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AMERICAN MORNING

Casey and Khalilzad Hold News Conference in Baghdad; Foley Investigation Continues

Aired October 24, 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: I'm Soledad O'Brien.
MILES O'BRIEN, CNN ANCHOR: And I'm Miles O'Brien. Good morning to you.

Lots happening this morning. Right to the news wall we go.

The White House abandoning that "stay the course" catch phrase to describe Iraq strategy. Any minute now we're going to hear from the U.S. top military and civilian leaders in Iraq. We'll bring that to you live from Baghdad as soon as it begins.

S. O'BRIEN: Also happening this morning. A search underway for an American soldier who disappeared in Iraq last night. There are fear this morning that he may have been kidnapped.

M. O'BRIEN: North Korea has no plans for a second nuclear test, so say the Chinese. But Kim Jong-il's regime also says it has no regrets about the first test.

S. O'BRIEN: Former Enron CEO Jeff Skilling is sentenced. He gets 24 years in prison for his role in the Enron scandal and the most spectacular corporate scandal in American history.

Miles.

M. O'BRIEN: Top of the hour. Let's go right to the weather. Chad Myers is talking about lake-effect snow once again.

S. O'BRIEN: No, no, no!

M. O'BRIEN: Hello, Chad.

(WEATHER REPORT)

S. O'BRIEN: And we've been telling you all morning, the U.S. commander, General George Casey, and also the U.S. ambassador to Iraq, Zalmay Khalilzad, are about to begin a news conference. It's going to happen in Baghdad at military headquarters. While we wait for it to begin, let's do a little discussion about what's happening there. Barbara Starr is at the Pentagon for us. Ed Henry's at the White House. Arwa Damon joins us as well. She's in Baghdad.

Barbara, good morning. Let's begin with you.

BARBARA STARR, CNN CORRESPONDENT: Soledad, good morning, as we continue to monitor these pictures, waiting for the two men to enter this press conference in Baghdad. It is taking place, of course, in the green zone. The highly secure area. General George Casey, Ambassador Zalmay Khalilzad.

The questions are likely to be, if it's not "stay the course," where are you going from here? Are there any new tactics? Any new strategy? Any new plans? The questions will be more troops? Less troops? Different troops? What are the Iraqis doing? And, most importantly, what is going to happen to crack down on these militias and death squads that are causing so much of the mayhem in Iraq.

Soledad.

S. O'BRIEN: Ed Henry, we're getting a two-minute warning from this news conference. We've expecting it in just a few moments. Question for you though. We've heard "stay the course" again and again and again from the president. Now it's, nope, not anymore.

ED HENRY, CNN CORRESPONDENT: Yes, it's changing the course or, in the words of "The Washington Post" this morning, cutting and running from that phrase we've heard from the president repeatedly. White House Spokesman Tony Snow basically saying that it no longer fits, staying the course. It does not accurately describe what the administration's approach is. That the administration is constantly adapting to the situation on the ground to try to deal with the enemy.

And so that raises the question, where did this phrase come from in the first place? It came from the president. He has used it repeatedly in recent months, to use it as the antidote to what he says is the approach, cut and run from Iraq.

That was then. This is now. Now is two weeks before the midterm election. Republicans have great fear that they're going to lose control of Congress. In large part because of Iraq. So the president desperately trying to show he's not for the status quo in Iraq. That's what Tony Snow was saying yesterday.

And also this morning the White House is facing some tough pressure from a top Republican senator, Lindsey Graham of South Carolina, telling the Associated Press that he believes, "we're on the verge of chaos and the current plan is not working in Iraq." Asked whether he believes Secretary Rumsfeld at the Defense Department or the military generals should be held accountable, Graham said all of them.

Soledad.

S. O'BRIEN: Ed Henry for us. He's at the White House this morning.

Ed, thanks.

Arwa Damon in Baghdad reporting for us on some terrible new numbers. Eighty-nine is now the latest death toll for the month of October alone and we're still, you know, not through the month yet. Arwa, we're just a few seconds away from this press conference beginning. That's going to be the big issue is the violence and security, isn't it?

ARWA DAMON, CNN CORRESPONDENT: Yes.

ZALMAY KHALILZAD, U.S. AMBASSADOR TO IRAQ: Hello, everyone. George Casey and I called this press conference today to explain our strategy and plans for success in Iraq, despite the challenging environment in which we operate. Our goal is to enable Iraqis to develop a multi-ethnic, multi-sectarian representative democracy after decades of tyranny. The American people know that this is very difficult and . . .

S. O'BRIEN: As you can see, we're having some technical difficulties. Let's check back in with Arwa Damon.

Arwa, they're beginning the press conference. We had a little satellite hit. Let's bring you back up again at the same time. Can we do a split screen, guys, so we can see this press conference as well. We'll just monitor it as well.

Oh, they're back. Let's take a look.

KHALILZAD: Despite the difficult challenges we face, success in Iraq is possible and can be achieved on a realistic timetable. Iraqi leaders must step up to achieve key political and security milestones on which they've agreed. As they take these steps, we can produce success and bring about Iraqi self-reliance, we must continue to support them.

Iraq is strategically vital due to its location and resources. However, more than Iraq is at stake. The broader Middle East is the source of most of the world's security problems, as was Europe in previous centuries. This is the defining challenge of our era. The struggle for the future of the region is between moderates and extremist political forces. The outcome in Iraq will profoundly shape this wider struggle and, in turn, the security of the world.

Those forces that constitute the extremist camp, including not only al Qaeda, but Iran and Syria, are at work to keep us and the Iraqis from succeeding. They fear Iraq's success. They want to undermine our resolve by imposing costs on us in terms of prolonging the conflict, imposing casualties and creating the perception that Iraq cannot be stabilized. The enemies of the American people believe that their will is stronger than ours and that they can win by outlasting us.

The killing that we all see every night on the television news are the work of the extremists. Since the liberation of Iraq, competition between sects and ethnic political groups for economic and political power has become a dominant feature of the political landscape. It is on this terrain that the battle for stability and progress in Iraq has been waged. Iraq's people are the principle victim of this war. They want it to end. The United States, as well as other friends of Iraq, has worked relentlessly to bridge these differences and improve the lives of the Iraqi people.

Politically, we saw Iraqis turn out in massive numbers for two national elections and the constitutional referendum. All of Iraq's sects and ethnic groups joined in historic transition. Iraqi leaders made historic compromises this April when they formed Iraq's first- ever government international community. These accomplishments were a beacon for the entire Middle East.

Economically, I see in Iraq every day that I do not think the American people know about, where cell phones and satellite dishes, once forbidden, are now common. Where economic reform takes place on a regular basis, where agricultural production is rising dramatically and where the overall economy and the consumer sector is growing. While a few provinces experience great violence, there is stability and progress in many others.

However, the battle over the future of Iraq has not been a one- sided fight. The enemies of Iraq, al Qaeda, Iraq's historic (ph) rivals and their local clients concentrate their efforts on tearing the Iraqi people apart along sectarian lines. Tragically, these efforts have had an effect. Now the primary source of violence is not simply an insurgency, but also sectarian killings involving al Qaeda terrorists, insurgents, militias and death squads. Iran and Syria are providing support to the groups involved.

As we look ahead, the question for the United States is whether we will acquiesce to or defeat the efforts of the enemies of Iraq. The answer to that question is that we should not acquiesce, but, instead, should make adjustments in our strategy and redouble our efforts to succeed. The United States, as well as other supporters of Iraq, is pursuing a strategy to reduce the sources of violence, to defeat extremists fermenting killing, to increase Iraq's capability to provide for its own security and to expand involvement of international community in supporting Iraq. This is not easy and cannot proceed without occasion setbacks and necessary adjustments.

To reduce the sources of violence, our strategy has three key elements. First, we're inducing Iraqi political and religious leaders who can control our influence on groups in Baghdad to agree to stop sectarian violence. Second, we are helping Iraqi leaders to complete a national compact. Key political forces must make difficult decisions in the coming weeks to reach agreements on a number of outstanding issues on which Iraqis differ. Enacting an oil law that will share the profits of Iraq's resources in a way that unites the country.

This is of critical importance. Amending the constitution to make all Iraqis understand that their children will be guaranteed democratic rights and equality. Reforming the devalification (ph) commission to transform it into an accountability and reconciliation program. Implementing a plan to address militias and death squads. Setting a date for provincial elections and increasing the credibility and capability of Iraqi forces.

Iraqi leaders have agreed to a timeline for making the hard decision needed to resolve these issues. President Talabani has made these commitments public. The United States and its coalition partners will support Prime Minister Maliki and other leaders in their effort to meet these benchmarks.

The third element is persuading Sunni insurgents to lay down their arms and accept national reconciliation. We are reaching out to Arab states, such as Saudi Arabia, the U.E. and Jordan to help by encouraging these groups to end the violence and work for a united and independent Iraq and to work against al Qaeda. These countries have promised to be helpful.

To defeat extremist groups, we will continue military operations against death squads and al Qaeda and adapt our plans for a stabilizing Baghdad. To increase the capability of Iraqi security forces, we continue to train and equip the Iraqi forces needed to achieve success. We are coordinating with Prime Minister Maliki and his team on developing a plan for the transfer of security responsibilities. Reforming the security ministry is one of the benchmarks that the Iraqi leaders have agreed to. This plan will be ready before the end of the year.

To broaden international support for stabilizing Iraq, Iraqi leaders and the United Nations have been working on a plan, an international compact, with Iraq that will consist of a commitment by Iraq to do what's necessary in terms of continued economic reform and policies to put the country on the path to stability and prosperity in exchange for the international community's support. Many countries, including those . . .

S. O'BRIEN: You've been listening to the U.S. ambassador to Iraq, Zalmay Khalilzad. And he is holding a press conference, along with the U.S. commander, General Casey, this morning. Haven't heard from the general yet. And what he is saying essentially in his words is that success in Iraq is possible. He said there's far much more than just the country of Iraq at stake now. That, in fact, the outcome of what happens in Iraq is going to be critical to what happens not only in the Middle East but also across the whole world.

We've be monitoring this press conference. We're going to continue to monitor it as well as when General Casey updates us on the situation, militarily speaking, as well.

Miles.

M. O'BRIEN: The course of the war in Iraq has political implications, of course, and we're two weeks until the midterm elections. And some new poll numbers show voters are in a foul mood in this country. Our CNN/Opinion Research Corporation poll shows only 38 percent think Democrats have a clear plan for solving the country's problems. Republicans fared worse. Just 31 percent believed in their problem-solving skills. It's about an even split on whether the parties possess high ethical standards. Forty-nine percent for Democrats, 46 for Republicans. As for whether each party can protect the country. The responses from Democrats and Republicans identical, 59 percent for each party.

With numbers that close and the war not going well, President Bush trying to shift attention to the economy, which is faring well. In an interview with CNBC, the president talked about low unemployment, low inflation and the tax cuts he championed.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I believe we'll hold the House and the Senate. No question, a strong economy is going to help our candidates. Primarily because they have got something to run on. They can say, our economy's good because I voted for tax relief.

(END VIDEO CLIP)

M. O'BRIEN: The president appeared on CNBC's "Closing Bell" with Maria Bartiromo. And as the election gets closer, stay tuned to CNN for a special series of prime time reports this week. We're calling it "Broken Government." Look for reports from the best political team on television tonight at 8:00 Eastern.

Some stories we are following for you this morning.

More than 1,600 pounds of ground beef recalled due to possible E. coli contamination.

Plus, we'll look at how YouTube could help shape the outcome on Election Day. Stay with us.

(COMMERCIAL BREAK)

M. O'BRIEN: Top stories we're following for you on the news wall.

That news conference continues. That's General George Casey. He's the top U.S. general in Baghdad right now. He's addressing reporters. We're watching it very closely for you. We'll bring any developments to you as soon as we hear them.

It is now a little more than 15 minutes past the hour. If you're heading out the door, we invite you to stay tuned for just a moment. Chad Myers at the CNN Weather Center with a traveler's forecast for you.

Hello, Chad.

(WEATHER REPORT)

M. O'BRIEN: More closed-door testimony in the Mark Foley scandal today. In a few hours, New York Congressman Tom Reynolds will appear before the Ethics Committee. Once again the question is, what did Republican leaders know about the former congressman's salacious e- mails to teenage pages? Our congressional correspondent, Andrea Koppel, live on Capitol Hill with more.

Andrea, good morning.

ANDREA KOPPEL, CNN CORRESPONDENT: Good morning, Miles. Congressman Reynolds is one of two top Republicans who claims that he told House Speaker Dennis Hastert about Foley's inappropriate behavior last spring. That's months before Hastert says he first learned the news. Now according to a timeline released by his office, Hastert says he doesn't remember such a conversation, either with Reynolds or with the House majority leader John Boehner, who testified before the committee last week. Hastert maintains that he first learned the news about the Foley e-mails last month when the news media first reported it.

Now yesterday a top Hastert aid, his chief of staff, Scott Palmer, testified before the committee for six and a half hours. And after he emerged from behind closed doors, his attorney had a short statement.

(BEGIN VIDEO CLIP)

SCOTT FREDERICKSEN, SCOTT PALMER'S ATTORNEY: Scott was very pleased to have had the opportunity to testify before the committee. Scott's testimony has been consistent with the position he's taken all along.

(END VIDEO CLIP)

KOPPEL: Now for three weeks now, the House Ethics Committee has interviewed over a dozen lawmakers and their aide as they try to get to the bottom of whether or not Republican leaders tried to cover up the Foley scandal. But they have as yet to hear from the House speaker himself. But on the campaign trail yesterday, Miles, Hastert was quoted as telling reporters that he planned to testify before the committee this week.

Miles.

M. O'BRIEN: And would that be the end of it, do you think, Andrea? Will he be the final witness? And could this thing be wrapped up in time for the election?

KOPPEL: Well, he would certainly be the most senior witness to testify. But there's still a couple of other Hastert aides who would need to come before the committee. They might do so this week. And it is entirely possible that the committee could issue a report before the November 7th elections.

Miles.

M. O'BRIEN: Andrea Koppel on Capitol Hill, thank you.

Soledad.

S. O'BRIEN: Some of the stories we're following for you this morning.

The White House says that President Bush is no longer going to use the phrase "stay the course" to describe his policy on Iraq. And former Enron chief Jeff Skilling is sentenced. He gets 24 years in prison. Andy's got more on that just ahead on AMERICAN MORNING.

(COMMERCIAL BREAK)

M. O'BRIEN: Back now. We're continuing to monitor that news conference out of Baghdad. That's General George Casey as he continues on. He, just a moment ago, said the nature of the conflict there has changed. He said the additional brigade of troops to Baghdad has had a decisive effect. We just reported a little while ago, 89 troops now dead just this month in Iraq. The deadliest month in two years there.

Shifting gears now. The poster child for corporate greed and malfeasance, Jeff Skilling, will spend most of the rest of his life in prison. Andy Serwer is here with more on that. And Jeff Skilling, to the end, unrepentant.

ANDY SERWER, CNN CORRESPONDENT: Yes, that's right. I mean, he was saying that he wasn't particularly going to apologize for what happened at Enron on a personal level because he was still appealing. And while he said he was sorry about what happened, he said that he didn't do anything wrong. So there you have it.

Now as far as him spending the rest of his life in prison, Miles, that's probably right if you do the math. He's 52 years old. And yesterday Judge Sim Lake in Houston sentenced him to 24 years and four months in prison. The judge did allow him to go home wearing an ankle bracelet monitoring system. And there was some talk of him reporting directly to prison. The judge suggested a federal facility in Butner, North Carolina.

Also yesterday various victims of the Enron collapse got a chance to address Jeffrey Skilling. They called him a liar, a thief and a drunk. He showed no emotion during sentencing at all.

The judge also ordered, first of all, that his assets, $60 million worth, be liquidated. Some of that will go to legal fees. But the bulk of it will go to compensate victims of Enron. Although when you parc it out to all the people, it won't amount to that much money, $45 million, for instance. And also Skilling must undergo alcohol and mental health counseling.

So a lot going on here. But it is sort of the final big chapter of Enron, I think, that is closed at this point.

M. O'BRIEN: All right. So when you pile up all the assets there, the late Ken Lay's assets, Skilling's and the others, how much of a kitty is there for these poor people who lost their 401(k) money, their retirement, their dreams?

SERWER: Well, you know, it's hard to add that all up. First of all, Lay's money is still part of his family's at this point because remember his conviction was thrown out. But that's one of their civil suits. They're going to try to get their hands on that. I mean it could be as much as $100 million. There's so much litigation still going on. That's why I said it's the final big chapter.

An interesting point here, just to give you an idea of what was going on in Judge Sim Lake's mind. He said about Skilling, "his crimes have imposed on hundreds, if not thousands of people, a life sentence of poverty." Which I think may be slightly strong. Perhaps even overstating the case. But, still, I mean, a lot of people lost a lot of money.

M. O'BRIEN: And just quickly, will there be class action efforts there to get this money or will people have to individually sue to get this money?

SERWER: Well, again, that's still yet to be determined. But one would think that there would be an attempt at that.

M. O'BRIEN: OK. Andy Serwer, thanks very much.

SERWER: Thanks, Miles.

M. O'BRIEN: Soledad.

S. O'BRIEN: All right. Let's take you right back to that news conference that's taking place in Baghdad. We're hearing from the U.S. commander in Iraq, General George Casey, and also the U.S. ambassador in Iraq, that's Khalilzad, this morning. The ambassador is picking up the question talking about the goals that he says have not changed as they now go to the question and answer portion of this news conference. So let's listen in for just a moment.

KHALILZAD: Reduction in the sources of violence as a result of progress on the national compact and the reconciliation and increase Iraqi capability to deal with what remains of that struggle.

But we have to know, and I have emphasized this, this is not a one-sided affair or game. There are enemies, both internal and external, that they adapt and adjust. But I believe that Iraq will make significant progress in the coming 12 months.

GEN. GEORGE CASEY, CMDR., MULTI-NATIONAL FORCE-IRAQ: From my perspective on the security side, we have been focusing on helping build Iraqi security forces that can maintain domestic order and deny Iraq as a safe haven for terror. We are about 75 percent of the way through a three-step process in building those forces. And it's going to take another 12 to 18 months or so until I believe the Iraqi security forces are completely capability of taking over responsibility for their own security. Still probably with some level of support from us, but that will be asked for by the Iraqis.

The other thing that we do, is we support Zal and the political efforts and the economic efforts. I would say, much as Zal has said, if the political leadership of Iraq can come together and resolve the basic issues that are dividing them, I believe we can make good progress on the security front. And that coupled with the already good process with the Iraqi security forces, I think can put Iraq in a very good place in 12 months.

JOHN BURNS, "THE NEW YORK TIMES": John Burns, "New York Times." A question for General Casey.

We heard last week from General Caldwell about the need to refocus and adapt Baghdad's security plan, but there's been much discussion as to what that would mean. Can you address the question of troop levels and whether additional troop levels, if necessary, would be American. Whether those are Iraqi? And if American, would that involve holdovers for some of the units now in the country? And could you go on from that to discussion the question of your timeline for the draw down of the American troops and how that will be affected by the adjustments you make in Baghdad.

CASEY: Welcome back, John.

BURNS: Just the question you wanted.

CASEY: Just one question.

The Baghdad security plan. We are already -- I mean, we continue to say that, we review this weekly. General Correlli and General Kerman (ph), who are conducting the tactical operations review with more (INAUDIBLE) than that. And we already have taken adjustments inside that to react to what the enemy is doing, and to put us in a position to deal with things we think they're going to do.

I'm not going to get into specifics of what we're going to do in the Baghdad security plan, because I don't necessarily want to telegraph what we're getting ready to do here with the enemy.

That's it. I think you can expect us to continue to hold onto the focus areas with the Iraqi security forces, and to follow through on what we're trying to do on the build phase to put -- to help with the basics, to improve basic services for Baghdad.

Now, do we need more troops to do that? Maybe. As I've said all along, if we do, I will ask for the troops I need, both coalition and Iraqis. But I think it's important for all of us to understand right now that we're not going to have security -- total security here in Baghdad until the major political issues that are dividing the country are resolved. And the political leaders understand that. And they're wrestling with that part of it.

As with the militia issue, all of this -- what we're doing here takes an integrated political and military effort to achieve decisive results. That's what we're working with the Iraqis to do.

I don't know if I got them all, John. But that's as close as I can get.

QUESTION: Timeline for American troops (INAUDIBLE)?

CASEY: Timeline? I said a year or so ago if the conditions on the ground continued the way they were going, I thought we would have fairly substantial reduction in coalition forces. We began that reduction in December of last year with the offering of two brigades. We were proceeding along that line until really the end of June, early July when it became apparent that, as I said, the Iraqi security forces were about half way through a three-year, three-step process, that they weren't going to have the impact on the security situation in Baghdad that was needed to give this government, new government some breathing room.

And so I reversed what I doing and we committed these forces here. And they've had a decisive impact on what's going on here in Baghdad. I still very strongly believe that we need to continue to reduce our forces as the Iraqis continue to improve because we need to get out of their way. The Iraqis are getting better. Their leaders are feeling more responsible for the security in Iraq, and they want to take the reins. And I think we need to do at that. I can't tell you now until we get through Ramadan and the rest of this when that might be.

QUESTION: Andrew North from BBC. A question to both of you: Despite the progress you talked about, elections and economic activity, you have a situation now where more and more Iraqis say, with the rising violence, life was actually better under Saddam Hussein. Hasn't the time come to admit it would have been better if the Americans had never come to Iraq, that the project here has failed?

KHALILZAD: No, I don't think that. The important fact to keep in mind that, of course, a lot of innocent Iraqis are getting killed, and that's a source of concern to us, and to the Iraqis. But during Saddam, thousands upon thousands of Iraqis were killed as a result of a government policy. The government, which has a responsibility for protecting the citizens, was, in fact, killing -- killed thousands upon thousands of Iraqis.

Now these killings are taking place by the terrorists, by death squads, and the government, with the support of the coalition, is trying to bring that to an end. I think the potential for the positive impact for the Iraqis from the success of this project to build a democratic -- (AUDIO GAP)

(END LIVE FEED, IN PROGRESS)

S. O'BRIEN: Once again, you can see we took a little satellite hit there. And we obviously are going to try to bring that back up. It looks like it's still frozen. We'll monitor to this press conference hearing from General Casey and also Ambassador Khalilzad.

You could hear them talking both about progress but also getting questions from the journalists who are present in that news conference, asking about the realities on the ground. And if that's contradictory to some of the progress they're talking about.

One of the things we heard from General Casey, he said it will be 12 to 18 months before U.S. forces will be able to, to some degree, turn things over to the Iraqi security forces, before U.S. forces will have some kind of minimal role, a minimal impact, is by General Casey's guess at that point.

We're going to continue to monitor this. As we get that news conference, continuing out of Baghdad. Also some other stories that we're following for you this morning, the midterm elections just two weeks from today. We'll take a look at why the Democrats have such a tough time winning support in the South. That, and much more, ahead. Stay with us.

(COMMERCIAL BREAK)

S. O'BRIEN: New polls show just how disillusioned voters are by elected officials on both sides of the aisle. According to the CNN poll, done by the Opinion Research Corporation, on the question of who has a clear plan for solving the country's problems? No body. Only 38 percent of people polled say Democrats do; 31 percent say Republicans do. Take a look at the negative numbers. The Democrats fair slightly better when it comes to who has higher ethical standards. They get 49 percent, Republicans 46 percent. Once again take a look at the negative numbers there.

And 52 percent say Republicans don't have high ethical standards. Finally, both parties dead even on just who can protect the country, 59 percent, say people who respond to polls, for both.

Democrats are, of course, hoping they can regain control of the House and the Senate. They've been the minority party for the better part of the last 12 years. Senior Political Correspondent Candy Crowley joins us with a broken government report.

Candy, good morning.

CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT: Good morning, Soledad.

We spent about the past five weeks looking at a single question, why in the past have Democrats had so much trouble winning elections? Part of our story took us to the 11th District of North Carolina where a 16-year incumbent named Charles Taylor, Republican, is being given a stiff challenge from Democrat Heath Shuler.

(BEGIN VIDEOTAPE)

CROWLEY (on camera): Are you a Nancy Pelosi Democrat?

HEATH SHULER, (D-NC) POLITICAL CANDIDATE: You know, I don't like to classify.

CROWLEY (voice over): Washington liberal does not play well in North Carolina conservative. It is part of why, over the past three decades, Southern and rural, mostly white Democrats have looked inside the National Democratic Party and gone elsewhere.

BRUCE REED, DEMOCRATIC LEADERSHIP COUNCIL: Our biggest problem is that of late we've been losing elections.

CROWLEY: What is wrong with these people? From Virginia to Montana to Georgia, crack open a Democrat and they'll tell you, it's the wussie factor.

MAX CLELAND, (D) FORMER U.S. SENATOR: You've got to lance that bubble. I mean, you know, it's been a narrative for the Republicans for decades now, kind of an underlying narrative against the Democrats that they're soft on Communism. And now it's soft on terrorism.

CROWLEY: It's the culture.

DAVID "MUDCATS" SAUNDERS, DEMOCRATIC STRATEGIST: The culture is reason the Democrats have been losing elections. It has nothing to do with policy. It has to do with culture.

CROWLEY: It's the guns.

GOV. BRIAN SCHWEITZER, (D) MONTANA: People ask how many guns I have, and I tell them none of your damn business. And not as many as I'd like.

UNIDENTIFIED MALE: Used to be an awful strong Democratic community right here.

SHULER: I think it still is. I think it still is.

CROWLEY: If his journey is to end in Washington, Heath Shuler needs 11th District Democrats to come home.

SHULER: That's where we have to do a good job of being in a district like this, where they can talk and they can spread the word, and say he's not like some of the national Democrats. You know, he's one of us.

(END VIDEOTAPE)

CROWLEY: Just to give you an idea, Soledad, how big this problem has become, by the time George Bush leaves office, over the past 40 years, Democrats will have occupied the Oval Office, just 12 of those. As you know, they've been in the minority up in Congress on Capitol Hill for 12 years -- Soledad.

S. O'BRIEN: I thought that first question was interesting and the tap dance that followed was also interesting. Is that an indication that, in fact, Democrats in the South are really trying to distance themselves from key figures like Pelosi?

CROWLEY: They're certainly trying to address their own constituency. In the South, for Democrats, that really is a culture they need to address and that they need to be a part of. Obviously, Nancy Pelosi is being used sort of as the boogie man for Republicans who say, oh, he's a Nancy Pelosi Democrat. Which, in fact, the Republican is running commercials like that. So, it's a -- you know, it is a fine line as they walk because Heath Shuler, this Democrat that you just saw, says, look, you know, I have a lot in common with the Democratic Party, but I've got to run my own race. So, there's some distance there, but kind of a juggling act.

S. O'BRIEN: Candy Crowley for us this morning. Candy, thanks.

And as the election gets closer, of course, we're going to run our special series of prime time reports this week, it's on "America's Broken Government" Look for reports from the best political team on TV at 8:00 p.m. Eastern Time, time all week -- Miles.

MILES O'BRIEN, CNN ANCHOR, AMERICAN MORNING: We've re- established our satellite link with that rare news conference in Baghdad, the U.S. Ambassador to Iraq, Zalmay Khalilzad, now addressing reporters' questions. Let's listen in.

(BEGIN LIFE FEED, IN PROGRESS)

KHALILZAD: ... brought down, whether it's insurgents, whether it's militias, and there is a need for a program to move forward. And the government, as I said, the leaders have committed themselves to it, including Muqtada al-Sadr, from what the prime minister says, and we need to test whether that is true by moving forward on the plan.

CASEY: Let's go back to Sheik Mazad (ph) for a minute. To your question.

KHALILZAD: Yes.

CASEY: I did that, at the request of the prime minister. And it had directly to do with the militia strategy that Zal is talking about and you're asking about. The prime minister was going down for his first meeting Muqtada al-Sadr, in some time, to discuss precisely this issue. We just happened to pick this guy up after checking to make sure we had no information that he had anything to do with attacking coalition forces. I made the call in support of the prime minister. And my assessment was, operational risk was far exceeded by potential strategic pay off.

QUESTION: Laura Logan, CBS News.

Ambassador Khalilzad, if I could ask you, please, has Muqtada al- Sadr, actually agreed to any of the plans that you've outlined here? Has there been any direct contact between him and U.S. representatives. Because him, and all of his ministers, who control key ministries like the ministry of health say that they refuse, still, to have any direct contact with the U.S. And if that is the case, then how are we expected to believe that they will support this plan in anyway?

And to General Casey, can I ask you, please, can we have an honest assessment of the Iraqi security forces? Because when we are on the ground, with your commanders, they tell us that when they try and order up an operation and ask for the Iraqi battalion or Iraqi brigade, they're lucky if they get 40 to 50 percent of the guys who are actually there. They have soldiers and policemen who are coming and collecting their paychecks and not showing up.

The special inspector general of Iraq says there is no mechanism in place, and hasn't been for three years, to determine what forces show up, what don't, what the levels of attrition are, who is operationally capable. So the numbers really are a lie. We want the truth and your soldiers on the ground want the truth out there.

KHALILZAD: With regard to your question on Muqtada al-Sadr, I am relying on the prime minister for what I said, which is that he has agreed to getting rid of the militias, that those who are unauthorized to carry weapons needs to be dealt with. That he supports the government and the political process. And we just need to test that with implementation.

You're right that contacts with -- and we don't have direct contact with Muqtada al-Sadr. We do interact with him through his representatives in the assembly and beyond, but we do not have direct contacts yet.

CASEY: Laura, the numbers aren't a lie. And the numbers are prepared by the soldiers in the field and their Iraqi counterparts on a monthly basis. And, frankly, we have pretty good resolution between the numbers we have here, and the numbers I see when I go out to the divisions in the field.

Now, what's the problem? The problem is on one part, under- manning. And the second party is the leave policy of the Iraqi armed forces that puts about a quarter of the unit on leave at any one time. We've recognized this. The minister of defense put in place several months ago a policy that will increase the manning in Iraqi units to 110 percent. So when they take the people off for leave, there's a credible enough force to get on -- to put in the field. But it's not a lie. And it's something that's recognized and been addressed by our leadership and by the Iraqi leadership.

(CROSS TALK)

KHALILZAD: Please, just a minute.

CASEY: We have one Iraqi question?

KHALILZAD: Yes, we'll get in an Iraqi question now.

QUESTION: Thank, gentlemen. Nic Myra (ph), with "The Washington Post".

Let's see. General Casey has repeatedly said that resolving the militia issue will take a military and political approach, but Prime Minister Maliki has made clear he doesn't want any kind of U.S. military action against the militias. He's said that specifically and he's blocked you from entering Sadr City. So when the question comes to it's up to the Iraqi government to show resolve against the militias, they've already made clear they're not going to take a tough approach like the U.S. wants. And Muqtada al-Sadr has already said that his militia is not a militia, per se, and he's not going to disband it. So absent any kind of military force against these militias and these death squads for the main component of violence right now, how are you going to solve the militias?

KHALILZAD: I don't agree with your characterization. I believe that the prime minister has said to me, and to George, that he believes in an integrated approach, political, yes. That's the best approach if you can convince those that control militias to cooperate with decommissioning, demobilization and reintegration plan.

He has said he does not rule out the use of force. We will see what happens, but I believe right now we are in the phase of developing a plan for how to move forward with demobilization and decommissioning and reintegration plan. Our people, both from the military and civilian side, are working with a team that has been designated by the prime minister to develop such a program.

And I believe that the prime minister, in order for this country to succeed, will have to do whatever is necessary to -- on the one hand, increase the credibility and capability of the Iraqi forces, which he's anxious to do. For Iraq assume increasing responsibility, which he's anxious to do in the security domain, but also to deal with the unauthorized military formations problem.

CASEY: First, I don't think anybody should leave here thinking that we're not doing anything against death squads.

KHALILZAD: Right.

CASEY: We and the Iraqi security forces are actively tracking, targeting, detaining people who are operating in death squads -- and their leadership -- who are breaking the law. That's different than the militia itself.

Secondly, what has to happen here, as we and the Iraqi government address the militias, is that the Iraqi security forces emerge from this struggle as the dominant security forces in Iraq. And I believe that that can happen. And I think it will happen, and it may happen with our support. But we'll work that out with the Iraqi government.

KHALILZAD: Sadad (ph)

QUESTION: An Iraqi question?

KHALILZAD: Let's get an Iraqi question.

QUESTION (through translator) Ali Hassan (ph) from Hora (ph).

Excellency, you have talked about a new strategy that you would put together in the next phase. Do you think --

M. O'BRIEN: That news conference continues. We're going to continue to monitor it. General George Casey saying about 18 months before he believes Iraqi security forces can stand up, as is the term, that wasn't his exact words.

In the meantime, he says he reserves the right, along the way, to ask for additional U.S. troops if he feels it's needed or additional Iraqi troops for that matter. He also said a little earlier that he felt Iran and Syria were not at all being helpful to the situation.

Ambassador Khalilzad, also along the way, talking about the situation there. And indicating -- both of them indicating that that additional brigades of U.S. forces, in Baghdad, had significantly changed things and the entire conflict had changed significantly in recent weeks and months.

We'll continue to follow it as more news nuggets come out if it, we'll bring them to you. Some of the other stories we're following for you morning: Space travel for the rest of us. We'll take you to a very different kind of space race. A look at the Second Annual X-Prize Cup is ahead.

(COMMERCIAL BREAK)

S. O'BRIEN: Some of the stories we're following for you this morning: The Iraqi government is expected to take full control of security in the next 12 to 18 months, as announced by the top U.S. general in Iraq, at a news conference that took place just moments ago.

It came less than an hour after the American death toll in Iraq climbed to 89, that's just for this month of October, alone.

In Washington, New York's Republican Congressman Tom Reynolds set to testify before the Ethics Committee. Members want to know what he knows about the Mark Foley scandal.

It's 51 minutes past the hour. If you're about the head out the door, let's first check in with Chad -- is what I'm trying to say -- he's going to look at the "Traveler's Forecast".

(WEATHER REPORT)

M. O'BRIEN: Space, the final frontier. Now, seeing a new breed of intrepid explorers, running a new kind of space race. It's more like Rube Goldberg (ph) than Verner von Bron (ph). But don't bet against these determined and in some cases well-funded dreamers who turned out this past weekend in New Mexico for the Second Annual X- Prize Cup.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: We've got Russ building up and -- oh!

M. O'BRIEN (voice over): The Pixel has, well, landed. Welcome to a whole new kind of space race.

JOHN CARMACK, ARMADILLO AEROSPACE: It's not long off from when we can just park one of these things over and say, give me your ticket, get on it, let's go for a ride.

M. O'BRIEN: John Carmack made a fortune creating video games, "Doomed" the most famous. Now he spends half his time running a company called Armadillo Aerospace. He and his team flying their prototype moon landers, hoping to land $350,000 in NASA-funded prize money.

MIKE FOALE, ATRONAUT: If they do that right, it means that NASA can borrow, or encourage that technology, for its own purposes, going back to the moon.

M. O'BRIEN: Just part of a $2 million kitty for all manner of spacey ideas demonstrated, or at least attempted, at the Second Annual X-Prize Cup, in Los Cruses New Mexico. PETER DAIMANDIS, WIREFLY X-PRIZE CUP: The prize concept really allowed these teams to get funding, it brought the ability for the public to touch and feel it.

M. O'BRIEN: Peter Diamandis is the space visionary who dreamt up the $10 million X-Prize for a pair of civilian space flights. Aviation legend Burt Rutan won that contest two years ago.

DIAMANDIS: The competition really was about keeping the dream alive for those other teams and giving them a world stage.

M. O'BRIEN: The X-Prize was funded by Dallas communications entrepreneur Anousheh Ansari. Here signing autographs fresh from her $20 million trip on a Russian rocket to the International Space Station, a newly minted rocket star.

ANOUSHEH ANSARI, SPACE TOURIST: Space is for everyone who wants to be in space, because it is physically challenging. It does require you to be physically prepared and mentally prepared for it.

M. O'BRIEN: It was all about heated competition here. A half dozen teams vying in the space elevator contest, a solar powered baby step on turning science fiction into fact.

(on camera): This is the ribbon they used for this space elevator competition. It's made of rubber and nylon, and it's only about 200 feet in length. If you're going to really try to build the real thing, you would have to use something that's stronger and lighter. One of the new technologies they're looking at are so-called carbon nanotubes, which are very strong and very light. But it would have to be an awful lot longer. How long, you ask? Try 66,000 miles in length.

(Voice over): In theory, you could take cargo and people to space at the speed of an elevator, eliminating the need for heat shields and rockets. One of the prototypes was hatched by some high school juniors from California.

(on camera): Were there any adults involved in this at all?

UNIDENTIFIED MALE: Yeah, his dad.

M. O'BRIEN: He helped. Is he an engineer to kind of guide you?

UNIDENTIFIED MALE: No, he's a real estate broker, but he's a genius when it comes to this sort of stuff.

(LAUGHTER)

M. O'BRIEN (voice over): In the end, nobody won anything. But they came close and 20,000 people dropped by to see how close we may all be to one day flying to space.

CARMACK: Ninety percent of the things are going to fail. We may have seven or eight prospects, or something here, but it's not at all unreasonable to think they could all bomb. (END VIDEOTAPE)

M. O'BRIEN: Now, there are about 20 small private companies trying to build new space vehicles, in addition to Richard Branson's heavily promoted efforts to build a rocket to take people to space. There are a handful of others trying to do the same thing. Interesting, Soledad, most of them are run by dot.com millionaires, and in some cases billionaires.

S. O'BRIEN: They can do it, yes.

M. O'BRIEN: Many of them who are kind of science fiction buffs, grew up on Apollo and "Star Trek" and feel a little bit disillusioned about where we are in space right now and trying to push it along with some capital. They have a little bit of it.

S. O'BRIEN: I don't get the space elevator. That whole -- that blue thing was supposed to stretch people?

M. O'BRIEN: Think about a yo-yo string. If the yo-yo string is long enough and you're spinning it, the string becomes taut. Well, that is essentially what that ribbon would be on a space elevator. It just has to be about 66,000 miles out.

S. O'BRIEN: So, it would be attached to what?

M. O'BRIEN: Well, there, you could put a counterweight at the other end. You could attach it to an asteroid or something and make this long string.

(LAUGHTER)

S. O'BRIEN: I see where we're going with this.

M. O'BRIEN: And up the elevator you go. OK, it's not going to happen tomorrow, but this is an idea that could happen. And we could all just be taking the elevator to space for about 100 bucks -- inflation adjusted.

S. O'BRIEN: It would save you so much money.

M. O'BRIEN: Think of the savings, yes.

S. O'BRIEN: That was a cool (INAUDIBLE)

A look at the stories we're following for you this morning: The search is on for that U.S. soldier who is missing in Iraq. We'll update you on that situation. And much more ahead on AMERICAN MORNING.

(COMMERCIAL BREAK)

M. O'BRIEN: Good morning to you. Tuesday, October 24. I'm Miles O'Brien.

S. O'BRIEN: And I'm Soledad O'Brien. Let's begin right at the news wall this morning. Our big story is Iraq. The U.S. ambassador to Iraq and the top American general there just wrapped up a news conference. They say Iraqi should be able to take -- Iraqi security forces, rather -- should be able to take full control of security there within 12 to 18 months. That is with some minimal U.S. support.

According to General George Casey, and he says that means the U.S. can continue to think about troop draw downs in the long term. Short term, however, he says, more U.S. troops could be needed.

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