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AMERICAN MORNING

Taking on Iran: Military Could Land on Terror List; Consumer Outrage: Who Should Spot Toxic Toys?; Lead Exposure: Spotting Trouble in Kids

Aired August 15, 2007 - 08:00   ET

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


(BEGIN VIDEOTAPE)
KIRAN CHETRY, CNN ANCHOR (voice over): Trouble times three. Right now, three storms stirring up high seas and high emotions from Hawaii to the Texas Gulf Coast.

UNIDENTIFIED MALE: If necessary, I have to leave, I have to leave. Pray to god it doesn't happen.

CHETRY: Plus, kids at risk. Growing fears about recalled toys and concerns about baby bibs.

SALENA ROSA, CONCERNED ABOUT TOY RECALL: I wanted him to get tested for lead, because at this age, they put a lot of things in their mouth.

UNIDENTIFIED MALE: OK. Let's listen to your heart.

CHETRY: The simple test for exposing a serious health threat on this AMERICAN MORNING.

(END VIDEOTAPE)

CHETRY: And welcome once again. Thanks for joining us. It is Wednesday, August 15th.

I'm Kiran Chetry.

ROB MARCIANO, CNN ANCHOR: Halfway through the month. Good morning.

John Roberts is off. And I'm Rob Marciano.

CHETRY: Halfway through the month and we could have our first hurricane of the season. So...

MARCIANO: Some say it's about time. We'll see what happens.

CHETRY: Meantime, we begin with a major move by the White House. Concern over Iran's nuclear ambitions and its role in the Iraq war, it could force the administration to declare Iran's military a terrorist organization. This would be the first time they would classify an actual country's military a terrorist organization.

Barbara Starr monitoring this story from the Pentagon this morning.

Tell us why the U.S. is considering this bold step now, Barbara.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, good morning to you, Kiran.

This is because the U.S. is so concerned, of course, about Iran's support for the war in Iraq, about its support for terrorism around the world. What is going on is behind the scenes. There is a massive debate under way. The possibility is that they will declare Iran's Revolutionary Guard Corps and its elite al-Quds Force, which is part of the overall structure of Iran's military, a terrorist organization or a supporter of terrorism.

What will that mean? Well, that will mean that they will try to cut off those groups' access to international banking and international finance. The effort is part of the other side of the war on terrorism, if you will, the financial side. Very strict financial sanctions to cut off their support, to cut off their access to banking, to try and stop their terrorist activities.

No final decision has been made. But the U.S. has been moving against Iran in financial markets for sometime now, cutting off their access to banks by their own financial institutions. Part of the concern, Kiran, is the Revolutionary Guard Corps is so now heavily invested in Iranian businesses and Iranian banking, that it's really part of the economy of that country, so it's going to be tough to go after them. It's all on the table for a decision -- Kiran.

CHETRY: Wow, it's a bold move. We'll see if it actually happens.

Barbara Starr reporting from the Pentagon.

Thank you

MARCIANO: Kiran, we're watching some extreme weather. Three storms -- Flossie, reclassified as a tropical storm overnight -- CNN's Reynolds Wolf there on the big island told us that last hour the storm has actually passed a little bit to the south, but there's still a threat for seeing some heavy rains and potentially some flash flooding.

Also, Tropical Storm Dean, there it is brewing in the Atlantic. It may hit the eastern Caribbean before too long and it could become our first Atlantic hurricane of the season. So we're watching that closely.

But a more immediate concern likely is what is happening in the Gulf of Mexico. Right now just a tropical depression, but tropical storm watches are up for parts of Texas. The wind and the waves are picking up and heavy rain is on the way tonight as that storm heads toward south Texas.

Of course Jacqui Jeras in hurricane headquarters weather center tracking all of this. (WEATHER REPORT)

CHETRY: Well, we have an update now on that massive toy recall, some nine million additional toys pulled off the shelves. And we're hearing from China this morning.

The Chinese government releasing a statement saying that the small magnets on toys like the Polly Pockets were made following guidelines from Mattel. It asked U.S. importers to share some of the responsibility. And according to Reuters, a spokesman for the Chinese toy industry says that it knew as early as March about problems with the small magnets on the toys.

So, a lot of parents are wondering, who's responsible? Should Mattel or the government have done more?

Greg Hunter is looking out for you and asking that question this morning.

Greg, what did you find when it comes to being able to trust the safety of these toys we buy our children?

GREG HUNTER, CNN CORRESPONDENT: Well, I'm at Greenpoint's Toy store in Brooklyn, and the owner has already taken all of this stuff off the shelves as of yesterday, but who is really responsible for this? It's certainly not the toy store owner. And what should parents know?

Listen up.

(BEGIN VIDEOTAPE)

HUNTER (voice over): Mattel launched a second massive recall of toys manufactured in China in as many weeks. This time, the toy company took out full-page newspaper ads to reassure parents of its commitment to safety. But that didn't quell the consumer outrage.

UNIDENTIFIED FEMALE: We buy things for our children, toys, and then they come out with something like this. It's horrible.

HUNTER (on camera): Does this big newspaper ad make you want to trust them again?

UNIDENTIFIED FEMALE: Of course not.

HUNTER (voice over): Over the last seven years, Mattel has recalled more than 15 million toys. The company says that's a small number considering it makes a half-billion toys a year.

UNIDENTIFIED MALE: We've had a history of trust, and when you look at the number of recalls, we think we make overwhelmingly safe products.

HUNTER: Mattel pledged to change procedures. It will now test every batch of toys it makes for lead and work with regulators to develop new safety standards for magnetic toys. But one toy industry watchdog says that's good but too late.

JAMES SWARTZ, WATCH: Realistically, we're not going to get all these items back. Once they're out there in our homes, in our schools, there's no way to get them all back, so there need to be better controls in the first place to prevent this.

HUNTER: The Consumer Product Safety Commission, relied on to safeguard toys, is supposed to oversee the industry. However, the agency has been downsized, its staff cut by more than half in the past 25 years, with only 100 inspectors for all products for the entire country.

NANCY NORD, ACTING CHAIRWOMAN, CPSC: Our economy is so big, hundreds and hundreds of millions of toys and other products come into this country every day. And the notion that somehow we are going to pre-clear these hundreds of millions of products is naive.

HUNTER: Mattel says its 75-year history of making safe toys for children should speak for itself.

UNIDENTIFIED MALE: We are upset and feel we feel we've disappointed some people. And again, we want to continue to earn the trust of consumers. And they will judge us over time by our actions.

(END VIDEOTAPE)

HUNTER: So, let's talk about the biggest recall -- the biggest part of this recall, some, you know, seven million Polly Pockets toys. Here's how it works.

You know, Polly has little clothes that, you know, hang on by magnets. See that? They hang on by magnets just like this.

You can see the little magnets right here, little magnets that hold this on. Well, let's show you how powerful these magnets are.

I got a couple. And it will only take me a couple of seconds to actually dig them out. And look right here.

Here are the magnets, right? Now, look at how powerful these magnets are. Did you see that? If one of these magnets gets caught in a small child's intestine, and then he swallows another one and they get on two sides of an intestine wall, pediatricians, experts say the big trouble, it can cause blockage, and that's why you need to look out for them.

Now, for a complete list of this latest recall, 9.5 million toys, and two weeks ago, log on to CNN.com for a complete list. Very complicated. You need to look at the production years, you'll need to look at the model numbers to make sure you're throwing away and getting rid of the right toys.

Back to you guys.

CHETRY: All right. Good advice. Greg Hunter, thank you. MARCIANO: Kiran, other headlines new this morning.

The White House is condemning suicide bombings in northern Iraq as barbaric. Five simultaneous attacks hit two small towns about 60 miles west of Mosul. Two hundred people were killed, two hundred more were hurt. Right now, 16,000 U.S. and Iraqi troops are fighting al Qaeda in the Diyala River Valley, and the colonel leading the operation described just how entrenched al Qaeda is.

(BEGIN VIDEO CLIP)

LT. COL. ANDREW POPPAS, 5-73 AIRBORNE SQUADRON: They had a hierarchy both in terms of judicial, the political -- they had a police force that maintained. They had transportation units. They had a military wing.

(END VIDEO CLIP)

MARCIANO: The U.S. military reporting this morning that 11 militants are dead and four detained in its new round of anti-al Qaeda operations.

Well, NASA will decide today if repairs are needed on the space shuttle Endeavour. Tests have NASA cautiously optimistic that the shuttle could make a safe return to Earth even with a small hole the size of a business card in the shuttle's protective tiles. More tests will be done today.

Meanwhile, teacher-turned-astronaut Barbara Morgan is talking about her mission in space with students in Idaho. They asked her about exercising in space. In response, she said she lifted two of her fellow astronauts in one hand. They're a lot stronger up there, that's for sure.

Illinois congressman and former House speaker Dennis Hastert is expected to announce his retirement later this week. Hastert is the longest-serving Republican speaker in history. He lost the job when his party lost control of Congress last November. A formal announcement on his future plans is scheduled for Friday.

And an NBA referee accused of betting on the same games he officiated is expected to plead guilty later this morning. Donaghy resigned July 9th after 13 years as a referee. Commissioner David Stern called the betting scandal the most serious situation the league's ever faced. No other refs or players have been named.

And a member of the Rutgers women's basketball is suing Don Imus for slander and defamation of character. Kia Vaughn claims the shock jock's comment that got him fired was sexist, racist and damaging to her reputation.

On "AC 360" last night, Vaughn's attorney addressed what's believed to be the first lawsuit by a player in the case.

(BEGIN VIDEO CLIP) RICHARD ANCOWITZ, ATTORNEY FOR RUTGERS PLAYER: Very often in this business and in other businesses you hear the phrase "It's not about the money." Well, in this case, it kind of is about the money.

Kia would like to set up a scholarship fund that would chair research and study of the issue of bad speech, of foul speech, of evil and malevolent speech in society, especially racist and misogynistic and sexist speech. And that's what we intend to do.

(END VIDEO CLIP)

MARCIANO: The suit also named CBS, MSNBC and Imus' producer. It was filed on the same day Imus and CBS settled their legal differences over his firing in April, paving the way for Imus to return to the airwaves -- Kiran.

CHETRY: Thanks, Rob.

Well, time now to check in with our AMERICAN MORNING team of correspondents for other stories new this morning.

And the markets could be headed for another rocky ride today.

Ali Velshi following that for us.

Hi, Ali.

ALI VELSHI, CNN CORRESPONDENT: Good morning, Kiran.

We have a lot of news going on right now. But the first thing I want to tell you about is that the Dow was down yesterday 207 points. That's the fourth time in a row that it's been down.

Let's take a look at what the Dow has done in recent days.

It is now down 970 points from its all-time high, which was 14,000. We're looking, in fact, at an opening that might be around 13,000 today. It's down 600 points, more than 600 points in the last four days, and it's down 200 -- it's had five 200-point or greater losses in the last month.

So, some of that is because of the level that the Dow is at, but we are expecting some problems right now. We've got futures pointing to an open around the 13,000 level, and, of course, once it starts to get below that, we may see further problems.

Some things happening this morning. In about 20 minutes, we're going to get the inflation report, and that will affect markets. If inflation is showing as higher, that is going to affect markets to the downside, because that means that the Fed will not think about cutting interest rates.

The other two things that have happened is that Merrill Lynch has downgraded the stock of Countrywide Financial Corporation to a sell. It is telling its clients to sell that stock.

This is a company that has lost half its value since February. It's at the center of the subprime mortgage crisis.

And the other thing is, as we're following storms in the Gulf of Mexico, oil has started to creep up in anticipation of production shutdowns in the Gulf. And we are hearing that Shell has now started evacuating nonessential personnel from some of its Gulf of Mexico rigs and operations.

So we're following all of that to see how it comes together. We'll give you a better read of this in maybe about 20 minutes or so -- Kiran.

CHETRY: Ali, thanks so much.

Well, the toy recall has parents wondering, are their kids at risk for lead poisoning?

CNN's chief medical correspondent, Dr. Sanjay Gupta, is joining us now with more on that. Some practical advice for parents.

Hi, Sanjay.

DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: Hey, good morning.

You know, the dangers of lead are pretty clear in children. You could have developmental delays, you could have brain damage, even death. And there is no safe level of lead for your child's body.

The question, what to do about it? How do you get tested? Well, a simple test might provide the answers.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: OK. Let's listen to your heart.

GUPTA (voice over): When Salena Rosa brought Justin in for a six-month checkup, she wanted to know, could my child have lead poisoning?

ROSA: I wanted him to get tested for lead, because at this age they put a lot of things in their mouth.

UNIDENTIFIED FEMALE: One, two, three. Here we go.

GUPTA: Justin had his finger pricked, a simple blood test for lead. Even though he seems perfectly healthy, it's important to know this: lead poisoning can happen before your child shows any symptoms.

DR. LEO TRANSANDE, CENTER FOR HEALTH & ENVIRONMENT: We have no early warning signs for a child with low-level lead exposure. We found that any level of lead exposure in a child can cause toxic injury.

GUPTA: Parents like Rosa, who have recalled toys in their home, are eager to know how much exposure is too much. Here's a general rule of thumb. Doctors say normal play is OK, but if your child licked or chewed toys containg lead paint, consider getting a lead test.

TRANSANDE: We don't know what exposure might have occurred there. And so we're left with having to test children after the fact.

GUPTA: Justin's lead test results will be back in a few days. His mother says she already feels relieved.

ROSA: My best bet is to always come to the doctor if I'm unsure about something. It's better to be safe than sorry.

(END VIDEOTAPE)

GUPTA: And to be clear, the Centers for Disease Control actually recommends, as things stand now, that children be tested at ages 1 and 2 for lead intoxication. And that is the current recommendations -- Kiran.

CHETRY: All right. Sanjay, also, if your child is tested and those levels unfortunately come back and they look like the exposure is high, what do you do then?

GUPTA: Well, a couple of things. You saw Justin get that little finger prick test. That's sort of a screening test, if you will. If it comes back high, there's going to be more blood taken for a more confirmatory test.

If both of those are still high, there's a therapy called chelation therapy. And what that basically involves is injecting some particular things into the blood system to sort of bind that lead and try and draw it out.

Again, you know, it doesn't really reverse the problems. It just prevents the problems from getting worse down the line. So, again, you really want to get this checked earlier to try and prevent any symptoms from developing in the first place.

CHETRY: All right. Sanjay Gupta, thank you so much.

GUPTA: Thank you.

CHETRY: Rob.

MARCIANO: Kiran, a Hezbollah threat tops our "Quick Hits" right now.

Thousands of Hezbollah supporters rallied today in Beirut, Lebanon, marking the first anniversary of the end of the war with Israel. Hezbollah's leader said if Israel attacks again, it will face a "big surprise" that could shake the entire Middle East.

And Benjamin Netanyahu is trying to become prime minister again of Israel. He was voted in as the leader of the Likud Party. In his victory speech, he made it clear that he wants his old job back.

And a self-described pedophile arrested twice in one day for hanging out near a daycare center. But is he a sinister threat or just a showboat trying to get attention?

We'll talk to the reporter who first introduced us to him. That's coming up next on AMERICAN MORNING.

(COMMERCIAL BREAK)

CHETRY: And welcome back to AMERICAN MORNING. Some of the best shots of the morning in our "Quick Hits" now.

A typhoon slamming the Philippines, turning roads into rivers, trapping people in waist-deep water. That storm now moving -- heading out and moving toward Taiwan.

Wildfires exploding across Wyoming. One couple running from the wall of flames after being forced from their home. Firefighters are battling this monster from the ground and the air.

And a facial, if you will, for London's Gherkin building. Crews washing the windows for the first time since it opened three years ago, giving new meaning to soap on a rope. How about a lunch break 540 feet up in the sky?

MARCIANO: Well, admitted pedophile Jack McClellan claims that he didn't expect to find kids on a college campus when he showed up outside a daycare center at UCLA.

Stacy Butler of our affiliate KCAL is the first reporter to expose McClellan to the L.A. area and the first to talk to him.

(BEGIN VIDEOTAPE)

JACK MCCLELLAN, ADMITTED PEDOPHILE: It is really just a sexual thing. It's the whole ambiance of children that I enjoy.

STACEY BUTLER, REPORTER, KCAL (voice over): Jack McClellan isn't afraid to tell you how he feels about little girls.

(on camera): Are you a pedophile?

MCCLELLAN: Yes. I didn't even consider myself one until a couple of years ago. I started reading some of the stuff on the Internet and it kind of resonated with me. Kind of refer to ourselves as kind of the silent majority.

BUTLER (voice over): But he is terrified to show his face.

MCCLELLAN: I've received a lot of death threats.

BUTLER: Death threats, because he says he took pictures of little girls at countless family events near Seattle, then posted them on his pro-pedophilia Web site.

MCCLELLAN: I felt the best thing to do would be to get completely out of that area.

BUTLER: Before McClellan left Washington State, his site was shut down. But now it's back, and so is he, this time right here in the southland.

MCCLELLAN: I'm looking to find a permanent place here.

BUTLER: We found McClellan living out of his car near Venice Beach, mapping out local events to attend where little girls, or LGs, as he calls them, are plentiful.

(on camera): What about those events do you like?

MCCLELLAN: Just to be -- well, obviously, I'm just going there mainly to be around the kids.

BUTLER: He claims he's not a convicted sex offender, and police say his Web site is legal.

McClellan's message to parents? Get used to it. He's allowed to attend the same festivals you do.

(on camera): You don't see what you're doing as wrong?

MCCLELLAN: No. I mean, obviously, I'm not doing anything illegal at these things. I mean, if they pass a law saying you can't go to these things to admire kids, I mean, I guess I'd have to obey to that.

(END VIDEOTAPE)

MARCIANO: Stacey Butler has been following McClellan's legal case. She joins us now live from L.A.

We just saw a little bit of your piece, Stacey. Obviously, he is a bit creepy on camera. What is he like in person?

Tell us about him.

BUTLER: Well, in a word, "creepy" would describe it. But in order know Jack McClellan, you have to understand we're talking about a 45-year-old man with a 22-year history of mental illness.

So, a lot of people have asked me, well, "Is he really a pedophile? Do you think he is really perpetrated?" It's hard to answer that question. I don't think anyone can unless you're following him, if you followed him the last 22 years closely.

I think what you really have to consider is that he could be both. He could be a danger to society and he could be mentally ill. And I do believe that that's what we're talking about here.

MARCIANO: You say in one of your reports that he has a criminal past. He has been convicted of a drug felony, I believe, but nothing as far as, you know, sexual offending or child molestation. Here's -- listen to this reaction in between one of the two arrests that were made just on Monday.

(BEGIN VIDEO CLIP) MCCLELLAN: If I was going to violate this order willfully, I mean, I would have gone down to some place with a lot of kids, like a festival or a park with kids. I mean, one of the last places you would think to find a whole bunch of kids is UCLA.

(END VIDEO CLIP)

MARCIANO: Now, Stacey, you mentioned he could be a threat. My question is, is he being naive by assuming that? Or is he using the media? Is this guy just trying to get attention?

BUTLER: Yes. I don't -- I don't know that "naive" is really the word. I do believe that he knows what he's doing.

You know, he went to that psychology building on the campus of UCLA. That building was the only building there that had small children. It was a daycare center for children 3 months old to 3 years old.

He could have been hanging out in the cafeteria or any number of places. He chose that building.

MARCIANO: What happened in the arraignment yesterday?

BUTLER: The judge basically did something nobody expected. He deviated the bail, so the bail went from $5,000 to $150,000. Now, this does not happen easily.

The judge is obviously aware of a clear and present danger that Jack McClellan presents. Otherwise, he would not have done that.

Now, some information came out yesterday. The city attorney basically said that Jack McClellan has two felony drug convictions stemming from charges in 1999 and 2000 right here in California.

You see him there. That was him behind plate glass yesterday in court, expressionless.

You know, it's odd. You try to understand this man and what his motivations are. I don't think anyone can.

Jack McClellan, by his own admission, has said when he was diagnosed, he won't say what he was diagnosed with. It's possible it was schizophrenia. He has said, "My diagnosis goes on for pages and pages."

This is not a clear-cut case.

MARCIANO: Well, it looks like we won't see him on the streets until he raises $150,000 or the case goes to court.

Stacey Butler, thank you very much for joining us, KCAL, our CBS affiliate out there in Los Angeles.

BUTLER: Thanks, Rob.

CHETRY: The search for six missing miners in Utah topping your "Quick Hits" now.

They still haven't been heard from and rescuers say they are increasingly frustrated. A third drilled hole could reach the spot today where the miners may be trapped.

And a volcano comes to life in the Pacific ring of fire. In Indonesia, plumes of smoke and ash shooting higher than the Empire State Building. Nearby buildings covered in dust; farmers are being warned to stay away.

The NSA eavesdropping program will face a panel of judges today. A hearing today will determine whether lawsuits challenging the program can go forward.

We're going to be getting details on that next on AMERICAN MORNING.

(COMMERCIAL BREAK)

MARCIANO: Welcome back to the most news in morning. Your "Quick Hits" now.

The publishing world connecting with the iPhone. Consumers can already make calls, watch videos, take pictures, listen to music. Now HarperCollins setting up a special link for mobile users to read up to a dozen new books right off your phone.

Kiran is applauding that.

CHETRY: I need that phone.

MARCIANO: Some new coin in your pocket. The first Thomas Jefferson U.S. dollar coins are coming out today. The U.S. Mint is putting out a series of dollar coins for all the U.S. presidents.

And Elvis impersonators, or artists, as they like to be called, they're taking to the stage in Graceland this week. The vigil tonight to honor the 30th anniversary of the death of Elvis. Fans gathering despite the 100-plus-degree heat that's blanketed Memphis all week long.

CHETRY: That guy looks exactly like Elvis. I thought it was Elvis for a second.

MARCIANO: Come on.

CHETRY: He looked -- not -- no, no, no, not this one. The one before, that looked exactly like Elvis. I mean, he had to have something done.

MARCIANO: Well, he is the best artist of the batch.

CHETRY: Not this guy. The next guy. Ready? Here we go.

All right. This guy, I can tell he's not Elvis. The bad wig gives it away. This guy, he looks exactly like Elvis.

MARCIANO: Yes, I think you're right. I could see him in a movie in Hawaii somewhere. You know? I don't think he dances like Elvis.

CHETRY: Maybe Elvis has not left of the building, Rob. Did you ever think of that?

MARCIANO: Oh, you know, don't creep me out here. It's been 30 years.

CHETRY: Well, here is a look at a story coming up that you can't miss.

We talked about this huge recall, Mattel, another nine million toys out there. Well, we went shopping in the streets of New York City to see if you're actually in a toy store, have they gotten everything off the shelves and how do they know which toys are safe?

MARCIANO: Kiran went shopping yesterday. That, by the way, not breaking news. But she did it to help us, you know, find out and talk to the store owner. I mean, the store owner, you said, was a little bit -- she didn't really know what to say to her customers.

CHETRY: Yes. She was -- she was incensed about the whole situation. That's a lot of toys to go through and make sure that you're stocking your shelves with things that are safe.

So we're going to tell you what she said and what you need to know about the dangers of lead coming up when AMERICAN MORNING returns.

(COMMERCIAL BREAK)

MARCIANO: Good morning, Seattle, the Emerald City! There it is all aglow. We're looking southwest. When the sun comes up you might be able to see Rainier. Thanks, KIRO, our affiliate out that way. The Emerald City looking gorgeous and it will be much cooler than say the central part of the U.S. today.

CHETRY: You're really good look at this. How did you look at that and know where were looking?

MARCIANO: I used to work in Portland. And just down the road there, from Seattle. Beautiful part of the world, especially this time of year, because it doesn't rain, and it's nice and cool. Can't say that for everybody else.

CHETRY: Lush, green and beautiful. They say it they pretend it rains a lot more there because they don't want us moving there. Is that true?

MARCIANO: Well, I don't want to comment, because I have friends still there still, who don't want people moving there.

CHETRY: I guess there's some truth to that. Well, welcome, once again. Wednesday, August 15. I'm Kiran Chetry.

MARCIANO: I'm Rob Marciano, in for John Roberts.

CHETRY: We start off with unusual step, possibly, by the U.S. government. The Bush administration might be ready to place another country's military on its list of terror groups; the Bush administration considering an extreme step against Iran.

They're talking about putting Iran's Revolutionary Guard on its list of terrorist organizations. It would be the first time that another government's military has been put on a terror list. It would let the U.S. go after the Revolutionary Guard's finances.

The top U.S. commander in Iraq, General David Petraeus, could pull troops out of some parts of Iraq. There's a report in the this morning's "Los Angeles Times" that says that when Petraeus reports to Congress next month he will propose some pullbacks. Many U.S. commanders say they believe the surge has improved security.

(BEGIN VIDEO CLIP)

GEN. GEORGE CASEY, CHIEF OF STAFF, U.S. ARMY: There was progress in Iraq every day. I was back there over the weekend and there continues to be progress. I mean, the surge is having the intended military effect. Our guys are seeing progress on the security front.

(END VIDEO CLIP)

CHETRY: Well, the report says Petraeus is not ready to reveal what areas that troops would leave -- and that he plans to keep the same overall level of U.S. forces in Iraq. They would just be deployed to other areas, where they would be needed more.

MARCIANO: Also on our "Security Watch" this morning, two lawsuits questioning the legality of the National Security Agency's eavesdropping program, will be heard today. Kelli Arena joins us now live from Washington with more on the challenges to the government's spy program.

Good morning, again, Kelli.

KELLI ARENA, CNN JUSTICE DEPT. CORRESPONDENT: Good morning, Rob.

You know, those lawsuits do charge that the government's secret warrantless wiretapping program was illegal. And the government argues this case should be thrown out, because even talking about this program in court would reveal state secrets and make the nation more vulnerable to an attack.

Now, one suit was brought on behalf of a Saudi man who claims that he is being wrongly labeled a terrorist because the NSA misinterpreted conversations that he had. Another suit is being brought by the Electronic Frontier Foundation, it's a privacy group and it's arguing that the surveillance program is just simply unconstitutional.

As you know, Rob, this program was discontinued at the beginning of the year. Some changes were made but there's still a lot that we do not know and some experts say that the only way that Americans will ever truly know what the NSA is doing for these cases to go forward.

MARCIANO: Kelli, we got news this morning -- actually about an hour ago -- from law enforcement officials slated to identify a group of Muslims who could be on the path to being home-grown terror. What do you know about that?

ARENA: That is a report that was put together exclusively by New York City's police department, its intelligence unit there. They've been working on that report, I'm told, for about a year or so. And one of the conclusions that it comes up with is that investigators there have identified these groups of Muslim men, within the Northeast area, that they say could eventually someday, maybe be on a path to becoming home-grown terrorist or act out against the United States.

This is something I want to make very clear, it's an NYPD product. I mean, the FBI, which, obviously, has sole responsibility for terrorism, is -- was not involved in this. I haven't seen the report yet, Rob. I'm told we're going to get a press conference at 10:00 out of New York so we should have the whole thing there.

You know, there has been some concern, obviously, about young Muslims in the post-9/11 era, but there has been a lot of outreach -- you know, a lot of outreach efforts made into that community. As you know, you know, to try to bridge any gaps that may exist. I think that I can say with some certainty that that report will probably ruffle a lot of feathers later on this afternoon in the Arab-American community.

MARCIANO: We'll look for that. You say 10 o'clock Eastern time.

ARENA: That's what I'm told. We'll see.

MARCIANO: All right, we'll look for contacts on that throughout the day.

Thank you, Kelli Arena live from Washington.

Now, let's go to -- well, the Darth Vader of the markets. You've given us nothing but bad news the past month!

ALI VELSHI, CNN FINANCIAL CORRESPONDENT: I've been waiting for this moment. I have good news for you!

CHETRY: He has good news.

MARCIANO: I don't believe it.

VELSHI: The inflation report is out for the month of July and it is exactly where it was expected to be. Now, the reason this is important is because if inflation increases faster than expected, that means the Fed won't cut interest rates, because the Fed wants to contain inflation. If inflation is where it is, the Fed could consider cutting interest rates.

Why is this? Because if the Fed cuts interest rates it makes more money available to people in businesses to spend, and as people spend more it increases demand and causes inflation. So, number one, we got inflation under control for July. Why is it under control? Because there were lower gasoline prices in July and this subprime thing.

People losing their homes, or paying more for their mortgages, means they actually end up with less money to spend. So they're spending less because they've got less money. And the lower gasoline prices, gasoline is one of the components that gets calculated in inflation.

So the good news here is that inflation was under control in July. The Dow futures which were down as much as 80 or 90 points a little while ago, have now started to come back. We could look for an opening that is just mildly lower. Could even be sort of dead on flat as we open. We'll have to see how that goes.

MARCIANO: When flat is good!

VELSHI: When flat is good --

MARCIANO: You know it's a been a tough market.

VELSHI: That's right. What did we learn this week? If your credit score is as high as your SATs, you're OK. And when flat market at the open, is good. I'll keep you posted.

CHETRY: No Ivy Leagues, here.

All right, Thank you very much, Ali.

Well, the health of Luciano Pavarotti topping your "Quick Hits" now. He could be released from a hospital in Italy today. Pavarotti was admitted last week with a high fever and he had surgery last summer to remove a tumor in his pancreas.

And remembering Phil Rizzuto, fans poured into Yankees stadium last night to pay tribute to the Hall of Fame short-stop and the legendary broadcaster. Rizzuto was battling pneumonia when died Monday at the age of 89.

And you're a huge Yankee fan, what was his catch phrase?

MARCIANO: Holy cow! Loved listening to him.

CHETRY: Many, many people loved him and he will be missed.

Well, millions of popular toys recalled just in the past month. But that doesn't mean they're all off of the store shelves. It's actually harder than you think to make sure that every toy in a toy store is spotted and yanked if it's not safe. We're going to talk more about it. I headed to a toy store to find out why, coming up ahead on AMERICAN MORNING.

(COMMERCIAL BREAK)

MARCIANO: Welcome back to the most news in the morning.

And honest teen's lucky find tops our "Quick Hits". Steven Pfeifer just stumbled on a Purple Heart while walking down a street in Wisconsin. The name on the back Richard Borek (ph) appears to be one of the men killed in World War II, so now Steven is trying to find the soldier's family.

The State Department reports this morning that one of six American diplomats, who have served in dangerous countries like Iraq and Afghanistan, may suffer from post-traumatic stress disorder. Symptoms of the condition can include insomnia, anxiety and depression and substance abuse. The study conducted from June 1 to July 15th.

A there's a new oldest person in the world. Edna Parker of Shelbyville, Indiana is 114! She's five feet tall, and weighs 70 pounds. But she's able to walk around. She's in good health and amazingly Edna lives in the same nursing home where the world's tallest woman also lives. That's Sandy Allen, she's 7'7".

CHETRY: Congrats.

Well, we've been following the case of Jack McClellan, he's the self-confessed pedophile. He's actually in custody right now for violating a restraining order for getting too close to kids. Well, now lawmakers in California want to pass a law that's aimed at people like McClellan. It's call the Surrogate Stalker Act. Assembly Cameron Smith and his wife, Lena, are the people behind it.

Good morning to both of you.

LENA SMITH, CO-FOUNDER, MOTHERS AGAINST SEXUAL PREDATORS: Good morning.

CAMERON SMITH, CA. STATE ASSEMBLYMAN: Hi, Good morning.

CHETRY: Assemblyman Smith, let me start with you. Your legislation is called the Surrogate Stalker Act. What is a surrogate stalker?

C. SMITH: Well, we feel that Jack McClellan, and other pedophiles like him, are acting as surrogate stalkers for other pedophiles. By going into our communities and basically posting reviews of community events for other pedophiles on his website and others. They are stalking our children for other pedophiles to see where is the best place to find children. And they're exploiting a loophole in the law by being able to do this without any legal ramifications.

CHETRY: So this is when he goes to these public places, takes photos of little girls -- or children -- and then posts them on web sites, so other pedestrian files can look at them?

C. SMITH: Exactly. So we feel he is basically stalking our children for other pedophiles. So we want to close that loophole.

CHETRY: Alina, I understand that you actually encouraged your husband to do this. Tell us what happened.

L. SMITH: I did. We're parents. We have two small kids. We have two kids under the age of four. And in some of my discussions with other moms, particularly online, I had been getting all of these e- mails about what we're going to do about this guy.

He had been in our community and said he wanted to return to our community. He liked it. It was a great place for kids and to see kids. I got an e-mail that talked about some mothers in L.A., who were organizing. Who wanted to do legislation. And it was a Sunday morning, we're eating our breakfast. And I looked at my e-mail.

And then I kind of looked at him, and I said, hey, I know a legislator. So I think you need to step up and we need to do something about it. Since then, we got the bill going. And then I joined the group of moms to form Mothers Against Sexual Predators of California.

CHETRY: You know, I think you have a lot of people on your side here. We want to -- it's just the reaction of everybody. You want to do what you can to get people like that off the street.

But, Assemblyman, there have been concerns about the constitutionality of your proposal; about whether or not you can really nail somebody down when they haven't necessarily -- or it's difficult to prove their intent to do something wrong.

C. SMITH: Exactly. And that is why we are being very sensitive when we're crafting this legislation. We're working with local prosecutors, our legislative counsel, and other nonprofit groups, child protective groups, to make sure that this legislation is surgical in nature, and it has the desired effect without hitting any of the other constitutional issues that we deal with.

And make sure that those businesses that are operating professionally and appropriately are not impacted by this. So we are very sensitive to that and we want to draft the Surrogate Stalker Bill to be as specific as possible to accomplish what we want.

CHETRY: All right. So you are introducing this, and hopefully it will get tagged as urgent and be able to make its way through.

Assemblyman Cameron Smith, as well as Lena Smith, thanks for joining us today.

C. SMITH: Thank you.

L. SMITH: Thank you.

MARCIANO: News this morning about the vaccine that prevents cervical cancer. A new study says if you already have HPV the vaccine won't prevent you from getting cervical cancer, but how do you know if you actually have HPV? Dr. Sanjay Gupta joins us live, from Atlanta, with critical information about what -- actually not just women, Sanjay, but men also need to know about this most common sexually transmitted disease.

SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: Yes, it is one of the most common sexually transmitted diseases and has gotten a lot of attention. One of the critical points there, though, Rob, is a vaccine is designed to prevent somebody from getting the infection in the first place.

Some of the controversy around all this is people who already have a diagnosed HPV infection, the vaccine is really not going to do them any good. But for people who actually have never had an HPV infection, it can be 98 percent effective in terms of preventing this particular virus from ever taking hold.

Why is that important? Well, HPV is associated with cervical cancer. So you can better reduce your chance of getting cervical cancer if you get the vaccine in the first place. And that is where some of the controversy is coming in, Rob.

MARCIANO: How do you know if you actually have the virus?

GUPTA: Well, it can be difficult. A lot of people may never have symptoms whatsoever. There are certain people who should get tested. For example, a woman who is sexually active, who gets a PAP smear that looks abnormal. She can get tested for the virus. People who have had other procedures can also get tested for the virus. But there's no specific blood test per se, so it can be difficult.

It can also be, for men, for example, there can be things like genital warts. That might be a symptom that you get. But even in men, you may not actually know that you have the HPV infection.

MARCIANO: Is there any sort of vaccine for men?

GUPTA: Well, it's the same vaccine that is now approved for women/girls, at a young age, is also being tested in men. It makes sense because this is a sexually transmitted virus. You want to see if you can protect men as well. Those studies are currently under way. It is not approved yet for men, but everyone that we've been talking to while investigating this story says that is part of the goal. To see if you might be able to inoculate or vaccinate men as well to prevent the HPV from transmitting back and forth.

MARCIANO: Dr. Sanjay Gupta live from Atlanta.

Thanks, Sanjay.

GUPTA: Thank you.

Well, if you have questions for Sanjay e-mail us at cnn.com/americanmorning. Sanjay will answer your questions tomorrow right here on AMERICAN MORNING.

CHETRY: And CNN "Newsroom" just minutes away. Tony Harris is at the CNN Center with a look what is ahead.

Good morning, Tony.

TONY HARRIS, CNN ANCHOR, CNN NEWSROOM: Good morning, Kiran. I'm sitting next to the good doctor. On the "Newsroom" run down for you.

An Iraq attack: Prime suspect Al Qaeda so says the U.S. military. A coordinated wave of suicide bombers strike, more than 200 dead.

A former NBA referee heading to court right now. Sources telling CNN he will be plead guilty to betting on games.

And market watch: Investors can't shake the credit jitters. The volatile Dow in danger of falling below 13,000 today.

We have got you covered on any breaking news. You are in the "Newsroom" just minutes away, at the top of the hour. Right here on CNN.

Kyra, back to you.

CHETRY: All right, give Sanjay a hug for us.

(LAUGHTER)

HARRIS: OK!

GUPTA: He'll do it!

CHETRY: He will, too. He's the friendliest guy at CNN. Isn't he?

MARCIANO: Yeah. He owns that place. Good to see you, Tony.

CHETRY: Well, flooding topping your "Quick Hits" now. North Korea saying that hundreds of people are missing and dead after flood waters washed away thousands of buildings and farmland. The U.N. says another 300,000 families may be homeless because of that intense flooding.

Today is Independence Day in India; 60 years ago, the country got its independence from British rule. Thousands gathered for celebrations.

(BEGIN VIDEO CLIP)

CHETRY (voice over): Coming up on AMERICAN MORNING, toxic toys.

UNIDENTIFIED FEMALE: It's unbelievable they still do that today, with all that we know about how much it hurts your children.

CHETRY: More than 9 million toys from China recalled. Dangerous lead and choking hazards the culprit. So, who is protecting your children? And why does this continue to happen? Find out next on AMERICAN MORNING.

(COMMERCIAL BREAK)

MARCIANO: Welcome back to the most news in the morning. "Quick Hits" now: Three people killed, five hurt, in a chemical plant fire in Russia. It started in a blaze in the plant's furnace.

Recycling center goes up in flames in Georgia. The fire department says they collect plastics, metals, and glass. No reports of injuries there. And still no word on how the fire started.

And another fire, a brush fire, is under control this morning in L.A. Griffith Park. Hundreds of visitors were forced to leave the park's landmark observatory as a precaution. The cause of the fire under investigation.

More possible danger from a product made in China to tell you about this morning. "The New York Times" reports certain Chinese-made vinyl baby bibs, sold by Toys "R" Us, contain lead. Up to three times the amount allowed actually. Toys "R" Us says its own tests show that the bibs are within the guidelines and are safe. So far no recall.

This new report is further confirmation from a grandmother from Illinois, who first got investigators looking into lead in baby bibs. Her name is Marilyn Furer and in 2005 she saw news reports about lead in the plastic liners of lunch bags. She then noticed how it looked like the plastic on her grandson's bib. She sent the bib off to the lab and the test confirmed her gut instinct.

(BEGIN VIDEO CLIP)

MARILYN FURER, EXPOSED LEAD IN BIBS: I never imagined there would actually be lead in a baby bib, that is worn next to the body, that the baby sucks on, touches, on a daily basis. And so when I found the lead on the bib, I was just really dismayed.

This is another travesty that things that are this dangerous could be on the market shelves for our children to get damaged brain cells from.

(END VIDEO CLIP)

MARCIANO: After Marilyn blew the whistle, Wal-Mart recalled the bibs sold under another name, and apparently thousands of the bibs had already been sold. So far, no reports of injuries there.

Kiran, with more on this angle.

CHETRY: Right, because it really the question for parents everywhere. They're going through the piles of toys in the house this morning, after the second major recall from Mattel in a month. It's really a long road from the manufacturer in China, to the toy store, to your home. Each store owners saying they have a hard time sorting out which items are safe. We took a trip to the toy store to check it out.

(BEGIN VIDEOTAPE)

CHETRY (on camera): Made in Switzerland.

UNIDENTIFIED FEMALE: Yeah. Denmark, Germany.

CHETRY: That's one toy you don't have to worry about.

(Voice over): But there are plenty other concerns up and down every toy store aisle.

UNIDENTIFIED FEMALE: I have to worry what can they choke on, what could they get lead paint, what are you going to buy today that could be recalled tomorrow?

Batman is also on, the Disney cars, Polly Pockets.

UNIDENTIFIED FEMALE: Oh, no! Uh-oh!

CHETRY (on camera): The ripple affect of this these latest recall of millions of toys can be felt at toy stores across the country, like this one here, in Manhattan. The store owners and employees must go shelf to shelf checking out the thousands of toys making sure they're safe for their customers.

I have kids of my own. I have a three-year-old daughter and a 12- year-old son. My daughter plays with Dora. I don't want to be giving her this product too. So, I don't want to sell it to my customers, because I don't sell anything to my customers that I wouldn't give to my own child.

CHETRY: But toy store owner Donna Schofield says that's difficult because she hasn't even been told by Mattel which products are being recalled.

(on camera): OK, so when you look at the shelves, I mean, we see Polly Pocket here, Polly Pocket here. Even the Doggy Day Care that one -- but you still don't know if you have to clear the shelves of these, right?

UNIDENTIFIED FEMALE: No.

CHETRY: What is the wait?

DONNA SCHOFIELD, TOY STORE OWNER: We're waiting for them to fax us the sheets with the UPC codes, so we can check because some of these items are not stuff that came in this month, or last month, it could have been stuff that came in last year, and it's not on that recall stuff. So we're waiting to see what items they are listing.

You would think they would send us information before they announced to the world that these toys are no good.

CHETRY: She says it's hard to advise her customers. Bottom line, there are no guarantees. Today's toy may be tomorrow's recall.

SCHOFIELD: So it's really hard to say, yeah, this is a good item. Buy it.

(END VIDEOTAPE)

CHETRY: The U.S. Consumer Product Safety Commission is encouraging parents to check toys in their home and match them against the recall lists and you can find the links to those recall lists at cnn.com.

MARCIANO: Here is a quick look at what the CNN "Newsroom" is working on at the top of the hour.

(BEGIN VIDEO CLIP)

HARRIS: See these stories in the CNN "Newsroom".

Flossie weakening as it skirts Hawaii; in the Gulf, a tropical system aiming at Texas.

Five suicide attacks in Iraq, more than 200 people killed.

Red meat, white bread, sugary desserts, why colon cancer survivors need to avoid these foods.

The persistent heat wave causes a playground to catch wire fire.

"Newsroom" just minutes away at the top of the hour on CNN.

(COMMERCIAL BREAK)

MARCIANO: That's going to be it for us. Thank you for joining us.

CHETRY: See you back here tomorrow.

MARCIANO: Will be.

CHETRY: Hopefully, we'll see you back here tomorrow, as well. Meanwhile, the CNN NEWSROOM with Tony Harris and Heidi Collins begins right now.

HARRIS: Good morning, everyone. You are in the CNN NEWSROOM. I'm Tony Harris.

COLLINS: I'm Heidi Collins. Watch events come into the NEWSROOM, live on Wednesday, August 15.

Here's what's on the run down. Will this blob become Erin? A gathering storm targeting Texas; one of three systems on our radar.

HARRIS: A form NBA ref in court this hour. Sources telling CNN he will plead guilty to betting on games.

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