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Deadly Superbug; Chester Stiles In Court; Mukasey Confirmation; Gerri's Top Tips

Aired October 17, 2007 - 10:00   ET

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

UNIDENTIFIED FEMALE: It's just better when he's here. You know, I just wish that everybody could come home already. But the good thing is, you know, it makes us stronger. I'm glad it teaches my daughter about (INAUDIBLE) sacrifice.
JESSIE DEGOLLADO, CNN CORRESPONDENT, (voice over): Eight months without your father is a long time when you're five.

UNIDENTIFIED FEMALE: Honest to God, she always asks for him to protect her daddy.

DEGOLLADO: After the reunion, the family will eventually move back to California where they say they'll be starting their lives over again as a family.

Jessie Degollado, KSAT (ph) 12 News.

(END VIDEOTAPE)

HEIDI COLLINS, CNN ANCHOR: Good morning, everybody. I'm Heidi Collins.

TONY HARRIS, CNN ANCHOR: And I'm Tony Harris. Stay informed all day in the CNN NEWSROOM. Here's what's on the rundown.

A good top to bottom scrubbing. A Virginia school system cancels classes for the cleaning. A deadly superbug is to blame.

COLLINS: His first court appearance this hour. Will we learn more about child rape suspect Chester Stiles? We'll have live coverage.

HARRIS: Will there be a declaration of independence. President Bush and his choice for attorney general. Likely to hear that question today, Wednesday, October 17th. You are in the NEWSROOM.

COLLINS: A Virginia school system shut down today. The reason? A dangerous drug-resistant infection. It led to one student's death. The mother of 17-year-old Ashton Bonds says he died Monday after he was diagnosed with MRSA. That's an antibiotic-resistant staph infection. The Bedford County superintendent says all 21 schools in the district are closed today for a thorough cleaning. It's an attempt to keep the infection from spreading. The decision followed a protest by concerned students.

(BEGIN VIDEO CLIP) UNIDENTIFIED FEMALE: We're just trying to find answers. We want to know what's going to be done about cleaning up the school.

UNIDENTIFIED MALE: I don't feel safe at all going back in there.

Not only to remember Ashton, but to get it through to the administration and all that we don't want another one of our friends or another one of our classmates gone because of them not doing anything and we want something done about this.

(END VIDEO CLIP)

COLLINS: Health officials say staph infections have spread through schools across the nation over the past few weeks. The Virginia students organized their protest using text messages and social networking sites.

HARRIS: And we want to get more information now on the Virginia school closures and exactly what's being done. On the phone with us right now is Ryan Edwards. He is the public relations coordinator for Bedford County Schools.

Ryan, good to talk to you.

RYAN EDWARDS, BEDFORD COUNTY, VIRGINIA, SCHOOLS: Good to talk to you as well, Tony. Good morning.

HARRIS: And good morning.

Ryan, I'm a little curious. Is this a move you were thinking about, the district was thinking about, or was your hand forced a little bit by the students?

EDWARDS: Well, we certainly took both the students and the parents' concerns into account. I mean, that definitely weighed heavily because they are who we are here for. So, yes, that played into it, Tony. But more so, we just wanted to do everything we could to take precautions, to try to reduce the spread of this bacteria.

HARRIS: So how difficult is something like this? We're talking about 21 schools. How difficult is this to coordinate? First, you'ave got to close the schools. You've got to give that advanced notice to the parents that the schools will be closed. And then you've got to go about the job of actually scrubbing down these schools. How difficult to coordinate all that?

EDWARDS: Tony, yesterday was a very hectic day, but we all came together fairly well. We have 21 great principals and our school nurse coordinator, Patricia Knox, has done a great job getting the word out about how we need to go about with this cleaning and how, when the students return, they need to protect themselves. And washing hands is the number one . . .

HARRIS: That is it. Ryan, you have hit it. Say it again, sir. EDWARDS: Yes, washing your hands. And even more to that, Tony, we're providing all of our students with 60 percent alcohol solutions, which is the best way to disinfect and cleanse your hands.

HARRIS: So I've got to ask you, with all of this reporting going on on this story today, I'm kind of curious as to what you're using actually to scrub down the desks and walls and whatever else you're scrubbing down. What are you using because I want to go home and use the same stuff on my house.

EDWARDS: Well, you may just have that inside your house. What we're using is not much different than you would find on a store shelf. I mean we are using a lot of household cleaners, and they are effective at exterminating this bacteria.

HARRIS: So schools open tomorrow?

EDWARDS: Yes, we're hoping so. Now we're not going to -- we're not going to guarantee that.

HARRIS: Yes.

EDWARDS: But as long as we feel that we have completed a thorough cleansing of our schools by the end of the day today, then -- unless parents and students hear different, we are going to bring those buses right in and start classes as normal tomorrow.

HARRIS: Ryan Edwards with us on the phone.

Ryan, good to talk to you. Thanks for your time.

So how common is the deadly superbug? We will ask the director of the Centers for Disease Control and Prevention, Dr. Julie Gerberding. A live interview coming up right here in the NEWSROOM.

COLLINS: In the meantime, some information coming in to the CNN NEWSROOM. And I want to show you some of these pictures that we're getting coming out of Pompano Beach, Florida. Take a look at this. A pretty serious traffic accident here.

We have information that says, and you can probably tell by looking yourself there at the type of vehicles, two trooper, state troopers, were involved in a serious accident here. This is the northbound lanes of I-95, once again in Pompano Beach, Florida. I-95 is actually now closed, if you're familiar with that area.

These pictures coming into us from our affiliate there, WPLG. So we'll continue to watch that. Certainly hope that everybody is OK there. But the pictures look certainly frightening. We'll watch that and give you any new information just as soon as it becomes available.

Also, among our top stories, Chester Stiles is in court this hour. He is accused of raping a three-year-old girl and videotaping it. Police on the search for more possible victims or accomplices in the case. The discovery of the tape eventually led to a police manhunt. It ended two days ago when Stiles surrendered during a traffic stop. Stiles was identified after police released his image. One tipster who identified Stiles by name was his former girlfriend.

(BEGIN VIDEO CLIP)

ELAINE THOMAS, STILES FORMER GIRLFRIEND: When the enhanced photos came out on the news, when I realized that it definitely was him, I knew that there was really nothing else that I could do. How could I not tell them who that man was? That little girl suffered unimaginable things and I knew for a fact it was him.

(END VIDEO CLIP)

COLLINS: Police say the little girl, who's now seven years old, apparently has no memory of the attack. Her mother says she'd like to be Stiles' executioner. Our Ted Rowlands is in the courtroom for Stiles' appearance. Ted's going to be joining us a little bit later right here in the NEWSROOM.

HARRIS: Chester Stiles was featured on the television program "America's Most Wanted." Joining us now, "America's Most Wanted" correspondent, Jon Leiberman.

Jon, great to see you again.

JON LEIBERMAN, "AMERICA'S MOST WANTED": Tony, I'm glad it's under these circumstances, certainly.

HARRIS: Yes. Absolutely.

What can you tell us about the circumstances, speaking of which, of Stiles' arrest. Was that a couple of days ago?

LEIBERMAN: Yes, you know, Tony, I got to tell you, this guy had fashioned himself to friends and family as a survivalist, as a real macho type. But at the end of the day, he got pulled over with no tags on his car. The car that police thought he would be driving when they found him.

He was outside of Las Vegas, Nevada. They pulled him over. They asked him for his license. He gave them an expired California driver's license with some other guy's photo on it. The heads-up cop said, well what's your Social Security Number. The guy didn't know.

Two questions later the guy says, you know what, I'm Chester Stiles. I'm the guy on that videotape you're looking for. And then what does this guy do, Tony? He vomits right in front of the police officers. So that shows you, you know, what we're dealing with here.

HARRIS: Yes. I suspect there's been some kind of an interview with this guy at this point. Are we aware of any other victims?

LEIBERMAN: No, but at this point, Tony, that's the big question for police is, are there other victims out there? Now that there's a good mug shot of this guy, and we said on your program a couple weeks ago that he had changed his appearance. He grew out his hair a little bit. Now that there's a good picture of this guy, now police will be getting calls and even more leads to see if there are other victims out there.

HARRIS: And how about accomplices? Anything on that?

LEIBERMAN: Yes, again, police trying to piece together the time line. He's been on the run two and a half weeks. They want to know who he's had contact with. You know, though, this isn't your normal sort of run of the mill fugitive. This guy didn't use credit cards. He dealt in cash. He didn't use cell phones. So they're going to have a tough time sort of building the time line of where he's been. But keep in mind, Tony, this guy's been a fugitive actually for the past three years. So police have three years now to go back and say, who helped this guy? And, you know, like most fugitives, he was caught in his comfort zone right around where he was from in Vegas and where his friends and family were.

HARRIS: Hey, Jon, 21 felony charges against him. I'm wondering if there are any more they can hit him with. I suppose that's a lengthy list. What kind of a sentence is he looking at if he is convicted of all of those?

LEIBERMAN: Oh, this guy is not going to see the light of day. I mean he's looking at 30 years just on the federal child porn stuff. Then he has those 21 counts that you just alluded to. If, if, and we pray and hope they do the sentence consecutively, if he is convicted, I mean this guy's not going to see the light of day for a long time, nor should he. I mean right now he's wanted in two separate child molestation cases. We don't know if there are any more out there.

HARRIS: OK. Jon Leiberman.

Jon, great to see you. Thanks for your time.

LEIBERMAN: Good to see you, Tony.

HARRIS: Thanks for your coverage on this story. And as we mentioned just a moment ago, Chester Stiles due in court any moment. And when we get those pictures, we'll bring them to you here in the NEWSROOM.

Jon, thanks.

LEIBERMAN: Sure.

COLLINS: This hour on Capitol Hill, a soft-spoken former federal judge set for a grilling. Senate confirmation hearings for attorney general nominee Michael Mukasey. CNN justice correspondent Kelli Arena is live in Washington for us this morning.

Kelli, what kind of case is Mukasey expected to make for himself?

KELLI ARENA, CNN CORRESPONDENT: Well, in his opening statement, which we have a copy of, Mukasey will promise to protect civil liberties while he keeps the nation safe. And he'll also promise to let the rule of law dictate, not individual interests or political motives. And, you know, it doesn't look like he has a lot to sweat about today because he's already getting glowing reviews from Senate Democrats.

(BEGIN VIDEO CLIP)

SEN. PATRICK LEAHY, (D) JUDICIARY CHAIRMAN: Right now, from what I've seen, I would expect him to be confirmed because we know that we need somebody to clean up the Department of Justice. We know that we need somebody to restore the independence of the Department of Justice. Something that it's had both under both Republican and Democratic presidents in the past. Something it's lost with this administration. I want him to bring it back.

(END VIDEO CLIP)

ARENA: Still, you know, lawmakers feel like they were really burned by the former attorney general, Alberto Gonzales. And so Mukasey is expected to face some tough questions, including how he's going to improve morale at the Justice Department, where he stands on the issue of torture, for example, whether he'll resist political pressure, especially from the White House. We spoke to some lawyers who have argued cases before Mukasey, and they say that his record will speak for itself.

(BEGIN VIDEO CLIP)

ANDREW PATEL, JOSE PADILLA'S ATTORNEY: Judge Mukasey is definitely a law and order person. But he's also very fair. He has tremendous integrity and tremendous intelligence. He has always listened to both sides and truly listens with an open mind and intellectual honesty.

(END VIDEO CLIP)

ARENA: Now while his confirmation may be easy, his job at Justice is going to be anything but. You're going to hear from a lot of lawmakers today talking about how dysfunctional they believe the Department of Justice has become and how there is a lot of cleaning up to do.

Heidi.

COLLINS: Yes, I think you bring up a really good point about morale. We talked about that for so long when Attorney General Alberto Gonzales was in charge. But, Kelli, I do wonder, we heard from Democrats, we heard from some lawyers. What is likely the feeling about Mukasey from Republicans?

ARENA: Well, you know, he is getting glowing reviews all the way around. You know, this is, obviously, the president's choice. They will back him. It was Democrats that he had to win over. And he had a series of private meetings on Capitol Hill. You know, cameras got to those lawmakers after those meetings. And we have not heard anyone say that they will not confirm him. That he does not have their support.

Lots of questions, obviously. This is their opportunity to say, hey, look, you know, we want to make sure that, you know, the rule of law is followed here. You know, that the same shenanigans won't go on that we believe went on under Gonzales. You know, they'll get those assurances today and I think we move on.

COLLINS: All right. Very good. When is it ever this easy, if it turns out to be this easy?

All right. CNN's justice correspondent Kelli Arena.

Thank you, Kelli.

COLLINS: And a program note. About 30 minutes from now, President Bush will be in the White House briefing room. He's going to be taking some questions from reporters. We'll have that news conference live for you on CNN. 10:45 Eastern.

ROB MARCIANO, CNN METEOROLOGIST: And I'm Rob Marciano in the CNN severe weather center and we're getting that today. Not only today, but tonight, tomorrow, a big fall storm wrapping up and tornadoes are likely. The whole forecast is coming up in the CNN NEWSROOM.

HARRIS: Also ahead, water wars. A deadline today in Georgia's battle against an extreme drought.

COLLINS: Busted on base. Illegal immigrants found working construction at a Texas Army base. The concerns about who may be following them in. You're watching CNN. We're back in a moment.

(COMMERCIAL BREAK)

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

Deadly sandstorm in southern California. Collision after collision. When drivers are blinded by the dust.

COLLINS: And I'm Heidi Collins.

Rescue at sea after drifting three days in a dingy. What they did when their boat ran out of fuel. Stay tuned right here in the CNN NEWSROOM.

(COMMERCIAL BREAK)

HARRIS: Well, we're talking about a drought relief deadline. Georgia's governor demanding a response today on decreasing the amount of water released from a major reservoir. Georgia is in the grips, I want to tell you, of an extreme drought. The Army Corps of Engineers releases water from Lake Lanier to protected threatened mussels and sturgeon down stream in Florida. And the state's congressional delegation wants the Corps to turn off the tap.

(BEGIN VIDEO CLIP)

SEN. JOHNNY ISAKSON, (R) GEORGIA: It's a simple request. We are at a place in our time in our country today and in a region, my home region, the state I represent, where the health, safety, and welfare of my people are threatened.

(END VIDEO CLIP)

HARRIS: So water levels in Lake Lanier are down dramatically. Other states blame metro Atlanta's booming growth for the current water crisis.

COLLINS: OK. Water crisis. We've been talking about it for several days now. Last time that we looked at the graphic that you made, Rob, 16 inches, I believe, deficit here in the Atlanta area? Twenty-three some odd inches in Alabama. Huntsville, Alabama.

(WEATHER REPORT)

COLLINS: Deadly sandstorm. At least two people killed in chain reaction wrecks in southern California. Two others still in critical condition this morning. You can see cars scattered all over that roadway. The blinding sandstorm and high winds caused at least three separate pileups. As many as 16 people were injured.

HARRIS: You know, they make baby toys soft. Do they also make them dangerous? Questions over a commonly found substance.

GERRI WILLIS, CNN CORRESPONDENT: I'm Gerri Willis.

Going green without breaking your wallet. That's "Top Tips" coming up next in the CNN NEWSROOM.

(COMMERCIAL BREAK)

HARRIS: Boy, oh, boy, what a market. What's going on with this economy? The strength of the economy, huh? Take a look at the numbers. The big board, New York Stock Exchange. We get data this morning that housing starts down, permits to build new homes in the future, down, and look at the Dow. Inside the first hour of the trading day, the Dow up 49 points. The Nasdaq up 31. We are following the markets with Susan Lisovicz all morning long right here in the CNN NEWSROOM.

COLLINS: You can go green with your car, your home, and even your groceries. Now how about your mortgage? Here to explain, CNN personal finance editor Gerri Willis.

Gerri, good morning to you.

WILLIS: Hey, good morning, Heidi.

COLLINS: What are we talking about here with these green mortgages?

WILLIS: Yes, green mortgage. This sounds crazy, doesn't if?

COLLINS: Yes, a little.

WILLIS: It's actually been around a long time, but they're getting more popular now because, well, energy efficient mortgages allow you to roll in the cost of green improvements into a new loan. That's right. You can qualify for a bigger mortgage, as much as 15 percent more than the home's value, as long as you spend that additional money on improving your home's energy efficiency. So that means you've got to invest in upgrading insulation or installing new windows. Now lowering your monthly utility bills is an even better idea than usual this year because home energy prices are going up a lot. More than 30 percent this winter.

Heidi.

COLLINS: Oh, gosh, that is awful, Gerri.

So what do you have to do in order to get one of these mortgages?

WILLIS: Job number one, you need a home energy rater to inspect your home. They'll issue what's called a HERS reports. It stands for home energy rating system. It measures whether the home meets certain energy efficient standards. It suggests improvements to make in your home. And it estimates the energy savings with these kinds of improvements. Plus, it gives you an estimated price tag for the upgrades and it costs between $150 and $400. But I got to tell you, it can really show you how to save money. If you want one of these energy raters, go to natresnet.org.

Heidi.

COLLINS: Natresnet.org. Got it.

So is this a good idea for pretty much any homebuyer?

WILLIS: Well, you've got to do the math. OK. As a rule of thumb, you don't want to spend more than a third of your income on housing. Make sure that the savings you get from these improvements offset the increased cost of the loan. And this is critical. Ask your energy rater how long it will take for the improvements to pay for themselves. For example, blowing insulation into a home that has none will have immediate benefits, but installing solar panels, hey, that takes far longer to pay off because they're really expensive. Make sure the mortgage payment fits easily into your budget. The last thing you want to do is take out a larger mortgage and then not be able to afford it.

COLLINS: Yes, that's for sure. And, you know what, everybody loves a tax credit. Any deals, any incentives for energy improvements in your house?

WILLIS: Yes, there are but you've got to move fast. The home energy tax credit. The government has offered one for last year and this year. It's up to $500. And it's a credit, it's not a deduction, for installing energy efficient appliances, windows, insulation, heating and cooling equipment, and several other improvements. OK, it's not a lot of money, but it's going away at the end of the year. So if you want to take advantage of it, you've got to work fast and get this stuff done before the 31st. And this is the year to do it. I mean, face it, Heidi, I mean, it's going to be really cool this winter. Prices are going up a lot. It's time to make those improvements.

COLLINS: Yes, got to do it quick, too, before Christmas.

WILLIS: That's right.

COLLINS: Because once Christmas comes, forget it.

All right. Gerri Willis, our personal finance editor.

Thank you, Gerri.

WILLIS: My pleasure.

HARRIS: And still ahead in the CNN NEWSROOM, an accused child rapist. He's in court minutes from now and so are we.

COLLINS: Also, a deadly superbug spreads beyond hospitals. How common is it? We're going to ask the director of the Centers for Disease Control and Prevention. We'll have a live interview coming up in just a moment.

HARRIS: And President Bush will be in the White House briefing room shortly for some Q&A with reporters. The news conference minutes from now, live on CNN.

(COMMERCIAL BREAK)

(COMMERCIAL BREAK)

COLLINS: Good morning, everybody. You are in the CNN NEWSROOM. I'm Heidi Collins.

HARRIS: Bottom of the hour. Welcome back, everyone, I'm Tony Harris.

Among our top stories, Chester Stiles in court any minute now. He's accused of raping a three-year-old girl and videotaping it. Police on the search for more possible victims or accomplices. The discovery of the tape eventually led to a police manhunt. It ended two days ago when Stiles surrendered during a traffic stop. Stiles was identified after police released his image -- live pictures now of the courtroom. One tipster who identified Stiles by name was his former girlfriend.

(BEGIN VIDEO CLIP)

ELAINE THOMAS, STILES' FORMER GIRLFRIEND: When the enhanced photos came out on the news, I -- when I realized that it definitely was him, I knew that there was really nothing else that I could do. How could I not tell them who that man was? That little girl suffered unimaginable things, and I knew for a fact it was him.

(END VIDEO CLIP)

HARRIS: Police say the little girl, who is now seven, apparently has no memory of the attack. Her mother says she'd like to be Stiles' executioner.

Our Ted Rowlands is in that courtroom right now for Stiles' appearance. We will be joined by Ted later, and as soon as we see Chester Stiles, we will bring you those live pictures right here in the NEWSROOM.

COLLINS: Also in the headlines this hour, it's called MRSA. The drug-resistant staph infection has shut down a Virginia school system today. It's blamed for one student's death. And it may be more common than scientists previously thought.

Dr. Julie Gerberding is the director of the Centers for Disease Control and Prevention. She is with us now from CDC headquarters right here in Atlanta.

Dr. Gerberding, thanks for being with us. This is certainly a talker this morning. People pretty concerned, I think because of some of the statistics that I'm sure you're very familiar with. MRSA infections have tripled in the last five years?

DR. JULIE GERBERDING, CDC DIRECTOR: You know, this is a very serious problem, and I understand why people are so concerned about it and some are probably even frightened, given the news today.

But it's important to appreciate that many of these infections are the same infections moms have been dealing with for decades. They're very preventable, they're not going to cause the kind of serious complications that are in the news right now, and there are a lot of things that we can do to prevent them.

COLLINS: OK, what do you mean that moms normally deal with these and then, how did this one, for this child, 17-year-old, in Virginia get so out of control?

GERBERDING: You know, it's always very sad when an infection like this causes such a serious tragedy, but in most cases, the kinds of infections we're talking about cause the typical sort of minor skin infections that usually don't even need a doctor's attention. What they do need is to be cleaned with soap and water and kept covered, and people who touch them need to keep their hands clean. So for most of us, that's the kind of skin infection that staph aureus causes.

But there are some serious strains of staph out there. Some of them are very drug-resistant, especially in people who have other medical conditions. They can be very, very serious and sometimes fatal. Those are the infections that account for most of the numbers that we reported today.

COLLINS: But the scariest part of all, Dr. Gerberding, not very many of us are physicians. We look at the pictures of these different sort of red marks or rashes, if you will. How do you know? How do you know which one you have to immediately get to the doctor for and which one you may just treat with an ointment of some kind that you may have at your home?

GERBERDING: Well, again, most of the infections are the same things that people have been seeing forever. If you see a skin infection that looks like the redness is getting bigger or if it's associated with a lot of swelling around the wound or if the individual has a fever, those are reasons to definitely seek doctor's attention. But most of the time, these are things that can be treated with the same kind of common sense approaches that we've been using for years.

COLLINS: OK, although it's very, very tragic for this family ...

GERBERDING: Absolutely, absolutely.

COLLINS: ...in Virginia. I'm glad that you're helping us keep it in perspective. We don't want to be hysterical by any means.

That being said, the other part of this story, is it not, that we are now seeing -- we're talking with our Dr. Sanjay Gupta about this -- these types of infections going outside of the hospital and into the community, more in the locker rooms, more with sporting equipment -- true?

GERBERDING: Well, one of the things that's happened is that the infections that probably initially developed in the hospital do move out into the community because the patients move out into the community and sometimes, the factors that are associated with the drug-resistance leak over into the more garden-variety bacteria.

But even in hospitals, these infections can be prevented. And one of the messages that CDC is really leaning on right now is that hospitals need to know their infection rates. They need to take steps to prevent these infections in hospital patients so that they don't cause problems in the community.

COLLINS: And I think we've said it as many times as possible already today, but it bears repeating. Wash your hands, wash your hands, and then wash your hands some more.

GERBERDING: Absolutely, and if you're a hospital patient, ask your doctor if he or she washed their hands and make sure you ask them every day. Do I need to have this catheter? And ...

COLLINS: They don't really like that though, when you ask. And I think some people are certainly intimidated ...

GERBERDING: Well, this is ...

COLLINS: ...to ask those questions of their healthcare providers.

GERBERDING: This is an environment where patients have a right to ask and they have a right to know, and we strongly support them taking responsibility and we are admiring those who do, but we're also working with healthcare facilities across the United States to really do a better job of measuring their own problem and doing something about it.

COLLINS: All right, very good. Dr. Julie Gerberding from the CDC this morning. Dr. Gerberding, thank you.

GERBERDING: Thank you.

HARRIS: And new just moments ago out of Atlanta, a judge suspending the trial of accused courthouse shooter Brian Nichols. Nichols is accused of killing a judge and three other people in March of 2005. This would have been the third day of jury selection in the case. The problem, finding more money to pay Nichols' lawyers. The State Public Defender's Council says it's already spent almost $2 million on Nichols' defense.

Tension in the Red Zone. Turkey's parliament today considering whether to go after Kurdish rebls in northern Iraq. A resolution on the table, but if approved, Turkey says it's troops would not immediately enter Iraq. The U.S. also worried about Turkey cutting off U.S. access to a key air base and Turkish air space. U.S. relations with Turkey have suffered since a House panel approved calling the World War I deaths of Armenians in Turkey genocide.

At stake for the U.S. war effort in Iraq, about a third of the U.S. fuel supply and 70 percent of its air freight go through Turkey. So will 95 percent of new mine-resisant armored vehicles set for delivery in coming months. And a great deal of Iraqi trade goes through the Turkish border.

COLLINS: Security concerns on U.S. military posts after illegal immigrants are busted.

CNN's Ed Lavandera reports.

(BEGIN VIDEOTAPE)

ED LAVANDERA, CNN CORRESPONDENT (voice-over): Construction workers have invaded the million acre Ft. Bliss army post.

COL. TIM WHITE, U.S. ARMY: It's unprecedented. Well, right now, we've got $3.2 billion worth of construction that's going to occur here.

LAVANDERA: At any given time, there could be several thousand workers inside this secure military instillation. But even an army post isn't immune to the infiltration of illegal workers. Last month, at least nine illegal immigrants were arrested while doing other construction work on military housing.

(on camera): According to the contracting firm, Balfour Beatty, the workers did show the proper paperwork, except the documents turned out to be fake. The company says it takes immigration documentation seriously and has reminded its subcontractors to be more vigilant.

(voice-over): The contracting firm says some 3,000 workers have been cleared to work inside Ft. Bliss in the last two years. The number highlights the challenge in checking out so many people.

UNIDENTIFIED MALE: And unless we give employers some kind of tools to sort out who these people actually are, this problem is going to get worse, not better.

LAVANDERA: And the fear is a terrorist could follow in the footsteps of a construction worker.

UNIDENTIFIED MALE: That is a danger because we don't know who is following this or that illegal person across.

LAVANDERA: And like in this case, get too close to army soldiers.

Ed Lavandera, CNN, Ft. Bliss, Texas.

(END VIDEOTAPE)

COLLINS: The president, front and center today, attending a special ceremony for the Dalai Lama. But first, a news conference. It is jsut minutes away now.

We want to get straight to CNN's Elaine Quijano live at the White House for us this morning. Elaine, good morning to you. The president going to be talking about a variety of issues today.

ELAINE QUIJANO, WHITE HOUSE CORRESPONDENT: That's right. And it's been about a month since the president held his last news conference. So, why hold one today? Well, a senior Bush aide tells me really, there are a lot of issues percolating, simply, on Capitol Hill right now, and this is a good chance for the president to get out and make his arguments on that.

Now, what are some of the issues he's expected to discuss in his opening remarks? Domestic issues, SCHIP for instance. There has been that heated battle over the children's health insurance program. Expect the president to talk about that. He just vetoed legislation dealing with that issue because he saw that particular bill as a step toward socialized medicine. Democrats, though, are trying to override that veto. So, you'll hear the president talk about that today.

Also, look for him to talk about the larger budget battle, really, that's taking place between him and members of Congress. The president also taking on Congress on the issue of domestic surveillance.

Now, on the international front, officials here at the White House say that the president will also reiterate his opposition to a House resolution that speaker Nancy Pelosi has said she plans to bring to a vote at some point that deals with the issue of Turkey, and specifically it would label as genocide the World War I killings of Armenians by Ottoman Turks. This is a situation that's really enraged the Turkish government. They are, of course, a key ally in the war on terror. So all of those topics on the agenda for the president's opening statement.

Something we don't expect him to discuss in his opening remarks is something he'll likely be asked about, and that is the situation involving the Dalai Lama. Now yesterday the president held a behind- closed-doors private meeting in the residence of the White House. Something he has done before, but what was different now, China is very angry because the Dalai Lama will be receiving that Congressional Gold Medal that you mentioned later this afternoon. And the Chinese see that really as interference in their own government's affairs. They've made very clear they're not happy with that.

Nevertheless, President Bush is expected to go on with his participation in that particular ceremony, even going so far as to make remarks. So you can bet, Heidi, that Beijing will be listening very closely to that as well as to this news conference.

So those three topics that you mentioned -- even though we're not going to hear about the Dalai Lama, as we continue to watch the microphone there.

COLLINS: Let me just ask you, Elaine, a little bit more about SCHIP. Last time we spoke I believe the bill was about $35 billion is how much it would cost, or is being asked for. The president really doesn't want to spend more than $5 billion, but we've been hearing reports that about $14 billion would do it. Has there been any movement that you know or that we may expect to hear more about today?

QUIJANO: Well, that's certainly that something that we'll be keeping on ear out for. The president is essentially going to say, look, I am willing to work with lawmakers on this issue.

And we should note that the legislation that the president vetoed was not just legislation reported by Democrats. Some Republicans, prominent Republicans voices, supported that particular piece of legislation as well.

Nevertheless, the president vetoed it. Democrats, as I said, are looking to see if they can get the votes to override that veto. The president today is going to be laying out once more his sentiment that really this particular piece of legislation amounts to socialized medicine, but he is willing to come to the table and work with lawmakers to get something passed. So we'll have to wait and see what exactly the president says on that front -- Heidi.

All right, Elaine Quijano, in the room, waiting for the president to come to the microphone there. Elaine, thanks so much.

HARRIS: We get an opportunity to talk to Candy Crowley now. And, Candy, good to see you.

And I'm wondering, as the president gets ready to hold this news conference and talk about all the issues that Elaine just sort of laid out for us, I wonder what kind of real impact this kind of a speech might have for the candidates out on the stump. Are they looking, particularly Republican contenders, are they looking for something from the president these days?

CANDY CROWLEY, CNN SR. POL. CORRESPONDENT: A little distance actually is the answer to your question. Look, he has decreasing sway, as any president would have at this point in his administration, during a second term. Having said that, this particular president has low poll ratings, and that makes him doubly a problem on the campaign trail and for Republicans on Capitol Hill. We focus so much on the presidential race, where they are trying to figure out where there is some distance they can put between themselves and George Bush, and still appeal to their conservative base.

But remember, on Capitol Hill every member of the house is running for re-election, a third of the Senate. The Republicans are in the hole on this one. So there are a number of political careers on the line, and George Bush, quite frankly, at this point, hurts more than he helps.

HARRIS: Boy, so I'm wondering, you're on the stump and you're listening to these speeches time and time again. How often does the president even come up on the stump? I'm sure the Democrats are trying to make hay over the comments. So maybe that's the way to take this. What are the Democrats saying about the president these days?

CROWLEY: I was going to say I hear his name a lot more on the Democratic side than you hear on the Republican side, particularly with Hillary Clinton, who at this point does not want to go after her opponents. She's a front-runner. She's taking a typical front-runner stance and leaving her opponents alone. They go after her. She goes after George Bush, and, you know, by osmosis Republicans in general. So where you hear the verbal assaults on George Bush the most is in the Clinton campaign.

HARRIS: OK, Candy Crowley: Candy, great to see you. The president just moments away from the news conference. As you heard Elaine say just a moment ago, a lot of topics for questions and answers today, and we haven't even mentioned the fact that the attorney general designate, Michael Mukasey, before the Senate Judiciary Committee for confirmation hearings this morning. So we'll certainly, I would suspect, hear some questions on that, and, again, as Heidi mentioned, with Elaine, the attempt by the House to override the president's SCHIP veto, probably questions on that topic as well.

To the president now.

GEORGE W. BUSH, PRES. OF THE UNITED STATES: Good morning.

We're now more than halfway through October, and the new leaders in Congress have had more than nine months to get things done for the American people.

Unfortunately, they haven't managed to pass many important bills.

Now the clock is winding down. In some key areas, Congress is just getting started.

Congress has work to do on health care. Tomorrow, Congress will hold a vote attempting to override my veto of the SCHIP bill. It's unlikely that that override vote will succeed, which Congress knew when they sent me the bill.

Now it's time to put politics aside and seek common ground to reauthorize this important program. I have asked Health and Human Services Secretary Mike Leavitt, National Economic Council Director Al Hubbard, and OMB Director Jim Nussle to lead my administration's discussions with the Congress.

I made clear that, if putting poor children first requires more than the 20 percent increase in funding I proposed, we'll work with Congress to find the money we need. I'm confident we can work out our differences and reauthorize SCHIP.

Congress has work to do to keep our people safe. One of the things Congress did manage to get done this year is pass legislation that began modernizing the Foreign Intelligence Surveillance Act. FISA is a law that our intelligence professionals use to monitor the communications of terrorists who want to do harm to our people.

The problem is that Congress arranged for the measure they passed to expire this coming February. In addition, the House is now considering another FISA bill that would weaken the reforms they approved just two months ago.

When it comes to improving FISA, Congress needs to move forward, not backward, so we can ensure intelligence professionals have the tools they need to protect us.

Congress has work to do on the budget.

One of Congress' basic duties is to fund the day-to-day operations of the federal government. Yet Congress has not sent me a single appropriations bill.

Time is running short, so I urged the speaker and the leader of the Senate to name conferees for six of the annual appropriations bills that have already passed the House and the Senate.

The two houses need to work out their differences on these bills and get them to my desk as soon as possible. They also need to pass the remaining spending bills, one at a time, and in a fiscally responsible way.

Congress has work to do on education. As we saw from the recent nation's report card, the No Child Left Behind Act is getting results for America's children.

Test scores are rising. The achievement gap is beginning to close. And Congress should send me a bipartisan bill that reauthorizes and strengthens this effective piece of legislation.

Congress has work to do on housing. Back in August, I proposed a series of reforms to help homeowners struggling with their mortgage payments. We're into six weeks later; Congress has yet to finish work on any of these measures.

These are sensible reforms that would help American families stay in their homes and Congress needs to act quickly on these proposals.

Congress has work to do on trade. Earlier this year, my administration reached out to the Congress and we forged a bipartisan agreement to advance trade legislation. Now Congress needs to begin moving on trade agreements with Peru, Colombia, Panama and South Korea. These agreements expand access to overseas markets, they strengthen Democratic allies and they level the playing field for American workers, farmers and small businesses.

Congress has work to do for our military veterans. Yesterday, I sent Congress legislation to implement the Dole-Shalala commission's recommendations that would modernize and improve our system of care for wounded warriors. Congress should consider this legislation promptly so that those injured while defending our freedom can get the quality care they deserve.

Congress also needs to complete the veterans' affairs appropriations bill that funds veterans' benefits and other ongoing programs.

We have our differences on appropriations bills. The veterans bill is where we agree.

So I ask Congress to send me a clean bill that will fund our veterans, a bill without unnecessary spending in it.

And they need to get this work done. And I hope they can get it done by Veterans Day. It seems like a reasonable request on behalf of our nation's veterans.

Congress has work to do for law enforcement and the judiciary. I want to thank the Senate Judiciary Committee for beginning hearings today on Judge Mukasey's nomination to serve as the attorney general. I urge the committee to vote on that nomination this week and send it to the full Senate for a vote next week.

The Senate also needs to act on the many judicial nominations that are pending and give those nominees an up-or-down vote. Confirming federal judges is one of the most important responsibilities of the Senate, and the Senate owes it to the American people to meet that responsibility in a timely way.

With all these pressing responsibilities, one thing Congress should not be doing is sorting out the historical record of the Ottoman Empire. The resolution on the mass killings of Armenians beginning in 1915 is counterproductive. Both Republicans and Democrats, including every living former secretary of state, have spoken out against this resolution.

Congress has more important work to do than antagonizing a democratic ally in the Muslim world, especially one that's providing vital support for our military every day.

There's little time left in the year, and Congress has little to show for all the time that has gone by.

Now is the time for them to act. And I look forward to working with members of both parties on important goals that I've outlined this morning.

And now I look forward to taking some of your questions, believe it or not.

(LAUGHTER)

QUESTION: Mr. President, Turkey's parliament is invading -- sending military forces into Iraq to pursue Kurdish rebels. Do you think that Turkey has a legitimate right to stage a cross-country -- cross-country offensive -- cross-border offensive?

BUSH: I talked to Ambassador Crocker and General Petraeus about this issue this morning. We are making it very clear to Turkey that we don't think it is in their interests to send troops into Iraq.

Actually, they have troops already stationed in Iraq and they've had troops stationed there for quite a while. We don't think it's in their interests to send more troops in.

I appreciate very much the fact that the Iraqi government understands that this is a sensitive issue with the Turks.

And that's why Vice President Hashemi is in Istanbul today, talking with the Turkish leaders, to assure them Iraq shares their concerns about terrorist activities, but that there's a better way to deal with the issue than having the Turks send massive troops into the country -- massive additional troops into the country.

What I'm telling you is, is that there's a lot of dialogue going on, and that's positive. We are actively involved with the Turks and the Iraqis, through a tripartite arrangement. And we'll continue to -- dialoguing with the Turks.

QUESTION: Why are you going to attend the congressional award ceremony for the Dalai Lama today when...

BUSH: When am I, or why am I?

QUESTION: Why are you going to, when China has expressed outrage about it?

And what, if any, potential damage do you see to U.S.-China relations, considering that you need their support on dealing with Iran and North Korean nuclear issues?

BUSH: One, I admire the Dalai Lama a lot.

Two, I support religious freedom. He supports religious freedom.

Thirdly, I like going to the gold medal ceremonies. I think it's a good thing for the president to do, to recognize those who Congress has honored. And I'm looking forward to going.

I told the Chinese president, President Hu, that I was going to go to the ceremony. I brought it up. And I said I'm going because I want to honor this man.

I have consistently told the Chinese that religious freedom is in their nation's interest. I've also told them that I think it's in their interest to meet with the Dalai Lama and will say so at the ceremony today in Congress.

If they were to sit down with the Dalai Lama they would find him to be a man of peace and reconciliation. And I think it's in the country's interest to allow him to come to China and meet with him.

So my visit today is not new to the Chinese leadership. As I told you, I brought it up with him. I wanted to make sure he understood exactly why I was going.

And they didn't like it, of course. But I don't think it's going to damage -- severely damage -- relations. As a matter of fact, I don't think it ever damages relations when an American president talks about, you know, that religious tolerance and religious freedom is good for a nation. I do this every time I meet with them.

David? Welcome back.

(LAUGHTER)

QUESTION: Mr. President, the last time you used that line and we were here...

(LAUGHTER)

BUSH: You know something, the interesting thing about it is, it works every time, because...

(LAUGHTER)

... because there's a grain of truth.

I won't use it again, though.

(LAUGHTER)

QUESTION: There's a report today from Israel Army Radio indicating that the Syrians have confirmed that the Israelis struck a nuclear site in their country. You wouldn't comment on that before, and I'm wondering if now, on the general question, you think it's appropriate for Israel to take such action if it feels that there is mortal danger being posed to the state.

BUSH: David, my position hasn't changed.

QUESTION: Can I ask you whether...

BUSH: You can ask me another question.

QUESTION: Did you support Israel's strike in 1981 on the Iraqi reactor outside of Baghdad?

BUSH: You know, Dave, I don't remember what I was doing in 1980 -- let's see, I was living in Midland, Texas. I don't remember my reaction that far back.

QUESTION: Well, but as you look at, as president now... BUSH: In 1981, in Midland, Texas, trying to make a living for my family and...

QUESTION: But you're a careful -- you know, someone...

BUSH: Student of history -- I do. Yes.

No, I don't remember my reaction, to be frank with you.

QUESTION: But if I ask you now, as you look back at it, do you think it was the right action for Israel to take?

BUSH: David, I'm not going to comment on the subject that you're trying to get me to comment on.

QUESTION: Why won't you? But isn't a fair question to say, given all the talk about Iran and a potential threat, whether it would be appropriate for Israel to act...

BUSH: I understand.

QUESTION: ... in self-defense if Iran were to develop nuclear weapons?

BUSH: I understand what you're trying to take. I understand what you're trying to take. It's a clever ruse to get my to comment on it, but I'm not going to. Thank you.

QUESTION: Well, I'm just wondering why you think it's not appropriate to make that judgment when it is a real world scenario, as we know, since they apparently took this action against Syria.

BUSH: Welcome back.

(LAUGHTER)

QUESTION: Thank you, Mr. President. Thank you.

I don't know if you saw the picture on the front page on one of the papers this morning of Mahmoud Ahmadinejad and Vladimir Putin.

BUSH: I did.

QUESTION: They look like they're getting along pretty well. And they are among...

BUSH: (OFF-MIKE) front page of the paper. No, man, come on.

(LAUGHTER)

QUESTION: They looked like they were enjoying each other's company. And I'm wondering, since they were leaders of five Caspian Sea region nations -- they have now declared each country will not be used as a base to attack the other.

A, what do you make of their growing relationship? B, does it complicate what the United States can do in the region?

And, C, would you characterize that arrangement as some sort of Caspian Sea Truman doctrine or something like that?

BUSH: You know, I think it's hard to judge how their conversations went, from a picture. Generally, leaders don't like to be photographed scowling at each other or, you know, making bad gestures at each other.

So I'm not surprised that there was, you know, a nice picture of them walking along. You know, I try to make sure that, when I'm with foreign leaders, there's a pretty picture of the two of us walking down, you know, the colonnades or something like that, to send a good message.

QUESTION: Are you saying it's not so warm?

BUSH: Well, I don't know yet. What I'm about to tell you is, is that I'm looking forward to getting President Putin's readout from the meeting.

I think one of the -- the thing I'm interested in is whether or not he continues to harbor the same concerns that I do. And I say "continues," because when we were in Australia, he reconfirmed to me that he recognizes it's not in the world's interest for Iran to have the capacity to make a nuclear weapon.

And they have been very supportive in the United Nations. And we're working with them on a potential third resolution.

So that's my concerns. I don't worry about the pictures. I understand why they meet. I will continue to work with Russia, as well as other nations, to keep a focused effort on sending Iran a message that you will remain isolated if you continue your nuclear weapons ambitions.

QUESTION: But this declaration doesn't speak to that, Mr. President. This declaration doesn't suggest isolation for Iran, just the opposite, that Russia and Iran are going to do business.

BUSH: We'll find out. See, that's -- you're trying to get me to interpret the meeting based upon a news story or a picture. I'd rather spend some time with Vladimir Putin finding out exactly what went on.

Thank you.

QUESTION: When North Korea tested a nuclear device, you said that any proliferation would be a grave threat to the U.S., and North Korea would be responsible for the consequences.

Are you denying that North Korea has any role in the suspected nuclear facility in Syria?

BUSH: See, you're trying to pull a Gregory.

QUESTION: Yes, I am.

BUSH: OK. Well, I'm not going to fall for it. But I'd like to talk about...

QUESTION: Doesn't (OFF-MIKE) a right to know about who is proliferating, especially when you're negotiating with North Korea?

BUSH: Now, you have a right to know this, that when it comes to the six-party talks, proliferation, the issue of proliferation, has equal importance with the issue of weaponry and that North Korea has said that they will stop proliferating, just like they have said they will fully disclose and disable any weapons programs.

Step one of that has been dealing with shuttering Pyongyang (sic). Step two will be full declaration of any plutonium that has been manufactured and/or the construction of bombs, along with a full declaration of any proliferation activities.

And, in my judgment, the best way to solve this issue with North Korea peacefully is to put it in the -- keep it in the contexts of six-party talks. And the reason why is that diplomacy only works if there are consequences when diplomacy breaks down.

And it makes sense for there to be other people at the table, so that if North Korea were to, you know, have said to all of us, "We're going to do X, Y or Z," and they don't, that we have other people, other than the United States being consequential.

There's a lot of aide that goes on between North Korea and China -- or North Korea and South Korea. And therefore, if they renege on their promises, and they have said -- they have declared that they will show us weapons and get rid of the weapons programs, as well as stop proliferation.

If they don't fulfill that which they've said, we are now in a position to make sure that they understand that there be consequences. And I'm pleased with the progress we're making. There's still work to be done; you bet there's work to be done.

Do I go into this thing saying, "Well, you know, gosh, the process is more important than the results"? I don't. What matters most, you know, to me -- or whether or not we can achieve the results that I've said we're hoping to achieve.

And, if not, there will be consequences to the North Koreans.

QUESTION: Is Syria part of those talks? Is Syria part of the talks?

BUSH: Proliferation is -- a part of the talks...

QUESTION: Including Syria?

BUSH: Look, in all due respect to you and Gregory, this is not my first rodeo.

(LAUGHTER)

And I know what you're -- trying to get me to comment.

I'm not going to comment on it, one way or the other.

QUESTION: But your administration has talked about...

BUSH: Thank you.

Martha?

QUESTION: Mr. President, on Iraq, you've talked repeatedly about the threat of Al Qaida in Iraq. And we've also heard a lot about the military progress that's being made against that group.

Can you tell Americans how close the United States is to declaring victory against that group?

And if you're not able to do so, does that suggest that your critics are correct, that this war cannot be won militarily?

BUSH: I -- the Iraq situation cannot be won by military means alone. There has to be political reconciliation to go with it. There has to be an emergency of a democracy. That's been my position ever since it started.

Al Qaida's still dangerous. They're dangerous in Iraq. They're dangerous elsewhere. Al Qaida's not going to go away any time. That's why it's important for us to be listening -- you know, finding out what their intentions are and what are their plans, so we can respond to them.

This war against Al Qaida requires actionable intelligence. That's why this FISA bill is important.

And they still want to do us harm, and they're still active.

Yes, we've hurt 'em bad in Iraq. We've hurt 'em bad elsewhere. If you're the number three person in Al Qaida, you've had some rough goes. You've been captured or killed. And we're keeping the pressure on them all the time.

And so, yes, we're making progress, and -- but, no, I fully understand those who say you can't win this thing militarily. That's exactly what the...

QUESTION: But does...

BUSH: That's exactly what the United States military says, that you can't win this military (sic). That's why it's very important that we continue to work with the Iraqis on economic progress, as well as political progress.

And what's happened is in Iraq is there's been a lot of political reconciliation at the grassroots level. In other words, people that hadn't been talking to each other are now talking to each other. They're beginning to realize there's a better future than one of -- one with a country with deep sectarian divide.

And what's going to end up happening is, is that the local reconciliation will affect the national government.

In the meantime, we're pressing hard to get the national government to complete the strategic partnership with the United States, as well as pass meaningful legislation, like the de-Baath law or the provincial government law or the -- or the oil revenue-sharing law.

QUESTION: What you just laid out -- should the American people be prepared for a large number of U.S. forces to remain in Iraq after you're finished with your presidency?

BUSH: The troop levels in Iraq will be determined by our commanders on the ground and the progress being made.

Thank you.

QUESTION: Mr. President, I'd like to follow on President Putin's visit to Tehran; not about the image of President Putin and President Ahmadinejad, but about the words that Vladimir Putin said there.

He issued a stern warning against potential military action -- U.S. military action against Iran.

BUSH: Did he say U.S.?

QUESTION: Yes.

BUSH: Oh, he did?

QUESTION: He said -- well, at least the quote said that.

And he also said, quote, "He sees no evidence to suggest Iran wants to build a nuclear bomb."

Were you disappointed with that message, and does that indicate, possibly, that international pressure is not as great as you once thought against Iran abandoning its nuclear program?

BUSH: As I say, I look forward to -- if those are, in fact, his comments, I look forward to having him clarify those. Because when I visited with him, he understands that it's in the world's interests to make sure that Iran does not have the capacity to make a nuclear weapon.

And that's why, on the first round at the U.N., he joined us. And second round, we joined together to send a message.

I mean, if he wasn't concerned about it, then why do we have such good progress at the United Nations in round one and round two? And so, I'm -- I will visit with him about it. I have not been briefed yet by Condi or Bob Gates about, you know, their visit with Vladimir Putin. And...

QUESTION: But you definitively believe Iran wants to build a nuclear weapon.

BUSH: I think so long -- until they suspend and/or, you know, make it clear that -- that their statements are (ph) real -- yes, I believe they want to have the capacity, the knowledge in order to make a nuclear weapon.

And I know it's in the world's interests to prevent them from doing so. I believe that the Iranian -- if Iran had a nuclear weapon, it would be a dangerous threat to world peace.

We've got a leader in Iran who has announced that he wants to destroy Israel. So I've told people that, if you're interested in avoiding World War III, it seems like you ought to be interested in preventing them from having the knowledge necessary to make a nuclear weapon.

And I take the threat of Iran with a nuclear weapon very seriously. And we'll continue to work with all nations about the seriousness of this threat; plus, we'll continue working the financial measures that we're in the process of doing.

In other words, I think -- the whole strategy is, is that, you know, at some point in time, leaders, or responsible folks, inside of Iran, may get tired of isolation and say, this isn't worth it.

And to me, it's worth the effort to keep the pressure on this government.

And secondly, it's important for the Iranian people to know we harbor no resentment to them. We're disappointed in the Iranian government's actions, as should they be.

Inflation's way too high. Isolation is causing economic pain. This is a country that has got a much better future -- people have got a much better -- should have better hope inside Iran than this current government is providing them.

So, look, it's a complete issue, no question about it, but my intent is to continue to rally the world to send a focused signal to the Iranian government that we will continue to work to isolate you in the hopes that at some point in time somebody else shows up and says it's not worth the isolation.

Yes, ma'am?

QUESTION: Mr. President, you are sponsoring the international peace conference. President Abbas said he's not going to come unless there is a timetable.

BUSH: Who said that? QUESTION: President Abbas.

BUSH: Oh, yeah?

QUESTION: Secretary Rice said that failure is not an option. You talked about substantial issues need to be discussed.

What is the minimum expectation from you that you will call this conference a success? And what you offering the Arab nations to encourage them to participate?

BUSH: Right. Well, that's why Condi's making the trip she's making, is to explain to people, in private as well as in public, that, one, we're for a comprehensive peace.

Two, that there is a -- the meeting, international meeting will be serious and substantive. In other words, as she said the other day, this isn't going to be just a photo opportunity. This is going to be a serious and substantive meeting.

We believe that now is the time to push ahead with a meeting at which the Israelis and Palestinians will lay out a vision of what a state could look like.

And the reason why there needs to be a vision of what a state could look like is because the Palestinians that have been made promises all these years need to see there's a serious, focused effort to step up a state.

And that's important so that the people who want to reject extremism have something to be for.

So this is a serious attempt. And I'm pleased with the progress. And the reason I'm pleased is because it appears to me that President Abbas and Prime Minister Olmert are, one, talking -- I know they're talking a lot, but they're making progress.

And, in order for there to be lasting peace, the deal has to be good for the Palestinians as well as the Israelis.

Our job is to facilitate the process.

Another reason I have an international meeting is to -- is to get Arab buy-in for a state. In other words, part of the issue in the past has been that the Arab nations stood on the sidelines. And when a state was in reach, they weren't a part of the process, encouraging the parties to move forward.

And so, this is a -- that's what I mean by comprehensive. It's comprehensive not only for what the state will look like, it's comprehensive in getting people in the region to be a part of the process.

So I'm feeling pretty optimistic about it.

QUESTION: But could you discuss refugees and Jerusalem and security and all the issues that...

BUSH: The important thing -- I have discussed those publicly, as you know, early on in my presidency when I articulated a two-state solution.

The important thing is for the Israelis and the Palestinians to be discussing them. That's the important issue. The United States can't impose peace. We can encourage the development of a state.

That's precisely what I have been doing since the early stages of my presidency. In order for there to be a Palestinian state, it's going to require the Israelis and the Palestinians coming to an accord.

We can facilitate that, but we can't force people to make hard decisions. They're going to have to do that themselves. And I'm encouraged from what Condi tells me is going on in the Middle East, that there is a -- you know, the attitude is let's work together to see if we can't lay out that vision for the sake of, you know -- for the sake of peace between Israel and the Palestinians.

And it's possible. I believe that we will see a democratic state. And I understand how hard it is. And the reason it's hard, by the way, is because there are extremists who don't want there to be a democracy in the Middle East, whether it be in Iraq or Lebanon or in the Palestinian territories.

That's the struggle. When you see people trying to blow up the opportunity for a state to exist, you've just got to understand it's broader than just the Palestinian territory. It's a part of this struggle, this ideological struggle in which we're engaged.

And we've got to ask ourselves: Why don't they want there to be a democracy?

And the answer is, because it doesn't fit into their ideological vision; they, being the extremists.

Another issue with Iran, by the way, that is of great concern to us is their willingness to fund groups that try to either destabilize or prevent the rise of a democracy.

Anyway, I'm optimistic this can be achieved. And we'll continue working to that end.

QUESTION: Could I ask you about a domestic matter?

BUSH: Sure.

QUESTION: The Commerce Department reported today that the housing starts last month fell to the lowest level since 1993.

How concerned are you that this housing recession will spill over into the broader economy? And what more can be done to prevent that from happening? BUSH: I'm encouraged by the rate of inflation, the job growth. We've had 49 consecutive months of uninterrupted job growth, which is a record here in America.

I'm pleased with the fact that our deficit is shrinking. But like our secretary of the treasury, I recognize there's a softness in the housing market.

By the way, we had growth in the GDP because of exports. In other words, there's positive elements of our economy, but, no question, the housing is soft.

And the fundamental question is: What do we do to help homeowners? And I don't think we ought to be providing bail-outs for lenders. But I do think we ought to put policy in place that help people stay in their home.

And that's why this FHA modernization bill is really important, because it'll extend the reach of the FHA and to help more people be able to refinance their homes.

Part of the issue in the housing market has been that, as a result of asset bundling, that it's hard sometimes for people to find somebody to talk to, to help them refinance.

In other words, in the old days, you know, you go into your savings and loan, your local savings and loan and sit down and negotiate a house deal, and the person with whom you negotiated would be around if you had financial difficulties to say, "Can't you help me restructure."

Today the originator of the note no longer owns the note in many cases.

And the securitization of mortgages actually provided a lot of liquidity in the market, and that's a good thing. But it also creates a issue here in America, and that is: How do we get people to understand the nature of the mortgages they bought and how do you help people refinance to stay in home -- stay in their home?

And so that's what Secretary Paulson and Secretary Jackson have been working on, particularly with the private sector, to facilitate the ability to people to refinance.

And finally, we need to change the tax law. You're disadvantaged if you refinance your home. It creates a tax liability.

And if we want people staying in their homes, then it seems like to me we've got to change the tax code. That's why I talked to Senator Stabenow the other day and thanked her for her sponsorship of an important piece of tax legislation that will enable people to be more likely stay in their homes.

So there's some things we can do. In the meantime, he's got to understand that it's going to have to work out -- when you got more houses than you got buyers, the price tends to go down. And we're just going to have to work through the issue.

I'm not a forecaster. But I can tell people that I feel good about many of the economic indicators here in the United States.

QUESTION: Mr. President, following up on Vladimir Putin for a moment, he said, recently, that next year, when he has to step down according to the constitution, as the president, he may become prime minister; in effect keeping power and dashing any hopes for a genuine democratic transition there.

Senator McCain...

BUSH: I've been planning that myself.

(LAUGHTER)

QUESTION: Senator McCain said yesterday, sir, that when he looks into Putin's eyes, he sees a K, a G and a B.

(LAUGHTER)

BUSH: Pretty good line.

(LAUGHTER)

QUESTION: And he would never invite him to Kennebunkport. And he says it's time we got a little tough with Vladimir Putin.

I wonder if you think -- is Senate McCain right?

And what would it mean for Russian democracy if, when you leave power, assuming you do, in January 2009...

(LAUGHTER)

... if Vladimir Putin is still in power?

BUSH: Yes. You know, one of the interesting -- well, my leadership style has been to try to be in a position where I actually can influence people. And one way to do that is to have personal relationships that enable me to sit down and tell people what's on my mind, without fear of rupturing relations.

And that's how I've tried to conduct my business with Vladimir Putin. We don't agree on a lot of issues. We do agree on some. Iran is one. Nuclear proliferation is another. Reducing our nuclear warheads was an issue that we agreed on early.

But I believe good diplomacy requires good relations at the leadership level. That's why, in Slovakia, I was in a position to tell him that, you know, we didn't understand why he was altering the relationship between the Russian government and a free press. In other words, why -- why the free press was becoming less free.

And I was able to do -- he didn't like it. You know, nobody likes to be talked to in a way that may point up different flaws in their strategy. But I was able to do so in a way that didn't rupture relations.

He was able to tell me going into Iraq wasn't the right thing.

And, to me, that's good diplomacy. And so -- and I'll continue to practice that diplomacy.

Now, in terms of whether or not it's possible to reprogram the kind of basic Russian DNA, which is a centralized authority, that's hard to do. We've worked hard to make it -- you know, appear in their interest, or we made it clear to them that it is in their interest to have good relations with the West.

And the best way to have good long-term relations with the West is to recognize that checks and balances in government are important, or to recognize there are certain freedoms that are inviolate.

So Russia's a complex relationship, but it's an important relationship to maintain.

QUESTION: Do you think it's (OFF-MIKE) if he stays in power after you're gone?

BUSH: I have no idea what he's going to do. I asked him when I saw him in Australia. I tried to, you know, get it out of him, who's going to be his successor, what he intends to do, and he was wily. He wouldn't tip his hand.

I'll tip mine. I'm going to finish -- I'm going to work hard to the finish. I'm going to sprint to the finish line, and then you'll find me in Crawford.

QUESTION: Mr. President, I'd like to turn your attention back to Capitol Hill.

A year ago, after Republicans lost control of Congress, you said you wanted to find common ground. This morning you gave us a pretty scathing report card on Democrats. But I'm wondering: How would you assess yourself in dealing with Democrats this past year?

QUESTION: How exactly have you been in dealing with them on various issues? And do you think you've done a good job in finding common ground?

BUSH: We're finding common ground on Iraq. I recognize there are people in Congress who say we shouldn't have been there in the first place, but it sounds to me as if the debate has shifted; that David Petraeus and Ryan Crocker's testimony made a difference to a lot of members.

I hope we continue to find ground by making sure our troops get funded. We found common ground on FISA. My only question is: Why change a good law? The way that law was written works for the security of the country.

That's what the American people want to know, by the way: Are we passing laws that are beneficial to the American people? This law is beneficial because it enables our intelligence experts and professionals to find out the intentions of Al Qaida.

Now, the law needs to be changed -- enhanced by providing the phone companies that allegedly helped us with liability protection. So we found common ground there.

Hopefully we can find common ground as the Congress begins to move pieces of legislation.

The reason I said what I said today is there's a lot to be done. As you recognize, I'm not a member of the legislative branch; probably wouldn't be a very good legislator.

But as the head of the executive branch, it makes sense to call upon Congress to show progress and get results. It's hard to find common ground unless important bills are moving. They're not even moving. Not one appropriations bill has made it to my desk.

How can you find common ground when there's no appropriations process?

We found common ground on a trade bill -- trade bills, really important pieces of legislation, as far as I'm concerned.

One of the reasons why is exports helped us overcome the weakness in the housing market last quarter. If that's the case, it seems like it would make sense to continue to open up markets to U.S. goods and services.

And, yet, there hasn't been one -- there haven't been any bills moving, when it comes to trade. Veterans' affairs is an area where we can find common ground.

I've called in -- I asked Bob Dole and Donna Shalala to lead an important commission, a commission to make sure our veterans get the benefits they deserve.

I was concerned about bureaucratic delay and, you know, I was concerned about a system that had been in place for years, but just didn't recognize this different nature, a different kind of war that we're fighting.

I don't like it when I meet wives who are sitting beside their husband's bed in Walter Reed and not being supported by its government, not being helped to provide care.

I'm concerned about PTSD. And I want people to focus on PTSD.

And so we sent up a bill. And I hope they move on it quickly.

There's place where we could find common ground.

QUESTION: Is it all their fault that these bills aren't moving, when you've got these veto threats out?

BUSH: I think it is -- I think it is their fault that bills aren't moving. Yes. As I said, I'm not part of the legislative branch.

All I can do is ask them to move bills. It's up to the leaders to move the bills.

And you bet I'm going to put veto threats out.

Of course, I want to remind you, I put a lot of veto threats out when the Republicans were in control of Congress. I said, now, if you overspend, I'm going to veto your bills. And they listened. And we worked together.

Whether or not that's the case, we'll find out.

And, by the way, on the SCHIP bill, we weren't dialed in in the beginning.

The leaders said, "OK, let's see if we can get something moving." And I'm surprised I hadn't been asked about SCHIP. It's an issue...

QUESTION: How far are you willing to go?

BUSH: Surprised I hadn't been asked about SCHIP yet.

I made it abundantly clear why I have vetoed the bills.

I find it interesting that when Americans begin to hear the facts, they understand the rationale behind the veto. First of all, there are 500,000 children who are eligible for the current program who aren't covered. And so to answer your question on how far I'm willing to go, I want to provide enough money to make sure those 500,000 do get covered. That ought to be the focus of our efforts.

Six or seven -- in six or seven states, they spend more money on adults than children.

And, finally, the eligibility has been increased up to $83,000. That doesn't sound like it's a program for poor children to me.

And I look forward to working with the Congress, if my veto is upheld, to focus on those that are supposed to be covered.

That's what we need to get done.

QUESTION: I wonder if you feel blind sided by the very blistering criticism recently from retired General Ricardo Sanchez, who was one of your top commanders in Iraq.

He told a news conference last week that there's been glaring, unfortunate display of incompetent strategic leadership within our nation leaders on Iraq.

BUSH: Right.

QUESTION: Seems like quite a lack of common ground there, sir.

BUSH: You know, look, I admire General Sanchez's service to the country. I appreciate his service to the country. The situation on the ground has changed quite dramatically since he left Iraq.

The security situation is changing dramatically. The reconciliation that's taking place is changing. The economy is getting better.

And so I'm pleased with the progress we're making, you know. And I admire the fact that he served. I appreciate his service.

QUESTION: Should the American people feel disturbed that a former top general says that?

As commander in chief, are you in control of and responsible for military contractors in Iraq?

And, if not, who is?

BUSH: Yes, I'm responsible, in that the State Department has hired those military contractors.

QUESTION: Are you satisfied with their performance?

And, if not, what are you doing to satisfy yourself that...

BUSH: I will be anxious to see the analysis of their performance. There's a lot of studying going on, both inside Iraq and out, as to whether or not people have violated rules of engagement.

I will tell you, though, that a firm like Blackwater provides a valuable service. They protect people's lives. And I appreciate the sacrifice and the service that the Blackwater employees have made. And they, too, want to make sure that if there's an inconsistencies or, you know, behavior that shouldn't -- that ought to be modified, that we do that.

And so we're analyzing it fully.

QUESTION: I wanted to ask you about SCHIP and why you even let that get to a situation where it had to be vetoed. Isn't there a responsibility by both the president and congressional leadership to work on this common ground before it gets to a veto?

BUSH: Right. As I said we were -- we weren't dialed in. And I don't know why. But they just ran the bill and I made it clear we weren't going to accept it.

That happens sometimes.

In the past, when I -- you know, I said, "Look, make sure we're a part of the process," and we were.

In this case, this bill started heading our way, and I recognize Republicans in the Senate supported it. We made it clear we didn't agree. They passed it anyway.

And so now, hopefully, we'll be in the process. That's why the president has a veto. Sometimes the legislative branch wants to go on without the president, pass pieces of legislation, and the president then can use the veto to make sure he's a part of the process.

And that's -- as you know, I fully intend to do that. I want to make sure -- and that's why when I tell you I'm going to sprint to the finish and finish this job strong, that's one way to ensure that I am relevant, that's one way to ensure that I am in the process, and I intend to use the veto.

QUESTION: Thank you, sir. A simple question.

BUSH: Yes?

QUESTION: What's your definition of...

BUSH: It may require a simple answer.

(LAUGHTER)

QUESTION: What's your definition of the word "torture"?

BUSH: Of what?

QUESTION: The word "torture," what's your definition?

BUSH: That's defined in U.S. law, and we don't torture.

QUESTION: Can you give me your version of it, sir?

BUSH: No. Whatever the law says.

QUESTION: You talked about sprinting to the finish, and then you also, just a moment ago, sounded a bit resigned to the fact that, if legislators don't move bills, there's not much you can do to it. So...

BUSH: (OFF-MIKE) right now. Not to interrupt you, but it's called the bully pulpit. And I hope to get -- I was trying to get your attention focused on the fact that major pieces of legislation aren't moving, and those that are are at a snail's pace.

And I hope I did that. I hope I was able to accomplish that.

QUESTION: One more on veterans...

BUSH: I rudely interrupted him.

QUESTION: Do you feel as if you're losing leverage and that you're becoming increasingly irrelevant? And what can you do about that to...

BUSH: Quite the contrary. I've never felt more engaged and more capable of helping people recognize -- American people recognize that there's a lot of unfinished business.

And, you know, I'm really looking forward to the next 15 months. Looking forward to getting some things done for the American people.

And if it doesn't get done, I'm looking forward to reminding people as to why it's not getting done.

But I'm confident we can get positive things done. I mean, you shouldn't view this as somebody who says, well, this is, you know, it's impossible for Congress and the president to work together.

Quite the contrary. I just named some areas where we have worked together. And we're going to have to work together. We have to make sure our troops get the money they need. We have to make sure America's protected.

Having said that, I'm not going to accept a lousy bill. And the American people don't want there to be a lousy bill on this issue. The American people want to know that our professionals have the tools necessary to defend them.

See, they understand Al Qaida and terrorism is still a threat to the security of this country. In other words, they're still out there. And they're still plotting and planning.

And it's in our interest to have the tools necessary to protect the American people. It's our most solemn duty.

So there's a lot of areas where we can work together. This just happens to be period of time when not much is happening.

And my job is to -- is to see if I can't get some of that movement in the right direction, and at the same time make sure that -- you know, that we're a part of the process. And one way the executive branch stays a part of the process is to issue veto threats and then follow through with them. And so, that's what you're going to see tomorrow as to whether or not the Congress will sustain my veto on a bill that I said I would veto and explained why I'm vetoing it.

And, again, I want to repeat it, so the American people clearly understand.

One, there are half a million children who are eligible under this program that aren't being covered today.

Two, states are spending -- some states are spending more money on adults than children. That doesn't make any sense if you're trying to help poor children.

By the way, in Medicaid we spend about $35 billion a year on poor children. So, if somebody's listening out there saying, "Well, they don't care about poor children," they ought to look at the size -- the amount of money we're spending under Medicaid for poor children.

And finally, to increase eligibility up to $83,000 in my judgment is an attempt by some in Congress to expand the reach of the federal government in medicine.

And I believe strongly in private medicine.

Now, I think the federal government ought to help those who are poor. And it's one of the reasons why I worked on Medicare reform was to make sure that we fulfill our promise to the elderly.

But I don't like plans that move people from -- encourage people to move from private medicine to the public, and that's what's happening under this bill.

So, I'm looking forward to working with the Congress to, you know, make sure the bill does what it's supposed to do.

Listen, thank you all for your time. I enjoyed it.

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