ayatollah, only for his son to emerge later.

UNIDENTIFIED GROUP: (INAUDIBLE)

UNIDENTIFIED MALE: This is very close to the surface for the Al- Sadr family. Now that they have a chance to lead, I don't think they're going to give it up.

(END VIDEOTAPE)

TODD: Analyst say al-Sadr, even though he's only in his early 30's, has a great sense of when to challenge U.S. forces and when to pull back. That's one reason they believe that if and when the United States pulls out of Iraq, Muqtada al-Sadr may well emerge as one of that country's most powerful leaders -- John.

KING: Man worth watching. Brian Todd thank you very much. And admitting mistakes and vowing more help, President Bush went to New Orleans today to mark the one year since Hurricane Katrina left the city in ruins. CNN White House correspondent Suzanne Malveaux is traveling with the president.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well, John, a lot of people you talk to here are very disappointed with the Bush administration and the president's response to Hurricane Katrina. They thought that things would move along a lot faster. Many of them doubting President Bush's speech given in Jackson Square where he committed the federal government to Hurricane Katrina, rebuilding on the Gulf Coast. President Bush, who has suffered politically from Hurricane Katrina, is trying to convince them otherwise.

(BEGIN VIDEOTAPE)

MALVEAUX (voice-over): One year after the federal government's botched response to Hurricane Katrina, President Bush once again vowed he would do better.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I take full responsibility for the federal government's response. And a year ago I made a pledge that we will learn the lessons of Katrina and that we will do what it takes to help you recover.

MALVEAUX: The federal government has committed more than $100 billion to Gulf Coast recovery. Yet tens of thousand of residents in New Orleans are still waiting on federal housing money in order to rebuild.

UNIDENTIFIED MALE: he needs to make people down here feel good. On one hand, there's this neglect happening and then he comes in for a photo-op and tries to pull another Jackson Square speech.

(MUSIC)

MALVEAUX: The president marked Katrina's anniversary with a series of choreographed events, visiting the damaged home of jazz legend Fats Domino, lunching with volunteers from Habitat for Humanity and attending a service at the famed St. Louis Cathedral (ph). There he sat with residents he'd met on previous trips to the gulf. People we caught up with before official Washington descended on the city. Kim and Calvin Stewart (ph) seated behind the first lady, owners of one of the only diners open in the Ninth Ward.

BUSH: Red beans and rice...

MALVEAUX: Mr. Bush stopped by the Stewarts' (ph) diner six months ago.

UNIDENTIFIED MALE: I had to rake, scrape and borrow to open this diner.

MALVEAUX: Business hours have been cut in half, employees have not yet returned.

UNIDENTIFIED FEMALE: (INAUDIBLE)

UNIDENTIFIED FEMALE: I've got all family members. That's all I can have. There's nobody back in the community.

MALVEAUX (on camera): What did you think a year later would look like?

UNIDENTIFIED MALE: Everybody back. New Orleans swinging just like old times (INAUDIBLE). New Orleans looks almost as if the day of the storm, still looks like that.

MALVEAUX (voice-over): In April, the president made a visit to Ms. Ethel Williams (ph), the day volunteers were gutting her home.

(on camera): If there was one person or anybody who you could talk to now to say fix this, who would it be?

UNIDENTIFIED FEMALE: Say fix this. MALVEAUX: Fix this. Fix this.

UNIDENTIFIED FEMALE: Mr. George W. Bush, fix this problem for me.

MALVEAUX: Today Ms. Williams sat beside the president who delivered a little bit of encouraging news.

UNIDENTIFIED FEMALE: He said (INAUDIBLE) the roof is going on the house today, so you'll soon be back in your house.

(END VIDEOTAPE)

MALVEAUX: Well that certainly is the hope of many people here whose lives have been put on hold and are doubtful that the federal government will follow through -- John.

KING: Suzanne Malveaux in New Orleans, thank you very much.

Now Tropical Storm Ernesto is moving toward South Florida, but a hurricane watch is now up as far up north as Carolina. Meantime, a powerful Category three storm is off the Pacific Coast of Mexico. That's Hurricane John packing winds of 115 miles an hour. Let's get the latest forecast now from Max Mayfield, of course the director of the National Hurricane Center in Miami. Max thanks for joining us. Let's start with Ernesto. What's the latest?

MAX MAYFIELD, DIRECTOR, NATIONAL HURRICANE CENTER: Well the good news here is that it has definitely not strengthened. It's going to move -- well it is moving on the Florida Keys and the South Florida Peninsula. It is a mediocre type of storm. There are still some storm force winds and these rain bands. It is going to be rainy (INAUDIBLE) windy night here in South Florida. But this should not be a big, big deal. And then it's going to move on out off the Florida coast here about this time tomorrow night and head up toward the Carolinas . If the center gets off the East Coast fast enough, it will have a chance to strengthen. The longer it stays over the peninsula, the better it is and (INAUDIBLE) likely not become very strong.

KING: You say the longer it stays over the peninsula, the better it is, but what's your best guess? Your guess is it comes out back over water by some time tomorrow.

MAYFIELD: I think that if it comes out here on our forecast (INAUDIBLE) here, it will strengthen (INAUDIBLE) as a storm. We're not forecasting for it to become a hurricane. There is some probability that could happen, but the most likely scenario is for it to go into the Carolinas as a tropical storm.

KING: Tropical storm still a big deal, not as strong as a hurricane. What should folks up the coast be looking for in terms of rainfall and flooding?

MAYFIELD: Well here in South Florida, we just talked to the local Miami forecast office, and they're calling for five to ten inches of rain. Some isolated amounts higher than that. There will certainly be some local urbanized flooding, but it's just that -- it's so flat down here in Florida that's not a big deal. It will become a little more important if it gets up in the mountainous areas there in the Carolinas and Virginia.

KING: And let's shift to the West. Not a concern for the citizens of the United States, but Hurricane John brewing out there near Acapulco. What can you tell us?

MAYFIELD: Well this is actually a major hurricane. And the center -- the eye is so small you can barely see it right in here. It's moving towards the west/northwest, maximum sustained winds about 115 miles per hour in that hurricane. We just talked to the government of Mexico, the national (INAUDIBLE) service down there and they have a tropical storm warning up and storm watch up along the coast there. The core of that hurricane is going to stay off that coast and that's good news for them.

KING: Max Mayfield at that National Hurricane Center. Max thanks for joining us again tonight.

MAYFIELD: My pleasure.

KING: Take care Max. Thank you. Now Jack Cafferty joins us from New York. Hi, Jack.

JACK CAFFERTY, CNN ANCHOR: John, how would you like to pull the curtain back on that secret little world of government contracting? Actually it's not so little.

Legislation introduced by Democrat Senator Barack Obama and Republican Senator Tom Coburn was supposed to do just that, give us a look inside. It would have brought transparency to $2.5 trillion worth of government contracts. You could just go online, see how much, who got the contract, et cetera. The bill did get through the Senate Homeland Security and Governmental Affairs Committee earlier this summer, but a funny thing happened to it on the way to the Senate floor, an unknown senator has put a secret hold on this legislation, which means unless that same unknown senator lifts the hold, this measure will never be voted on.

Nobody knows who did this yet, but there's a Herculean effort underway to try to find out. Someone in the United States Senate doesn't think the public should know how $2.5 trillion of our money is awarded to government contractors. Now there are only 100 weasels in the U.S. Senate, so you'd think they could find out who did this and I hope they do. Here's the question. Does a single senator have a right to keep $2.5 trillion in government contracts secret from the tax-paying public? You can e-mail your thoughts to CaffertyFile@CNN.com or go to CNN.com/CaffertyFile. Just incredible.

KING: Maybe the secret senator is watching and will send you a note.

CAFFERTY: Yes, I doubt that will happen. I really hope they find out who this is. KING: We'll keep on it and we'll see what the answers are. Thank you, Jack. And coming up, an FBI most wanted fugitive is captured in Las Vegas. The leader of a religious sect is behind bars after being on the run. Find out why police had feared a Waco-style shootout.

Plus, disaster blame game, former FEMA director Michael Brown is in THE SITUATION ROOM. Find out why he wants to hold Homeland Security's feet to the fire.

And utube whistle blower, one man turns to the Internet to take on the government. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

KING: It was a massive manhunt for a man with many wives. There are new developments in a bizarre story here in the United States. He says he's a man of God. But police say that the acts he committed were un-God-like to say the least.

Let's get the latest now from our justice correspondent Kelli Arena -- Kelli.

KELLI ARENA, CNN JUSTICE CORRESPONDENT: John, Warren Jeffs is best known as a polygamist, but officials allege that he's guilty of sexual misconduct against young girls.

(BEGIN VIDEOTAPE)

ARENA (voice-over): Officials feared a violent showdown, but in the end Warren Jeffs was taken into custody quietly by a Nevada state trooper after a routine traffic stop.

GEORGE TOGLIATTI, DIR., NV PUBLIC SAFETY DEPT.: The vehicle last night was a new 2007 Cadillac Escalade with temporary license plates out of Colorado that were not visible, so that was their reason initially to stop the vehicle.

ARENA: Inside the car, the trappings of life on the run, cell phones, walkie-talkies, laptop commuters, wigs, sunglasses, credit cards and more than $50,000 in cash.

UNIDENTIFIED MALE: We have been saying now for probably six months asking people to look out for entourages of SUVs with darken windows that he would be accompanied by his security, which he usually is.

ARENA: Instead he was riding with one of his wives and a brother. Jeffs has been on the FBI's most wanted list since May for allegedly arranging marriages between underage girls and older men. He rules over the Fundamentalist Church of Jesus Christ of Latter Day Saints, a polygamist sect with an estimated 10,000 followers.

UNIDENTIFIED MALE: He has raped and sodomized many, many children, girls, women, and he's created this culture that is damaging in its own right. ARENA: Jeffs was indicted in June in Arizona for allegedly arranging a marriage between a 16-year-old girl and a married man. He is charged in Utah with two felony counts of rape as an accomplice for allegedly arranging the marriage of a teenage girl to an older man in Nevada.

(END VIDEOTAPE)

ARENA: Now Jeffs is expected to be extradited to either Utah or to Arizona to face the charges against him but that hasn't been announced yet. He does remain in federal custody. And officials are hoping that his arrest will prompt his victims to come forward and testify -- John.

KING: Sort of a routine ending to a very bizarre case.

ARENA: Sure is.

KING: Kelli Arena thank you very much. Now a former government contractor is alleging a fleet of refurbished U.S. Coast Guard patrol boats is susceptible to security and safety flaws. After concluding his concerns were not being taken seriously enough, he took a novel approach, blow the whistle online. Jacki Schechner is following the story -- Jacki.

JACKI SCHECHNER, CNN INTERNET REPORTER: John, the guy's name is Michael Decourt (ph). He used to work for Lockheed Martin. He was let go on August 11, but on August 3 he posted this 10-minute video on utube.com, the site where anyone can post a homemade video. It's since been viewed about 15,000 times. In the video Decourt (ph) alleges that Lockheed Martin made some mistakes when it outfitted some eight boats for the Coast Guard as a part of a larger program known as Deepwater. That's a large program to modernize the Coast Guard. He makes three specific allegations. One of them that the communication systems are insecure. He also says that the equipment won't withstand extreme temperatures and he talks about the camera system on the boat and how it had some blind spots. Take a listen to what he says here.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: While this problem could have been easily remedied by simply providing other camera to fill the blind spots, Lockheed Martin and the U.S. Coast Guard decided to deliver these boats without the extra camera. This situation leaves the boat...

(END VIDEO CLIP)

SCHECHNER: ... (INAUDIBLE) several times. We reached out to Lockheed Martin for their statement. They say they have thoroughly investigated his concerns. They found them to be without merit. There are no safety or security issues. Decourt (ph) also sent an e- mail to the Department of Homeland Security Inspector General's Office.

They are investigating his concerns. They say that their auditors will have a review if that available in September. We also reached out to the Coast Guard to get their statement and a spokeswoman for Deepwater told us they are committed to safety and national security. They do not have unsafe boats on the water and they are cooperating with the inspector general's investigation -- John.

KING: And we'll see how those investigations go. Jacki Schechner thank you very much. And still to come tonight in THE SITUATION ROOM, he was the man in charge and he says the scapegoat for the failed response to Hurricane Katrina. Former FEMA director Michael Brown joins us in THE SITUATION ROOM a year to the day after the killer storm hit.

Plus, Iran's president versus President George W. Bush, CNN's Jeanne Moos looks at the great debate challenge.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

KING: Zain Verjee joins us with other news making headlines right now. Hi, Zain.

ZAIN VERJEE, CNN ANCHOR: Hi, John. At least 62 people were killed and 55 injured in a pipeline explosion about 100 miles south of Baghdad. Iraqi officials say the victims were trying to siphon fuel from the pipeline and they were using a generator. They say it may have sparked triggering the explosion.

Space shuttle Atlantis is heading back to its Florida launch pad. NASA had ordered it back to its hangar because of Tropical Storm Ernesto. The move was under way when officials reversed course deciding that Ernesto does not pose a threat. NASA now says September 6 is the earliest launch date for Atlantis.

The Boulder, Colorado, district attorney says the man who confessed to killing JonBenet Ramsey still believes that he committed the crime but DNA evidence shows that John Mark Karr was not involved in her death. D.A. Mary Lacy is now being criticized for bringing Karr from Thailand where he was arrested to Colorado. Karr now faces extradition to California where he's wanted on child pornography charges.

In San Francisco, police say one person is dead and three are in critical condition after a driver went on a hit and run spree targeting pedestrians with his SUV. The attacks happened in several neighborhoods over a 20-minute span. A total of 13 people were injured. The driver is in custody and police aren't giving his name and they don't really know his motive either.

KING: That's fine. Oh I read that.

VERJEE: John.

KING: Zain, thank you very much. And just ahead, on this day that we remember Hurricane Katrina, we're also keeping our eye on Hurricane John, now threatening a popular tourist destination. Find out if you need to change your vacation plans.

And also on this Katrina anniversary, the man whose handling some say bungling of the storm made him a household name. I'll go one on one with former FEMA director Michael Brown.

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

(COMMERCIAL BREAK)

KING: To our viewers, you're in THE SITUATION ROOM where new pictures and information are arriving all the time. Happening now, a powerful hurricane off Mexico's Pacific Coast. Hurricane John has grown to a category three storm and is threatening to trigger floods and mudslides as it rushes past the coast. If you're heading to Acapulco, and other Pacific reports, beware. Forecasters expect John to grow even stronger tomorrow.

President Bush is urging New Orleans residents displaced by Hurricane Katrina to come home. He joined ceremonies today marking one year since the storm devastated the Gulf Coast and killed 1,800 people across the region.

Former FEMA director Michael Brown shares his biggest regret about the Katrina catastrophe ahead.

And Venezuela's president is showing solidarity today with Syria and fresh defiance of the United States. Hugo Chavez is in Damascus for talks with President Bashar Al-Assad.

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

Happening now, Tropical Storm Ernesto bearing down on Florida with a warning going out to residents tonight don't let your guard down. It may not be a hurricane, but the storm till poses a threat.

CNN's John Zarrella is live for us in Miami with the latest -- John.

JOHN ZARRELLA, CNN CORRESPONDENT: John, it certainly does, but as night falls here in Miami, steady rain, gusty winds. We expect to be going through that through much of the night, but you know a couple of good things have come out of this. First of all, it did not intensify into a hurricane. It is not likely to intensify into a hurricane before it makes landfall in extreme southern Florida. And the other good thing is that people took this seriously here and they prepared. Gas lines, particularly yesterday, stretched around blocks, sometimes 45 minutes long. I was in line for a good 20 minutes yesterday getting gas at one station, and that was the story around all of south Florida yesterday.

In a town known as Sweetwater, which is notorious for flooding, they handed out sandbags -- city officials -- to hundreds of people who came to pick those bags up. It's become a ritual before every storm that threatens south Florida. People go there to get those sandbags and they are much needed sandbags. One of the issues facing people down here is that hundreds upon hundreds of people still have blue tarps on their roofs. The aftermath, the remnants, the reminders of Hurricane Wilma, a fairly potent hurricane that hit us last October 24th here in south Florida.

And there is concern with the steady rain -- five perhaps 10 inches of rain in south Florida over the next 12 hours or so -- that many of those blue tarps could be compromised causing roof collapse and causing perhaps some injuries. So people that have blue tarps on their roofs were urged to seek safety and go someplace else.

Now, I have to tell you, John, that on this one-year anniversary of Katrina -- I stood in New Orleans last year on this day, and I can tell you, these are the kinds of storms we like to see, the ones that don't develop like Katrina did -- John.

KING: So far, it seems like less of a storm. John Zarrella, on watch for us, though, in Miami. John, thank you very much.

And as John just noted, the other storm on the minds of many today, Hurricane Katrina, which destroyed much of New Orleans exactly one year ago. Virtually every aspect of the city is still struggling to recover, including the healthcare system.

CNN's senior medical correspondent Dr. Sanjay Gupta is here with that story -- Sanjay.

DR. SANJAY GUPTA, CNN SR. MEDICAL CORRESPONDENT: Yes, it's interesting, John, the very measure of a society is how they take care of sick and the dying. It's been a year, as you mentioned, and it seems like as far as the hospitals go, it's going to get worse before it gets better.

(BEGIN VIDEOTAPE)

GUPTA (voice-over): Just a year ago, patients died on this parking deck, waiting to be rescued. As a doctor, I have never seen anything like it.

(on camera): What's going to happen to some of these patients if you don't get them out of here?

DR. BEN DEBOISBLANC, CHARITY HOSPITAL: Two of them have already died here on this ramp waiting to get out in this very spot.

GUPTA: So now a year later, you look back on the year, are you pleased with how things have gone?

DR. FRED CERISE, LA DEPT. OF HEALTH AND HOSPITALS: I don't think anybody is pleased with where we are right now.

GUPTA (voice-over): Dr. Fred Cerise is the state secretary of health. He's supposed to be leading the effort to resuscitate healthcare. But nearly a year after Katrina, there's still no plan. He started working on one just last month, when he was tapped by the governor and the federal government. (on camera): This is a complicated problem. Are you responsible?

CERISE: There's not going to be one person that you can point to and say, you're responsible for the healthcare system.

GUPTA (voice-over): But if the state's top health official isn't responsible, who is? Saris doesn't have an answer for us. Meantime, people are at risk again.

(on camera): There were six shootings in New Orleans last night. There was only two operating rooms available. What's going to happen if this continues to happen as the city repopulates and -- don't forget -- we're back in hurricane season?

CERISE: The city is stressed right now. There's no surge capacity, if you will.

GUPTA (voice-over): Half the area's hospitals remains closed. Patient-filled ambulances wait hours to unload. The mentally ill have nowhere to go. Suicide rates have tripled. Every emergency room is at full capacity 24 hours a day, every day.

(on camera): This is the famed trauma center of Charity Hospital. They actually wheel patients right into this area, and try to take care of some of sickest and dying patients here in the city. What we've found now though, is it's the hospital itself that is sick and dying. And that's become a metaphor in so many ways for the overall state of healthcare here in New Orleans.

(voice-over): The building is now deemed unsalvageable, so Charity opened an emergency clinic in -- no joke -- an abandoned department store, without any beds, incapable of admitting patients, strictly triage. And it opened a center for trauma only this fertility clinic, 20 minutes from downtown. Some New Orleans doctors say rebuilding healthcare has not been a priority at any level of government.

(on camera): This is crazy. I mean, it's been a year. Hotels are opening up. Businesses are opening up. We're talking about hospitals here.

(voice-over): Three-quarters of its physicians have left New Orleans, but not Dr. Jim Aiken (ph).

UNIDENTIFIED MALE: We feel like we're a stepchild in first response.

GUPTA: Cerise's Committee is expected to propose a healthcare fix in October, nearly 14 months after Katrina.

CERISE: It's a complex multitude of problems. Can we do more? Absolutely.

GUPTA: University Hospital will be opening this fall, but it will be a long time before it's safe to get sick in New Orleans. (END VIDEOTAPE)

GUPTA: You know, if I had to sum it up, in just a couple of words, no surge capacity. I mean, it's really remarkable. I mean, forget about a hurricane, John. A bus crash could really do this city in. I don't know how they're going to -- this is an American city. I don't know how they are going to take care of patients.

KING: This is not only sober, quite a depressing look. Dr. Sanjay Gupta, thank you very much.

GUPTA: Thank you, John.

KING: And as Sanjay notes, there on this anniversary, there's still hard feelings across the region. We will turn now to the lingering criticisms of the federal response.

(BEGIN VIDEOTAPE)

KING: And joining us now, the man who was at the helm of FEMA after Katrina, and who later took the heat, and the fall, Michael Brown.

Mike Brown, thanks very much for joining us from New York.

MICHAEL BROWN, FORMER FEMA DIRECTOR: My pleasure, John.

KING: I want to begin with something you said this morning that I found quite interesting. On the "Today" show on NBC this morning, you said this: "You want to protect the president, because you're a political appointee, so you're torn between wanting to tell the absolute truth, and following those stupid talking points. To this day, that is my biggest regret."

Mike Brown, tell us on this day as the country reflects on Katrina, what is the truth about the president and his role in all of this that we don't know, that you have been reluctant to tell?

BROWN: Well, I think the administration, John, is now reaping what it sowed for the past three-and-a-half, four years with the Department of Homeland Security. All the public has to do is go back and look at the memos that I wrote in 2003 and again in 2005 warning that this was going to happen.

You know, it is crippled, it has suffered from the money that's been taken by Homeland Security, by the fact that, you know, Secretary Chertoff and Secretary Ridge just flatly refused to do catastrophic disaster planning. And we are now reaping the problems of that.

KING: Have they learned the lesson from that? Is there more money going into the planning now? Or do you think they are just papering this over?

BROWN: Well, that's -- I think that's going to be the role of you and me and everyone in the media and the American public, to watch and really hold their feet to the fire, that it's not just, again, talking points, that Secretary Chertoff doesn't come on and just talk about, you know, we are doing all of these things, which I hope he's doing. But we've have got to hold their feet to the fire and make sure they really do implement those reforms.

KING: Many people watching this are probably asking the question, why should I listen to this guy? This is the guy who was running FEMA when this all happened.

Now, I know you think there is plenty of blame to go around. But Congress did look into it. And we had a conversation yesterday with Senator Susan Collins. She's the chairwoman of a Senate committee that looked into all this. And she says at the top of the blame list, in her view, is a guy named Michael Brown.

I want you to listen to Senator Collins.

(BEGIN VIDEO CLIP)

SEN. SUSAN COLLINS (R), MAINE: Well, I was very disappointed in the federal response. It was hesitant and halting, when it should have been crisp and competent. I think the person who was the biggest failure in this was Michael Brown, the director of FEMA, who failed to take control and deliver essential services.

(END VIDEO CLIP)

KING: Is she right, Mike Brown?

BROWN: Isn't that amazing, that the senator who oversees FEMA, the one that I went to for two years, and said, Senator, these -- this is not working; we need these things; isn't that amazing, that she now tries to deflect that blame back to the one guy who was saying, all along, we need to fix these things?

It's the same old Washington politics. And I would say to Senator Collins, come on, Senator. Get real about this.

KING: Well, let me ask you this, and play devil's advocate. She's not here.

She's from the state of Maine. It's not going to get hit by a hurricane any time soon, or certainly not by a high-force hurricane. She is also someone who has sparred with this president and administration from time to time.

She is known as a maverick. Why wouldn't she stand up and say, "I think Mike Brown is to blame, but I also think, in the year after, they haven't done X, Y and Z," if she really feels that way?

BROWN: Because I think we are too close to the '06 and the '08 elections. I think that's exactly what's going on.

And no one wants to -- look, this is all part of, as long as we can continue to blame Mike for everything that went wrong, literally for everything, then, that's the mantra they are going to stick to. Look, when she talks about, "Why didn't he get stuff down there; why didn't he take charge?" I tried, for the first five days, to take charge. I couldn't get a unified command established, because there was this fear of, well, if we come in and federalize this, how is that going to look, if we federalize a white, female Democrat governor and we don't federalize a white, male Republican governor, referring to Governor Barbour in Mississippi?

It's just politics at its absolute worst.

KING: Well, then, let me go back to the first point, then.

You say that you are reluctant at times. It appears -- now, tell me if I am mischaracterizing what you are saying -- that you are reluctant to be more honest about the president and his role in all this, because you want to stick to the talking points; you want to be a loyal political appointee.

At that moment, when you are trying to get federalized, why didn't you just go to the president of the United States, say, "Damn it, Mr. President, we need to do this, or else we are in serious trouble"?

BROWN: And that's what your viewers need to know, John, is, that is exactly what I did. I did that on numerous occasions.

Prior to the storm, I did it. Everyone remembers the famous "Heck of a job, Brownie" phrase. I had spent about three or four minutes with the president prior to that, telling him exactly how bad things were throughout the Gulf Coast region.

KING: And what did he say?

BROWN: There was just this amazing, you know, well, keep trying, and we're going to keep doing -- you know, talk to Joe and talk to Andy and the other people on the staff, and we will make things work.

I talked to him again on Tuesday morning, immediately following landfall, and said, "Mr. President, that we have lost at least 80 percent of the population of New Orleans." And there was this astonished gasp from everybody on the conference call about, are you kidding me? And that's astonishing to me, because we had talked about it for two days prior to land fall and during land fall, and the next day.

KING: Michael Brown, the former director of the Federal Emergency Management Agency, thank you for joining us today, on what has to be a momentous day for everybody, but especially for you, the one-year anniversary of Katrina.

Michael...

BROWN: Thank you, John.

KING: Michael Brown, thank you very much.

(END VIDEOTAPE)

KING: Up ahead tonight, how old is too old or the run for president? If you ask Senator John McCain, he might tell you that age is nothing but a number. Plus, Iran's president dares President Bush for an uncensored debate. Jeanne Moos takes a look at how it would all could go down. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

KING: Light the candles, this is a big day for Senator John McCain. It's his 70th birthday and it raises a question that could be crucial to his future in presidential politics. Does age matter? Our congressional correspondent Dana Bash has more on the senator's big milestone. Dana?

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Well John, the senator is in Montenegro. That's where he's spending his 70th birthday. He's there on a 10 day, five country trip with his Senate colleagues. And it's that kind of image, somebody who is always on the go that McCain is eager to cultivate as he gears up for a probable presidential run and faces questions about whether he's up to the challenge.

(BEGIN VIDEOTAPE)

BASH (voice-over): Just how old is John McCain? Get used to hearing this ...

SEN. JOHN MCCAIN (R), ARIZONA: I am older than dirt, I have more scars than Frankenstein, but I have learned a few things along the way.

BASH: One lesson, try to turn a potential liability -- age -- into a self-deprecating punchline, much like the role model he'd like to replace in the history books as the oldest man to become president.

RONALD REAGAN, FMR. PRESIDENT OF THE UNITED STATES: I am not going to exploit for political purposes my opponent's youth and inexperience.

BASH: Ronald Reagan was 69 years, 349 days old, when he took office in 1981. McCain would be 72 years, 144 days old, on Inauguration Day 2009. Reagan's former chief of staff says judge McCain by how he acts, not his age.

KEN DUBERSTEIN, FORMER REAGAN CHIEF OF STAFF: You don't all of a sudden start covering yourself with a blanket and having tea at 2:00 in the afternoon just because you are 70-years-old.

BASH: McCain goes out of his way to come off more Gen-X, than geriatric.

MCCAIN: Congratulations.

BASH: Appearing in movies like "The Wedding Crashers" and hosting Saturday Night Live. MCCAIN: (SINGING).

BASH: Aides and allies played down the significance of 70 by playing up his tireless pace.

SEN. SUSAN COLLINS (R), MAINE: I like to think I have a lot of stamina. He leaves me in the dust.

BASH: But anyone McCain's age faces higher risks. The government says 88 percent of those over 65 have at least one chronic health condition. One in four older Americans suffer from a decline in cognitive health. McCain's personal history adds to the challenge -- multiple bouts of skin cancer.

MCCAIN: My health is excellent.

BASH: Top aides are preparing for the scrutiny that comes with a bid for president.

SCOTT REED, REPUBLICAN STRATEGIST: Part of the campaign strategy will be to put out the health records, probably have a more aggressive schedule of going to doctors, but open the book and show everything.

(END VIDEOTAPE)

BASH: Six years ago, McCain released some 1,500 panes of medical records, an effort to prove the former prisoner of war was physically and psychologically fit to be president. Aides say they'll have to do that again, but they say, John, that the senator goes for checkups every three months to the Mayo Clinic in Arizona and say right now, six years after his last bout with cancer, he's cancer free.

KING: Do they worry at all that he'll be running to succeed a president who makes a very public show of his physical fitness? It used to be running, now we see George W. Bush mountain biking. What do the McCain people say about that?

BASH: Well you know, they hey made a point of telling us that the senator at the beginning of the congressional recess, hiked rim to rim with his son at the Grand Canyon, something that not a lot of people do. That's something that they made a point of talking about in advance of the stories that they knew were going to come out about the senator's 70th birthday. But the one thing that McCain aides say over and over again is experience in a post-9/11 world, they truly believe really, really matters and they're definitely already talking about turning that into a plus, not a minus, the age question.

KING: We'll see how this all plays out in the campaign incumbent. On this day, happy birthday, Senator McCain. Thank you, Dana Bash. And up ahead, Jack Cafferty wants to know does a single senator have the right to keep $2.5 trillion in government contracts secret from the public? He'll have your e-mails next.

And what if President Bush accepted Iran's offer to debate the president of Iran? Our Jeanne Moos takes a look, coming up. You're in THE SITUATION ROOM. (COMMERCIAL BREAK)

KING: A look now at some of "Hot Shots" coming in from the Associated Press.

We begin in the Middle East. A woman walks past the wreckage and rubble left behind in the suburbs south of Beirut.

Diwaniah, Iraq (ph): Iraqi soldiers conduct a patrol from the back of a pickup truck.

New Delhi, India: a bizarre scene. Activists from People for the Ethical Treatment of Animals protest outside a livestock convention.

And in Davie, Florida, a frustrated man shares some choice words with a gas station attendant. Gas lines are long as Floridians gear up for Ernesto.

And that's today's "Hot Shots." Pictures often worth 1,000 words.

And Jack is standing by now in New York with "The Cafferty File." Hi Jack.

JACK CAFFERTY, CNN ANCHOR: That screaming at the gas station guy doesn't help.

KING: No, it doesn't work.

CAFFERTY: It doesn't work.

A bill introduced by Senators Obama and Coburn was on it's way to shedding some light on world of government contracts -- wouldn't you like to know what they're doing with our money -- but suddenly this bill was stopped in its tracks. An unidentified senator put a secret hold on the bill. The question we're asking is, "does a single senator have the right to keep $2.5 trillion in government contracts secret from the taxpaying public?"

Phil in Philadelphia, "Of course he does. Could you imagine what would happen if anyone found out how our money is being squandered, wasted and is filling the pockets and coffers of the favored few? The American people might wake up from their collective stupor and actually hold these crooks accountable by tossing the dishonest bums out on their keisters."

A little play on words there.

Bob in Michigan writes, "the entire congress doesn't have the right to keep $2.5 trillion in government contracts secret from the public."

Carol in Toronto, "the real question should be, why does the secret hold rule exist in an open democratic government? The American public might also be interested in when this rule was put into place and by whom? And in New York, "where's a good information leak when you need one. I mean, if this administration can out a CIA operative and get away with it, surely someone can out this so-called senator without retribution."

Brian in Wisconsin, "no elected official should keep any of our taxpayer spending secret, it's like saying, trust us, we can spend your money better than you so you don't need to know what you're buying."

And Rich in Waterford, Connecticut, "why not? I trust each and every government official to do what is fair, honest and in the best interests of the American people. You'll have to excuse me now, I need to go finish righting my letter to Santa."

If you didn't see your e-mail here, you can go to CNN.com/caffertyfile where you can read some more of these little gems online -- John.

KING: A little early for a letter to Santa. It must be a long note.

CAFFERTY: Well, that's not exactly the point.

KING: I'm with you.

I think we're going to find out who this senator is. Jack Cafferty, thank you very much.

I sometimes get the point.

Still ahead, the president of Iran challenges George W. Bush to a debate. Can two world leaders argue their way through a nuclear crisis? Jeanne Moos is on the story. You're in "THE SITUATION ROOM."

(COMMERCIAL BREAK)

KING: Now don't hold your breath, but it would be fascinating, not to mention historic -- a debate between the leader of a free world and the leader of a rouge nation who says the United States is the devil. More now from CNN's Jeanne Moos.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT (voice-over): His nemesis proposed an idea that's debatable: that President Bush....

MAHMOUD AHMADINEJAD, PRESIDENT OF IRAN (through translator): Should participate in a direct television debate with us. And the press can be there too and ask their questions from us.

MOOS: The last time an axis of evil leader challenged the president to a debate, it was Saddam Hussein on "60 Minutes II."

DAN RATHER, CBS ANCHOR: This is not a joke.

SADDAM HUSSEIN, PRESIDENT OF IRAQ (through translator): No.

RATHER: How would this work? Who would moderate this debate?

HUSSEIN: You, Mr. Rather.

MOOS: Remember when President Bush first debated John Kerry and got raked over the coals for blinking, head shaking, squinting and eye rubbing.

UNIDENTIFIED MALE: America is the new Texas, we'll kick your ass.

UNIDENTIFIED MALE: I can't believe I'm behind in the polls to this.

MOOS: And you can imagine Iran's president Ahmadinejad trying to intimidate President Bush by invading his space as Al Gore once did.

BUSH: But can you get things done? And I believe I can.

MOOS: Ahmadinejad's debate proposal came at a two-hour press conference with a few odd moments. For instance, when a reporter recited a poem.

UNIDENTIFIED FEMALE: We are aflame for justice.

MOOS: Iran's president tried to get him to stop.

AHMADINEJAD: I think you should end now.

UNIDENTIFIED MALE: But this is a timely poem. I really would like to use this podium to finish my poem.

MOOS: And President Ahmadinejad took a page out of President Bush's press conference technique.

BUSH: That's a ridiculous looking outfit.

MOOS: Joking about reporter's outfits.

AHMADINEJAD: You're wearing the same outfit as I am.

MOOS: But despite the good humor, the White House nixed the debate idea, calling it a diversion.

JOHN BOLTON, U.S. AMBASSADOR TO THE U.N.: It's not a debate I would look forward to, or waste any time thinking about.

MOOS (on camera): But since we have time to waste, we thought about it. Try to imagine what a Bush/Ahmadinejad debate might be like.

BUSH: How are you feeling?

AHMADINEJAD: We won't be happy. But we won't be worried about it either. BUSH: Sometimes I'm happy.

AHMADINEJAD: They should be embarrassed.

BUSH: They sponsor Hezbollah.

AHMADINEJAD: They've been a little, you know, bad tempered.

BUSH: And they're wrong.

AHMADINEJAD: You know, the time has really passed for that kind of language.

BUSH: It's kind of like dancing together, isn't it.

MOOS (voice-over): But the U.S. isn't taking the bait when it comes to this debate.

Jeanne Moos, CNN, New York.

(COMMERCIAL BREAK)

KING: There's a reason why we love Jeanne Moos.

Now some supporters of Iranians nuclear program are taking an unusual step, hacking, Iranian president Mahmoud Ahmadinejad's web site. Internet report Jacki Schechner is here to explain -- Jackie.

SCHECHNER: John, the Iranian president has a blog that we believe is run by the Iranian government. And today it was hacked. According to Zoneh.org, a Web site that tracks hacks and defacements online. The hackers themselves contacted Zone H at 10:30 Eastern time this morning to claim responsibility.

This is what it looked like. It was group called Y Underground.

Now Zone H says this is an Iranian group. The message was posted in Farsi using the Roman alphabet. We had CNN translators take a look. Essentially it thanks Ahmadinejad for defending Iran's right -- defending their right to develop nuclear energy.

We went back to the Web site this afternoon. It is now intact -- John.

KING: Thank you, Jackie.

And thank for joining us. Up next, "PAULA ZAHN NOW." Soledad O'Brien is in New Orleans for Paula.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com

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