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AMERICAN MORNING

Foley's Lurid E-Mails

Aired October 2, 2006 - 07:00   ET

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


SOLEDAD O'BRIEN, CNN ANCHOR: Florida Congressman Mark Foley and the e-mails that he sent to a 16-year-old male congressional page all the talk of Washington this morning. Here's the very latest. The FBI now investigating whether or not any federal laws have been broken. And as CNN was first to report, House Speaker Dennis Hastert has called for a Justice Department investigation into whether lawmakers in his own party knew about Foley's inappropriate contact with the teenager but did not act.
Also, there are calls for the head of the National Republican Congressional Committee, Representative Tom Reynolds, to resign. CNN also first told you about the news that Reynolds knew about the e- mails. He says he relayed the information to House Speaker Hastert. Republican leaders today are going to meet in Orlando to discuss just who will replace Foley on the November ballot.

To give you an idea what we're talking about, one e-mail exchange, Foley asked the 16-year-old page what he's wearing. These are e-mails back from 2003. The teenager's response, t-shirt and shorts. The congressman then answers, love to slip them off of you. In another, the congressman asked the boy, do I make you horny. The teenager said, a little, to which the congressman responds, cool.

AMERICAN MORNING's Bob Franken in Washington, D.C., for us. Ed Lavandera is in Chicago following the Foley/Hastert connection. Susan Candiotti in Palm Beach County, Florida, which is Foley's home district. Suzanne Malveaux is at the White House for us. Got a lot to cover. Let's begin with Bob Franken.

BOB FRANKEN, CNN CORRESPONDENT: Well, Soledad, it's fair to say that ex-Congressman Foley's life is in shambles right now and Republican leadership is trying to make sure that they don't have a similar fate for their congressional reelection chances also being in shambles.

(BEGIN VIDEOTAPE)

FRANKEN, (voice over): Congressman Mark Foley is gone from Congress, but his Republican leadership is struggling to avoid being buried in his fallout in this very competitive election battle for control of Congress, while Democrats would love to bury them.

REP. JANE HARMAN, (D) CALIFORNIA: Well, I do think voters in an election season have a right to know what the leaders of Congress did, what they knew, and when they knew and what they did. And I think these matters will have to come out. FRANKEN: The Republican leaders, in particular House Speaker Dennis Hastert, were trying to not get hopelessly entangled in questions about how they handled the Foley matter. Hastert's aides were notified in the fall of 2005 by Louisiana Republican Congressman Rodney Alexander that a page he had sponsored complained about what the page called "sick" e-mails he had received from Foley. The information was shared over the next few months with the top echelon of the GOP in the House, including Hastert's office. They reached a consensus that Mark Foley's e-mails were merely "over friendly" and Foley was warned and all communications with the page and to be careful about his contacts.

The chairman of the House Republican Campaign Committee, Thomas Reynolds, and House Majority Leader John Boehner, say they were told earlier this year and brought to it the attention of Hastert himself. There the matter stood until the explosive revelations of more provocative communication in the form of instant messages to former pages in earlier years and an explosive chain of reactions.

From House Democratic Leader Nancy Pelosi, Republican leaders should be questioned under oath about what she called the cover-up. Speaker Hastert himself has sent a letter to Attorney General Alberto Gonzales and another to Florida Governor Jeb Bush asking for federal and state investigations. In fact, sources tell CNN, the FBI has begun a preliminary investigation. All of this is being watched very closely at a White House that is battling to make sure the president's fellow Republicans keep control of Congress.

DAN BARTLETT, WHITE HOUSE COUNSELOR: And I know more than anybody else Speaker Hastert wants to make sure that if any crime was committed that they be held accountable.

(END VIDEOTAPE)

FRANKEN: And Republicans in and out of Congress are very worried that they, too, are going to be held accountable, Soledad, by the voters.

S. O'BRIEN: Yes, with the election just a few weeks away. Bob Franken for us. Thanks, Bob.

CNN's Ed Lavandera is in Aurora, Illinois, this morning.

Ed, good morning to you.

What exactly is in the letter that Speaker Hastert has now sent on to the Justice Department?

ED LAVANDERA, CNN CORRESPONDENT: Good morning, Soledad.

Well, we're here in Aurora because this is Speaker Hastert's home district, near Illinois. And a lot of people here waking up this morning as they're catching the train on their morning commute into the city for work this morning, is paying close attention to this letter that Dennis Hastert has written to officials at the Department of Justice and officials in the state of Florida, looking into this matter.

What Dennis Hastert goes on to say in this is that they've broken down these communications between Representative Foley and this page into two different sets of communications. One, dating back to 2005 that was not sexually explicit in nature. But it is the second set of communications, these instant messages, that apparently were written between Representative Foley and this page, that Dennis Hastert wants official investigators to take a closer look at.

He writes in this letter that "these sexually explicit communications warrant a criminal referral in two respects. Initially, since the communications involved interstate communications, there should be a complete investigation and prosecution of any federal laws that have been violated. In addition, since the communications appear to have existed for three years, there should be an investigation into the extent there are persons who knew or had possession of these messages but did not report them to the appropriate authorities."

And in the letter, Hastert goes on to say that this should include members of Congress at this point. Soledad, we're hear at this train station. We're going to be taking the pulse of voters in Dennis Hastert's home district here to get a sense of just exactly how they're reacting to the news here this morning.

Soledad.

S. O'BRIEN: Ed, how unusual is it for Congress to ask for this kind of investigation?

LAVANDERA: Oh, it's absolutely very rare. But given that we're so close to the mid-term elections coming up here in a little more than a month, of course, the Republicans find it very important to make sure that the voters here who are catching the train to work understand they're doing everything that needs to be done to get this matter investigated fully.

S. O'BRIEN: Ed Lavandera for us this morning. Thanks, Ed.

Rick.

RICK SANCHEZ, CNN ANCHOR: And then there's the question of just who is Mark Foley. Certainly well-known in Florida. Certainly well- known among Republicans. He's well-liked in his home district previous to this in south Florida. In fact, he was expected to win re-election. Some who follow this would say he would have won it easily. Susan Candiotti live now from West Palm Beach with a profile of a man who's now at the center of this scandal.

Good morning, Susan.

SUSAN CANDIOTTI, CNN CORRESPONDENT: Good morning, Rick.

You know, people who know Foley best say that he's a very funny guy, known for his dead-on political impersonations. But none of his friends is laughing about the personal and potentially criminal trouble he's in now.

(BEGIN VIDEOTAPE)

CANDIOTTI, (voice over): Mark Foley's friends call him warm and giving.

ESTER DINERSTEIN, FRIEND OF MARK FOLEY: Mark is funny. He is genuinely happy about having a Polish background, which I identify with. That's where I was born. And he was always quick with a hug.

CANDIOTTI: A congressman, they say, who worked tirelessly for his constituents. But how was that seed planted? Right here, at age six, in 1960, at a Lantana, Florida, shopping center. Foley told a Washington, D.C. paper called "The Hill" he had a chance encounter with Congressman Paul Rogers.

This is where Foley said he saw his Florida congressman, Paul Rogers, in action, working the crowd. The center of attention. That's when Foley reportedly said he was hooked. Not to mention the congressman paid him $5 to hand out campaign brochures.

In junior high, he told a newspaper he felt like moving to Manhattan to manage some apartments. After briefly owning a restaurant and serving in local office, Foley was elected a Florida congressman. From there, he won six terms as a U.S. congressman.

When Foley dropped out of a run for the U.S. Senate in 2003, there were rumors he was gay. He told reporters his sexual orientation was private. He said he dropped out of the race because of his father's cancer. Friends describe Foley as a devout catholic who once met the late Pope John Paul II.

DINERSTEIN: I'm extremely saddened that the political arena is backing away from him at a time where I truly believe that we, as friends of his, should be gathering around him.

CANDIOTTI: The scandal now facing Foley is hard for any of his friends to understand.

UNIDENTIFIED MALE: They're just the people who are out front of a very large army and of a philosophy and of values, so something like this is a betrayal of all of that.

(END VIDEOTAPE)

CANDIOTTI: And this afternoon, Florida Republican leaders will be meeting to decide on a replacement candidate for Foley. And with just over a little more than five weeks to go before the election, that campaign won't be easy, complicated by the rules, which mean it's too late to take Foley's name off the ballot.

Rick.

SANCHEZ: Susan, thanks so much for that report.

Well, with the mid-term elections right around the corner, a scandal is the last thing that the GOP needs in a year when every seat seems to count. CNN's Suzanne Malveaux is joining us now live from the White House.

Suzanne, what is the White House saying and doing this morning about this?

SUZANNE MALVEAUX, CNN CORRESPONDENT: Well, Rick, as you can imagine, the White House is really in full-scale damage control at this point, putting out White House officials, the counselor to the president over the weekend, as well as his press secretary this morning. Essentially they're making two points about this. First, they're distancing themselves, saying they knew nothing about the accusations against Congressman Foley before the news reports came out. And secondly, they are also trying to say that they believe the Republican leadership, and they have a lot invested in this, is actually acting appropriately in carrying out an investigation.

(BEGIN VIDEO CLIP)

DAN BARTLETT, WHITE HOUSE COUNSELOR: I think the leadership is being very forthcoming about what they know and when they knew it. There's going to be, I'm sure, a criminal investigation into the particulars of this case. So I don't think anybody has to worry about this being thoroughly investigated. We're going to get to the bottom of this, the leadership is. And that's very important because we need to make sure that the page system is one in which children come up here and come work and make sure that they're protected.

(END VIDEO CLIP)

MALVEAUX: So, Rick, while clearly the White House is trying to distance itself from this scandal, they certainly have a dog in this fight. And that is why you're going to hear White House officials also express confidence in the Republican leadership. They need to keep the majority in the Senate and the House. It's been very much invested in that. They believe that President Bush is not going to be able to get very much done in the next two years unless they keep those majorities.

SANCHEZ: Now, on top of that, they also have the situation with Bob Woodward's book, which also seems to put them somewhat on the defensive. He makes allegations about Tenet, CIA director, going to the White House, trying to get to Condoleezza Rice prior to 9/11 to warn her about things. It talks about apparently Rumsfeld and Condoleezza Rice not getting along. Really not getting along. Like not even taking each other's phone calls. Is this a problem for the White House?

MALVEAUX: It potentially could be a very big problem for the White House. You're talking about five weeks before the mid-term elections. You've got this explosive book, these allegations. That is why you see White House officials full-court press over the weekend and the next couple of days. We'll wait and see whether or not we hear from the president himself to address directly some of these allegations. They put out this five-point myths (ph) talking points from the White House, basically denying a lot of the accusations in the book, saying that these warnings of al Qaeda to National Security Advisor Condoleezza Rice back then were not ignored. That these conversations that there were differences but that it was a healthy environment.

And also they deny that former Chief of Staff Andy Card was carrying out a campaign to oust the Defense Secretary Rumsfeld. But what they don't say is that -- they don't deny that he wanted him to go, but simply that there was a campaign. So listen to the language very carefully. All of this, a White House very much on the defensive.

Rick.

SANCHEZ: Interestingly enough, Bob Woodward's written three books. And this is the first one where he's actually directly critical of the Bush administration.

Suzanne Malveaux, we thank you for that report. We'll be checking back with you.

And we should probably, on a program note, let you know that Tony Snow, press secretary for the president, is going to be joining us. Soledad's going to be having a conversation with him. That's coming up at 7:30. So that's coming up in about 15 minutes. Talking, of course, about the situation with Mark Foley.

Soledad.

S. O'BRIEN: All right, Rick, thanks.

Happening this morning.

Major relief and an alert neighbor saved a nine-month-old baby from almost certain death. Mary Busey (ph) noticed the child was dangling from that balcony on the third floor, holding on by one hand. Well, the baby let go and Busey was able to catch her before the baby hit the sidewalk. A pretty amazing story there.

Canadian officials are looking into just why an overpass collapsed, killed five people in Quebec. Motorists say the road just appeared to sink and then it collapsed.

SANCHEZ: Secretary of State Condoleezza Rice is on her way to the Middle East. She's hoping to revive Israeli-Palestinian peace talks. Rice will make stops in Israel, Egypt, Saudi Arabia and the Palestinian territories.

Well, this hasn't happened in almost 40 years. This morning the Lebanese army is deployed along Lebanon's southern border with Israel. The promise, that it will fight what it calls any Israeli aggression. This follows a near complete pullout by Israeli forces.

S. O'BRIEN: Brazilian authorities say there are no survivors from a jet liner crash in the Amazon Jungle. A plane carrying 155 people went down on Friday and apparently clipped a smaller plane in midair. The smaller plane was able to land safely.

And the Venezuela president, Hugo Chavez, says that Fidel Castro tells him he's ready to die. Chavez says the Cuban leader told him this when the two met back in August as the Cuban president was recovering from intestinal surgery.

In California, firefighters are close to containing one of the largest fires ever to strike that state. The Day fire, it's called that because it started on Labor Day, has burned 254 square miles of forest. Now firefighters say the calm winds and high humidity are helping them control the fire.

SANCHEZ: It's not something to give to much attention to. But I'm still wondering, I don't know if you are, Chad, why it's called the Day fire and not the Labor fire or the Labor Day fire, right?

(WEATHER REPORT)

S. O'BRIEN: Ahead this morning, the political fallout from the investigation into Congressman Mark Foley. We'll take a look at how this scandal could affect the midterm congressional elections.

And is there a hot new car in your future? We'll have all the buzz from the Paris Auto Show.

And later, we'll tell you what could be a big breakthrough. It could mean the end of painful insulin shots for thousands of diabetics.

Those stories all ahead on AMERICAN MORNING.

(COMMERCIAL BREAK)

SANCHEZ: Once again, back to that growing fallout from the resignation of Congressman Mark Foley, following allegations that he exchanged suggestive, lurid, sexually explicit e-mail messages with a former congressional page. CNN was first to tell you House Speaker Dennis Hastert has asked the Justice Department to investigate how lawmakers handled the allegations against Foley just last night. Also, it's a rare move. It comes as Democrats raise allegations themselves of cover-ups by the Republican leadership on this issue. With midterm elections only weeks away, what really is the potential impact of a scandal here? Senior political correspondent, Candy Crowley, is good enough to join us now from our Washington bureau.

Candy, let's start with this, if we possibly can. It's a statement that's been released by Republican Congressman Chris Shays yesterday. He's calling for, as you know, the investigation of his party's leaders. For the sake of the viewers, let's go ahead and put it up. He says, "if they knew or should have known the extent of this problem, they should not serve in leadership." This is a Republican criticizing the Republican leadership. Don't see a lot of this during the Bush administration. Will we be seeing more, do you suspect?

CANDY CROWLEY, CNN CORRESPONDENT: Well, you know, as far as Republicans go, it's sort of every man for himself. Chris Shays is in a tough fight up there in Connecticut. So it seems to me he's raised the bar a little, "if they knew or should have known." That's not a legal problem. That's a political problem. So, obviously, when you see Dennis Hastert, the speaker, saying, listen, investigate us, FBI, you can see the extent of the potential for trouble and probably the reality of trouble that Republicans are in over this.

SANCHEZ: Let me ask you a question about them asking. Because I'm curious about this. When they ask for an FBI investigation, and if indeed the attorney general and the FBI investigate this, doesn't that also give some of these lawmakers a pretext to say, when people like Candy Crowley come knocking on the door, I'm sorry, I can't talk to you about this because, after all, it's being investigated by the police or by investigators?

CROWLEY: It does. But I think this is so serious to this extent that voters understand this kind of scandal. It's not one of those Abramoff things that they think, oh, everybody does this and it's a little complicated because it's about K Street (ph) and who took who to lunch and what's legal and what's not legal. This is pretty understandable to voters. This is not anything that Republicans can run away from. And I think they know that. You've seen them pretty out front there and talking. Also remember that there's been a call for an approval of an ethics committee.

So you have sort of two tracks here. One is legal, and that's what the FBI is looking into. But the ethics committee on Capitol Hill is gong to be looking into what Chris Shays talked about, which is should they have known.

SANCHEZ: One can't help but be interested in what happens politically. The Democrats, obviously, stand to gain here. Tim Morrison is the gentleman who probably is going to gain the most. He was in a race against Mark Foley that most insiders say he probably would not have won, right?

CROWLEY: Well, it was a target race and Democrats would argue that they thought that they had a chance to pick that up. I think right now they would argue that they are going to pick that up. So just in sheer numbers, that gives Democrats a win, probably regardless of who Republicans pick this afternoon down in Florida.

Beyond that, again, when you look at something like the corruption of Congress and the faces Abramoff, I think that's difficult for voters to look at. Most of them we found in the polling after the Abramoff scandal thought that both parties were corrupt. But now we have Democrats sort of running very hard on the do-nothing Congress, saying, you know, Republicans don't know how to lead and then along comes this scandal and these charges of cover-up, which you know is a very politically loaded word. So this is something I think voters really understand.

And I think it reflects, if it ends up reflecting badly, on the Republican leadership and how they're able to handle Congress in general. And it really looks like it was politically oriented. Whether or not it was, sometimes in Washington, perception becomes reality very quickly. SANCHEZ: And that's a tough nut to crack, isn't it? Because these are people who deal in the world of politics. This, as you just alluded to moments ago, is not really a political issue. This is a humanistic issue. It's about children. It's about parenting. It's about things that we often don't even try to discuss in our own homes because it's that delicate. Will they be adept enough, the GOP leadership, to somehow find a handle on this thing? How difficult, from your experience, will it be for them?

CROWLEY: It's tough because, again, as you say, this is something in every household that every parent, and even non-parents, understand. I mean this is not all that difficult to grasp. So it's a tough one for Republicans to get out in front of. They can limit the damage. Whether or not that will be good enough, I don't know.

I mean, but I think you see them trying to stay ahead of Democrats. Please investigate us. Yes, we'll agree to this ethics committee. So you see them at least trying to get out ahead of it. You see other Republicans calling for an investigation. So that's probably the best they can do at this point.

SANCHEZ: And, of course, the question that will always be asked is, you're doing it now, but why didn't you do it earlier? And they're probably asking themselves some of those same questions. Candy Crowley, part of the best political team in television, thanks so much for your insight on this. Appreciate it.

Soledad.

S. O'BRIEN: Coming up this morning, the future is now at the Paris Auto Show. We'll take a look at some of the hot new wheels that are on display there.

Plus, a dramatic rescue in Florida. We'll tell you how a pleasure trip turned into just a big disaster for five boaters.

Those stories all ahead on AMERICAN MORNING.

(COMMERCIAL BREAK)

SANCHEZ: Welcome back.

Start your engines. Yes, the Paris Auto Show is shifting into high gear and, no, you don't have to buy a ticket to Paris to see it because we've got it for you right here. Started this weekend. Some of the vehicles on display, you ready for this? Look at the guys on the crew. Suddenly we have all their attention.

The Dodge Avenger. It's a midsize version of the Charger. What do you think? Swanky? This is also -- you like it?

ANDY SERWER, CNN CORRESPONDENT: Nice car.

SANCHEZ: You like it?

SERWER: Yes. I like that color. SANCHEZ: Here's the . . .

SERWER: It's money, Soledad. That's money.

SANCHEZ: Soledad's like, hmm.

S. O'BRIEN: That's an ugly color.

SANCHEZ: The Volkswagen Iroc, as in middle of the word scirocco, is a two-door sportster as well. That's a pretty nice-looking car. Is that the same one or have we moved? There we go.

Now the Nissan Qashqai. The sporty SUV named after an Iranian desert tribe. Why in the world did they name it after that? But that's what it looks like.

SERWER: Scirocco blow that thing right away.

SANCHEZ: I bet. And then the Audi R8 is Audi's all-new 420 horse power V-8 sports car. How about that, huh, Andy?

SERWER: Yes, I like that.

SANCHEZ: The car's engine is actually visible through its large rear window. There you have it. Didn't have to go to Paris. We got it.

SERWER: That's great.

S. O'BRIEN: You know, that may not have been worth the trip.

SERWER: Well, Soledad . . .

S. O'BRIEN: Some of those colors . . .

SERWER: A couple thumbs down there from Soledad.

S. O'BRIEN: No, they're cute. They're very small. They're -- some of the colors. The green one.

SANCHEZ: Too loud, right? To loud?

S. O'BRIEN: It's a little loud. That's what I was going to say.

SANCHEZ: Like you need the switch on it.

S. O'BRIEN: Let's talk business news now. Wal-Mart using more part-time workers, maybe. Andy Serwer's "Minding Your Business."

Good morning.

SERWER: Good morning, Soledad.

Kind of some controversial moves here spelled out in a story in "The New York Times" this morning, saying that Wal-Mart is trying to get the most out of its 1.3 million person work force. But is it playing fair? The company is looking to get its employees to become more flexible, to get the employees to work at different times, changing shifts, be available 24/7 basically critics are charging. Now some of that, obviously, is completely fair and is above-board. You want to make your employees be as productive as possible.

Now some of the things, though, are more questionable, according to the newspaper. For instance, the paper says that Wal-Mart is looking to make its work force part-time, have part-timers fill 40 percent of its employment slots. The company says that's not the case, but does acknowledge that part-time workers make up for between 25 percent and 30 percent of the company's work force, up from 20 percent a year ago.

Also part of the story is that the company is looking to cap wages at various employment levels so that you can't get paid more unless you get a promotion. Workers say this is just an effort to force out older, higher-paid workers. And so here we have it yet again. The back and forth between employees and Wal-Mart and also unions that are looking to try to get into Wal-Mart and unionize the store. And basically what's going on is that the unions are hearing this kind of information, using it, and we have a drama played out on the front page of the newspaper.

SANCHEZ: You cannot buy a "Playboy" magazine at Wal-Mart, as far as I understand, but there is something to do with "Playboy" that you have coming up.

SERWER: That's right. Coming up in our . . .

S. O'BRIEN: Wow. I was wondering where he was going with that.

SERWER: Yes, I was too, but I got it.

Coming up in the next business segment, Rick, we're going to be talking about the "Playboy" bunny coming back. And you'll never guess which town "Playboy" has decided to have a club in.

SANCHEZ: Well, there you go.

By the way, not that I have -- just to be clear, not that I've ever gone looking for that magazine over there at Wal-Mart.

SERWER: Oh, I didn't think that for a minute Rick.

SANCHEZ: Unless it had great articles.

O'BRIEN: Moving on ahead this morning. The White House is firing back at controversial claims made in Bob Woodward's latest book, it's called "State of Denial." The White House press secretary Tony Snow is going to join us live just ahead on AMERICAN MORNING.

(COMMERCIAL BREAK)

O'BRIEN: Happening this morning, Defense Secretary Donald Rumsfeld says he has no plans to quit. A new book by Bob Woodward is highly critical of how Secretary Rumsfeld and the Bush administration are handling the war in Iraq.

Right now, Secretary of State Condoleezza Rice is headed to the Middle East, she's going to try to lay the groundwork for new peace talks between the Israelis and the Palestinians.

And in Atlanta today, an emergency hearing for Brian Nichols, he's accused of killing four people during a courthouse rampage last year. Prosecutors think he might be plotting an escape from jail and they want to review security measures at that jail.

Welcome back, everybody. I'm Soledad O'Brien.

SANCHEZ: And I'm Rick Sanchez, sitting in today for Miles.

O'BRIEN: With Republicans dealing with the Mark Foley scandal and an unflattering book from Bob Woodward, there's certainly a lot to talk about with the White House press secretary, Tony Snow. He joins us from the White House this morning. It's nice to see you, Tony. Thanks for talking with us.

TONY SNOW, WHITE HOUSE PRESS SECRETARY: Good to see you Soledad, thanks.

O'BRIEN: Where do you want to begin? There is so much to cover. Let's talk about the book first, shall we? The book as you well know, charges that the president misled the American people about just how badly things are going and have been going in Iraq. You obviously disagree.

SNOW: Yeah. It was interesting because a couple weeks ago, we were accused of being fear mongers because the president has just finished delivering a sober series of speeches talking about al Qaeda, talking about the nature of al Qaeda. Really Soledad, if you go back and look through the published speeches, the president's never tried to sugar-coat this. He's talked about a long war. He's also mentioned that there would be times when combat hostilities would be visible. And long stretches where a lot of the main action wouldn't be visible to the American people. But the idea that somehow the president has been misleading the American people is just flat wrong. What's interesting to me is the wildly divergent sort of claims that are leveled against us. One week it's rose-colored glasses, the next week, it's fear mongering. The fact is the president understands that in a time of war, you have to keep the public in the loop, you have to explain what's going on, you have to explain what you're doing and why, which is what we have been doing for the last couple of months.

O'BRIEN: Ok, well then let's take a look at some of the president's speeches as you advised. First, as you know in Bob Woodward's book, he talks about this secret memo, that's from 2005 from State Department. Here is what the memo says, we've excerpted a little bit of it, put it on the screen there. "Iraq remains a failed state. Shadowed by constant violence and undergoing revolutionary political change." And this memo goes on to conclude that the American effort is suffering because there is no comprehensive unified policy. One month later, here is what the president says. One month, Rose Garden, listen. (BEGIN VIDEO CLIP)

BUSH: By claiming their own freedom, the Iraqis are transforming the region and they're doing it by example and inspiration rather than by conquest and domination. The free people of Iraq are now doing what Saddam Hussein never could, making Iraq a positive example for the entire Middle East.

(END OF VIDEO CLIP)

O'BRIEN: A secret memo says one thing. Three to four weeks later, the president's addressing the American people from the Rose Garden, he says exactly the opposite.

SNOW: Well you know, Soledad, a secret memo. There are lots of memos that come across the desk and they are differing assessments. I've been in the room where the president has talked to people who have held dramatically divergent views on what the situation is in Iraq. What the president was talking about there, was the fact that the Iraqi people had risked their lives and they voted and they had put together a government -- a government that has now been seated. You have a prime minister who is moving forward toward reconciliation. The fact that the president has gotten a memo actually helps weaken the central premise of the book which is that he doesn't get bad news or he doesn't consider it. He does. But he also gets views from generals on the ground. He gets it from our ambassador in Baghdad. He talks to people regularly who have been there. We have talked to scholars from all over the political spectrum. To sort of cherry-pick one memo and say a-ha, this memo is the truth, there are many memos. He looks at them. He reads them. He questions people closely about them. And he pushes people to give him honest answers and I think maybe the most important take away that I want people to understand is, when George W. Bush is in a room with advisers he's not sitting back saying, tell me a rosy scenario because you know what, that would be irresponsible for a commander in chief.

O'BRIEN: It was certainly a rosy scenario that was delivered in the entire context of the speech. But I want to move on.

SNOW: If you're going to make the point, let me just push back a little bit --

O'BRIEN: Well I'm just answering your point which is that it's not always a rosy scenario. And frankly, if you look at his speech --

SNOW: What he's talking about is an area, if you have democracy flourishing in Iraq, where you have Syria on one side and Iran on the other, both of which would be threatened by that. If you have Iraq and Afghanistan on both sides of Iran practicing democracy, it does send a powerful message. And what the president was talking about is the democratic ripples that have begun to manifest themselves in the Middle East, and that is a game change.

O'BRIEN: And my original question went back to a memo that he received one month earlier that called it a failed state of constant violence. I'm just saying, that when there are charges that the American people were not necessarily given the full story, this speech sort of goes ahead and confirms what Bob Woodward seems to be saying.

SNOW: No, not really. Because again, what you have, and there are a number of cases where somebody will talk about a memo, a meeting. The president has many memos, many meetings. The other thing that he has done, if you go back and start looking through the speeches, for instance, the ones that have been given in the last month, he has always talked about the difficulty of the task. He has always --

O'BRIEN: Well certainly in the last month I would completely agree with you. Absolutely, in the last month we have certainly heard that from the president. Many people have said, yeah, now, the president is talking about that but he may have been slow to get there. I do want to talk a little bit about Congressman Mark Foley which is our other prong. So if we can shift, I'd love to move on. There is a lot to talk about there as well. There is an investigation, as you well know, but my question would be, why is Representative Hastert, when he was aware that there were over friendly e-mails between a congressman and a 16-year-old page, why so slow to move to an investigation?

SNOW: You're going to have to ask the speaker about that stuff. Look, our plate is full enough. This is a terrible story. And Soledad, I have three kids. I think it's absolutely incumbent on members of Congress, many of whom have the charge of young pages, to make sure that these kids can come and get a good experience in Washington, not have to worry about the sort of things that have been alleged here. My sense is, figure out what the facts are, figure out who knew what when, let the House go ahead and conduct its investigations and others do it. We're going to find out the facts and I think probably sooner or later, because people do want to know.

O'BRIEN: I would assume everybody would want to know, including the president. I mean we're not talking about any old person, we're talking about the leadership of the Republicans in Congress. Why would he not hear something that's disturbing or his office? Over- friendly, when I see that word as a parent and I think any parent would say whoa, over-friendly? Any communication between a 16-year-old and a congressman why doesn't that raise red flags, major, massive red flags?

SNOW: Look, I hate to tell you, but it's not always pretty up there on Capitol Hill and there have been other scandals as you know that have been more than simply naughty e-mails. You know look, again, I'll reiterate my point. I think it's important to protect these kids and make sure that they have a good experience and like you, I want to find out what happened. But before we prosecute let's figure out what all the facts are. That's probably the most important thing to do is to be fair to all parties.

O'BRIEN: Well, there are some who would say the perception comes across then, regardless of where we are in the investigation, that in fact, there was more of a concern about political fallout than there was about the welfare of a 16-year-old or any other teenagers who may work in the office. SNOW: Again Soledad, I'll let you or the unnamed people draw the conclusions. I'm going to stick by my point which is that I think we have to take care of these kids.

O'BRIEN: Does the president and does the administration standby Representative Hastert as far as he has led so far on this issue?

SNOW: Again, we have to find out what's going on. You're trying to create problems. What you are trying to do is pick fights here. We need to figure out what's going on. Find the facts, figure out what the situation is, everybody's rushing for resignations and this and that. Let's just figure out what the deal is and then we can proceed from there.

O'BRIEN: Well just a final point and I'm not -- certainly not rushing for anybody's resignation.

SNOW: Sure you are.

O'BRIEN: Absolutely not. I am just here to try the figure out the story, sir.

SNOW: So am I.

O'BRIEN: And I'm certainly not trying to create problems. I am just concerned as I would imagine lots of voters would be about the leadership on both sides, Democrats and Republicans.

SNOW: Look, I think it's going to be interesting because maybe all these folks will start taking a look at how they treat the young people who are in their charge. Again, I'll reiterate the second point, I think you and I agree on this. It's a horrible story. It's a horrible story. We have to figure out what happened, if there is a bigger problem, fix it.

O'BRIEN: Tony Snow is the White House press secretary. Nice to talk to you, thanks for being with us this morning. Appreciate it.

SNOW: Thanks Soledad.

O'BRIEN: Rick?

(WEATHER REPORT)

O'BRIEN: Coming up this morning, thousands of diabetics might soon be able to say goodbye to painful insulin shots. We're going to tell you about a potential break through just ahead.

And later, the Pentagon does not let women serve in combat so why are so many women dying in Iraq, female soldiers? We'll take a look ahead on AMERICAN MORNING.

(COMMERCIAL BREAK)

O'BRIEN: There's hope this morning for more than 2,000 Americans who believe that they suffer from type 1 diabetes. They might actually have a different form of diabetes, a diabetes that can be controlled with a pill rather than an insulin shot. CNN's Keith Oppenheim has more for us.

(BEGIN VIDEOTAPE)

KEITH OPPENHEIM, CNN CORRESPONDENT (voice-over): From the way she bops around the house, you might never suspect 6-year-old Lilly Jaffe carries a disease. But when Lilly was just one month old, she was diagnosed with type 1 diabetes. Lilly's doctors believed her body could not produce insulin to control her blood sugar.

MIKE JAFFE, FATHER: It was just a heavy, sad time.

OPPENHEIM: For years, Lilly's parents, Lori and Mike Jaffe, gave her injections. Then switched to an insulin pump, monitoring her blood sugar and adjusting her insulin as many as 30 times a day. Twice, Lilly had seizures.

LORI JAFFE, MOTHER: She was shaking. She was tensing up. Her eyes were bulging out of her head. It was something a mother never wants to see.

OPPENHEIM: But last June, Mike Jaffe heard a remarkable lecture from Dr. Lou Philipson of the University of Chicago.

DR. LOUIS PHILIPSON, UNIVERSITY OF CHICAGO: There could be 2,000 or 3,000 people in the United States alone who are taking insulin who may not need to take insulin. And that is huge.

OPPENHEIM: The question was, did Lilly belong to a small percentage of people who actually have a form of monogenic diabetes and could it be managed with pills, drugs called sulfonylureas, instead of insulin?

(on camera): I will illustrate the basic science on this drawing board. This is a pancreas cell and this is a pathway for potassium on the cell membrane. With monogenic diabetes, because of a mutation, this pathway stays open and that prevents the cell from producing and secreting insulin. But research indicated that if you give these patients sulfonylurea drugs, you close off this pathway and you trigger the cells so that patients can produce and secrete insulin on their own.

(voice-over): Lilly's DNA was tested and it turned out she had the mutation. For five days at the University of Chicago Hospital, she was gradually introduced to the pills and weaned from insulin.

L. JAFFE: Over the course of days we saw a miracle unfolding right before us.

M. JAFFE: And see that she was correcting her own blood sugar for the first time. It was absolutely awesome. It was just mind- blowing.

OPPENHEIM: Now, Lilly controls her diabetes by taking pills just twice a day. How is it easier?

LILLY JAFFE, DIABETES PATIENT: It's because -- because everyone is not stopping me and I can just take the pills and it's more quicker.

OPPENHEIM: At her young age, Lilly understands she can now be more like a normal kid, with a shot at a much healthier future. Keith Oppenheim, CNN, Chicago.

(END OF VIDEOTAPE)

O'BRIEN: For patients like Lilly, that might still need to take insulin, especially during an illness when your blood sugar level can vary pretty widely, but Lilly is believed to be only the fourth person in the United States to benefit from the new treatment. Good news there, medically speaking. Rick?

SANCHEZ: Up next, Andy is "Minding your Business." And you know what he's talking about?

O'BRIEN: What?

SANCHEZ: Playboy clubs.

SERWER: Yes. I am the playboy.

O'BRIEN: Why aren't we getting the important news on today guys?

SERWER: It's a big business, Soledad. We will talk about the first playboy club to open up in over two decades and you can just guess which city it's going to be opening in.

SANCHEZ: Don't tell me. Do it during a commercial.

O'BRIEN: I have the slightest idea.

SANCHEZ: Thanks Andy. Also ahead, more, of course, on the scandal surrounding Congressman Mark Foley. The story, raising questions about the role of teenage pages on Capitol Hill. We're going to take a look at that and exactly what do pages do. It's ahead, right here, on AMERICAN MORNING.

(COMMERCIAL BREAK)

O'BRIEN: Playboy club is reopening. Google is buying a piece of history. That's just some of the business news that Andy is following as he "Minds your Business." Good morning.

SERWER: Good morning Soledad. Yeah, that's true. The bunnies are back and I guess this will be to the chagrin of some and the horror of others. That's right, a new playboy club is going to be opening up October 6th in --

SANCHEZ: Chicago?

SERWER: No.

SANCHEZ: That's where it started.

O'BRIEN: Midtown?

SERWER: No, Las Vegas because what happens there, stays there. They're going to have a casino license and there you go.

O'BRIEN: The outfits look the same.

SERWER: The last one closed in Lansing, Michigan in 1988. Can you imagine what that would be like, that 1988 Lansing, Michigan, the last playboy club?

SANCHEZ: Wow.

SERWER: The last one opened up was in New York 21 decades ago. And you may remember, even Hef said this thing was doomed for failure because they had male bunnies and Hef said this is the end. It was a big deal, obviously, the first ones opened up in the 1960's and they were global in London, Chicago, the Bahamas, Tokyo, they had 22 of them, 25,000 bunnies. Remember Gloria Steinem famously wrote about being a playboy bunny. And so they're starting it back up again.

SANCHEZ: It was a private club, it was just a cocktail lounge really.

O'BRIEN: The outfits change, the outfits --

SERWER: The bunny outfits are going to be back.

O'BRIEN: Pretty much the same.

SERWER: They may be updated but you still have the little -- everything going on there.

SANCHEZ: Make great costumes for Halloween, by the way.

SERWER: For some.

O'BRIEN: No, they don't, for the record, moving on.

SERWER: Soledad, moving on to Google. And this is, you know, what is it about silicone valley and garages? Everything seems to happen in garages. Everything seems to be invented there. Google was founded in a garage and the Google guys, Larry Page and Sergey Bren(ph) are going out and buying the garage, this is the house right here, where the company was founded. It's an interesting story. They rented this garage in Menlo Park in a house, $1700 a month which sounds like a lot of money. The company had about $1 million at that point. Today, it has $10 billion in cash and $125 billion market value. Only eight years ago. And Hewlett-Packard was founded in a garage. Apple Computer was founded in a garage.

O'BRIEN: Their parents kicked them out. SERWER: Yes, I guess so. You computer geeks get out there and do your thing. And actually, tourists come to this garage and visit and take pictures. So Google didn't want to post the address but you can find it at Google. If you use Google, you can find -- you know what I'm saying.

SANCHEZ: And you should go in your garage and see if you can find a popular toy, for example.

SERWER: Conjure something up.

SANCHEZ: Is there something coming up on a toy?

SERWER: There is something coming up on a toy Rick. We're going to be talking about Elmo. It's October so it's time to start thinking about Christmas shopping. And we told you about this Elmo and there is actually a little bit of a problem with Elmo.

O'BRIEN: Oh, no.

SERWER: The new Elmo, yeah.

SANCHEZ: Don't tell us any more.

SERWER: I won't tell you any more, you have to stay tuned.

O'BRIEN: All right, thank you, Andy. We'll take a look at the top stories as well right after a quick break, including the very latest on Congressman Mark Foley's resignation and now the investigation that is surrounding him. AMERICAN MORNING is back in a moment.

(COMMERCIAL BREAK)

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