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AMERICAN MORNING

Cheap Computers; Missing Soldier in Iraq; President Bush Stumping for Republican Candidates, Donald Rumsfeld

Aired November 2, 2006 - 07:59   ET

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


MILES O'BRIEN, CNN ANCHOR: It's that time of year ago to think about the holiday shopping season. And if you have a computer on your list, Andy Serwer has great news for you.
Right?

ANDY SERWER, MANAGING EDITOR, "FORTUNE": I do. I was going to get you software this holiday season. Remember...

(CROSSTALK)

M. O'BRIEN: You were.

SERWER: This is good news for consumers, maybe not such good news for PC makers. PC makers not necessarily so happy with Microsoft. That's because its new Vista operating system is not coming out until January, and usually they get a big tailwind when you have a new operating system, people buy a lot of computers. But since it's not happening until after the holiday season, what's a PC maker to do?

How about this...

M. O'BRIEN: So should you hold off?

SERWER: No. They're going to cut prices because they're not going to get the usual bump from a new operating system before the holiday season.

M. O'BRIEN: Right.

SERWER: So it is a good time to buy a PC or notebook before Christmas or the holiday season. In other words, a good time to buy right now because they're cutting prices.

M. O'BRIEN: Would they give you a free upgrade to Vista when it comes out? They probably should.

SERWER: You get some coupons.

M. O'BRIEN: Coupons.

SOLEDAD O'BRIEN, CNN ANCHOR: I was going to say, you're so not getting a free -- you must be new. It doesn't look like that.

M. O'BRIEN: I thought I'd ask. SERWER: Notebooks, $750; a desktop PC $500. And prices are really, really coming down.

S. O'BRIEN: That's great.

SERWER: Another story to tell you -- look at that.

M. O'BRIEN: That's cheap.

SERWER: That is. A "Wall Street Journal" story.

Another thing to tell you about this morning, do you like food? Yes. There's a new food network -- that was an easy -- there's a food -- it's called food@yahoo.com.

Yahoo! is devoting a special Web site to food, and they're going to have all kinds of videos and content from Rachel Ray, of course, the chef of the moment, right? Martha Stewart, Wolfgang Puck -- and this is what I kind of like, thousands of recipes. And I think it's kind of cool to go to a Web site and just type in spareribs and you have a million...

M. O'BRIEN: That's been done.

SERWER: It has. Amazon has done it. But this is...

M. O'BRIEN: All right.

SERWER: Yahoo! is playing catch-up again -- Ketchup again.

Taking a page out of your book, Miles.

S. O'BRIEN: Please, not two of you punning at us all day. I can't take it.

(CROSSTALK)

M. O'BRIEN: You're a ham in more ways than one.

SERWER: Stop it. Stop it.

M. O'BRIEN: All right. Thank you.

The next hour of AMERICAN MORNING begins right now.

S. O'BRIEN: Developing news from Iraq. The military briefing this morning in Baghdad has new information about that kidnapped American soldier.

M. O'BRIEN: A major American contractor leaving Iraq. The company was paid $2 billion. What did it get done, and was it just another casualty of the violence in Iraq?

S. O'BRIEN: And five days until the midterm elections. The candidates working overtime to get their messages out. They're hoping to move past John Kerry's now infamous joke if they're a Democrat. Those stories, much more ahead on this AMERICAN MORNING.

M. O'BRIEN: Good morning to you. It is Thursday, November 2nd.

I'm Miles O'Brien.

S. O'BRIEN: And I'm Soledad O'Brien.

Thanks for being with us.

Let's begin with the U.S. military now providing new details about that missing soldier in Iraq. He's been missing for more than a week.

Let's take you right to the Pentagon. CNN correspondent Barbara Starr is there.

Good morning, Barbara.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Good morning to you, Soledad.

The soldier has been missing since October 23rd, and at this morning's news briefing in Baghdad for the first time, the U.S. military showed a photograph of this man and identified him to the world by name.

He is 41-year-old Ahmed Qusai al-Taai. He is an Iraqi-American, a soldier in the U.S. Army. He has been working as an interpreter- translator in Baghdad with the U.S. military, on deployment now for several months.

He went missing on October 23rd, last seen at his base near Baghdad. Was going apparently to meet with his Iraqi wife out in the city in Baghdad when he was, according to the words General Caldwell very carefully used, allegedly kidnapped.

According to reports, he was at a relative's home. Three cars pulled up, and he was, this man, this soldier, was handcuffed and taken away. The U.S. military has been on a desperate search for him.

General Caldwell talked about that.

(BEGIN VIDEO CLIP)

MAJ. GEN. WILLIAM CALDWELL, SPOKESMAN, MULTINATIONAL FORCE, IRAQ: Iraqi security forces and coalition troops are working around the clock to return him to safety and to return him back to his family. And also to catch the perpetrators of this crime.

Search operations are based on actionable intelligence, and there has been a particular focus in areas east of the Tigris River. Elements of five brigade combat teams, more than 2,000 coalition forces, and more than 1,000 Iraqi security forces are directly involved in this search operation.

(END VIDEO CLIP)

STARR: Soledad, General Caldwell was asked by one of the reporters in Baghdad whether there has been any contact with the kidnappers. He would not be specific about that. All he would say was there was "an ongoing dialogue" with people in Iraq who might have some information about the whereabouts of this man -- Soledad.

S. O'BRIEN: That's kind of an interesting answer to that question, isn't it?

Barbara Starr at the Pentagon for us.

Thanks, Barbara.

At the White House this morning, with just days before the election, and while the president spends his day stumping for candidates out West, he continues to stand by his man at home. That's Defense Secretary Donald Rumsfeld.

CNN's Ed Henry live at White House for us this morning with more.

Good morning, Ed.

ED HENRY, CNN WHITE HOUSE CORRESPONDENT: Good morning, Soledad.

That's right, the president's final push begins today in Montana. That's where Republican Senator Conrad Burns is trailing in the polls right now. Then on to Nevada and Missouri, that tossup Senate race you were talking about in the last hour.

Still, after that -- Iowa and Colorado as well in the next couple days. But after that, we don't know where the president's plane is going to be heading. The White House will be looking at the polls, trying to figure out where he can help in the last couple of days.

But while he's stumping for candidates on the road, the president also stumping for his defense secretary back here. A vote of confidence as well for Vice President Dick Cheney in an interview with wires services.

You know the president has heard a lot of criticism, particularly about the defense secretary. Many Republican candidates, not just Democrats, but Republicans saying the defense secretary should go. The president, though, yesterday declaring, "On Secretary Rumsfeld, I have asked him to fight two fronts in the war on terror, Afghanistan and Iraq, as well as transform our military. Any one of those would have been a lot for any secretary of defense to handle. He's handled all three at the same time, and I'm pleased with the progress we're making."

Now, last hour on AMERICAN MORNING, White House spokesman Tony Snow was on, and he reaffirmed that support.

(BEGIN VIDEO CLIP)

TONY SNOW, WHITE HOUSE PRESS SECRETARY: Don Rumsfeld is a visionary leader, and he's competent. And yes, a lot of people may second-guess things that he's done. That also happens anytime during warfare. The president knows the people he's got working for him.

(END VIDEO CLIP)

HENRY: Those warm words for Rumsfeld, though, just fires up the Democratic base. They say this basically shows that while the president has stopped using the phrase "stay the course," by sticking with Rumsfeld, sticking with Vice President Cheney, he's showing that in fact in Iraq he is staying the course -- Soledad.

S. O'BRIEN: And he was making similar comments about Dick Cheney, too, wasn't he?

HENRY: That's right. In fact, in this interview with the wire services, the president declaring about the vice president, "The good thing about Vice President Cheney's advice is you don't read about it in the newspaper after he gives it. In other words, he's a trusted adviser. He's not -- you know, he's not out there trying to make his own way."

Not surprisingly, we've heard the president say similar things for the last six years about the vice president. But again, I think from the Democrats, you'll hear they believe this shows the president has dug in. Despite all the criticism, particularly on Iraq, that he's sticking with the people who led him into war and he's not listening to the critics who have said he perhaps needs to make a change, specifically at the Pentagon -- Soledad.

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

Thanks, Ed.

HENRY: Thank you.

S. O'BRIEN: Miles.

M. O'BRIEN: The war in Iraq still the top issue on many voters' minds five days out from the midterm elections. According to a CNN poll, 49 percent say Iraq is extremely important to their vote for Congress. Terrorism slipped to second since August. Forty-six percent think it is most important. The economy and gas prices come in third and fourth.

So, where does that leave voters this morning? Are they anxious to make a big change in Washington?

CNN's Candy Crowley has been talking to a lot of voters. She joins us now from Elk Grove, Illinois with more.

Hello, Candy.

CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT: Hi, Miles.

Yes, this is the 6th District of Illinois that we're standing in. And it's a microcosm of what's happening in a lot of these races. This is an area that has been solidly Republican. It is a seat that's belonged to Henry Hyde, a Republican leader in the House. He's been here quite -- a couple of decades.

The fact is, that the Republican candidate here considered a rising star in the state is having a tough time in this district. His challenge comes from Tammy Duckworth. And this is where Iraq plays heavily.

Duckworth is an Iraq war veteran. She lost both legs in Iraq when a rocket-propelled hand grenade landed in her lap when she was in a helicopter. So Iraq is here both symbolically and on the voters' minds.

I talked to Duckworth yesterday. She said, absolutely, Iraq comes up all the time. I think it's up there in the top issues. Here, health care also an issue.

Nonetheless, while the president sticks to his guns, the price may be out here in the political arena, where many Republicans who should otherwise have a fairly easy time of it in -- in these districts, are having quite a struggle. And the overlay to all of that has been Iraq, as the polls have proved over and over and over again throughout the months -- Miles.

M. O'BRIEN: Have you had a chance to get a sense, one way or another, how John Kerry's gaffe, his "stuck in Iraq" gaffe is playing out there?

CROWLEY: Well, I can tell you, it didn't play well, because even the Democrats, including Duckworth, sort of walked back from it and said, really unfortunate, not what he should have said, took us off of our message here. So when even Democrats are walking away from it, you know it hasn't played well.

Will it affect the election? It may in this way: It may bring Republicans out.

After all, John Kerry is someone that Republicans have not liked. The party has been very concerned about whether their base is going to come out. It is lost if they can't crank that turnout machine up and bring voters to the polls.

So something like this -- and you saw the Republicans jump on it right away -- something like this tends to rouse the base, remind them, oh, yes, that's why we're for the Republican Party, and maybe get them out to vote.

M. O'BRIEN: Candy Crowley, thank you very much -- Soledad.

S. O'BRIEN: Happening this morning in North Carolina, police believe they have found the body of John Woodring. He's the man wanted in the September murder of his estranged wife at a domestic violence shelter. Police are now waiting for autopsy results to confirm that that body, which was found on a houseboat, is indeed Woodring. Iran is test-firing dozens of missiles today. That's according to Iranian TV. It reports that one missile is capable of carrying a nuclear warhead that could potentially reach Israel and the American troops who are stationed in the Middle East. Iran says the launch is part of routine military drills and should not be seen as a threat.

Over at the U.N., a senior U.N. official and a Miami businessman under arrest. They're charged in a scheme involving more than $50 million in U.N. contracts. One of the men allegedly helped the other get millions of dollars in the contracts and in return got an apartment in Midtown Manhattan for little or no rent. Now both men face up to 10 years in prison if they're convicted -- Miles.

M. O'BRIEN: Coming up on the program, a major U.S. contractor is leaving Iraq. Its $2 billion contract is up. Is Bechtel, however, another casualty of war? Or is there something else to this story?

Plus, the flap over Senator Kerry's so-called botched joke. Is it the last word on the story or the final one on Kerry's presidential prospects? That's ahead.

(COMMERCIAL BREAK)

S. O'BRIEN: Some of the day's top stories.

A big vote of confidence for Vice President Dick Cheney and the secretary of defense, Donald Rumsfeld. President Bush said the men have permanent job security.

And Senator John Kerry apologizing to American troops. He says what he said was misinterpreted when he said you could get stuck in Iraq if you don't study hard.

Thirteen minutes past the hour. Let's get a quick check of the traveler's forecast for you. Chad's got that.

Good morning again.

CHAD MYERS, CNN METEOROLOGIST: Good morning, Soledad.

(WEATHER REPORT)

M. O'BRIEN: Billions of dollars are pouring into Iraq. A lot of it earmarked for rebuilding the country. Now one of the largest American contractors involved in the reconstruction, Bechtel, is pulling out.

Now, the official line is, Bechtel's contracts are up. And there's no question, Bechtel also paid a heavy price.

CNN's Aneesh Raman live from Baghdad with more -- Aneesh.

ANEESH RAMAN, CNN CORRESPONDENT: Miles, good morning.

They are heading out, the engineering giant based in California. And as they do, Bechtel is proving a prime example of how the violence here is dramatically inhibiting efforts to rebuild this country.

(BEGIN VIDEOTAPE)

RAMAN (voice over): For contractors in Iraq, any day could return into this...

UNIDENTIFIED MALE: God damn! IED on the left side. Two IEDs.

RAMAN: ... the chaotic scenes of an insurgent ambush. This video from last year shows an American truck driver being shot at. The man filming survived, three of his colleagues did not.

It is for private companies the human cost of rebuilding Iraq. A cost one of the biggest Bechtel knows all too well.

In the past three years, Bechtel had two government contracts worth $2.3 billion, completing, the company says, 97 of the 99 projects it was tasked with. But Bechtel, like many other contractors here, has seen a good number of those projects, ranging from electricity to water plants, sabotaged by insurgents, crippled by lack of security, and has seen 52 of its employees, mainly Iraqi subcontractors, killed.

LT. GEN. CARL STROCK, ARMY CORPS OF ENGINEERS: We are facing a battle as we build these projects, and so they are not as efficient as you might find a construction project in Memphis, Tennessee. People are actually shooting at you, they're intimidating. The workers we have working for us.

RAMAN: In 2003, the U.S. Congress budgeted $18.4 billion to reconstruct Iraq. The lieutenant general says most of the project's budgeted 10 percent for security. And while in some parts they are using less than that, elsewhere security is costing 40 percent. Factor in spiraling sectarian violence...

UNIDENTIFIED MALE: They just killed him.

RAMAN: ... and rebuilding Iraq is these days more difficult than ever.

(END VIDEOTAPE)

RAMAN: And Miles, here's one specific example in terms of Bechtel. They were commissioned with building a state-of-the-art children's hospital in Basra last year, a pet project of the first lady. Estimated costs when they started, $50 million. They were supposed to finish by December of last year.

Instead, by this summer it wasn't done. The project was suspended, and now Bechtel says with security costs the project now will cost $98 million -- Miles.

M. O'BRIEN: Ninety-eight million. Will it be completed, though?

RAMAN: It's still up in the air. They're looking at the situation there. Bechtel is now gone. When we talk about the 97 projects, this is one of the two they didn't finish. But even those that they finished out of the 99, a lot of those regress backward because of violence, sabotage, because it was crippling work shortages, because of threats made. So we're talking about also upkeeping those, let alone finishing these big ones that aren't done yet.

M. O'BRIEN: All right, Aneesh. Thank you very much.

That dramatic footage of a contractor under fire in Iraq speaks volumes about the risks of doing business there. The question now, whatever became of the notion that the U.S. would orchestrate an Iraqi version of the Marshall plan?

Browning Rockwell worked as a contractor in Iraq, helping to build schools and hospitals. He joins us now from Washington to talk a little bit about this.

Browning, good to have you with us in the program this morning.

BROWNING ROCKWELL, FMR. CONTRACTOR IN IRAQ: Good morning, Miles.

M. O'BRIEN: What -- is there any way in a condensed way you can describe what it's like to work there?

ROCKWELL: Well, I think the footage was pretty accurate. It's a very, very intense environment as you're going around. It's a case where you're always worried about being in the wrong place at the wrong time, waking up in the morning really not knowing where you're going that day, how you're going to get there, and whether you're going to get back home at night.

It's a very, very tense environment.

M. O'BRIEN: And your personal experience, you were at the business end of a gun, on one occasion at least. What happened?

ROCKWELL: Well, early one morning, about a year and a half ago, we were driving back from Baghdad to Amman, Jordan, and we came down the road near Ramadi about 7:30 in the morning, and a BMW pulled us off -- drove us off the road. We were driving about 100 miles an hour, pulled us off the side of the road, and next thing we know about four gunmen were out with guns pointed to our heads asking us for our money and our valuables.

So it was a pretty -- pretty eye-opening and frightening experience at the time.

M. O'BRIEN: And I suspect you thought the worst would happen there. You were pretty lucky to get away from that one, huh?

ROCKWELL: Certainly. Fortunately, I was with three other Iraqis, and I was very low key, didn't say anything. And basically at that time just wanted our money and any other valuables that we had. But several months later, it escalated to they were taking hostages. So I was very fortunate. M. O'BRIEN: Yes.

I'm trying to get a sense of what the impact is now that Bechtel is leaving, or what impact Bechtel actually brought to bear while in Iraq. One of the things we talk about a lot is electricity and the amount of electrical production.

Right now in Baghdad, on average they get about five and a half hours a day. Before the war, they had 16 to 24 hours. It seems like things are going backward there. Is that true?

ROCKWELL: Well, you also have to understand it was an archaic system to begin with. So when the U.S. came in, they had to really take an old system and basically start from scratch. And there was also a huge demand on power and electricity that came as a result of the liberation in Iraq. So a lot of factors came into play: an antiquated system, a high demand.

Certainly it's not what everybody would like it to be at this time. And they're doing their best to improve that.

M. O'BRIEN: A lot of people would say that was so crucial, though, that the U.S. came in, and all the hope that was associated with that, and then the lights couldn't even come on. Would you look at that as sort of a turning point, a fork in the road, or were there others along the way, where, you know, would that the U.S. had done something things might have turned out better?

ROCKWELL: Well, there's always 20/20 hindsight. There are a lot of things that could have been done differently.

I think there were a lot of very talented people that went there with great ambitions to make a change. But unfortunately, you know, events occurred that changed things.

Security was a major issue, as you've highlighted in this program. Just the -- things don't move as fast as we would like them to move there. And it was a culture that was coming out of the dark ages in some ways and being confronted with a lot of things to grapple with.

So, it was a disappointment on a lot of fronts. I don't think I can pinpoint any one item, but overall, I know it's a disappointment for all parties involved.

My biggest concern today is, what does this change, and what does the impact it's going to have on the Iraqi contractors and other people who have committed themselves and their resources, and their futures to this? It's a tragedy on that front. And probably an even greater tragedy.

M. O'BRIEN: All right. Just quickly -- we're out of time -- would you go back?

ROCKWELL: Well, certainly. It's a wonderful country. Wonderful people. A lot of opportunity. It's certainly a bit ominous right now from what you see in the news, but it's a beautiful country with a lot of very interesting opportunities there. And hopefully will improve in years to come. Right now I think I would be a little bit reluctant to.

M. O'BRIEN: All right. OK. I understand.

Browning Rockwell, former contractor in Iraq.

Thanks for being with us -- Soledad.

ROCKWELL: Thank you.

S. O'BRIEN: A quick look at the stories we're following for you this morning.

President Bush, campaigner in chief for some, somebody to avoid for other Republicans in tight races.

Ahead this morning, a look back at how other presidents faced the music in midterm elections.

Plus, it's YouTube versus versusing UTube in court. The legal battle over two very different Web sites straight ahead.

(COMMERCIAL BREAK)

S. O'BRIEN: Donald Trump is catching a little heat over a giant flagpole that he's put up.

Oh, "The Donald". Will he never learn?

Andy Serwer is watching that.

SERWER: Yes. Well, there's a lot of places we can go, Soledad, with this.

First of all...

S. O'BRIEN: Let's just stick to the flagpole.

SERWER: All right. Well, "The Donald" is wrapping himself in the American flag again. I mean, that's one place we have to go. And yes, "The Donald" has a big pole, it's a giant flagpole, it's an 80- foot flagpole down at Mar-a-Lago, which is -- well, his house is now kind of a club, I guess -- Mar-a-Lago, excuse me -- down there in Palm Beach.

M. O'BRIEN: So this big building there, is that his house or a clubhouse there?

SERWER: It was his residence.

M. O'BRIEN: It was.

SERWER: It's called a club now. S. O'BRIEN: It's beautiful.

SERWER: I think he might have sort of done something with it.

M. O'BRIEN: Right.

SERWER: But in any event, that's 80 feet high. It violates zoning. It's 15 by 25 feet.

And here's what he says. "I'm an American. You don't need a permit for an American flag. How can you regulate a flag? How can you regulate patriotism?"

To which I say, how can you regulate an insatiable thirst for publicity?

M. O'BRIEN: To which we are feeding into right...

S. O'BRIEN: And actually, you do need a permit, apparently.

SERWER: Yes, I guess you do.

And, you know, remember a couple of months ago we did a story about how he had the same issue at a golf club out in California. He put up a flagpole that was too big for the town zone.

M. O'BRIEN: Oh, you know what? I thought this was the same one. This is a different one.

SERWER: No, this is a different one.

M. O'BRIEN: Oh my gosh.

SERWER: That's why this is a little bit of a campaign.

S. O'BRIEN: It worked the last time.

SERWER: Yes.

S. O'BRIEN: There was a "Seinfeld" episode on this. Do you guys remember that?

SERWER: Yes.

S. O'BRIEN: The giant flag against the building?

SERWER: Right, yes.

M. O'BRIEN: Oh yes.

SERWER: The next time you do this, Donald, I don't think we're going to talk about it, OK? Right? Fair?

S. O'BRIEN: Just a warning.

M. O'BRIEN: He'll come up with something else, trust me. Trust me.

SERWER: I think he will.

All right.

Another story, an update of a story we also told you about a couple weeks ago, I guess. You remember the story about YouTube, the other YouTube Web site? They're, of course, YouTube, the very popular video-sharing Web site. And then there's the UTube, spelled U-T-U-B- E...

M. O'BRIEN: Right.

SERWER: ... which is the business Web site of a little company out in Toledo way, called Universal Tube and Roll Form which makes metal tubes, apparently. And...

S. O'BRIEN: They're counting their money already, aren't they?

SERWER: ... their Web site is getting crashed continuously because people are confusing their Web site for the YouTube Web site, and now they're suing YouTube.

Well, you know what, folks? I don't think you have a whole lot to stand on here.

M. O'BRIEN: Oh, I think it's a lead pipe cinch.

SERWER: You do?

M. O'BRIEN: What are you talking about. Yes.

SERWER: I think it's -- I think it's, like, too bad. And they've got to find a new home.

So...

M. O'BRIEN: You don't think they'll just -- a few bucks?

S. O'BRIEN: Oh, I'm going to go with UTube on this one.

SERWER: Really?

S. O'BRIEN: Yes.

SERWER: You like the little guy.

S. O'BRIEN: For no reason whatsoever. And I'm -- no, not even that. I just...

SERWER: You like those little manufacturing companies in Ohio. They're just near and dear to your heart.

S. O'BRIEN: I think that has cash written all over it.

SERWER: We'll see about that. We'll see what happens. M. O'BRIEN: Thanks, Andy.

SERWER: You're welcome.

M. O'BRIEN: See you later.

Stories we're following for you right now.

Iran's war games. It's reportedly launching missiles today -- well, actually not reportedly. We have the pictures right there. It is launching missiles. Reportedly, though, capable of carrying a nuclear warhead, so it is said. So that's where the "reportedly" part comes in.

And could there be a longer lasting damage from Senator John Kerry's botched joke?

That's ahead on AMERICAN MORNING.

(COMMERCIAL BREAK)

M. O'BRIEN: He says he's sorry, but will John Kerry's joke gone bad doom any dreams of another run for president for him?

S. O'BRIEN: President Bush is in good company. We'll take a loot at how other presidents in history also faced the music, the midterm election. Jeff Greenfield will offer his perspective straight ahead.

M. O'BRIEN: And health coverage for you uncovered, the steep cost of going without health insurance. Those stories and more ahead on this AMERICAN MORNING.

S. O'BRIEN: Welcome, everybody. It's Thursday, November 2nd. I'm Soledad O'Brien.

M. O'BRIEN: And I'm Miles O'Brien. Thanks for being with us. Happening this morning, a big vote of confidence for Vice President Dick Cheney and Secretary of Defense Donald Rumsfeld. President Bush says they'll have jobs as long as he's president. Cheney and Rumsfeld face on-going criticism on how they're managing the war in Iraq.

And President Bush says his commanders tell him the U.S. has enough troops in Iraq. He also says it's hard for him to tell if U.S. troops will still be in Iraq when he leaves office in 2009. The president's comments come after one of the worst months for U.S. troops in Iraq.

Israel continues its drive through parts of Gaza. Overnight, two Palestinians were killed in a second day of fighting. We're told one of the victims is 75-year-old man. He reportedly shot while taking his disabled son off of a balcony. Israel insists it's only targeting militants who have been firing rockets into Israel.

In Mexico, two men are being held in the shooting death of an American journalist. Thirty six-year-old Bradley Will (ph) was killed during street protests following the leftist take over of the city of Oaxaca. The men were detained after residents pointed them out as Will's killer. Meanwhile, Mexican police are expanding their control of Oaxaca. At least eight people have died during five months of protest there.

S O'BRIEN: A turn-around for Senator John Kerry now. He's apologizing for what he calls a botched joke and he says he regrets saying anything negative about those in uniform. But it looks like we haven't heard the end of it from the Republican side. Listen to Vice President Dick Cheney.

(BEGIN VIDEO CLIP)

DICK CHENEY, VICE PRESIDENT OF THE UNITED STATES: Of course, Senator Kerry said he was just making a joke and he botched it up. I guess we didn't get that nuance. Actually, he was for the joke before he was against it.

(END VIDEO CLIP)

S. O'BRIEN: AMERICAN MORNING's Dan Lothian live in Boston for us this morning. The question, of course, is what's John Kerry going to do? Can he recover enough in the long run? Dan, good morning.

DAN LOTHIAN, CNN BOSTON BUREAU CHIEF: That is the big question this morning, Soledad. Good morning. Senator John Kerry may have apologized, but after several days of this fire storm, political experts are trying to gauge the damage he may have inflicted to his credibility, and to his party.

(BEGIN VIDEOTAPE)

LOTHIAN (voice-over): Twenty three-year-old Marine second lieutenant Joshua Booth was killed in Iraq last month. Senator John Kerry called and comforted the Massachusetts family. But Booth's mother says the botched joke about the war has inflicted another wound.

DEBRA BOOTH, SON KILLED IN IRAQ: I'm very disturbed, I'm very insulted and very sad.

LOTHIAN: Senator Kerry's blunder is now raising questions about his judgment, and his political future.

(on camera): How does this impact him as a figurehead, as someone who has a lot of credibility within the party?

PROFESSOR ROBERT GILBERT, UNIVERSITY OF MASSACHUSETTS: Well, I think it does have an impact. I think we see the impact already, because a number of other Democrats already beginning to criticize him.

LOTHIAN (voice-over): He's no longer on the trail campaigning for Democrats across the country.

TERRY JEFFREY, EDITOR OF "HUMAN EVENTS": He definitely has driven a wedge into the Democratic party.

LOTHIAN: But some political strategists say this controversy has a short shelf life.

JAMES CARVILLE, CNN POLITICAL CONTRIBUTOR: I can't imagine that three weeks from now anybody will remember this.

LOTHIAN: While Kerry hasn't indicated whether or not he'll run for president again in 2008, it's widely believed he's interested. Professor Gilbert says one bad joke is the least of his problems.

GILBERT: I don't think this is going to affect his 2008 chances, because I don't think his 2008 chances were great to start with.

CARVILLE: He was not the front-runner when the week started and he's less a front-runner when the week ended.

LOTHIAN: In fact, a new CNN poll, conducted by the Opinion Research Corporation before Kerry's comments, puts him at the bottom of the first tier of potential Democratic presidential candidates, behind his 2004 running mate, John Edwards.

(END VIDEOTAPE)

LOTHIAN: But, two years is a long time, and anything can happen between then, now rather, and then. One political adviser said he's reluctant to call the botched joke a career-altering moment because some politicians have recovered from much bigger blunders, Soledad.

S. O'BRIEN: Yes, so maybe he can recover, but what about other Democrats in this election now, just days away? If they distance themselves, is that enough?

LOTHIAN: That is a really good question and in fact, something that Candy Crowley was talking about earlier in the show. Some Democrats really have said that this controversy has been a huge distraction during these critical days before the midterm elections. Of course, we really won't know what kind of overall impact it will have until next week. But they hope the apology will remove the story from the headlines. Soledad?

S. O'BRIEN: Dan Lothian in Boston for us this morning. Thanks, Dan.

M. O'BRIEN: Here's a new twist on a dollar and a dream. How about a ballot instead. One state is dangling a million-dollar dream to get voters to the polls. AMERICAN MORNING's Chris Lawrence has our story.

(BEGIN VIDEOTAPE)

CHRIS LAWRENCE, CNN CORRESPONDENT (voice-over): In the game show version, contestants had to answer multiple questions to win the money. Mark Osterloh only has one.

MARK OSTERLOH, VOTER REWARD INITIATIVE: Are you a registered voter?

LAWRENCE: Osterloh wants to take some of the Arizona Lottery's unclaimed prize money and in every general election award a million bucks to one lucky voter.

(on camera): I know the goal is to get more people to vote, but is this the way to do it?

OSTERLOH: Do you have a better way?

LAWRENCE: Arizona already offers early voting by mail, but the state still ranks near the bottom of eligible voter turnout. If the Voter Reward Act passes and turnout increases, Osterloh says dozens of states could follow suit.

OSTERLOH: That could have a dramatic impact on who will have control of Congress in the United States and who the next president of the United States is.

LAWRENCE: Critics say it reduces voting to nothing more than a glorified scratch and win game.

BARNEY BRENNER, OPPOSES INITIATIVE: You've had people literally die to achieve and defend the right to vote in this country. And if that's not enough incentive for people to show up, and be heard in the political process, it doesn't really seem appropriate to try to bribe them.

LAWRENCE: Barney Brenner says Arizona needs voters who study political platforms, not show up for a powerball prize.

BRENNER: You're talking about an informed voter, right?

LAWRENCE (on camera): Right.

BRENNER: OK, well to be an informed voter, first you've got to be a voter.

LAWRENCE: Now, some would say first you have to be informed.

BRENNER: Well, let me say this, if you're not going to vote in an election why would you study the issues and candidates?

LAWRENCE (voice-over): Even if it passes, the act is sure to be challenged in court. And federal law prohibits exchanging money for votes.

JACK CHIN, U. OF ARIZONA LAW SCHOOL: Even if it's a general payment made to a lot of people, to get out the vote, still prohibited by the statute.

LAWRENCE: Osterloh thinks it won't apply if the state offers every voter an equal chance at the million. He says one will hit the jackpot but the entire electorate wins.

Chris Lawrence, CNN, Tucson. (END VIDEOTAPE)

M. O'BRIEN: The proposal is well intentioned if nothing else. Arizona was 40th out of the 50 states in terms of voter turnout in the 2004 presidential election.

Coming up, he's not on the ballot, but President Bush is quite influential in the upcoming midterm elections. Of course, you know that. A look back at some other presidents who faced similar heat with Jeff Greenfield.

Plus, millions of Americans don't have health insurance. And you can be paying the price. Dr. Sanjay Gupta explains on AMERICAN MORNING ahead.

(COMMERCIAL BREAK)

S. O'BRIEN: Top stories this morning -- five days to midterm elections. President Bush is stumping for Republicans in Montana and Nevada, and Missouri today.

And a new study in mice shows a chemical in red wine can be an effective fat fighter. Unlikely though at this point at least to help humans. To get enough of what's in red wine, you would have to drink about 100 glasses of wed wine a day -- Miles.

M. O'BRIEN: Thanks, Soledad. Political pros are just dying to know what will be on your mind as you go to the polls on Tuesday. Will it be the war in Iraq or are you more worried about the potholes you hit on the way to work?

Senior analyst Jeff Greenfield joining us with more on this.

Good morning, Jeff.

JEFF GREENFIELD, CNN SENIOR ANALYST: Good morning, Miles.

M. OBRIEN: The late Tip O'Neil had that expression -- all politics is local. We've said it a lot. Does it apply this year or not?

GREENFIELD: I think basically it is one of the great overblown pieces of non-wisdom in American politics.

M. O'BRIEN: Really?

GREENFIELD: Yes, of course there are local matters that can be decisive if your candidate is embroiled in a scandal most obviously. But, just take a look back at recent midterms. 1966, a war in Vietnam, racial unrest in American cities, riots on campuses. A whole sense of things were spinning out of control. That is the big reason why Democrats lost 47 seats in the House, and four in the Senate. Okay? 1974, Americans went to the polls about three months after Nixon resigned over Watergate. That year, the Republicans lost 49 seats in the House, and four in the Senate. That was not a local issue. 1982, you were in a major recession. Republicans lost 26 House seats. 1994, reaction against Clinton's failed health care plan, a sense of unresponsive Congress. Wipeout for the Democrats. They lost control of both houses of Congress. So, Miles, it's pretty clear to me that national and international events, as often as not have a big impact on this race.

M. O'BRIEN: So, big issues. These are all big issues tend to trump the local issues. In this case this year, Iraq...

GREENFIELD: I think Iraq most obviously, every poll shows it is the big issue. That is not, by the way, confined to local communities with large numbers of military folks. It's a national sense that things have not gone well, that the U.S. is not accomplishing what it set out to do. That's what the polls suggest, that we're less safe, most Americans think, because of Iraq. And, I would point by the way Miles to other national issues. I think the lingering memory of Katrina really is reinforcing the sense that Iraq kicked in, that competence was a major concern. I also think that the Mark Foley scandal, while it doesn't show up in the polls, really hurt Republicans in two ways. First, it kind of fed the image that congressional leaders cared about protecting their own than about protecting teenage pages. And I think among some social conservatives, it fed a sense that you want our votes, but you don't really protect our interests when push comes to shove. I think those are two big ones.

M. O'BRIEN: All right. Get the crystal ball out now. How is this going to shake out, the local versus national issue tension out there among the populous?

GREENFIELD: Well, how about no crystal ball, but at least some things to look for. In the last two elections, '02 and '04, the Republican turnout machine, not just their superiority and money, but their ability to target Republicans even in Democratic Districts -- we've talked alot about that -- has tended to be a big advantage. The question this year is, if there's this national broad-based discontent, is that going to overwhelm the Republican ground game. Second, I think we're seeing already that a number of once safe Republican House seats are now in play. Both parties and their allies are pouring money into districts in Idaho, the at-large district in Wyoming and upstate New York that were thought a few months ago to be absolutely safe for Republican incumbents. So, yeah, you can find some districts where local reasons explain this. You know, a slip of the tongue, a-la Kerry, that's happened at the local level. As I said, scandal -- financial, sexual or otherwise. But, I think we're going to find out Tuesday night just how applicable or not this Tip O'Neil quote is, my version of this, all politics is local, except when it isn't.

M. O'BRIEN: And quick thought, the Kerry factor? Is it really going to play...

GREENFIELD: I think -- it will have faded by Tuesday. We process information much more quickly and he isn't on the ballot. But if you've got Democrats in here and shot them full of Sodium Pentathol and asked what they thought of this, you probably couldn't broadcast it except on cable. Well, we are cable actually. M. O'BRIEN: We could do that. Senior analyst Jeff Greenfield, part of the best political team on television. Thanks for being with us -- Soledad.

S. O'BRIEN: It's 45 minutes past the hour. If you're about to head out the door, first let's listen to Chad's traveler's forecast.

(WEATHER REPORT)

M. O'BRIEN: "CNN NEWSROOM" is just a few moments away. Heidi Collins at the CNN center just a few feet from where Chad is right now to give us a preview. Hello, Heidi.

HEIDI COLLINS, CNN ANCHOR: He's just right over there, that's true. All right Miles, how are you? We have these stories coming up in the NEWSROOM rundown this morning. Big brother is watching and he may be a Democrat or a Republican. Political campaigns know more about you than you might think. The story might actually creep you out a little bit. That's what we try to do out in the NEWSROOM is creep you out.

One-stop shopping on Election Day. Cast your vote. Get a flu shot. But this effort to get voters to the polls has hit a bit of a snag. We'll tell you about that.

And , the last word on those last words in political ads. I'm Heidi Collins. And I approve this piece. Join Tony Harris and me us in the NEWSROOM at the top of the hour right here on CNN. Miles, back to you.

M. O'BRIEN: You've got our vote for sure, Heidi.

COLLINS: Cool. Thanks.

M. O'BRIEN: Coming up, the cost of America's uninsured. Dr. Sanjay Gupta looks at millions of Americans without health insurance and why the rest of us are paying for it.

And it is Thursday. You know what that means. Crew? Milescam day. E-mail me at milescam@CNN.com. Any questions you have for us, about the show, about the Hubble Space telescope repair commission, about the plane crash stories we've been covering. In any case, send it to me now, and the answers will be on pipeline CNN.com/pipeline at 10:00 Eastern.

Stay with us.

(COMMERCIAL BREAK)

(NEWSBREAK)

S. O'BRIEN: Let's get some medical news this morning's "House Call." A staggering number of Americans, 48 million people, have no health insurance. As that number grows, so does the burden on those who are insured.

Senior medical correspondent Dr. Sanjay Gupta is at the CNN Center in Atlanta.

Hey, Sanjay, good morning.

DR. SANJAY GUPTA, CNN CORRESPONDENT: Good morning, Soledad.

This is something we've been researching for quite some time now. Really startling numbers. We talk a lot about the insurance problem in this country. It affects everybody. And premiums have gone up about $900 per person on average every year. And there are about 46 million people uninsured. We talk about that number. But what's surprising to a lot of people is exactly who those uninsured are.

(BEGIN VIDEOTAPE)

GUPTA (voice-over): Layla Barr had been told she wouldn't be able to have children. So it was a little surprising when she found out she was pregnant.

LAYLA BARR, UNINSURED: When we found out that we were pregnant, we had not been trying to get pregnant. So we were a little scared, but very excited.

GUPTA: Layla and her husband, Emmet, had worked as chefs for more than 10 years. They had paid for health insurance on their own, until six years ago when Emmet had hernia surgery and their insurance company denied the claim, leaving the Barrs with a $24,000 debt. They were healthy, so they decided that paying their debt was more important than continuing their health insurance. Four years later, she was pregnant.

BARR: That was a total blessing for us. But we were then sort of thrust into, OK, well, what do we do now.

GUPTA: The Barrs tried to get insurance again, but were told they needed to have coverage a year before the pregnancy to qualify. They tried public assistance, but had too many assets to qualify.

BARR: What if there was a complication with the pregnancy? What if there was a complication with labor and delivery? Financially, it could be totally devastating for us.

GUPTA: In fact, health care costs are the No. 1 reason Americans file for bankruptcy. With nowhere else to turn, the Barrs negotiated directly with the hospital for delivery and doctors' fees, and took a second mortgage on their home to pay the $20,000 cost.

BARR: To have a baby, you shouldn't have to take out a second mortgage on your house.

EMMET BARR, UNINSURED: We're one of the wealthiest nations in the world, if not the most. It just doesn't make sense to me how we can't cover our citizens.

GUPTA: Forty-six million Americans have no health insurance, and the Barrs belong to one of the fastest-growing demographics, the uninsured middle class. An independent study found 41 percent of middle-income Americans had no health insurance for part of 2005. That's up from 28 percent in just four years. Why are so many Americans uninsured?

RON POLLACK, EXEC. DIR., FAMILIES USA: Health care costs are skyrocketing, at the same time that wages are very stagnant. And so employers are having a tough time continuing to pay for health care coverage.

GUPTA: The Barrs don't see any immediate way out of their health care crisis, but are looking into state child health care programs. In the meantime, they just hope that they and Isabella stay healthy.

E. BARR: Every day that I wake up, I'm an accident or an illness away from not being able to provide for my family, and that's cold, hard facts.

(END VIDEOTAPE)

GUPTA: And more and more families are finding themselves in the same position as the Barrs. As health care premiums continue to rise, it's just becoming too high a price point for many families to be able to afford.

S. O'BRIEN: It's such scary, scary information there. Now, some families can negotiate their costs, can't they? I mean, they go in with no insurance. Can you actually have a discussion with the hospital about negotiating a price?

GUPTA: You can. And the Barrs did do that actually with the birth of that child, with the hospital. A lot of times it's hard as an individual to negotiate, because you really don't have any negotiating power. And sometimes larger conglomerates will come together to negotiate on behalf of large groups of people. But it's hard. You know, she couldn't get health insurance, because they hadn't known a year before she was going to get pregnant that she was going to get pregnant. I mean, it's just hard for a young family like that to be able to take.

S. O'BRIEN: Scary stuff. All right, Sanjay. Thank you, Sanjay, for that. The cost of insurance is just one of the many health care issues that voters are talking about. You want to stay tuned for a special election edition of "HOUSE CALL" with Sanjay. Take a look at how your vote's going to impact your health next Saturday 8:00 Eastern Time, right here on CNN.

Coming up at the top of the hour, I'll drink to that, the healthy benefit one study seems to find in drinking red wine. And lots of it.

And Senator Kerry has apologized. Well, now what? Are his chances for higher office over? We'll take a look.

(COMMERCIAL BREAK)

M. O'BRIEN: That's all from us here on American morning. "CNN NEWSROOM" with Tony Collins and Heidi Collins begins right now...

S. O'BRIEN: Tony Harris and Heidi Collins.

M. O'BRIEN: Did I say Tony Collins?

S. O'BRIEN: Yes.

M. O'BRIEN: Oh, I thought all anchors had the same last name.

Tony Harris and Heidi Collins.

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

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