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CNN LATE EDITION WITH WOLF BLITZER

Interview With Barham Salih; Interview With Elaine Chao

Aired September 3, 2006 - 11:00   ET

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


JOHN ROBERTS, GUEST HOST: This is "Late Edition," the last word in Sunday talk.
(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: We will stay on the offense and defeat the terrorists abroad so we do not have to face them here at home.

(END VIDEO CLIP)

ROBERTS: President Bush goes on a new PR offensive for the U.S. mission in Iraq. But will a war-weary American public buy his message? We'll ask two members of Congress, Republican Christopher Shays and Democrat Marty Meehan.

(BEGIN VIDEO CLIP)

JOHN BOLTON, U.S. AMBASSADOR TO THE UNITED NATIONS: I don't think you can have the wide range of activities that Iran is engaged in for any reason other than seeking a military capability.

(END VIDEO CLIP)

ROBERTS: Iran defies a U.N. deadline to stop its nuclear program. What will it take to resolve the stalemate? Answers from Iran's top nuclear official, Ali Asghar Soltanieh.

(BEGIN VIDEO CLIP)

BARHAM SALIH, IRAQI DEPUTY PRIME MINISTER: We all recognize that he's the mainstream leadership of this country (inaudible) a civil war would be a calamity for all. There would be no winners.

(END VIDEO CLIP)

ROBERTS: Three years after U.S.-led invasion of Iraq, concerns that the country is on the edge of civil war. Conversation with the Iraqi deputy prime minister, Barham Salih.

And will Iraq be the deciding factor in this year's Congressional elections? Insight from former Clinton White House counsel Lanny Davis and top Republican strategist Matthew Dowd. Plus, on this Labor Day weekend, are American workers better off? Perspective from Labor Secretary Elaine Chao and Teamsters President James Hoffa. "Late Edition's" lineup begins right now. It's 11 a.m. in Washington, 8 a.m. in Los Angeles. It's 6:30 in the evening in Tehran and 7 at night in Baghdad. Wherever you are watching from around the world, thanks very much for joining us here on "Late Edition."

Wolf Blitzer is away this weekend on a well-deserved vacation. I'm John Roberts. We're going to talk about the United States mission in Iraq and the latest concern over Iran's nuclear ambitions with Republican Congressman Christopher Shays and Democratic Congressman Marty Meehan in just a few minutes' time. But first, Fredricka Whitfield is at the CNN Center in Atlanta. She's got a check of what's in the news right now. Fred?

(NEWSBREAK)

ROBERTS: Thanks, Fred.

Details now on that big arrest in Iraq. The capture of Al Qaida's second in command in that country. CNN's Michael Holmes joins us now live from Baghdad. Michael, what's the latest from where you are?

MICHAEL HOLMES, CNN CORRESPONDENT: Hi, John. Yeah, it was a big day for the national security adviser here, Mowaffak Al-Rubaie telling a news conference that this man had been captured a couple of days ago. He has named the man as Hamad Juna Baras al Zwaidi (ph). He has a couple of nom de guerres as well. He said that he was deputy to Abu Ayab al-Masri. Now, he in turn was the man who took over from Musab Al Zarqawi, the leader of Al Qaida in Iraq who was, of course, killed by U.S. troops back in June. Now, this arrest is important because Al Rubaie says among many other things, he was involved in a very auspicious and a very deadly bombing that took place here back in February.

(BEGIN VIDEO CLIP)

MOWAFFAK AL-RUBAIE, IRAQ'S NATIONAL SECURITY ADVISER (THROUGH TRANSLATOR): He is the one who is directly responsible for the criminal Haytam al Badri (ph), the mastermind and the bomber of the Samarra shrine. He has implemented the policy of Al Qaida in Iraq and the orders of Abu Musab Al Zarqawi in triggering sectarian sedition and violence in Iraq between Sunnis and Shiites.

(END VIDEO CLIP)

HOLMES: Now, as you heard there, John, it's important. This Samarra shrine was not just anything. This was a very holy place for Shias. It was an act, the bombing, that sparked the major sectarian violence that we have seen throughout Iraq, and in particular in Baghdad in recent months. John?

ROBERTS: All right. Michael Holmes for us live in Baghdad. And as we've seen in the past, Michael, certainly when number twos are taken down, another number two ready to take their place. We appreciate it. We'll get back to you later today. With Congressional elections just two months away and polls showing the U.S. public's mood souring on Iraq, President Bush is on a new campaign to regain support for the American military mission there.

Also today, new concerns over Iran's nuclear ambitions. That country today telling U.N. Secretary General Kofi Annan that their nuclear enrichment program is continuing. They also confirmed that to CNN.

Joining us from his home state of Connecticut this morning is Republican Congressman Chris Shays. He recently returned from his 14th trip to Iraq. And in Boston, Democratic Congressman Marty Meehan of Massachusetts. Congressman Meehan, let's start with you. You heard the news out of Iraq, Ahmadinejad said to Kofi Annan that he wants to negotiate a solution to this crisis, but at the same time, they're going to continue to enrich uranium. What, in your opinion, should happen here?

REP. MARTY MEEHAN (D), MASSACHUSETTS: Well, it's unacceptable for them to continue. We are very concerned. It represents a national security threat to the United States. I think we need a sense of renewed engagement with our allies. We have to show, I think, more strength, and it may be a case where sanctions, we can look at, but we need a renewed effort.

I think if you look at over the past four to six years, Iran is becoming increasingly more of a threat. In addition to that, we have the whole question of Iran giving aid to Hezbollah in southern Lebanon. So this is a major national security threat to the United States and our allies.

ROBERTS: Chris Shays, do you think that the United Nations Security Council, U.S. diplomats will be able to get agreement on a package of sanctions that can be tough enough to have any kind of an effect on Iran?

REP. CHRISTOPHER SHAYS (R), CONNECTICUT: Well, I somewhat doubt it. I think the U.N. has shown itself to be somewhat impotent, And Western Europe is simply tentative beyond measure. They do not want to confront Iran, and they do not want to help us in Iraq, and that's a huge message to the Iranians, that they're the players in that area.

ROBERTS: Congressman Meehan, do we have good enough intelligence on Iran to really know what's going on there?

MEEHAN: Well, I think it could be better. And I think we should do a better job reaching out to moderates in Iran. I also think, frankly, that our foreign policy hasn't worked very well. I think Iran has actually been helped by our efforts, a lack of competent efforts in Iraq.

And I think we also need to do a better job of providing assistance in southern Lebanon because I think that is also serving to empower Iran. But we have to engage here, and we have to make sure that we do everything we can to prevent the development of nuclear weapons by Iran. That means engaging moderate Arab states. It means engaging our allies and putting as much pressure on as we can.

ROBERTS: What do you think, Congressman Shays? Are there holes in our intelligence when it comes to Iran?

SHAYS: Well, there are huge holes. If you're not in a country, you don't know much about it, and you get it thirdhand. That was our problem with Iraq. I mean, it does argue that we should really have diplomatic relations with every country, Cuba, we should have had it with Iraq before and we should have it with Iran today. When we have diplomatic relations, we have people on the ground. We have our intelligence community working in our embassies. There are arguments that say we should.

And let me just make this point. Our relations with Iran diplomatically has been pathetic for decades, not just with this administration. But this administration outed the Iranians in terms of their nuclear program.

ROBERTS: Pretty tough talk for President Bush there, Congressman Shays. One thing that President Bush says repeatedly is that all options are on the table, which would include the military option. But are there any good options when it comes to the military? We put that question to David Kay, who was the chief weapons inspector in Iraq. Here's what he told CNN on Friday.

(BEGIN VIDEO CLIP)

DAVID KAY, FORMER U.N. CHIEF WEAPONS INSPECTOR: There's always a military option. The question is whether you're willing to pay the price. The Iranians have such easy counters after military attack, they can make our life impossible in Iraq.

(END VIDEO CLIP)

ROBERTS: But Congressman Meehan, do you think there's a viable military option here in Iraq?

MEEHAN: As a practical matter right now, no. We have 140,000 troops in Iraq. The fact of the matter is that (inaudible) and recruitment are down in our military. One of the things we need to do is get our military so we increase our end strength. We need more soldiers and Marines, and we're having difficulty doing that because of the war in Iraq.

But this idea that we can simultaneously have a war in Afghanistan and Iraq and then deal militarily with Iran, I don't think that's viable at this point. But in the end, I hope that we get a new policy, a new strategy in Iraq that results in us in being able to get our military to where it ought to be so that we can meet the challenges in the rest of the world.

ROBERTS: Now, on the subject of Iraq, Congressman Shays, here it comes. You knew it was coming. August 3, you said, quote, "Only about 40 percent of Iraq is under the military's control. You have 60 percent still not under control. To have a timetable for withdrawal -- is the unspoken word there -- is absolutely foolish.

You just returned from your 14th visit to Iraq and you said what we need a timetable for withdrawal. Why the change? SHAYS: Well, it's not a change in my support of Iraq. I believe we can't afford to lose. I think Islamist terrorists win; I think civil war breaks out and I think Iran becomes even a greater dominant player.

When I was talking about 40 percent, I was responding to people saying get out now and we're only covering 40 percent. When I talk about a time line, the timeline is based on, when they take over territory, then we get out and bring our troops home. We can't leave before they replace us. That would be the outrage.

ROBERTS: Congressman Meehan, every time Democrats raise the idea of a timetable for withdrawal, they get tagged by the Republicans as the party of cut and run.

Has Chris Shays joined the party of cut and run?

MEEHAN: Well, I'm encouraged by what Chris has had to say. I think it's pretty clear, if you look at the Pentagon's report that they released Friday afternoon, late Friday afternoon, the sectarian violence is increasing. July was the most violent month. This week has been the most violent week in Iraq.

So our policy has been a dismal failure. I think that it's important that we change that policy. I don't think that the United States can continue where we are.

And I'm very disappointed to see the president, the vice president and secretary Rumsfeld using this in a political way to get ready for the next election when the fact is they should be held accountable for their own incompetence in terms of Iraq.

And it starts with Secretary Rumsfeld. Secretary Rumsfeld has been pretty clear. They didn't send in enough troops. They say they listened to the generals on the ground. But the reality is General Eric Shinseki said that we needed a few hundred thousand troops and Secretary Rumsfeld put him out to pasture.

Rumsfeld said this war was going to last no more than six months in 2003. So somebody ought to be held accountable for this policy.

Congressman Shays, should Secretary of Defense Donald Rumsfeld resign?

SHAYS: Well, you know what, I'm not his biggest fan, but I'm not sure that, with two less years left in the administration, he should.

The bottom line is this. We made huge mistakes early on when we disbanded their army, their police and their border patrol, allowed the looting.

Then we started to make progress when we transferred power to the Iraqis and then when we set deadlines for the Iraqis, the politicians -- have elections to create a constitution; create a constitution; have a deadline to adopt the constitution; have a deadline to elect a government. So we saw huge progress for 18 months while we trained their police, their border patrol and their army.

But since January, basically, in my judgment, the political leadership in Iraq has been missing in action. Their troops, the Iraqi troops have been doing a great job, but they haven't.

We need to light a fire under them. We need to let them know that we will stay as long as it takes to get them to take our place but not a day later.

ROBERTS: Congressman Shays, also, let me come back to this idea of modification, if we could, in your position.

SHAYS: Sure.

ROBERTS: You're -- in the politics of it, you're in a tough fight in Connecticut in November. Your opponent, Diane Farrell, said on August 25, quote, "For 13 trips Chris Shays came back from Iraq saying progress was being made and supporting the president 100 percent. Now on trip 14 -- 75 days away from election day -- he's attempting to nuance his position to have it both ways."

What would you say to people who say you saw what happened to Senator Joe Lieberman, in the Democratic primary there, where he lost, supporting the war, and you're just looking for some political cover here?

SHAYS: Well, she's dead wrong. I was very critical of the administration right away, urged them not to disband the army, the police and the border patrol; very critical when I found that our troops weren't protected and had hearings to get us to make sure that we had the protective gear they needed.

So I have been a real critic of this administration, but when they transferred power in June of '04, I was one of the few people who said you're doing the right thing. And I was very supportive as they trained the police and the border patrol, very supportive of this government as they did all this heavy lifting with timelines. But I go where the truth leads me. And the truth tells me, as I've come back, after seeing this government now in power for three months, they are not doing the heavy lifting.

Even Sistani has said, the cleric has said, the Iraqi politicians need to come home from vacation and start getting back to work. That's the bottom line.

So, you know, I don't know where Iraq takes me in terms of an election, because I support the war in Iraq. I believe it is a noble mission. So I haven't changed my position one bit. I just want to light a fire under this government.

ROBERTS: Congressman Meehan, we want to give you the last word here before we go to break. We've got to get there fairly quickly. I just wanted to ask you. You're on the armed service committee in the House. Do you believe that American forces are caught in the middle of a civil war in Iraq?

MEEHAN: I think the evidence is pretty clear, if you look at the Pentagon's own report.

And it's interesting, I didn't hear Secretary Rumsfeld or Vice President Cheney referring to this report as some kind of appeasement tool or tie in Nazi Germany or Adolf Hitler.

The facts are the facts on the ground. And I don't know how the United States troops can be caught between the Sunnis and the Shias and the Kurds and, in addition to that, all of these militias that we see increasingly, not only fighting with American soldiers but also with the Iraqi security forces.

I think there is a civil war there, as a practical matter. So the question becomes, what is the role of the United States military when you basically have a civil war in a country?

(CROSSTALK)

And I disagree.

ROBERTS: All right, thank you, noted. We've got to go to break. Ahead, more of our conversation with Congressman Chris Shays and Marty Meehan.

And why is Iran refusing to suspend its uranium enrichment activities? We'll ask the country's top nuclear official.

And on this Labor Day weekend, we'll talk with Labor Secretary Elaine Chao about concerns that the Bush administration isn't doing enough to help American workers keep up with the cost of living.

"Late Edition" continues right after this.

(COMMERCIAL BREAK)

ROBERTS: Welcome back to "Late Edition." I'm John Roberts in for Wolf Blitzer, reporting from Washington. We're talking with Republican Congressman Chris Shays of Connecticut and Democratic Congressman Marty Meehan of Massachusetts.

And of course, the war in Iraq is going to play a very large role in the upcoming midterm elections, both of which you are running in.

And President Bush trying to turn around public opinion to some degree on the war with a series of speeches in which he's linking it to terrorism. Let's take a quick listen to what he said in Salt Lake City, addressing the American Legion Convention on Thursday.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: If America were to pull out before Iraq could defend itself, the consequences would be absolutely predictable and absolutely disastrous. We would be handing Iraq over to our worst enemies.

(END VIDEO CLIP)

ROBERTS: Congressman Shays, do you think President Bush can turn public opinion on the Iraq war around by linking it to terrorism? It's a link that he's made many times in the past. Why would it work for him this time?

SHAYS: Well, I mean, it happens to be the truth. And so you just speak the truth, and you let the truth take you where it takes you. The bottom line is this. The 9-11 Commission didn't say we're fighting terrorism. They didn't even say we're fighting Al Qaida. They said we're confronting Islamist terrorists. And you're not going to find them in Iceland.

That means we're fighting Hezbollah, Hamas, the jihad, the Brotherhood, Al Qaida and a whole list of others. That is the bottom line. Islamist terrorists.

ROBERTS: Congressman Meehan, do you agree with that, that Iraq is part of the war on terror? Recent polls show that the American public does not believe that. They do not believe that Iraq is connected with the overall war on terror.

MEEHAN: I think the administration is basically trying to take the fifth anniversary of 9/11 and take terrorists and put them all together and sort of mix it up with Iraq. I think the American people get the fact that Iraq was not a response to 9/11. And, in fact, at 9/11, there weren't Al Qaida terrorists in Iraq at that time.

Remember, we went into Iraq. This wasn't really about Al Qaida in Iraq at all, even though the administration sort of misled the American public. I don't think it's going to work because I think the American people get it. Iraq is separate from Afghanistan, which is separate from what's going on around the world in terms of the fight against terrorism. 9/11 and the fight against terrorism does not give the United States an excuse to invade any country it wants to where it thinks there ought to be regime change.

The fact of the matter is that these are separate and distinct. Yes, there are some similarities between extremism and Islam. But the fact is, it doesn't mean that our misguided policy in Iraq, that we should just stay the course. And I think the president, rather than have a PR strategy, he ought to have a new policy for Iraq.

ROBERTS: Congressman...

SHAYS: I would like to jump in.

ROBERTS: Go ahead.

SHAYS: OK. The 9-11 Commission was clear. We're not fighting Al Qaida. We're fighting and confronting Islamist terrorists. And when I come back from Iraq, I also visit the neighbors. And they recognize that if we leave Iraq, the Islamist terrorists win, Al Qaida wins, Iran wins, and they fear that tremendously. So they haven't separated it. It's not an isolated issue. And we have gotten NATO into Afghanistan to put effort there. But our effort now is to make sure we do not lose in Iraq.

ROBERTS: Congressman Shays, the president insisted that this series of speeches was not political. Is he being straight with the American public when he says that?

SHAYS: Well, I mean, I think it's what he believes. So the answer is, I don't know why he says it's not being political. If you guys want to say it's political, you're going to keep saying it. I think what he should say is, this is what I believe, and this is what I'm going to say, and the American people have to come to their own conclusions.

ROBERTS: Now, the White House has been playing a little bit of good cop, bad cop between the president and his surrogates, Vice President Cheney and Secretary of Defense Don Rumsfeld. Here's how Don Rumsfeld put the war in Iraq and the overall war on terror, addressing that same American Legion convention in Salt Lake City on Tuesday.

(BEGIN VIDEO CLIP)

DONALD RUMSFELD, U.S. DEFENSE SECRETARY: Once again, we face similar challenges in efforts to confront the rising threat of a new type of fascism. Today, another enemy, a different kind of enemy, has made clear its intentions, but some seem not to have learned history's lessons.

(END VIDEO CLIP)

ROBERTS: Secretary Rumsfeld there drawing a comparison between terrorism today and the rise of the Third Reich back before World War II and going so far as to say the people oppose the war in Iraq are trying to appease the terrorists in the same way that the Allies tried to appease Hitler prior to World War II. Congressman Meehan, did he go too far?

MEEHAN: He absolutely went too far. I thought his statements were outrageous. And once this administration's confronted with the fact that they have the same old tired policy that isn't working, that in fact, we're moving in the opposite direction in Iraq, they attack anyone who is willing to stand up and oppose their policy.

And I think that's wrong. And I would also add that we've been in Iraq now three and a half years. This war has lasted longer than what it took United States troops to get rid of the Nazis. And I think this idea that anyone that opposes this administration, that he can put a category of appeasement with terrorism or appeasement that went on through the Nazis, I think is outrageous, and I think it's over the line. And in the end, that's why it's so obvious that they're just playing politics with an election coming up.

ROBERTS: Congressman Shays, I just want to diverge a little here. SHAYS: Can I respond to that?

ROBERTS: Well, if you could do it very briefly. I'm almost...

SHAYS: Yeah. I read Rumsfeld's speech, and I buy into it entirely. Western Europe is asleep like Neville Chamberlain was asleep. I think people need to wake up to this war that we are confronting. Islamist terrorism is a real threat. We see it in London. We see it in Europe. And we're going to see it in the United States. And we better wake up.

MEEHAN: But Chris, we said we were going to go into Iraq to disarm Saddam Hussein. And that's not what happened.

ROBERTS: Gentlemen, if I could interrupt for a second here, I really want to switch gears with Congressman Shays because the -- just before we go here. There's a very interesting article in today's New York Times front page. It says that Karl Rove's word is no longer gospel in the GOP heading into this midterm election. Is that true?

SHAYS: I think that's true. And I think that's a healthy thing. He shouldn't be a god. He shouldn't be the gospel. But I also think it's interesting that the so-called leaks about a CIA agent didn't emanate from the White House, and it would be nice to have people bring that up as well.

ROBERTS: All right. Well, that's something that we'll get into a little bit later on with our political panel. For the moment, though, Chris Shays, Republican of Connecticut, Marty Meehan, Democrat of Massachusetts, appreciate you being with us. Have a good weekend.

MEEHAN: Thanks, John.

SHAYS: Thank you.

ROBERTS: Coming up, does Iran's nuclear program figure into that country's military moves? We'll talk with Iran's top nuclear official, Ali Asghar Soltanieh. But up next, a check of what's in the news right now, including the latest on more U.N. troops arriving in Lebanon today. Stay with "Late Edition."

(NEWSBREAK)

(COMMERCIAL BREAK)

ROBERTS: United Nations Secretary-General Kofi Annan is in Iran today in a bid to end the stand-off over that country's nuclear program.

Iran, on Friday, ignored the United Nations Security Council deadline to suspend uranium enrichment.

Earlier today, I spoke with Iran's representative to the International Atomic Energy Agency, Ali Asghar Soltanieh.

(BEGIN VIDEOTAPE) ROBERTS: Ambassador Soltanieh, let me begin by asking you, as of this moment, is Iran continuing to enrich uranium?

ALI ASGHAR SOLTANIEH, IRAN'S AMBASSADOR TO IAEA: The enrichment activities is continued under the full-scope safeguard of the agency. And inspectors just came out from Tehran and they were monitoring.

In addition to that, cameras are 24 hours monitoring and controlling the activities.

ROBERTS: Well, let me quote for you, if I could, from United Nations Security Council Resolution 1696, which says, "Iran shall suspend all enrichment and reprocessing activities, including research and development, to be verified by the IAEA."

Why is Iran not suspending enrichment activities as demanded by the United Nations Security Council?

SOLTANIEH: As our first reaction to the United Nations Security Council was, we do not see any legal basis for this demand. As I have already said on different occasions, there is no provision in the IAEA statute -- also NPT -- for requesting a country to stop or suspend enrichment activities. There is no limitation or restriction.

The only thing is that the IAEA has to verify and control the activities to make sure that there is no diversion. And this last report of Mr. ElBaradei proved -- this is a document proving our assertion that all activities have been for peaceful purposes and there is no evidence of diversion to nuclear materials.

ROBERTS: Right, NPT, we should point out, is the Non- Proliferation Treaty.

But it seems to be, Mr. Ambassador, here, a matter of trust.

Here is what the IAEA report on Iran, which was related on August 31, said about that. "Iran has not suspended its enrichment. The agency remains unable to confirm the peaceful nature of Iran's nuclear program."

You continue to say that this is for peaceful purposes, for the generation of electrical power, yet the IAEA is not sure. And there are many nations around the world that don't trust you.

SOLTANIEH: I want to, first of all, if you permit me to correct you. Don't say all over the world or many nations. Over 100 member states of the IAEA and 114 ministers of the non-aligned movement (ph) in Malaysia declared that Iran's activities are for peaceful purposes and this issue should remain in the IAEA. Therefore, this is, contrarily, what few countries have said.

The second point is, the IAEA have never, ever, Mr. ElBaradei reported, noncompliance and diversion of activities to military purposes. The only thing that, in this report, has been reflected is that some remaining few, remaining outstanding questions are not resolved. And this is not Iran to be blamed. The U.S. and the Europeans have sent this matter to New York and the Iranian government, having no other choice than to follow the rule passed by a parliament, therefore we have stopped the voluntary implementation of additional protocol, which we were implementing for three years.

And Iran, in fact, was the only country that was implementing additional protocol prior to its certification.

ROBERTS: Right.

SOLTANIEH: Therefore, when we have stopped it, then we cannot discuss the issues which are beyond our NPT obligation.

ROBERTS: Ambassador Soltanieh, here is one of the reasons why the IAEA is suspicious of the activity, or at least hasn't clarified the activity, can't say that it is for peaceful purposes.

The report cites Iran's production of uranium metal, which can be used for other purposes. But the IAEA believes that Iran is trying to cast uranium metal, perhaps into hemispheres, the use of which, many experts say, could only be for a nuclear bomb.

What's the uranium metal for?

SOLTANIEH: I just want, also, to remind you of our previous interview and also the document which is in the IAEA Web site -- and all the distinguished viewers could have a look on what we have thoroughly explained -- that, in only one and a half pages, among those documents which have been received years back from the intermediary, which you can find 10 times of those and more elaborate and detailed in any Web site.

And also, I just want to draw your attention that uranium metal is used for peaceful purposes.

ROBERTS: It is. But what's Iran's purpose?

SOLTANIEH: In a conversion facility -- the uranium conversion facility at Isfahan, which is under the IAEA full-scope safeguard, and it has been reported four years even before we were obliged -- Mr. ElBaradei was invited in 2000 -- there is one line because uranium metal could be used with one type of the reactors which use the uranium metal.

But as I said, this was one and a half pages that we have never paid attention and we have never used it. And it is under the IAEA seal. And this is nothing to be discussed so much and not making an issue, very minor issue.

Every activity and every gram of nuclear material are under the IAEA safeguard.

ROBERTS: Right.

SOLTANIEH: Regarding the trust and confidence, permit me to inform you that Iran has lost the trust during the last three decades. Iran is, at the time that I'm talking to you, is a 10 percent shareholder of Urradiv (ph) enrichment company in France. And we paid $1 billion as a loan to the company 30 years ago. But we have not received one gram of this material. There is no assurance of nuclear supply. And the committee on assurance of nuclear supply at the IAEA in 1987, after seven years of negotiations, collapsed.

Therefore, there is no legally instrument for assurance of nuclear supply, as I'm talking to you.

ROBERTS: OK...

SOLTANIEH: Therefore, Iran had no other choice than to depend on its own for its production of nuclear fuel. These are the facts and figures. And therefore, we don't have any confidence. And if we are going to make a confidence, let's start the confidence, we'll make sure confidence-building with both coming to the negotiating table.

ROBERTS: Ambassador Soltanieh, let me, if I could, come back to this issue of the uranium metal. You said, twice, it could be used for peaceful purposes. My question is, what is Iran's intent with this uranium metal?

SOLTANIEH: As I said, there was no intention. I said, among those documents we saved from the intermediary for the enrichment, there was also a document talking about changing the conversion of UF- 6.

And we do have this in large amount of the conversion of UF-6 also, in the (inaudible) of Isfahan. And I said that the intention, even if Iran wanted to have or any country wanted, to have uranium metal, these are applications. The uranium metal or uranium could be used in all the reactors. I'm somehow astonished, why these technical matters are not well-elaborated to public so that there will not be any confusion.

ROBERTS: The secretary-general of the United Nations, Kofi Annan, met with President Mahmoud Ahmadinejad this morning, this afternoon, in Iran. And he came out somewhat middling on his assessment, but he did have something positive to say about a potential solution in all of this. Let's listen to what the secretary-general said.

(BEGIN VIDEO CLIP)

KOFI ANNAN, U.N. SECRETARY-GENERAL: We also discussed the nuclear issue, and on the nuclear issue the president reaffirmed to me Iran's preparedness and determination to negotiate and find a solution to the crisis.

(END VIDEO CLIP)

ROBERTS: Ambassador Soltanieh, what is the solution to the crisis?

SOLTANIEH: The solution to the crisis is to come back to the negotiating table without any conditions. As our president have already said and we have many times reiterated, we are ready to come to the negotiating table and remove any ambiguities about our nuclear activities and to assure the international community that as now, the agency has reiterated that they have not found any evidence of diversion to military purposes.

These activities could remain exclusively for peaceful purposes. We are ready, full prepared to discuss any concern about different parties involved, and we have done so, and we are ready. And therefore, the best course of action is to start immediately the negotiating table, and to build up the mutual trust and respect.

ROBERTS: As the deadline came and went on August 31st, some tough words from U.S. President George Bush. Let's take a quick listen to what he had to say about the topic in Salt Lake City on Thursday.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: It is time for Iran to make a choice. We've made our choice. We will continue to work closely with our allies to find a diplomatic solution, but there must be consequences for Iran's defiance, and we must not allow Iran to develop a nuclear weapon.

(END VIDEO CLIP)

ROBERTS: Ambassador Soltanieh, the president's saying that there must be consequences. Is Iran concerned about potential consequence, whether they be sanctions under the United Nations, whether they be individual sanctions by member states or potentially a military attack against your nuclear facilities?

SOLTANIEH: I'm afraid that once again I have to repeat that in the civilized world, the language of threat, intimidation would not work. The policy of carrot and a stick have also not been useful. The best way is to sit down and discuss, and if there are any ambiguities or concerns, we are going to ready -- we are fully prepared to remove it.

And one thing that I have to say, we have never had a nuclear weapon in our defense factory (ph). Therefore we are not to follow for nuclear weaponization. And this is a pity that the United States as a nuclear weapon state was, which is the only country that applied the nuclear weapon in Hiroshima and Nagasaki, is accusing Iran again and again.

And we are reiterating once again, we do not have a nuclear weapon option. And that is the reason after the revolution, we continued to be a party to NPT. We could have withdrawn from NPT at that time, and we didn't have any political discussion now. You know that there are countries outside of NPT, and there is no issue raised in the IAEA. Iran is penalized to be too good and too cooperative and be an active party to NPT. And this is a serious setback to NPT. I assure that in the next NPT video conference, many member states will question this discrimination against a party to NPT, namely Iran. ROBERTS: Well, we'll continue to watch this very closely, and obviously with a lot of interest. Ali Asghar Soltanieh, who is Iran's ambassador to the International Atomic Energy Agency, from Vienna, Austria today, thanks very much for being with us. Appreciate it.

SOLTANIEH: I thank you, and thank you for your attention.

(END VIDEOTAPE)

ROBERTS: Up next, your money and the debate over whether American workers' wages are keeping up with rising costs. We'll talk with Labor Secretary Elaine Chao. "Late Edition" will be right back.

(COMMERCIAL BREAK)

ROBERTS: Although U.S. job growth picked up in August and the unemployment rate approached a five-year low, Bush administration critics are claiming the White House has done little to help improve wages for American workers. Joining us now from Louisville, Kentucky, is Labor Secretary Elaine Chao. Secretary Chao, welcome to "Late Edition," and happy Labor Day weekend to.

ELAINE CHAO, LABOR SECRETARY: Good morning. Thanks for having me.

ROBERTS: The latest jobs report, 129,000 jobs created. That's versus a monthly average this year of 140,000. Another sign the economy is slowing?

CHAO: No. I think we are entering Labor Day and with the 36th straight consecutive month of job growth. Our economy has produced well over 5.7 million net new jobs in the last two years. The unemployment rate is 4.7 percent, which is lower, a full percentage lower, than the average unemployment rate in the decade of the 1990s.

Now, you contrast this with Europe, France and Germany, in particular, which have unemployment rates almost double that of the United States. They have had no job growth, basically, in Europe and Japan combined, and the long-term unemployed in France is three times that of the United States. Average earnings per hour has actually increased 3.9 percent in the last year. So as we go into Labor Day, we're seeing steady, consistent gains for America's workers.

ROBERTS: But many economists will say, Secretary Chao, that it takes 150 to 200,000 jobs to keep up with economic growth, and that that's not happening.

CHAO: We're seeing about a monthly average about 140,000 net new jobs. This is just about that rate, which is necessary to have sustainable growth. Basically, we want wages to increase. We want the economy to grow. But not at a rate that's going to produce inflationary pressures. So right now, this rate is what we call not too hot, not too cold. It's just about right and sustainable.

ROBERTS: It's the Goldilocks effect, I guess you could say. Hey, listen, the economy is going to be a big issue in the upcoming election. People will vote, in part, on how they feel about the economy, how their wallets feel to them. But according to your new treasury secretary, what he said in a speech to the Columbia business school on August 1st, not everyone is feeling that extra fatness in their wallet. Let's take a listen to what he said.

(BEGIN VIDEO CLIP)

HENRY PAULSON, U.S. TREASURY SECRETARY: Amid this country's strong economic expansion, many Americans simply are not feeling the benefits. Many aren't seeing significant increases in their take-home pay. Their increases in wages are being eaten up by high energy prices and rising health care costs.

(END VIDEO CLIP)

ROBERTS: Secretary Paulson says not everyone is feeling it.

Secretary Chao, what's going wrong?

CHAO: Well, first of all, overall wages have increased dramatically since 2001. So when we're talking about overall income, first of all, let's make it very clear, we are talking about increases in overall wages.

And the debate is really about how much one group may have increased their wages versus another. But everybody's wages has increased.

Now, when we talk about wages, we need to talk about total compensation. Because that is what's most important. And total compensation includes not only wages but also retirement benefits, health benefits, paid leave.

Overall compensation has been up well over 6 percent since 2001. So overall, compensation overall is strong and it's overall, compensation numbers that we should be looking at.

Secondly...

ROBERTS: Secretary...

CHAO: Let me just finish one other thing. When we talk about personal income as well, let's talk about disposable, after-tax income. And after-tax income is what's, after all, in people's pockets. And that has increased to well over 8.2 percent since 2000.

ROBERTS: Secretary Chao, you'll have to forgive me. We've got a fire alarm going off.

CHAO: Yes, I hear that as well.

ROBERTS: But I wanted to ask you. The administration has not gotten credit for good economic growth. It was 5.6 percent in the first quarter this year, that reduced to 6.9 percent in the second quarter. But still, it's moving ahead. Yet at the same time, in polling, in an ABC News-Washington Post poll, 64 percent of Americans said that the economy is either not good or poor. Only 36 percent said it's excellent or good. What's going on with that perception?

CHAO: Well, Pew Charitable Trusts has another survey. Basically, they conclude -- there's one strong factor everyone agrees upon. And that is our workers, our workforce needs more training and more retraining.

And basically, that's what's happening. We are seeing not so much a wage gap in our country but a skills gap. We are increasingly turning into -- transitioning into a knowledge-based economy.

So those workers with higher skills, more education will be in greater demand. And their salaries will increase at a faster rate than workers who don't have as much education or as much skills.

So again, what we're seeing is not so much a wage gap but a skills gap. And what we need to do is to reinvest and invest in worker training and education and worker retraining.

ROBERTS: Another election issue is going to be minimal wage. Democrats would like to raise it to $7.25 from $5.15, where it's been for nine years now.

There are some Republicans who are thinking about that as well. Chris Shays of Connecticut is one. And Arnold Schwarzenegger recently signed on in California to a Democratic proposal to raise the minimum wage.

Is $5.15 a living wage?

And might you support some sort of move before the election to raise the minimum wage?

CHAO: Well, the administration supports an increase in minimum wage. And in fact, the Democrats in Congress, especially the Senate, and also my friends at the AFL-CIO, they could have supported the bill, called the trifecta bill, which would increase minimum wage from $5.15 to $7.25, which is exactly what they wanted.

Now, this is not a bill -- this is a bill that, again, was a bipartisan bill in the House, that passed the House. There were 34 Democrats who passed it. And so the Democrats had a chance, in fact, to raise the minimum wage and they did not.

ROBERTS: Secretary Chao, we're going to have to leave it there. We've still got these alarms ringing. We're going to have to try to figure out what that's all about.

We appreciate you being with us. Thanks very much for your time.

CHAO: Thanks so much for being with me.

ROBERTS: And we'll be back right after this. Stay with us. (COMMERCIAL BREAK)

ROBERTS: This is "Late Edition," the last word in Sunday talk.

(BEGIN VIDEO CLIP)

BUSH: The security of the civilized world depends on victory in the war on terror. And that depends on victory in Iraq. So the United States of America will not leave until victory is achieved.

(END VIDEO CLIP)

ROBERTS: Iraq faces an increasing number of deadly attacks from insurgents and militias. What can U.S. and Iraqi forces do to stop the slide toward civil war? We'll talk to Iraq's deputy prime minister, Barham Salih.

(BEGIN VIDEO CLIP)

RUMSFELD: Can we truly afford to believe that somehow, some way, vicious extremists can be appeased?

(END VIDEO CLIP)

ROBERTS: As tensions build in Iraq and Iran, the Bush administration goes on a political offensive. But how will U.S. foreign policy impact the polls in the upcoming Congressional elections? We'll get insight from two political insiders, former Clinton Special Counsel Lanny Davis and top Republican strategist Matthew Dowd.

And on this Labor Day weekend, a conversation about another major issue for voters: jobs. We'll discuss the state of the U.S. economy and the American worker with Teamsters President James Hoffa.

And welcome back. I'm John Roberts sitting in for the vacationing Wolf Blitzer. I just should point out we've changed our location to try to escape the fire alarm that was so prevalent in the Elaine Chao interview. We think it's stopped, so we should be able to move back outside soon.

We're going to have our interview with Iraqi Deputy Prime Minister Barham Salih in just a moment, but first of all, Fred Whitfield at the CNN Center in Atlanta has a check of what's going on in the news right now. Lots happening here, Fred. What about where you are?

(NEWSBREAK)

ROBERTS: Appears to be all quiet here now as well. Thanks, Fred.

In what's been another bloody week for Iraq with more than 250 civilians killed in attacks, growing fears that the country is on the brink of, if not already engulfed in, a civil war. And the sectarian violence is showing no signs of letting up. A short while ago, I spoke with Iraq's deputy prime minister, Barham Salih.

(BEGIN VIDEOTAPE)

ROBERTS: Deputy Prime Minister Salih, first of all, what can you tell us about the capture of this alleged al Qaida operative, said by Iraqi authorities to be al Qaida's number two man in Iraq?

BARHAM SALIH, IRAQI DEPUTY PRIME MINISTER: This is a very important development. It comes in the wake of the killing of Zarqawi and also a number of Zarqawi associates. Deliberate intelligence work both by Iraqi forces as well as the multinational forces have dealt a very severe blow to al Qaida organization in Iraq. And it is also significant because this man is believed to have been responsible for the attack on the shrines in Samarra, which led to the sectarian violence that we have seen. I hope that this will be a powerful signal to people that the government of Iraq, with the help of the international community and the multinational forces, we will not relent in the fight against terrorists.

ROBERTS: My understanding of it, Mr. Deputy Prime Minister, is that in addition to capturing this person, who goes by several names, including Abu Hammam (ph), you also ether captured or killed 11 other top al Qaida operatives and captured or killed some nine other lower- level operatives. What kind of wealth of information has this person been for you?

SALIH: There is a lot of operations going on, as a matter of fact. I mean, the killing of Zarqawi and his associates have also helped us get an insight through the intelligence that we acquired, the documentation that we have acquired, to have a better insight into al Qaida organization in Iraq, and many arrests that have been made since then have helped us gain a much better understanding. Obviously, I would not want to talk too much detail about this, but I can assure you this remains a top priority for the Iraqi government. And we are following every single lead, because this represents a very serious threat to this country, as well as the rest of the world.

So we are collaborating with our international partners, and more and more successes are taking place, but again, having said that, I do not want to be complacent. Al Qaida represents a serious threat, remains a serious threat, and we have to be very vigilant the way we deal with this threat.

ROBERTS: You know, it's been said by many, many people that one of al Qaida's goals in Iraq is to incite sectarian violence. Let me quote, if I could, from a recent Pentagon report, came out just on Friday here, about the amount of violence in Iraq. In the period between June and August, attacks increased by 15 percent. Iraqi casualties increased by 51 percent.

In June, 1,600 bodies were found. In July, it was 1,800; 90 percent of those were determined to be executions. Is it fair to say, Mr. Deputy Prime Minister, that Iraq is in the early throes, if not the full throes, of a civil war?

SALIH: Really, regardless of the academic debate of whether this constitutes a civil war or not, the reality is that there is too many people, innocent people losing their lives, and this is a grave situation. There is sectarian divide in this society, sectarian strife, and there are forces of the various communities that are trying to promote an agenda of hate and bigotry, and we have to stop that dynamic.

Also, it's important to remember that two years ago, we discovered a letter, intercepted a letter from Zarqawi, in which al Qaida outlined its strategy to bring about sectarian war in Iraq, civil war in Iraq. And to be fair, this society has been battered day in and day out with car bombs. Despite all that and despite these sectarian killings that we have seen, the bulk of the society, the mainstream leadership has stayed away from the conflict and are still searching for ways of overcoming our differences and fighting the terrorists.

This has not been easy, and again, every single life lost is one too many. And I do not want to underestimate the gravity of the situation. What I'm hopeful about is that everybody that I talk to in the senior leadership of the various communities understand if we do not walk back from the brink, it will be a catastrophe for all. And people realize that there will be no winners in the civil war, and we should be very vigilant and mindful of the strategy of al Qaida and other extremist organizations, that they want to disrupt the political process in Iraq.

ROBERTS: Mr. Deputy Prime Minister, let me just pick up on a couple of things you said. You said first of all, the debate over whether there is a civil war in Iraq is academic. That would seem to be an indication that it's a matter of semantics, that in fact you could say that Iraq is in civil war.

And secondly, my understanding of it is that it's not just al Qaida that's to blame. There are Shiite militias who are carrying out assassinations of Sunnis; there are Sunni militias who are carrying out assassinations of Shiites. It seems that everybody is involved here, not just terrorists.

SALIH: The point is, again, I say this is a grave situation. Too many innocent lives are being lost, and we have to turn the tide and change the course of events here. But it is not easy. And it is not easy because we live in the heart of the Middle East. We are burdened by so many other regional factors that you are all too well aware of.

Al Qaida and international terrorism is a burden, is a threat that we deal with day in, day out. A developed society like the United States has problems dealing with this threat. What about Iraq, a society in transition and the many problems that we're dealing with?

We are trying to chart a course for our nation to bring peace and stability. It is not easy. A good thing to remember is also that despite this badgering, despite these car bombs, despite these extremists, the bulk of the society and the main elements of the political leadership of this country are aware of the significance of the events that we're dealing with, are mindful of the responsibilities, and we are trying to make it happen. And there will be no immediate fixes. This is tough, but we are aware of the imperative of succeeding, and that failure is not an option for here.

ROBERTS: Now, Mr. Salih, the U.S. ambassador to Iraq, Zal Khalilzad, said a little while ago that the biggest threat facing Iraq right now are these militias. Iraqi forces did battle with the militia which is loyal to Muqtada al-Sadr in the town of Diwaniya earlier this week.

Here's what The New York Times wrote about that in an editorial. It said, "Instead of standing up to take over the defense of Iraq, the Iraqi army is in danger of crumbling. Now, government-backed Shiite militiamen have publicly killed Iraqi soldiers and fought an army unit to a humiliating draw, and Nouri al-Maliki, the prime minister, still hasn't decided where his military loyalty lies."

Muqtada al-Sadr is supportive of Nouri al-Maliki and yet here, Sadr's militia is battling Iraqi forces.

Where do al-Maliki's politics lie here?

SALIH: On the matter of militias, they represent a threat, undeniably so.

The prime minister and the government are adamant that there can be no tolerance for militias operating outside the law. And in fact, what happened in Diwaniya was very significant.

Yes, it was a major problem, but more importantly, in my opinion, the government has decided to act.

And Iraqi military forces, the ministry of defense and the Iraqi army, moved against these militias and took them on. And it was tough battles there.

And it was a very difficult and tough political decision for the prime minister to take, because he had to take on what is supposedly his constituency, or the constituency of the Shias in Iraq.

And I think the prime minister has been very clear that he will have no tolerance for these groups.

Yesterday, he went to Najaf to meet with Ayatollah Sistani. And there is blessing from the grand ayatollah and from the overall political leadership of the Shia community and overall Iraqis, as a matter of fact, that militias cannot be allowed.

The state should be the sole authorized force in the country. Any other force that will operate outside the law will be dealt with accordingly.

I cannot tell you that the government has sufficient resources and capabilities to eliminate this threat overnight, but I can assure you that the political decision inside the government is very committed and very serious about this. ROBERTS: Well, on that point, General George Casey, the commander of U.S. ground forces in Iraq, was talking about when Iraqi forces may be able to stand up and take care of security in your country. Here is what he said in Baghdad on Wednesday.

(BEGIN VIDEO CLIP)

GEN. GEORGE CASEY, U.S. ARMY: I can see -- over the next 12 to 18 months, I can see the Iraqi security forces progressing to a point where they can take on the security responsibilities for the country with very little coalition support.

(END VIDEO CLIP)

ROBERTS: Deputy Prime Minister Salih, can that happen?

Can Iraqi forces take control of the country within a year to 18 months, perhaps paving the way for U.S. forces to start coming home?

SALIH: Yes. It can happen, and it must happen. Because at the end of the day, there can be no genuine security in a country like Iraq unless the people of Iraq and their own security organizations, the indigenous security organizations, assume the lead.

This is already happening. We have had the transfer of security responsibilities to the Iraqi security forces in the Muthanna governorate.

In this month, September, we will be having Nasiriyah, Dhi Qar province being turned over to the Iraqi security services.

By the end of the year, we expect at least seven, eight Iraqi provinces will have been turned over to Iraqi security control. There is progress being made on that count.

In June 2004, when we assumed sovereignty, there were almost no Iraqi security forces as such. Today, we have more than 250,000, almost 300,000 Iraqi personnel, and they are in the military as well as the police force.

They are being trained; they are being equipped; and they are assuming the lead in the fight against terrorism and against the militias. That shows progress.

And I hope that, in the coming months, the Iraqi government will demonstrate to the Iraqis, first and foremost but also to the American public, that there is progress being made, that Iraqis are assuming responsibilities and are defending their own country.

But for some time to come, we will need the support of the United States, because we live in an interconnected world. We are battling international terrorism.

The Iraq of Saddam Hussein was a haven for terrorists. Today's Iraq is a partner to the United States and the rest of the world in the battle against terrorism. We expect that partnership to endure, but definitely, in Iraq, Iraqis have to defend their own country and have to be in the lead for that. But we would need support from the United States for some time to come.

ROBERTS: Well, there certainly are a lot of people in this country hoping that you can do it. And we should point out that there still is a matter of debate over whether or not Iraq was a haven for terrorists under Saddam Hussein.

Deputy Prime Minister Barham Salih, thanks very much. Appreciate your time, sir.

SALIH: Thank you for having me, sir.

ROBERTS: And coming up, the politics of war: What impact could the situation in Iraq have on November's congressional elections? We'll get the views of a prominent Democrat and Republican.

Then the costs of war for American workers. We'll talk with Teamsters Union president James Hoffa. "Late Edition" continues after this.

(COMMERCIAL BREAK)

ROBERTS: For the first time in more than a decade, Democrats appear to have their best chance of gaining a majority in both the House and Senate.

But Republicans still have an advantage with voters on the key issue of national security.

Joining us to talk about what could be the deciding factors when U.S. voters go to the polls in November, former Clinton White House counsel, Lanny Davis. He's the author of a new book called, "Scandal: How Gotcha Politics is Destroying America."

And in Sacramento, California, Matthew Dowd. He was the chief strategist for the Bush-Cheney 2004 campaign. And he's co-author of an upcoming book, "Applebee's America: How Successful Political, Business and Religious Leaders Connect with the New American Community."

I want to jump off by going back to earlier this week, President Bush's speech before the American Legion Convention in Salt Lake City, Utah.

This is the first in a series of speeches in which he's trying to raise flagging support among Americans for the war in Iraq by tying it to terrorism.

Here's what -- actually, sorry, no, this is what President Bush had to say in Little Rock on Wednesday. This was previewing the upcoming speech.

(BEGIN VIDEO CLIP) GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: My series of speeches -- they're not political speeches. They're speeches about the future of this country. And they're speeches to make it clear that, if we retreat before the job is done, this nation will become even more in jeopardy.

These are important times. And I would seriously hope people wouldn't politicize these issues.

(END VIDEO CLIP)

ROBERTS: So, Matthew Dowd, you could almost detect a little bit of a grin when President Bush said these are not political speeches.

It would seem obvious to many people that they are.

MATTHEW DOWD, REPUBLICAN STRATEGIST: Well, I mean, I think any time the president makes a speech on anything, whether it's the State of the Union address or an inaugural address or whatever, there's politics involved with it. But I think this year's election, I mean, there's going to be a lot of issues. I think, of course, Iraq and the war on terrorism should be an issue that both Democrats and Republicans go to the polls and decide what they want to do on it. And of course it should be an issue that's debated and discussed in this year's election cycle.

ROBERTS: What's your sense of it, Lanny Davis? Can the president turn around public opinion by coming out with a series of speeches and specifically tying Iraq to the greater war on terror?

LANNY DAVIS, FORMER WHITE HOUSE COUNSEL: Well, they tried it successfully in 2002, 2004.

ROBERTS: They tried it successfully, yes.

DAVIS: And I think that dog won't hunt. The facts are just too overwhelming. First of all, the American people have come to the conclusion at long last that the war in Iraq had nothing to do with 9/11 and nothing to do with Al Qaida. Secondly, the facts on the ground are that most Americans perceive that Iraq in its civil war, which is now pretty obvious, has been -- has become a magnet for terrorists and, in fact, we feel less safe because of the invasion of Iraq than we did before the invasion.

ROBERTS: Matthew Dowd, what Lanny Davis says is true according to some recent polling that we've seen, that the majority of Americans do not believe that the war in Iraq and the war on terror are connected, that they are separate entities. So can the president gain political points by tying those two things together?

DOWD: Well, I think come election day, Iraq, as I said, Iraq and the war on terror are going to be very important issues. I think the problem I think the Democrats have, the American public is very concerned about Iraq and what's going on, and they're very concerned about terrorism and it's very hard to separate those two things in the public's mind. They're very concerned about those things, but they have as yet to see a Democratic alternative or a Democratic vision that gets out of that situation or that improves that situation. So there's a concern by people about the Republicans in power and what's going on. As of yet, they haven't turned to the Democrats and said, aha, you have the solution. You have the vision. This is what we want. So I think that's why we're still in this 50/50 situation still, where these elections are very close and very tight. But I think until the Democrats offer an alternative solution or plan, the public is still waiting for that.

ROBERTS: Well, what about that, Lanny Davis? Are Democrats still vulnerable on this issue of national security, in particular, terror, and can the president, by trying to turn this election back around again to say it's all about terror and national security, gain an edge over the Democrats?

DAVIS: No, the Democrats aren't vulnerable because I think the American people know that Democrats are more concerned about getting Osama bin Laden than being involved in a several war in Baghdad, and that's the choice. Do we focus on getting the terrorists or do we focus on getting ourselves out of this mess that the administration got us into in the middle of a civil war in Baghdad?

Look, it's a very strange argument, with all due respect to Matthew, to say that the administration got into the mess, now it's up to the Democrats, and it's their fault for not telling us how to get out. One thing that Democrats are saying is we have to draw down the troops, and we have to turn over the fighting to the Iraqis, and we can't stay the course as President Bush tells us to do.

The American people have a choice between staying the course and having this civil war with our GIs caught in the middle of this crossfire, versus drawing down our troops and turning this over to the Iraqis and focusing on the real war against terrorism. Osama bin Laden is still not gotten dead or alive either way, and we want the focus to be on terrorism, not on being involved in a civil war in Iraq.

ROBERTS: You know, we saw in a recent CNN poll indications that the president has regained his competitive advantage over the Democrats on the issue of terrorism. Compared to March of this year in our CNN poll, when it was very close, 45 percent thought Republicans could do a better job of protecting the country against terrorism versus 41 percent of Democrats.

But look at how things have swung. Forty-eight percent now say the Republicans could do a better job versus 38 percent for the Democrats. But Matthew Dowd, a question. When the president talks about Iraq -- and people have formed pretty solid opinions on Iraq -- and he tries to tie it with terrorism, are people still listening to him this same way they did a year or two ago?

DOWD: Well, you know, he's the president. He's the leader of the free world and he's got a huge megaphone, so whenever he speaks, people listen, whether they agree with him or not. I think the public is still concerned. The public is not -- this idea that the public has got a completely 100 percent view on Iraq, what they view about Iraq is they're troubled. They're concerned.

They want the Iraqis to take over the security of the country, but the public also knows that we just can't pull out, that we have to have a process, we have to establish a secure government that controls the country and that deals with the situation. So the public, while concerned, is not sort of saying let's go, let's hurry up, let's get out and bring the troops home. And one thing I think everybody can agree on, whether it's the president, Lanny Davis or members, the Democrats in Congress, everybody wants the troops to come home as soon as possible.

Everybody wants security in Iraq to be done, and everybody wants terrorism in this country to be prevented. And I think that's what -- if we can all say we agree with that and then what's the process to getting to those elements, I think that's where the debate should be held, not because somebody got something in the mess. I think Lanny will remember that there was a number of Democrats in Congress that voted for the resolution, that wanted to go do this. So, I think if we agree to the intention and agree with the basis of this is, and let's argue over how do we get there.

ROBERTS: Let me turn to the horse race for a couple of minutes if I could before we go to a break here. The latest Rothenberg report has got 39 competitive races in the House of Representatives, 35 of those Republicans. Fifteen seats are needed to be picked up by the Democrats for a Democratic takeover. In the Senate, it's nine competitive races, five of those among Republicans, and six seats needed for a Democratic takeover. Lanny Davis, are the Democrats going to take control of Congress this year?

DAVIS: I'm pretty sure they're going to win both the Senate and the House, and I think certainly more confident of the House, but let me go back to what politics is usually all about, that Matthew and I are going to agree on a lot of things today. I certainly agreed with his last comment that we have to look forward, what do we do from here, and the choice in Iraq is stay the course versus let's start to draw down our troops.

But on the Congressional elections, this election's about what all elections are about: peace and prosperity. President Bush, as much as I have personal affection for him, has simply been wrong for getting us bogged down in this civil war in Iraq, so peace isn't working for him. And prosperity, most working Americans know that energy prices, stagnant wages, this economy is not working for most middle-class Americans. And on those two issues, you'll talk to Congressional candidates out in the (inaudible) that those two issues are hurting Republicans.

ROBERTS: Matthew Dowd, is Iraq at least partly responsible for the trouble that the GOP finds itself in this year?

DOWD: Oh, I mean, I think when you're in an environment where the public wants change, and that's what kind of environment we're in, it's problematic for the Republicans who are in power in the House and the Senate. That's a fact. And part of that change is what's going on in Iraq. Part of that change is a lot of things that's going on in this country, but until, I think, the Democrats speak to that -- one thing I think about the House and the Senate it's important for people to understand is that it's very hard for the Democrats to be successful because they're at a serious geographic disadvantage in this country.

They don't have as many U.S. Senate races that they can win. They have less House races that they can win. I think Democrats are going to pick up seats in the Senate, and I think they're going to pick up seats in the House this year. I think is the question can they overcome that geographic advantage that Republicans have in this country, I don't think we know that answer today. Might know it 30 days from now. We'll know it for sure November 7th. But that's the situation that Democrats are in. They're at a geographic disadvantage to this country.

ROBERTS: All right, well, we'll talk more about this when we come back. Coming up, Lanny Davis and Matthew Dowd talk about their new books.

Up next, though, we're going to get a check of what's in the news right now, including U.N. Secretary-General Kofi Annan's meeting with Iran's president. Stay with us on "Late Edition."

(COMMERCIAL BREAK)

ROBERTS: Welcome back to "Late Edition." We're talking about the stakes in this year's congressional elections and beyond with former Clinton White House counsel, Lanny Davis and Republican strategist, Matthew Dowd.

Matthew, let me ask you, first of all here, as we get into this second segment: A really interesting story on the front page of the New York Times today says that Karl Rove's word is no longer gospel in the GOP.

True, and what happened?

DOWD: Well, I think any time you have articles like that, there's a lot of people that say a lot of different things.

ROBERTS: Chris Shays said it was true.

DOWD: Well, I think one thing is that if there's anybody in the last 20 years that has helped the Republicans get elected around the country, more than anybody else, it's Karl Rove.

And the other thing is, I always think, whether you agree with somebody or not, it's always, I think, not a good thing to not ignore what smart people say.

So I think, one, things are overblown, as they often are, when people discuss them.

But two, I think people -- any time you have a smart person that might be giving advice or might be saying something, it's always, I think, not a good thing to ignore what they say.

ROBERTS: Well, I think the article was reflective of a lot of dissatisfaction in the Republican party with the popularity of the president at present.

Lanny Davis, can Democrats just sit on the sidelines and watch the GOP hang themselves, as they move toward the November election, or do you, as Matthew Dowd said, have to get out there and really articulate some policies and some alternate positions.

DAVIS: We've got to have an affirmative program and a vision for the country. I think Bill Clinton-plus is really where this party needs to move to. We need to command the great center of the country, a new politics that debates issues rather than attacks people personally.

We're fiscal conservatives now, we Democrats. That's what Bill Clinton was when he balanced the budget and gave us a surplus. We still believe in the government as a friend, not the enemy, but a limited government.

And we need to be more tolerant on social issues and cultural issues of people who differ with us. Those three are really the vision of this country that I think we have to return to, that the people of this country will support.

ROBERTS: Matthew Dowd, in your new book, "Applebee's America," which talks about how people vote values as opposed to actual policies -- they connect with a politician or a business or a religion and that's how they get that connection -- you say that President Bush had it up until 2005 but lost touch with the, quote, "gut values that put him in office."

What do you mean by that?

DOWD: Well, I think any time politicians, whether it's Bill Clinton that connects at people's gut level or George Bush that connects at people's gut level, what you have to get is people have to connect at their gut or their heart before you get to their head.

If you talk issues first, you're at people's head. The president has it to a degree but has lost some of that gut value connection with the public that he had for a long time.

And now a series of events and a series of things, I think, caused that. I think the situation in Iraq was part of that. I think, you know, the response to Hurricane Katrina and watching what people saw at the local and the state and the federal level -- so I think he's lost some of that, which is why, I think, you see his poll numbers have fallen and have had a hard time rising back up, because he's lost some of that connection with the American public.

ROBERTS: Now, we should point out, Matthew, that you wrote the book together with Doug Sosnik, who was President Clinton's political adviser, and Ron Fournier, former A.P. writer. You're also involved in a Web site called "Hot Soup," which has been put together by Joe Lockhart and Mark McKinnon, Lockhart being President Clinton's former press secretary, Mark McKinnon being President Bush's media director.

I mean, it's like "Ghostbusters." It's like dogs and cats living together, mass hysteria.

And now Lanny Davis's new book, "Scandal" is all about how "gotcha" politics is destroying America and everybody's got to work together.

Lanny, what's going on?

DAVIS: Well, first of all, I think what Matthew and I agree on is that we strongly disagree on the issues.

I'm a liberal Democrat and I think that our approach to government as a friend, not an enemy, but limited government is the right approach. And we have to debate the issues as partisans.

Partisanship is important to this country. Democrats and Republicans have differences and we need to debate those differences.

What we got into -- and it goes back to the '70s and the '80s, not just President Clinton -- is Democrats personalizing and demonizing the opposition during the Reagan and Bush years...

ROBERTS: Oh, they did (inaudible)

DAVIS: ... and then the Republicans did "Gotcha" right back to President Clinton in the '90s. And I think we Democrats are back to doing the same thing to President Bush now.

We are personalizing rather than debating the issues. And I think one thing Matthew and I will agree on is we can disagree civilly; argue the issues but not attack people's motives.

ROBERTS: Do you agree with that, Matthew?

DOWD: John, I totally agree with Lanny on this. I think the problem that we've had is people question other people's intentions and whether or not somebody's good or bad or evil or not and not say, well, they have a misguided policy or this is not going to achieve this.

I think we can all say, the Democrats -- they want to do something; they want to do something about the country's economy; they want to do something about the country's health care. And we can say, yes, both of us want to do something. Now, what's the right way to go about it?

I'm sitting in Sacramento, California. I do work for Governor Schwarzenegger here in California, who is trying to do it that way -- and he's being fairly successful about working with Democrats in the legislature to do that. But I think one thing a lot of us, people who have been in this political process for 20-plus years -- Lanny, me and others that have been doing this -- are tired of this politics where you can't sit down as friends, debate the issues and not decide whether or not somebody's good or bad but just have a discussion over what is the end result and how are we going to get there?

ROBERTS: Wow, I feel like I've been transported to the twilight zone. Are you catching flack for this, Lanny?

DAVIS: Well, I've been a long-time friend of Joe Lieberman's. He's godfather of my son. I genuinely believe in his brand of Democratic independent politics.

He's voted with the Democrats 90 percent of the time in the Senate. Yet he's been demonized because of people who disagree with his position on the war, which I happen to do as well. And my defense of him had led me to be subject to a lot of personal attacks.

That's the kind of thing that we liberals need to avoid. We pride ourselves on being tolerant as part of our ideology. We have to call the Republicans and the conservatives who try to demonize us. We've got to put a stop to this gotcha politics and try to debate the issues.

ROBERTS: Wow, I'm thinking if we stay with this much longer, a group hug is just ahead. Lanny Davis and Matthew Dowd, thanks very much. Really appreciate you coming in today.

DOWD: Glad to be here. Lanny, congratulations again.

DAVIS: Thank you. You too, Matthew.

ROBERTS: Interesting take on politics as we head toward the election. Up next, as the country prepares to mark Labor Day, we'll talk with Teamsters Union President James Hoffa about the state of organized labor and whether it's still relevant for American workers. "Late Edition" will be right back.

(COMMERCIAL BREAK)

ROBERTS: Welcome back to "Late Edition." Last hour, we spoke with Labor Secretary Elaine Chao about what the Bush administration is doing on behalf of American workers. Now the view from one of organized labor's leading figures. Joining us from Detroit is Teamsters Union President James Hoffa. Good to see you again, Mr. Hoffa.

JAMES HOFFA, PRESIDENT, TEAMSTERS UNION: Good to be here.

ROBERTS: Wanted to ask you first of all about the jobs report: 129,000 new jobs created in August, down from a monthly average this year of 140,000. But the secretary of labor said it shows that the economy is just right. It's not too hot, it's not too cold, sort of the Goldilocks effect. What do you make of that? HOFFA: I think the average American knows that's not true. We have educated people that can't find jobs. We've seen an exodus of millions of manufacturing jobs, good jobs with good pay, health care and pensions, leave this country, going to Mexico, going to China, going to India.

There's a hollowing out of the American economy right now because of what's going on. We have a race to the bottom. We've got to change that right now. These are bad times in America. We see Americans working more hours for less money than ever before. We see more credit card debt. We see the average Americans having a hard time today, and we've got to do something about it.

ROBERTS: Let me just pick up on that point when you talk about earnings. According to the Bureau of Labor Statistics, in August of 2006, average weekly earnings among American workers were $567.50, versus $519.12 in 2003. That's adjusted for inflation, so it would seem that people are, indeed, bringing home more money every week than they were.

HOFFA: Well, that's not what the Census Bureau said. The Census Bureau said that the average wage, the median wage of the average worker has gone down 2 percent when compared and corrected for inflation. Look at $3 gasoline. The average person working is taking a pay cut because of gas prices.

You see everything in your life going up. Your real estate, your cost of your apartment, everything in your life is going up but your wages are not going up, and the average American out there knows that's going on. And we see really two Americas right now. We see the rich and the rest of us with lack of opportunity. There's really a problem in this country of creating good jobs. We can't all work at McDonald's or Wal-Mart. What we have to do is have good, solid jobs where people can live a life in America like they should.

ROBERTS: Although real estate in some areas is beginning to go down, which is causing a different sense of consternation among some people. But the president, though, was out there saying the economy was doing well. Let's take a look at what he said. It was back on August the 18th at Camp David after a meeting with his economic advisers. Here's the president.

(BEGIN VIDEO CLIP)

BUSH: Our economy is maintaining solid growth and performing in line with expectations. Our solid economic growth is creating real benefits for American workers and families and entrepreneurs. Since August 2003, we've added more than 5.5 million new jobs.

(END VIDEO CLIP)

ROBERTS: And just Tuesday of this week, Rob Portman, the new budget director, said, quote, "While we still have challenges ahead, our ability to bounce back is a testament to the strong work ethic of the American people, the resiliency of our economy, and pro-growth economic policies, including tax relief." Basically saying after 9/11, the war in Iraq and other challenges facing America, the economy is doing pretty good, considering. Nothing to be said for that?

HOFFA: Absolutely not. What we're seeing is White House spin about an economy that's in a tailspin. It's not doing well. We have less good jobs in this country. Just look around what you see. I mean, you don't see a place where people can work. The average person can go out and get a good job. I mean, we have people with master's degrees driving cabs in New York because they can't get a good job in their chosen field.

We see people with college degrees that can't get good jobs. We see people that have been laid off, thousands of people, you know, that used to have a job working in manufacturing or in the auto industry, all lost their jobs. And the answer is, what they're saying is nothing but spin. And what they must be talking about, I'd like them one day to take us with a camera, let's go find these jobs, and what you're going to be finding is that they're at Burger King and Wal-Mart. And they're not good jobs. They're part-time jobs at eight bucks an hour.

You can't live on that kind of money. And what we're seeing is with inflation and gas prices and everything else going on that the average American is going back. The Census Bureau said that there are more and more Americans, there's 47 million people, without health care. There's 8 million children without health care. That the wages are going down. Now, that's the Census Bureau. I'll take their numbers over the White House spin.

ROBERTS: All right. Labor day, obviously, both a celebration of labor in this country and the traditional kickoff of the fall election campaign, both in off-year and presidential elections. How big a role are the unions going to play in this year's election?

HOFFA: They'll play an enormous role. Right now, we're fighting very hard to have a fair America. We're fighting about getting good jobs in this America. We're talking about sending people, maybe taking back the Congress. We're taking over. You know, look at what's going on in the statehouses. Eliot Spitzer is probably going to win in New York. We've got Corzine in New Jersey. There's good things going on.

ROBERTS: How much money are you going to spend?

HOFFA: We're going to spend as much as we can because we think it's important to put people in that will bring jobs, good jobs back to states, back to this country. One of the problems we're having right now is we can't even pass an increase in the minimum wage. Can you believe that? It's been at $5.15 for ten years.

Congress has had six increases in their salary in that period of time. And the average guy out there washing dishes can't get a pay increase or the minimum wage. We've got to make sure we change that. We've got to get -- change the way we do business with regard to these trade bills that are sending good jobs to Mexico.

ROBERTS: One more... HOFFA: Why can't we change that and say, let's have a trade bill where people have to buy from us instead of importing their products into our country? Why can't we do that? It can be done.

ROBERTS: One more question, if I could, for you, Mr. Hoffa. It's got nothing to do with labor, but it's the first time we've had an opportunity to speak with you since it happened. What did you make of the FBI's search of that horse farm in Bloomfield County, Michigan, looking for the remains of your father?

HOFFA: Well, you know, we watched it with great care, and every day we were, you know, watching what was going on, but, you know, it's 31 years ago. We have great memories of my father. He did a lot for the labor movement, and we'd like to find and have closure with regard to his disappearance.

But I want everybody to know that our family is a very strong family and we've had, you know, we've made our peace with his disappearance and we've moved on. We follow events like that, but we've made our peace, and we know where we're at.

ROBERTS: The mystery continues. James Hoffa, thanks very much for being with us. Best to you on this Labor Day.

HOFFA: Happy Labor Day.

ROBERTS: Up next, in case you missed it, "Late Edition's" Sunday morning talk show round-up, where party politics, Defense Secretary Donald Rumsfeld's future and immigration were all topics of the day, but first...

(BEGIN VIDEOTAPE)

(voice over): Shirin Ebadi: What's her story?

Ebadi is Iran's leading human rights activist and winner of the 2003 Nobel Peace Prize.

Ebadi rose to worldwide prominence for her efforts on behalf of Iranian women, children and those who are in prison for expressing dissent.

But the Iranian government is now threatening her with jail if she continues her work. She says she hopes the current international focus on Iran's nuclear program and the country's relationship with Hezbollah won't take attention away from Iran's human rights record.

Ebadi is the first female and Muslim to be awarded the Nobel Peace price.

(COMMERCIAL BREAK)

ROBERTS: And now, in case you missed it, let's check of the highlights from the other Sunday morning talk shows. On NBC's "Meet the Press, the two candidates in the closely watched and highly contested Pennsylvania Senate race sparred over the Bush administration's handling of the war on terror.

(BEGIN VIDEO CLIP)

SEN. RICK SANTORUM (R-PA): It is important that we are in the Middle East right now and confronting this broad war that we are involved in against Islamic fascism.

The bottom line is that we are now five years, almost, from September 11. No one gives anybody credit for the fact that we have not had any kind of terrorist attack in this country. The reason we haven't is because we've taken it to them where they are.

BOB CASEY, DEMOCRATIC PENNSYLVANIA SENATE CANDIDATE: He calls it Islamic fascism and he talks about the terminology and change in the terms. What we need, Rick, is not a change in the terminology. We need to change the tactics. And we've got to make sure that, even as you're debating whether or not we call Osama bin Laden a terrorist or a fascist --I don't think that really matters.

(END VIDEO CLIP)

ROBERTS: Well, they sparred lightly.

On ABC's "This Week," Senator Joseph Biden explained why he thinks Defense Secretary Donald Rumsfeld should resign.

(BEGIN VIDEO CLIP)

SEN. JOSEPH BIDEN (D-DE): It is not because I want to be vindictive. He is an impediment in this effort. He is not someone who's offering answers.

And the rest of the world looks at what he has to say and continues to lose confidence in our ability to act with some dispatch and success.

(END VIDEO CLIP)

ROBERTS: On CBS' "Face the Nation," Democratic Party Chairman Howard Dean blasted the Bush administration for suggesting that opposition to the Iraq war equalled appeasing the terrorists.

DEAN: Sixty percent of the American people believe the war in Iraq was a mistake. Secretary Rumsfeld and Vice President Cheney have gone on television, saying people who disagree with the president are essentially like Nazi appeasers.

You know, when you start attacking voters out of your frustration, that is not a good thing for winning elections.

(END VIDEO CLIP)

ROBERTS: And on Fox News Sunday, Judiciary Committee Chairman Arlen Specter said that he'll push to get a House and Senate-backed immigration reform bill approved this month.

(BEGIN VIDEO CLIP)

ARLEN SPECTER, CHMN. SENATE JUDICIARY COMMITTEE: My first call on Tuesday morning is going to be to Chairman Sensenbrenner.

And I'm going to say to him, Jim, let's sit down and talk. We've both have got bills. Everybody agrees it's a gigantic problem. The president wants it done. The American people want it done. Let's do it. Republicans control both houses and the White House. It's a major national problem. If we don't move toward solving it, we're not doing our job.

(END VIDEO CLIP)

ROBERTS: And wouldn't you like to be a fly on the wall during that conversation?

Highlights from the other Sunday morning talk shows here on "Late Edition," the last word in Sunday talk.

Coming up next, the results of our Web question of the week, "Which is a greater threat to global security, an Iraqi civil war or Iranian nuclear weapons?"

And coming up at the top of the hour, join me and CNN correspondents for "This Week at War."

And that's your "Late Edition" for Sunday, September 3. I'm John Roberts. Wolf will be back again next Sunday.

And stay tuned. I'll be right back with another edition of "This Week at War." Thanks for joining us.

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