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Bush Acknowledges Benchmarks Not Made in Iraq; Suspicious Package Delivered to John Edwards' Office; Security False Alarm on Plane; Water Main Break Leads to Rescues in Michigan

Aired July 12, 2007 - 13:00   ET

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

DON LEMON, CO-HOST: Eight out of 18. A progress report on Iraqi benchmarks gives new ammunition to President Bush and to the growing ranks of Iraq war critics on Capitol Hill. We'll hear from both.
FREDRICKA WHITFIELD, CO-HOST: And we'll talk about a surge. A new U.S. intelligence report says al Qaeda is alive and well and as strong as it was right after 9/11. Has the war on terror reached a stalemate?

DON LEMON, CO-HOST: Hello, everyone. I'm Don Lemon, live at the CNN world headquarters in Atlanta.

WHITFIELD: And I'm Fredricka Whitfield in today for Kyra Phillips. You're in the CNN NEWSROOM.

LEMON: But first, happening now: two developing stories. First, homeland security tells CNN there was no -- I repeat no -- security breach on that American Airlines flight that was diverted to New York on its way from L.A. to London. We'll have more details in a live report from LAX in just a moment.

Also happening now, a bomb squad investigating a beeping package delivered to the campaign headquarters of Democrat John Edwards in Chapel Hill, North Carolina. The office has been evacuated. More details on that situation as it develops here in the CNN NEWSROOM.

WHITFIELD: And the White House report on Iraq claims glimmers of progress since the start of the U.S. military surge, but not enough to satisfy lawmakers demanding immediate plans for a pullout. We'll start at the White House, where President Bush insisted today that Iraq is not lost.

Standing by is Elaine Quijano -- Elaine.

ELAINE QUIJANO, CNN CORRESPONDENT: Hello to you, Fredricka.

And President Bush also insisted that U.S. lawmakers have to give his surge strategy a chance to work, despite the fact that the Iraqi government has not met key political benchmarks or political goals. Legislative goals that even President Bush himself acknowledges in his interim report to Congress today deserve an unsatisfactory rating.

At the same time, the president sent a sharp message to Congress. He believes that he alone must remain fully in charge of the war.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I don't think Congress ought to be running the war. I think they ought to be funding our troops. I'm certainly I'm interested in their opinion, but trying to run a war through resolution is a prescription for failure, as far as I'm concerned, and we can't afford to fail.

(END VIDEO CLIP)

QUIJANO: President Bush aiming his message not just at his Democratic critics, but also some Republicans who have become increasingly vocal in voicing their discontent with his Iraq strategy.

The president trying to make the argument that it is early yet, that again, lawmakers have to give his surge strategy a chance to work. And while it is true that not all of the U.S. forces were in place fully for the U.S. surge until June, it is also important to note, Fredricka, that those U.S. troops started rolling in as part of the surge back in February -- Fredricka.

WHITFIELD: All right, thank you.

(BEGIN VIDEO CLIP)

SEN. DICK DURBIN (D), ILLINOIS: The president says we need to be patient and we need to wait. Every day that we wait, every week that goes by, another month, means more American soldiers who will be killed and injured in this war that has gone downhill for so long. It is time for us to start bringing these troops home.

(END VIDEO CLIP)

QUIJANO: The bottom line here is that, even as President Bush continues to point to what he says are signs of progress on the ground in Iraq, it is not just Democrats who are voicing their concerns, although as you just heard a moment ago, they were quick to pounce on this interim report released just today by the White House.

The White House also very, very insistent that fellow Republicans remain on the president's side, as well, even as an increasing number of those Republicans are coming forward and expressing their doubts, Fredricka.

WHITFIELD: All right. Thanks so much. Elaine Quijano at the White House.

Well, the Iraqi report lands on Capitol Hill in the midst of a Senate debate on a possible military pullout. The Senate's Democratic leaders aren't buying claims of progress. They say they have heard it all before.

(BEGIN VIDEO CLIP)

SEN. HARRY REID (D-NV), MAJORITY LEADER: It's well pastime a change of course in Iraq. We're committed to responding responsibly in many different ways to end this war so that we can focus on increasing our security and more effectively fighting terrorism.

The time to do this is now, not September. We're told good progress is being made. Wait until September. Good progress is being made. How many times over the last 4 1/2 years have we heard this?

(END VIDEO CLIP)

LEMON: Let's go to Baghdad now for further reaction. CNN's Hala Gorani is there.

Hala, how is this reception (ph) being received in Iraq?

HALA GORANI, CNN CORRESPONDENT: Well, it's a bit too early to get official reaction to the release of the actual report. But over the last few weeks, we have been speaking with high level officials, both from Sunni block parties to the Shiite=led government, as well as Sadr sympathizers, those who are with the party of the radical anti- American cleric, Muqtada al-Sadr.

And pretty much across the board, we hear them say, "You know what? Progress is possible. We just have to make sure that we continue to talk with those who we oppose on the political scene, even those we agree with."

But fundamentally, the timetable that is an American domestic timetable should not put pressure on us, because some of these benchmarks are very important laws. There's a law to share the oil revenues of this country.

Iraq could potentially be one of the richest countries in the world. It is potentially sitting on the second largest oil reserve in the world after Saudi Arabia. So how you divide up that money is extremely important.

As far as sectarian violence, well, you can potentially, looking at the numbers, notice a down trend for the month of January, for instance, to June. We went from almost 2,000 unidentified bodies in Baghdad to about 600 in June.

But if you look at it within the wider context of the war, it is the same level of violence as before that Samarra bombing of February 2006, which sparked very bloody sectarian carnage in this country.

So taking a step back within the context, there is not much progress on any of these benchmarks and, importantly, not much hope that any will be fulfilled by the end of this summer, Don.

LEMON: CNN's Hala Gorani. Hala, thank you for that report.

WHITFIELD: And here's something we're watching right now unfolding in Michigan. And it means a whole lot of water as a result of a water main break and a closed interstate.

Interstate 96, portions of it, are closed because of massive amounts of water. You're looking at it right there, streaming straight onto the roadway. This taking place in Livonia, Michigan. Interstate 96 eastbound at the Middle Belt Road; intersection is closed. And you can see a wider view right there of just how bad it is.

And now you're looking at taped images that we got just moments ago. You can see some of the cars that were trapped in this flooding. We have not heard of anyone's lives being jeopardized or whether there are any kind of rescue attempts because of those vehicles that you're seeing right there, anyone who was actually pulled, you know, from those vehicles.

But, of course, we're continuing to work our sources. So once again, interstate 96 in Livonia, Michigan. A real mess right there as a result of a water main break.

More on that as we get it, Don.

LEMON: Yes, you're right. That is a real mess.

Another developing story, this one in North Carolina today. Police evacuated the Chapel Hill campaign office, the headquarters of Democratic presidential hopeful John Edwards.

A suspicious package addressed to Edwards was delivered to the headquarters this morning. The package is now being examined. It is the third time this year that police have had to respond to a suspicious letter or package to Edwards' Chapel Hill office.

Joining us now by telephone is Captain Bill -- Bill Overton -- Captain Don Overton, I'm being told now, from the...

CPT. BOB OVERTON, CHAPEL HILL POLICE: It's Bob.

LEMON: ... Chapel Hill Police Department. It's Bob. So we'll get it right. It's one of those.

Captain Bob Overton, thank you for joining us. A lot of folks talking to us. We know that you joined us at the last second here, so we apologize for that.

But tell us, we're getting word that this package that was delivered, possibly beeping when it was delivered by a courier this morning?

OVERTON: Apparently, that was what occurred, and we were called to the scene at that point.

LEMON: Tell us what happened. Have you had a chance to look at this package? Has it been disabled? What have you found?

OVERTON: Yes, we called upon the Durham County Sheriff's Department bomb disposal unit, and they have investigated the package and rendered it safe.

LEMON: They have taken the package and rendered it safe. Do you know what it was?

OVERTON: We're still investigating as to the contents, but according to what I understand now, is that there is no threat.

LEMON: There is no threat?

OVERTON: Right.

LEMON: Again, as we've been reporting, and I'm not sure if you've had anything to do with this. This is the third time that there has been a suspicious package delivered to John Edwards' office, and obviously, his office is there in Chapel Hill. A cause for concern for you.

To what level of concern is this? And do you do anything differently now that you've received three of these packages?

OVERTON: Well, we're always concerned with any suspicious package. And we have had a protocol in place here at Chapel Hill well after the 9/11 situation, where some of the anthrax scares were occurring all over the country. And we've been implementing the same procedures for the Edwards situations. So we're pretty used to it.

LEMON: OK. Thank you very much. Everything is safe. No threat, according to Captain Bob Overton of the Chapel Hill Police Department. We appreciate you joining us here in the CNN newsroom.

But again, a suspicious package this morning delivered to the office of John Edwards, who of course is a presidential contender. But according to this captain, no threat. It's been disabled, and everything is OK.

WHITFIELD: Well, it took several hours and vast amounts of effort, but homeland security now concludes the scare that forced a London-bound airline flight to divert to JFK was a false alarm.

Here's what we know right now. American Airlines flight 136 from Los Angeles landed instead in New York shortly before 3 a.m. Eastern Time. A male passenger was removed from the flight and questioned by federal agents the rest of the morning.

At issue was whether the man had gone through proper security at LAX. We've just learned the feds believe he did and there was no breach of security.

Well, there are still lots of unanswered questions. CNN's Kara Finnstrom is live at LAX with more on this.

So how did this get started in the fist place, the concern over this passenger?

KARA FINNSTROM, CNN CORRESPONDENT: Well, this all started with an American Airlines crew member who was very concerned, and kind of unfolded all of this this morning.

The flight -- I'm going to show you a map of exactly where it was headed to and from, first of all. It left here from LAX, was headed, as you mentioned, to London, was diverted over Newfoundland early this morning and then landed in New York City. But the crew member on board that American Airlines flight thought that they recognized someone who had gone through security for only employees. They thought that he had gotten on a shuttle bus in a parking area and then had gone to an employee-only checkpoint into the airport and had, therefore, bypassed normal security. So that -- that crew member alerted security officials to this, and that's when all of this started to unfold.

What we have learned from TSA employees this morning is they checked their surveillance. This person did go through the normal check-in procedures. Actually checked in at the ticket counter, checked in baggage and then went through all the normal surveillance.

We also had some crews in New York this morning who talked with some of those passengers on board this New York flight. Or the flight that was -- that landed in New York.

A hundred and eight-eight passengers on board. Some of them obviously inconvenienced, but they told our New York crews that they didn't mind the inconvenience for that extra vigilance.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: You didn't get the sense that people on board that flight were scared, concerned?

JENNI BAINBRIDGE, PASSENGER: No.

ROGER BAINBRIDGE, PASSENGER: No, no.

UNIDENTIFIED FEMALE: Maybe relieved that actually whatever it was was discovered and caught?

R. BAINBRIDGE: Yes, I mean, I -- it came -- it kind of makes you feel a little bit better about flying, knowing that these things can get caught, rather than (UNINTELLIGIBLE).

J. BAINBRIDGE: I think also the fact that there were police, the fact that it was surrounded that made people feel safer. I certainly know that, when you said hijack, I felt a little scared. And when all these police came on, you felt protected.

(END VIDEO CLIP)

FINNSTROM: Now we're taking a live look now at LAX, where operations continuing normally this morning. Officials here tell us, you know, they do expect occasionally for there to be some mistakes because of all this extra vigilance in this post-9/11 world.

They reminded us that just 48 hours ago up in Oakland, passengers there saw some delays because a deputy thought they someone -- they saw someone go through an exit into the airport. So again, this morning, this a false alarm here at LAX.

WHITFIELD: All right. Well, we're glad it was a false alarm, in fact. All right. Thanks so much, Kara Finnstrom. LEMON: The Bush administration sees progress. Democrats disagree. We'll get some military perspective on Iraq's report card.

WHITFIELD: Plus, a shocking report has iPod fans all abuzz.

LEMON: And the bulls are on the run today, but not in Pamplona. Stephanie Elam has got the skinny on that.

STEPHANIE ELAM, CNN CORRESPONDENT: The bulls are definitely back in town. We're taking a look at numbers here, and it does look like we've got big gains and a new intraday high. I'll tell you all about it. That's ahead in the new room (sic).

LEMON: And champion of conservation. Wife of a president. Remembering Lady Bird Johnson, straight ahead in the CNN NEWSROOM.

(COMMERCIAL BREAK)

WHITFIELD: Progress in Iraq. Measurable in some areas, chiefly security. Not so much in others, chiefly political. That's according to the interim benchmark report out today.

One of the leading voices for pulling troops out of Iraq is presidential candidate and Democratic Senator Joe Biden. Senator Biden joins me now from Detroit.

Good to see you, Senator.

SEN. JOE BIDEN (D-DE), PRESIDENTIAL CANDIDATE: Hi, Fredricka.

WHITFIELD: What did we learn...

BIDEN: Hi, Fredricka.

WHITFIELD: What did we learn from this report that we, as a nation, didn't know about the progress and the benchmarks in Iraq?

BIDEN: Well, I think that the American people knew what the report said, that there's really no possibility for this central government led by Maliki to make the political process work. They're not trusted. There's no unity. The civil war is underway.

And although we may make incremental gains in some military positions, there's -- nothing is going to stop this civil war until there's a political settlement, and the report is clear. There is no political settlement, nothing to lead us to believe that there's likely to be anything that's going to end this civil war based on this policy.

WHITFIELD: So the president said that eight of the 18 goals have been met as satisfactory. What unmet goals most alarms you or concerns you the most?

BIDEN: In the goal, what most alarms me is there's been no progress on the sharing of oil, which is necessary to get the Sunnis in on the deal. There's been no progress on a constitutional amendment that will allow for regionalization that the Shia want. There's been no compromise made among the leaders as to how to bring together the fractionated parties.

So there's been no political progress at all. And until that happens, all we're doing is putting our troops in the middle of a meat grinder, in the middle of a civil war, in cities as large as six million people. For what purpose? For what purpose?

WHITFIELD: Meantime, the president said, you know, he is counting on the military generals to give him some direction, as well as -- their assessment is what he values the most. That Congress's role really should be somewhat diminished, or at least the expectations.

This is what he had to say. Let's listen.

(BEGIN VIDEO CLIP)

BUSH: Congress has got all the right to appropriate money. But the idea of telling our military how to conduct operations, for example, or how to, you know, deal with troop strength is -- I don't think it makes sense. I don't think it makes sense today, nor do I think it's a good precedent for the future.

(END VIDEO CLIP)

WHITFIELD: So what's your response to how he sees a more limited role of Congress in this whole equation?

BIDEN: When the president doesn't know that he's doing, it's the president's (sic) responsibility to step in. The fact of the matter, as you remember, Fredricka, the vast majority, the members of the chairmans (sic) of the joint chiefs of staff, the vast majority of the retired military, opposed this surge, said it would not make -- would not work.

He had to go all the way out to find a new chairman of the joint chiefs to agree with them. He found one general who thought it made sense. The truth of the matter is, the vast majority, the vast majority of the military leaders in America, in and out of government, think the president is wrong.

WHITFIELD: And your reaction to the president when he talks about whether al Qaeda is, indeed, stronger? Let's listen to what he had to say and then your reaction on the other end.

(BEGIN VIDEO CLIP)

BUSH: There is a perception in the coverage that -- that al Qaeda may be as strong today as they were prior to September the 11th. That's just simply not the case.

(END VIDEO CLIP)

WHITFIELD: Do you agree with that? BIDEN: The president should listen to his own intelligence experts. He says he's going to listen to the military. Why not listen to the intelligence community?

The intelligence community says something very different. The president should listen to his own intelligence community, from the CIA to the Defense Intelligence Agency, who as far back as February said his policy is creating more terrorists than destroying them and there is overwhelming evidence.

The president has said he was going to capture and kill Saddam; has not even come close to that in the last five years. Al Qaeda is alive and well in the western provinces of Pakistan. And you can see by the activity around the world it is very, very active.

And our own intelligence community, and I'm not revealing anything from a report that I have read, just recounting the public statements that have been made. Our own intelligence community says al Qaeda is stronger than they were on September 11.

The president should come out of his bubble. The president should take and get a grip on things here and start to listen to reality. What his own people in his own intelligence community are telling him.

WHITFIELD: Senator Joe Biden, thanks for your time.

BIDEN: Thank you very much, Fredricka.

WHITFIELD: And tonight at 10 Eastern, he served his country in combat for four years, and now he wants out, but the military says no. Now the case is headed to court. Hear both sides in a "360" exclusive of this guest, coming up tonight at 10 Eastern.

Now, if you'd like to know more about the passing and failing grades assigned to those Iraq benchmarks, just visit CNN.com. We've got the administration's complete report on our web site.

LEMON: A water main break is wreaking some havoc on people in Michigan. Take a look at this live picture coming in from our affiliate, WDIV, in Detroit.

This is Livonia, Michigan. Interstate 96 in the Middle Belt Road. It's closed there due to flooding. And once the shot pulls out, you can see just how damaging those floodwaters are, really causing some problems there.

Also, we're getting reports from this affiliate that there had to be some rescues from rescue crews to get people out of their vehicles there. And you see that bubbling up. That is that water main break.

Just moments ago, Ross Marroso, who's a WDIV chopper pilot, filed this report.

(BEGIN VIDEOTAPE) ROSS MARROSO, WDIV: A gentleman got rescued, I believe it was from this car, maybe about 15 minutes or so ago. And he was able to walk out with the emergency crews. They sort of waded themselves through.

But now, as I've got time here, circling around for me. It's now starting to come over the hood of the car, so it is getting deeper. It's certainly not getting deeper at a rate of, you know, feet per minute or anything like that. But every 10, 20 minutes, it is getting a couple inches deeper.

And when you consider that this is in an area that's not designed to hold water at all, and it really has rein to go as far down the freeway it wants, this really gives you an idea of how fast the water is coming out, that the water doesn't even have the time -- forget trying to drain for a moment, but trying to, you know, just spread out fast enough.

And you can see the damage that it's starting to take here in the parking lots and around even places where the water has receded a bit or has changed its course. You can see the mud here in the center of my screen. That's what's been left from this. Imagine what I-96 now is going to look like when they actually get all the water drained off of this.

(END VIDEOTAPE)

LEMON: Again, live pictures now. This is Livonia, Michigan. You can see that, man, that is a lot of water. All of that from a water main. It's not from rain. It's not from flooding due to rivers or what have you cresting and going above their banks. This is because of a water main break.

It has closed down the eastbound side of Interstate 96 at Middle Belt Road if you're in that area. And it's due to a water main break. Water streaming onto the interstate there.

Also, they're having to rescue some people from their cars.

So that's the latest from Michigan. Those pictures, again, courtesy of our affiliate, WDIV, in Detroit. We'll continue to follow this developing story for you and bring you the very latest here in the CNN NEWSROOM.

WHITFIELD: Grading the fight for Iraq. To the Bush administration it may be glass half full, but not everyone sees it that way. We'll ask retired Army General David Grange, straight ahead in the NEWSROOM.

(COMMERCIAL BREAK)

LEMON: On Wall Street, it is like the running of the bulls, but investors are not getting gored; they're getting rich. I wish I was one of them.

Stephanie Elam at the New York Stock Exchange to tell us what's behind this Wall Street surge. You call it that?

ELAM: Yes, Don. Yes, you can call it a surge. It's definitely felt the momentum building before the markets even opened today. And then it just kind of took off.

But it's been a rocky week, so it's nice to see investors are in a partying mood. Stocks are surging with the Dow hitting a new all- time intraday high.

The forces at work, takeover news and some relatively upbeat retail sales numbers.

First off, mining giant Rio Tinto says it's buying aluminum company Alcan for $38 billion. This would create the world's biggest aluminum company. That trumped Alcoa's own bid for Alcan, and it's sending Alcan shares up 10 percent. Alcoa, which is a member of the Dow 30, is surging 6 percent.

So lots of surging going on, Don. You see?

LEMON: OK. Lots of surging. I'll take your word for it. You know, I always hear you talking about -- you and Susan talking about mergers, and you guys say they usually help the market. Why is that?

ELAM: Yes, that's true. A lot of times you may hear us talk about Merger Monday. Because a lot of times these stories come out on Monday and they help the markets out on the day.

Well, that -- the reason why we care about this is because, first, they boost individual stocks, as one company offers a premium for another. So that stock that's getting purchased is actually going to get a lift on that day.

And these billion-dollar takeover deals also serve to reassure investors. They show that big corporations are confident in the economy. Everyone likes to see that.

Also helping today, signs that consumers continued to spend last month, even with soaring gasoline prices.

Another stock to note, Wal-Mart. Its shares are up more than 2.5 percent. The company reported much stronger than expected sales in June, while rival discount chain Target and teen retailers -- retailers Abercrombie and Fitch and American Eagle, they also posted healthy gains, as well.

And so those stocks are also seeing a nice lifts today.

There were some disappointments, but the optimism today comes because things in general were not as bad as many expected. So that's why you're seeing this pop here.

Let's take a look at the numbers right now.

(STOCK REPORT)

(COMMERCIAL BREAK)

LEMON: Hello, everyone. I'm Don Lemon live at the CNN World Headquarters in Atlanta.

WHITFIELD: And I'm Fredricka Whitfield, in for Kyra Phillips today, A report on benchmarks indicates the Iraqi military is stepping up to the plate. Does that mean U.S. troops can start standing down?

LEMON: Well, we're going to ask retired Army General, David Grange for his view on progress so far, and what still needs improvement. We're going to do that right away right away, right here in the CNN NEWSROOM.

WHITFIELD: The Bush administration's interim report on benchmarks for Iraq, like Iraq itself, it's promising in spots, but discouraging elsewhere. Here are some of the highlights. Of 18 goals set by Congress, the report calls progress on eight military benchmarks mostly satisfactory. On the political side, the assessment is not so rosy. Who is to blame for the continued continued lack of security?

The report says Iran and Syria both foster instability in Iraq with leaky borders and financial support for extremists. A White House spokesman describes the report with two words, balanced and sober. Joining us now from Chicago, retired Army Brigadier General David Grange. He's a CNN Military Analyst. Good to see you.

BRIG. GEN. DAVID GRANGE, U.S. ARMY (RET.): Thank you.

WHITFIELD: Sober, you agree with those words or that description?

GRANGE: Well, I think so. It's a very -- I think it's a balanced report. I think that the positives and negatives both came out in those areas in between that there may be a little bit of progress. But at lest it was somewhat thorough. It wasn't just a few phrases, catch lines thrown out there.

WHITFIELD: So, what are some of the most significant benchmarks or goals that were met in your view to help provide for a more secure Iraq?

GRANGE: I think that the new strategy is starting to take hold and hopefully our nation will give that a chance to work. Because many people call for a new strategy, the old one's not working, and in fact, it's only truly been implemented fully just this last month, because the troops just finally got all over there the middle of June.

I think that new strategy is working. The clear, hold, and build phases are taking hold. I think collaborations with some of our former adversaries in Anbar Province, as an example, is a success story. And, I think the sectarian violence is down in the types that we were concerned about with death squads and type of things.

WHITFIELD: And how is that measured? How do we know that? How is that measured? Because it seems every day, just about, or at least on a weekly basis, we are hearing about violence that has claimed the lives of dozens if not hundreds of Iraqis, as well as U.S. forces. And it's difficult for people to discern whether it's sectarian violence or whether it's insurgency or terrorists or who is to blame.

GRANGE: Sure, it's very difficult. Because usually when the coalition forces or Iraqi forces have success, the response from the adversary is to pick up the pace, and so you're going to get some violent responses. The other thing is it's not a steady rise as many people call. These are peaks and valleys of violence.

And as U.S. forces, Iraqi forces, as an example do something, you get counteractions and vice versa. And the other issue, don't count it -- you can't measure it really in -- in a number of people killed on either side. It has to be assessed in a localized manner by commanders in these particular areas. In reports that I have seen, they are very positive, and progress, though it be slow.

WHITFIELD: Well, perhaps underscoring the point you just made of Iraqi forces having some success, there is some partial agreement from what you said from Major General Rick Lynch who over the weekend said yes, there has been some progress, but -- and here is his sound bite.

(BEGIN VIDEO CLIP)

MAJ. GEN. RICK LYNCH, MULTI-NATIONAL FORCE IRAQ: Iraqi army brigade candidly is quite capable, very confident has great leadership and have great effect in our battle (unintelligible). They're only one brigade. And you need about another brigades worth of troops to be able to secure in that area.

Same with the national police on the east side of the Tigris River, we could use about three more battalions of security forces on that side, and they're not there yet. But the Iraqi forces either got to reposition them, or they got to generate them.

(END VIDEO CLIP)

WHITFIELD: So, pretty sobering. Not quite there yet. So, how long -- if this seems to be snails pace right now of that kind of Iraqi force -- readiness. How much longer before they're thoroughly ready in your view?

GRANGE: Yes. A tough question I mean, General Lynch would like to have them yesterday obviously. It's all about leadership. We train thousands of Iraqi soldiers and units. It's all about how they're led, and the most difficult task is finding these brigade and division commanders to led.

The reports I've seen some are terrific leaders, like I think the sixth and the eighth division commanders are very good. Others are lacking or not for they're not for their government; the Iraqi nation itself, but for faction -- they have faction loyalties. That's going to take the longest part and to determine when do you pick these leaders that are capable, that's a tough question. And I think it's going to take a while to weed all that out and get the right guys in the right place.

WHITFIELD: All right, General David Grange, always appreciate your insight. Thanks so much.

GRANGE: My pleasure.

LEMON: Almost six years after 9/11, a classified U.S. intelligence report says al Qaeda is still or again a very serious threat. In fact, CNN has learned that U.S. analysts believe the group is the strongest it's been since just after the 2001 attacks.

Our Justice Correspondent Kelli Arena has the story.

(BEGIN VIDEOTAPE)

KELLI ARENA, JUSTICE CORRESPONDENT (voice-over): Despite bombing al Qaeda's strongholds in counterterrorism operations around the world, al Qaeda is regrouping, and is at it's strongest since the war on terror began. U.S. officials say that's the conclusion of a classified government report. It certainly seems to back up what Homeland Security Secretary Michael Chertoff has been saying.

MICHAEL CHERTOFF, HOMELAND SECURITY SECRETARY: We do see some general trends that are concerning. We see the fact that they are training in certain parts of Pakistan, we see the fact that they have now reached into north Africa and they've got an affiliate in north Africa. We've seen over the last year increased activity in Europe.

ARENA: The secretary took a great deal of heat for saying it was his gut feeling that the U.S. was in a particularly vulnerable period.

SEN. JIM WEBB, (D) VIRGINIA: I would hope that someone who's the director of homeland security would have something else to offer us if he's going to be talking like that.

ARENA: So Chertoff had to spend time explaining what he meant.

CHERTOFF: We don't currently have specific, credible information about a particular threat against the homeland in the near future.

ARENA: Intelligence experts say al Qaeda has been able to find safe haven in the tribal areas of Pakistan.

JOHN KRINGEN, CIA DIR. FOR INTELLIGENCE: We see more training, we see more money, we see more communications, so we see that activity rising.

ARENA: What's more, the volume of messages from al Qaeda leaders has sharply increased.

DANIEL BENJAMIN, BROOKINGS INSTITUTION: But what it does tell us is that al Qaeda feels that it's -- it's in a pretty safe place for recording messages and distributing them. They certainly don't look like they're on the run.

(END VIDEOTAPE)

LEMON: That was CNN's Kelli Arena reporting. WHITFIELD: Still haunted by war, now fearing another, a family marks the anniversary of the Israeli-Hezbollah conflict, straight ahead in the NEWSROOM.

LEMON: A champion of conservation, wife of a president. Remembering Lady Bird Johnson, straight ahead in the CNN NEWSROOM.

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LEMON: Forty-five past the hour.

Three of the stories we're working on for you here in the CNN NEWSROOM. President Bush says he will -- he still thinks the Iraq war can and must be won. Responding to a new report on benchmarks, the president admits the Iraqi government has a lot of work to do.

John Edwards' presidential campaign headquarters was evacuated today. Police in Chapel Hill, North Carolina, investigated a suspicious package, but soon after, sounded the all clear.

And a powerful typhon is heading toward Japan. It could hit the U.S. Air Force Base in Okinawa tomorrow morning with winds equivalent to a category four hurricane.

WHITFIELD: Friends say even though Lady Bird Johnson was almost blind in her later years, she would often stop and admire a brilliant field of wildflowers. The former First Lady died at her home in Austin, Texas yesterday with friends and family close by. She was 94. Private services are planned Saturday and Sunday.

CNN's Wolf Blitzer looks back at her remarkable life.

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WOLF BLITZER, CNN ANCHOR: Claudia Taylor was close to nature almost from the time she was born in east Texas in 1912. The daughter of a well-to-do businessman, a baby nurse nicknamed her Lady Bird and it stuck. She was only five when her mother died, and the experience toughened her. At the University of Texas, she studied journalism and history.

Lady Bird fell in love with a young Capitol Hill aide in the 1930s, Lyndon Baines Johnson. They were married in 1934. She always saw her first job as both a mother and a politician's wife, campaigning tirelessly for her husband through his years as a Congressman, as a senator, and as vice president.

The hardest day may have been November 22, 1963.

VOICE OF "LADY BIRD" JOHNSON, FMR. FIRST LADY: We were rounding the curve, going down the hill. Suddenly, there was a sharp, loud report, a shot.

LIZ CARPENTER, LADY BIRD'S FMR. PRESS SECRETARY: She said to me, it's all been a dreadful nightmare. But somehow, we've got to have the strength to go on and so she supplied that strength. BLITZER: And go on she did, providing grace and a steady presence as Johnson took over the presidency. Their almost 40-year marriage was described as strong. But it had its rocky moments. She once said, "He may not have been perfect, but at least he was fun."

After moving back to Texas, and the 1973 death of LBJ, she continued working on her pet projects, such as this wildflower center in Austin, although a stroke in 1993 slowed her down just a bit.

LUCI JOHNSON, LADY BIRD'S DAUGHTER: Daddy used to say there were two types of people, the talkers and the doers. Lady Bird Johnson is very much a doer.

BLITZER: She saw her work on behalf of flowers as a symbol.

"LADY BIRD" JOHNSON: Obviously, wildflowers and native plants are not the great huge problem like the keeping some of the rainforests, which will affect the global climate, and hurt so many species, getting rid of hazardous waste, but it is a part of the whole mosaic, and to me, a joy giving forth, and I think there's room left in this world for joy, for pleasure, for understanding. It's all just a tangled web, every part works together.

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WHITFIELD: Well two days after Pakistani troops stormed Islamabad's Red Mosque, Pakistan's president vows to defeat extremism and terrorism in every corner of his country. The Pakistani army says it found the bodies of at least 73 Islamic militants inside the complex following the weeklong standoff. While many news organizations were allowed to tour the mosque today, CNN was not allowed inside. A CNN spokesperson said, quote, "The actions by the Pakistani government are regrettable. We remain committed to reporting from Pakistan," end quote.

LEMON: Under attack again. A nearly deserted Palestinian refugee camp in Northern Lebanon. One high-ranking security source calls it a final push to force out Islamic militants holed up there.

Lebanese soldiers deny that, saying they are just keeping up the pressure. It's not clear how many Fatah Al Islam fighters remain inside that camp in Tripoli. Most of the roughly 30,000 Palestinian who once lived there have fled.

A year ago, bombs and shells exploding to the south, along the Lebanese border with Israel. Hezbollah rockets raining down on Israeli towns. The Israeli army firing back. Civilians caught in the middle of all of it.

Earlier today Israel Prime Minister Ehud Olmert toured that still-tense border region, where reunited families are keeping a wary eye on neighboring countries.

Let's go to CNN's Cal Perry. (BEGIN VIDEOTAPE)

CAL PERRY, CNN CORRESPONDENT (on camera): Don, it was exactly one year ago today when Israeli civilians fled to the south. The IDF, that is is Israeli army, headed the other direction here to the north. And it was in fact the north that saw the most heavy bombardment from Hezbollah rockets.

(voice-over): The Cohen family of Kiriyat Shimona (ph) remembers Israel's second war in Lebanon all too well. Their town was hit by about 1,000 Hezbollah missiles fired from Lebanon. It was the worst=hit city in Israel.

MALI COHEN (through translator): I was at home and suddenly we were called to go to the shelter. My children and I moved to Jerusalem and stayed there until the war ended. My husband was injured in a rocket attack just a week before the cease-fire.

PERRY: Mali's eight-year-old daughter, Daniela, still has nightmares.

"It is scary at night," she says. "Sometimes I dream of a surprise attack."

The war forced many, like 12-year-old Assaf, to grow up quickly.

"I am afraid that a Katyusha will follow on us all of a sudden, and we'll have to rush to the shelter," he says. It will be scary.

Last summer, a month of heavy fighting on the ground in Southern Lebanon, but the legacy of this war is the unrelenting bombardment and shelling. The Israeli army fired over 10,000 shells into the south of Lebanon. While the Navy pinned down the coastal towns, the Air Force flew over 12,000 combat missions. Hezbollah fired around 4,000 rockets into Israel, creating chaos, fear and casualties.

Civil defense plans moved a quarter-of-a-million people to the south. Still, Hezbollah rockets killed 43 Israeli civilians and wounded another 4,000. The Israeli army said it killed some 600 Hezbollah fighters, while losing 119 of its soldiers. Human Rights Watch says over 1,000 Lebanese civilians perished.

But for now, all is peaceful again. Mali Cohen's youngest daughter, Avia (ph), waters the garden.

But the same day we speak to the Cohen family, the Israeli army is conducting war games on the Golan Heights. Mali can even point to Syria from her house. The fear is that another war could come from that direction.

(on camera): After the war completed, Israeli society quickly returned to places like this, Haifa in the north. But they did so with the knowledge that they're easily within rocket range of both Syria and Hezbollah -- Don.

(END VIDEOTAPE) LEMON: Thank you, Cal.

PHILLIPS: The president's assessment of progress in Iraq. Successes, failures, and political fallout, straight ahead in the NEWSROOM.

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