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Path Of Destruction; Your Money; President Defends Mukasey; Gerri's Top Tips; Southern Water Wars

Aired November 01, 2007 - 10:00   ET

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

UNIDENTIFIED MALE, CNN CORRESPONDENT, (voice over): Says he better not start now or else the lighter will be gone for good.
EMOGENE KYLE, BROUGHT LIGHTER AS GIFT: I would throw the thing away. I would go down to the ocean or get somebody to take me to the ocean and toss it in there where it would never come up again!

(END VIDEOTAPE)

TONY HARRIS, CNN ANCHOR: How about this as a footnote? Legendary war correspondent Ernie Pile (ph) once wrote that a cigarette lighter was one of the most coveted items for soldier or sailor.

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

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

War over water. Three drought state governors try to work out a truce today and we're at the water's source this hour with a live report.

COLLINS: Dozens of people dead in the Caribbean from a tropical storm. Is Florida next in line for Noel. We're watching from the weather center.

HARRIS: And a new scandal surrounding contractors in Iraq. What the military plans to do about it.

It is Thursday, November 1st, and you are in the CNN NEWSROOM.

And we are tracking Tropical Storm Noel this hour. I don't know why I keep getting ahead of the story. It is not a hurricane and I keep wanting to make it a hurricane. It is threatening to become a hurricane.

The storm already has cut a deadly path through the Caribbean. At least 64 people dead in the Dominican Republic and Haiti. Look at this flooding in Haiti. Tens of thousands evacuated. And one person in the Dominican Republic tells us an entire town disappeared. Many people still missing.

Noel is not expected to make a direct hit on the U.S. mainland, but tropical storm warnings are up for parts of Florida. There is a hurricane watch in the Bahamas.

COLLINS: Reynolds Wolf is joining us now from the weather center to give us an update on where this thing is and the possibility that it could become a hurricane.

Reynolds, what's the situation?

REYNOLDS WOLF, CNN METEOROLOGIST: Absolutely. Absolutely. It is a tropical storm, but, Tony, I love you, man. You're my friend. You know that. But take a look at this, seriously. I mean we're going to 70 miles per hour. At least the forecast calls for that as we get to 2:00 p.m. Thursday. And, ladies and gentlemen, there's not a huge difference between 74 miles an hour, which would make it a category one hurricane, and a strong tropical storm, which would be around 70.

So not a tremendous difference. The thing we really need to watch, the thing we really have to respect, it has been a tremendous rainmaker. In parts of the Caribbean over a foot of rainfall. And it could happen again today in parts of, say, Nassau, perhaps. Maybe into other parts of the Bahamas. So it's certainly an eye-opener. It's something we really need to watch.

That path brings it farther to the north and to the northeast as we get into 2:00 a.m. Friday. Seventy-mile-per-hour maximum sustained winds, then weakening as we get to 2:00 p.m. Friday. But keep in mind, these storms do wobble quite a bit. In fact, look at the past. This storm has -- look at the past as it came back past through Haiti and then actually went across Cuba, not once, but twice. Two landfalls on one island. That's a little bit unusual. So we really have to be careful when it comes to this storm.

Let's talk about what it's doing as we speak. It's really poorly defined, trying to get together. You'll notice it's starting to have more of the textbook shapes in the last couple of frames. And it is bringing rainfall in parts of the I-95 corridor. We've talked about beach erosions. That's going to be a big issue from the Florida coastline.

Something else that's going to be a big issue is going to be the strong waves. Big, big wave action we can anticipate. And we already have tropical storm warnings that are in effect from Coral Springs southward into parts of the keys.

Not expecting this to make landfall in the United States. And the big reason why is because this frontal boundary that is just slowly pushing it's way into parts of the southeast, it's going to be like a big broom, a barrier if you will, an atmospheric barrier that will be pushing the storm, at least trying to, and keeping it away from Florida.

That's a look at your forecast. Let's send it back to you. And, who knows, maybe in the next day or so we'll be talking category one hurricane. Always a possibility with these.

HARRIS: Yes. And, look, you've got permission to cuff me around the head and neck if I . . .

WOLF: Nope. Not going to do it. No, man. No. You're family, man. No way. Not going to happen.

COLLINS: Thank you, Reynolds.

WOLF: Any time.

HARRIS: All right. It is a war over water among three southern states. Most of metro Atlanta gets it's water from Georgia's Lake Lanier. But look at this. Georgia officials say a drought has left the lake with only about 80 days worth of drinking water. Now the feds say there's enough for about 280 days. What gives here? The governors of Georgia, Alabama, and Florida meet in Washington this morning. They're looking for ways to share the water. The U.S. Army Corps of Engineers to outline some options by tomorrow. We will have a live report on the southern water wars in about 30 minutes right here in the NEWSROOM.

COLLINS: Interest rates down, oil prices up, and Americans feeling the squeeze. Are we on a collision course with inflation? What does it all mean to you and your paycheck? CNN's Ali Velshi is here to explain more about this.

All right, Ali, so many questions. Yesterday's cut in the Fed rate, going to make a noticeable difference in my mortgage and credit card bills or are we talking more about psychology here and that ever important consumer confidence?

ALI VELSHI, CNN CORRESPONDENT: Well, you know, there's two very specific answers. One is it absolutely will make a difference because when the Fed cut rates by .25 percent and went to 4.5 percent, the prime rate went to 7.5 percent. Which means your loans, any loan, credit card, home equity that you have that's tied to the prime rate went down a quarter of a percentage point. You would think that is a very direct relationship to the amount of money you have. It makes money cheaper to borrow, businesses borrow more money, they hire more people, more people have jobs, people have lower interest rates, they spend more. That's how you're supposed to get the economy moving again.

But here's what happened. Back in September, remember six weeks ago they cut rates by half a percentage point and that, of course, also has the same effect. Guess what? We just found out today that consumer spending in September didn't increase as much as they thought it would increase. It increased, but less than expected.

Now you take that in, you take oil prices, which are very high, and then you take the big board. I don't know if you can see this right now.

COLLINS: Yes, I can.

VELSHI: It's 205 points?

COLLINS: Two hundred and two now. VELSHI: Two hundred and two points lower because now we're worried about inflation. If oil is at, you know, $96 a barrel, which is where it was overnight, it's come down a little bit, that's going to work its way into your heating oil, your gasoline prices, and for the rest of the country that doesn't heat with heating oil, Heidi, you still put gas in your car and you still depend on the trucks that bring your goods to the stores. Oil prices, when they're high, do work their way down into the economy and they do cause inflation.

COLLINS: All right. And as you mentioned, oil, but not only oil, gold, which we don't really talk about that much.

VELSHI: Correct.

COLLINS: I mean those prices are way up, too.

VELSHI: Gold is coming close to $800 an ounce. $850 is the highest its ever been. $792 is where it settled yesterday. It's back open for trade again.

But when gold goes up, that's a sign that many investors in the world think that inflation is a threat. Inflation is a threat for three specific reasons, Heidi. One is, interest rates are lower. That tends to encourage people to spend. Number two, this oil price and gas price, it makes things cost more. It's not just your car, it's everything that takes energy. And number three, the U.S. dollar is weaker again against major currencies. We import a lot of goods into this country and that means those goods will all cost more. Prices could be going up and that's dangerous.

COLLINS: Yes, inflation very different than recession though.

VELSHI: Very different.

COLLINS: I think there are still a lot of people who are arguing that we're not headed towards a recession.

VELSHI: Right. It's very interesting because right now the economy is OK, but we've got two camps. One that says it's slowing down and we're headed for a recession and the other one that says, uh- oh, inflation might be a concern. Two different problems. Two very different scenarios. Both of which the Federal Reserve would like to avoid, and that's the tough balancing act they're in right now.

COLLINS: Yes. And I heard some Christmas music the other day, I just have to tell you.

VELSHI: Yes. Shopping supposedly starting.

COLLINS: Yes, this time of year. Interesting to watch.

All right, Ali, "Minding Your Business," thanks so much.

VELSHI: Good to talk to you, Heidi.

COLLINS: You too. HARRIS: You know, they protest outside the funerals of fallen troops. Now they have been ordered to pay. A judge ordering Westboro Baptist Church to pay almost $11 million to the father of Lance Corporal Matthew Snyder. The 20-year-old Marine was killed in Iraq's Anbar province last March. Now members of the Kansas fundamentalist church routinely picket military funerals. They say they believe the Iraq War and its casualties are God's punishment for America's tolerance of homosexuality. Snyder's family sued the church for defamation and invasion of privacy and intentional infliction of emotional distress and the family won.

COLLINS: Philadelphia police searching today for a gunman who shot one of their own. This is surveillance video now from a Philly doughnut shop. The gunman in a hood. You don't quite see it here, but he did shoot Officer Charles Cassidy just as he came into the shop. Cassidy is now listed in extremely critical condition with a head wound. Police are hoping someone will recognize the gunman's walk, which is with a limp. Officer Cassidy was the third police officer shot this week in Philly.

HARRIS: And outrage over potential orders to serve in Iraq. And we're not talking about troops here. We're talking diplomats. Hundreds of State Department foreign service officers voicing concerns over policy that could force them to serve in Iraq or risk losing their jobs. The sharpest comments out of State Department town hall meeting coming from a 36-year veteran of the foreign service.

(BEGIN VIDEO CLIP)

JACK CRODDY, STATE DEPARTMENT EMPLOYEE: It's one thing if someone believes in what's going on over there and volunteers, but it's another thing to send someone over there on a forced assignment. And, I'm sorry, but basically that's a potential death sentence and you know it. Who will raise our children if we're dead or seriously wounded?

(END VIDEO CLIP)

HARRIS: Well, a move to directed assignments is rare but not unprecedented. In 1969, an entire class of entry-level diplomats were sent to Vietnam.

COLLINS: Want to take a minute now to get you up to speed on a story that we've been covering here. The attorney general nomination. President Bush, of course, nominated Michael Mukasey as attorney general. Elaine Quijano is standing by now with more information about some things that were said.

And, you know, Elaine, I remember, and tell me if I'm crazy, but I remember going to you on this story when the nomination first came out that it sounded like this was going to be an easy confirmation process for both sides of the fence seemed to be in favor of this nomination.

ELAINE QUIJANO, CNN CORRESPONDENT: Yes, absolutely. And, you know, that is what is so unusual about the debate that's happening now because, you're right, absolutely, it was just a couple of weeks ago that you had not just Republicans, but Democrats praising Judge Mukasey, Michael Mukasey, as the candidate for attorney general.

Well, now President Bush taking the unusual step of calling some reporters into his office this morning. The Oval Office not allowing cameras in, but talking about this nomination within the context of the larger war on terror that the administration is trying to prosecute. You will recall there have been some pointed questions in recent days for Judge Mukasey to answer. Democrats have not been satisfied with the way in which he's been responding to questions about waterboarding and specifically whether he believes waterboarding amounts to torture and is, therefore, illegal.

Well, President Bush telling reporters just a short time ago that it is unfair, in his view, to be peppering Mr. Mukasey with these kinds of questions because, as we've heard the administration say, and now we're hearing the president say directly, Mr. Mukasey has not been briefed on specific techniques. The reporter saying that President Bush talked about how this is a smart man, a good man, who has met with many senators on Capitol Hill. And the president expressing extreme disappointment that it has taken so long for this nomination to move forward.

So the president also, Heidi, I should mention, talking about a speech that he'll be giving really trying to focus a spotlight ahead of this speech where he'll be telling Congress it needs to give the government the tools it needs to fight the war on terrorism. And this nomination in the president's view being one of those tools, having an attorney general in place.

So the unusual step, again, Heidi, calling reporters in, not allowing cameras in, but President Bush really trying to get his message out even before he delivers his speech later today.

Heidi.

COLLINS: OK. So we'll be watching for that speech. Remind us, Elaine, where are we at with the confirmation process? I mean obviously at the beginning.

QUIJANO: We're at the -- well, we're sort of at the beginning here. What we have had now in recent days is Judge Mukasey delivering his responses to the questions that, in particular, Democratic senators on the Judiciary Committee had. And again, it's this issue of waterboarding that has so concerned the Democrats.

Now what we are going to see, a date has been set for next week. But at the same time, there had been some concerns perhaps he wouldn't have the votes necessary. Now despite the fact that there are these concerns, it does appear that the votes will be there for him to move forward, but it has certainly been a very highly charged debate and we're likely going to hear the president, of course, talk about that later today.

Heidi.

COLLINS: OK. We, of course, will be watching for that.

CNN's White House correspondent, Elaine Quijano.

Elaine, thank you.

Private contractors in Iraq and allegations of corruption. How will the military combat the problem? We'll have some answers for you in just a moment.

(COMMERCIAL BREAK)

HARRIS: Welcome back, everyone, to the CNN NEWSROOM. I'm Tony Harris.

Tiny Texas town for sale. Definitely a fixer upper.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: It needs a little restoration, but a person who is really creative, he could come out here and have that dance hall just kicking.

(END VIDEO CLIP)

HARRIS: Make your bids. That story coming up in the NEWSROOM. But right now we want to get to Senate Majority Leader Harry Reid making comments now on the Senate floor about the nomination of Michael Mukasey to be the next attorney general.

SEN HARRY REID, (D) MAJORITY LEADER: Started in 1492, the same time that Columbus discovered this nation, this world. In 1492 they also discovered waterboarding. How to torture people. Mostly Jews. But not all Jews. Some Christians who weren't Christian enough were waterboarded.

So, you know, maybe we'll work our way through Mukasey, but no one should be concerned about the fact that we have an obligation and a right to talk about torture. The chief legal officer of this country, the attorney general of the United States, shouldn't we know how he stands on waterboarding, on torture generally?

So, Mr. President, I look forward to our having a good day here and accomplishing a lot. We have a lot -- we don't have a lot of time left in this legislative session. We have at the most about six weeks. But I hope during that period of time that we can continue to work for the American people together. That's what the American people want.

HARRIS: All right. Senate Majority Leader Harry Reid there talking about the nomination of Michael Mukasey to be the next attorney general and commenting on waterboarding. That seems to be where the sticking point is right now in this confirmation process right now. Michael Mukasey says that the practice of waterboarding is deplorable, but won't comment on it as a practice or policy of the U.S. government in handling suspects, detainees, terror suspects. We will continue to follow this. If you'd like to watch more of this conversation going on right now in the Senate, we would encourage you to go to cnn.com.

(COMMERCIAL BREAK)

HARRIS: A symbol of racial hatred surfaces again. A noose hanging around the neck of a black mannequin found outside a Long Island, New York, home. Beneath the noose on the mannequin, a note with the "n" word written on it. Nassau County Police say it happened in a residential middle class area. So far no reports of any leads.

COLLINS: The noose, it represents lynching and terrorism. So why would an African-American entertainer go to an awards show wearing a noose? Comedian Kat Williams tries to explain on CNN's "Out In The Open" with Rick Sanchez.

(BEGIN VIDEO CLIP)

RICK SANCHEZ, CNN'S "OUT IN THE OPEN": We've had people on this show all day and they've been telling us about the history of the African-American experience and how hurtful it is for them to see something like that. You're an African-American entertainer and you wore one. How can you possibly explain that, Kat?

KAT WILLIAMS, COMEDIAN: I don't. I'm a comedian. I tell jokes. So you could be mad at the rope if you'd like, but the rope certainly hasn't done anything. And I thought I was helping, actually, Rick.

SANCHEZ: Well, explain to me, and I'm all ears, man, I'm ready to understand how you think this was helping.

WILLIAMS: Because I thought that the racists were lost because everywhere they put those nooses it wasn't the black neighborhoods. So I thought maybe they couldn't find the "n" words they were looking for. So I put it on one that I knew they could find and I wore a pink suit so in case they were looking. And so now that they know, I think that should solve everything and we can go back to Halloween because I'm black and, you know, my decorations aren't politically correct either. I have a bloody knife and a Frankenstein with screws coming out. We've got to get beyond this.

SANCHEZ: Yes, but you know -- you know what it is. And, listen, I respect you for coming on here and talking about this.

WILLIAMS: Thank you.

SANCHEZ: But you have to understand, right, that people always say -- my dad always used to say this to me. How do you expect people to respect you if you don't respect yourself? And as an . . .

WILLIAMS: And how do you think I disrespected myself?

SANCHEZ: Well, because you're doing something that is disrespectful of African-Americans, and you are an African-American.

WILLIAMS: But I'm African-American.

SANCHEZ: That's what I'm saying, man, you're an African- American.

WILLIAMS: So the concern is that maybe I'm -- maybe I've offended myself? I am an "n" word. There are colored people. There are African-Americans. These people don't like the "n" word.

SANCHEZ: Right.

WILLIAMS: That's what I am. And so I'm letting them know in case they were looking for that. That's where this is. And they can leave African-Americans and colored people and good white people alone with this because . . .

SANCHEZ: But don't you see how that gives . . .

WILLIAMS: It's like we didn't happen now.

SANCHEZ: But don't you see how that gives the guy who wants to go after you and people like you an opportunity? You're opening the door to what . . .

WILLIAMS: They've been doing it forever, Rick.

SANCHEZ: Well, but . . .

WILLIAMS: Right now they're cracking down on illegal immigrants.

SANCHEZ: But, Kat, that's a cop out to say, well, they've been doing it in the past.

WILLIAMS: Why would I need to cop out? I'm African-American already.

SANCHEZ: No, I'm just saying, they've been doing it in the past, so I don't care what they do in the future. Don't you want to educate? Don't you want to help people? I mean, don't we all want to kind of . . .

WILLIAMS: Nope.

SANCHEZ: No, you don't?

WILLIAMS: No. I don't educate people that put nooses out.

SANCHEZ: Let me ask you a question.

WILLIAMS: If you put a noose out, I'm not trying to educate you.

SANCHEZ: No, but you put the noose out, Kat.

WILLIAMS: I'm trying to talk to you.

SANCHEZ: You put the noose out, though. You put it around your neck, man. WILLIAMS: That is correct. Yes. Yes. Absolutely.

SANCHEZ: Do you regret that?

WILLIAMS: And isn't that what they were insinuating that they wanted to do when they hung it?

SANCHEZ: Forget about they and them.

WILLIAMS: Oh, well, then forget about me, too, then.

SANCHEZ: Let's talk about you. But, Kat, you did it. Let me ask you point blank.

WILLIAMS: Yes.

SANCHEZ: All right. Point blank. I want you to answer this.

WILLIAMS: I'm on CNN. My mama's looking at this. I know I did it.

SANCHEZ: Search your soul.

WILLIAMS: I'm trying to figure out who's mad.

SANCHEZ: I'm not mad. I'm just trying to . . .

WILLIAMS: Search my soul.

SANCHEZ: Search your soul and tell me if you could do this again? If you could have that day back, would you show up wearing that noose around your neck that so many people like you find so offensive?

WILLIAMS: I was hurt. I was hurt. I was bothered. I'm a comedian. The joke is all that I have. But I wasn't joking at that moment. At that moment -- if I could do it differently, I would change everything.

(END VIDEO CLIP)

COLLINS: Critics accuse Williams of making a mockery out of racism.

"The Noose, An American Nightmare," it's a CNN special investigation. You can catch it tonight 8:00 Eastern only here on CNN.

HARRIS: A war between the states. Bone dry weather to blame. Georgia, Alabama, and Florida fighting over water. The story in the NEWSROOM.

(COMMERCIAL BREAK)

COLLINS: Holy cow. You'd think this was the day after Halloween or something, but, yes, Dow Jones Industrial averages down 220 points resting now at 13,712. I told you when the stock market opened today that it was an interesting close because we were to the positive yesterday at the close by about 138 points. Now we're beyond that to the negative. So we're going to continue to watch those business stories and figure out what's happening there, if at all possible, as we continue on in the show.

HARRIS: You may not know this, but if you're invested in a 401(k), you've been paying fees that is could cost you thousands of dollars by the time you've retired. CNN personal finance editor Gerri Willis aware of all of that. She's here to tell us about those hidden fees and how we can fight them.

Gerri, great to see you.

GERRI WILLIS, CNN CORRESPONDENT: Good to see you, Tony.

HARRIS: How big a deal are we talking about here?

WILLIS: Now the market's down, big fees. I wish I had better news.

HARRIS: Yes. How big a deal are we talking about here with these fees and then maybe we can talk about why you think the market is down.

WILLIS: Well, look, all 401(k) plans have fees.

HARRIS: Yes.

WILLIS: And while 1 percent or 2 percent fees may not seem like a lot, guess what, it adds up. If your nest egg is $250,000, for example, a 1 percent fee costs you $2,500 a year. And a recent government report says that a 1 percentage point difference in fees can cut retirement benefits by 17 percent over 20 years. That's the difference between going to Europe and not going to Europe, right? Well 83 percent of the people don't even know that these fees exist.

HARRIS: Well, so let's get to the heart of it here. What are some of the fees that we're actually paying?

WILLIS: The big one, mutual fund expense ratios. You can find this on a prospectus or your employer should have a good idea of what the number is. You shouldn't be paying more than 1.5 percent a year unless you get face-to-face advice. But generally your mutual fund expense ratio should be within the range of 0.20 percent to 0.75 percent. So 75 basis points, 25 basis points. That's about the range. Remember, target retirement funds have even bigger fees. So it's not a good sign.

HARRIS: So those are the knowns. What about the unknowns?

WILLIS: There are a number of bundled fee that are included in your 401(k). Your employer may not even be aware of these. They can add up to 3 percent. And they include administrative costs, custodial fees, education services and investment advice fees. Now understanding these and finding these are tough, but right now there are two bills in Congress that call for full disclosure of these fees.

HARRIS: Great. So what can I do in the meantime to sort of ferret all this out?

WILLIS: Talk to your employer. You can appeal to them. Every company should have someone who is designated as a plan administrator. If you are not sure who to contact, call your payroll department and they can direct you to the right place. Ask about what fees the plan charges. Hey, raise your concerns that you may be paying too much in fees. The plan administrator can research these fees or begin investigating more cost-effective plans. If you don't seem to be getting anywhere, you can also contact the Department of Labor at dol.gov. They have a phone number, 888-4-USA-DOL.

HARRIS: OK. And, Gerri, it's Thursday. Let's look ahead to the weekend and the big "Open House" show.

WILLIS: Exactly. More mortgage meltdown news. We have critical information for folks who want to take advantage of these down prices, buy that first-time home. You want to join us for that, 9:30 a.m. Eastern Time right here on CNN. I hope your household will be tuned in.

HARRIS: Oh, you know, that's a given.

But what's your take on the markets? What's going on?

WILLIS: Well, you know, the thing that I'm concerned about is that people will get depressed about this, pull their money out, move their 401(k). This is not the time to be doing that. You know, there's going to be a lot of volatility in this market. It's going to be scary for some folks. You've got to ride the wave. Keep putting your money in. Over time -- it's over time that you make the most money.

HARRIS: And that's why she's our personal finance editor.

Gerri Willis, great to see you. Thanks, Gerri.

WILLIS: My pleasure.

ANNOUNCER: Live in the CNN NEWSROOM, Tony Harris and Heidi Collins.

HARRIS: And welcome back, everyone, to the CNN NEWSROOM. I'm Tony Harris.

COLLINS: Hi to everybody. I'd Heidi Collins.

A war over water in the deep south. The governors of Georgia, Alabama, and Florida fight it out in D.C. this morning. CNN's Rusty Dornin is on Georgia's Lake Lanier. The drought-stricken source of the water wars.

Boy, Rusty, a lot of dust there. What are we talking about by way of how much is left? RUSTY DORNIN, CNN CORRESPONDENT: Heidi, this is where a lot of the water is supposed to be. I should be, you know, 10, 15 feet of water above me. it's really quite stunning when you see it. I had not been out here.

Just to show you the shoreline along Lake Lanier. Now, remember, we are right near the dam. This is the major water source for Atlanta. And we are down to nine months. Now we've heard a lot of figures. There's three months left where they don't have to start pumping the water, don't have to start treating it, and then there's six more months when they're going to have to use piping, use treatment to get the water in what the so-called dead pool

DORNIN: Now we've heard a lot of figures. There's three months left where they don't have to start pumping the water, don't have to start treating it, and then there's six more months when they're going to have to use piping, use treatment, to get the water, and what the so-called dead pool. That's the inactive pool at the base of Lake Lanier. Now, of course, this has started all sorts of political battles. As you mentioned, the three governors going to Washington.

Initially when this started about a month ago, we started hearing these dire predictions, it was painted as a war really over allowing water out of Lake Lanier to flow down to Florida to keep the mussels alive. But the Army Corps of Engineers told me that is not the case.

(BEGIN VIDEO CLIP)

COL. BENJAMIN BUTLER, U.S. ARMY CORPS OF ENGINEERS: There are industries and other interests down stream that also need the water. It's not just the endangered species. Even if the Endangered Species Act wasn't there, we still would be needing to release a large amount of this water, maybe not the same amount, and we're resetting to see what the lowest we can go and keep these industries alive.

(END VIDEO CLIP)

DORNIN: And those industries include a nuclear power plant in Alabama, which the Alabama governor is very upset about, and also a coal-fired plant down in Florida. Those utility plants do need a certain amount of water, and these are the kinds of considerations that are going to be taking place in Washington.

But to give you a very dramatic view of what it's like on the ground here in north Georgia, let's take a look at a buoy that used to warn boats about rocks here. That a buoy that used to be on water in Lake Lanier. So that shows you how far down this reservoir is and how serious this situation is. There is going to be a local press conference -- now it's been postponed until tomorrow -- where the mayor is going to talk about cutting back 10 percent, everybody cutting back 10 percent, in their uses of water in order to conserve -- Heidi.

COLLINS: Wow. Rusty, that is just a really, really dramatic shot. I had no idea that it was that low. Let me ask you this though because I'm not sure that people understand sort of the whole legal process here. Georgia did file this injunction to try to force the Army Corps to cut back the amount of water will go let out of the lake. So where does that particular side of this all stand?

DORNIN: Well, they filed an injunction a couple weeks ago with a judge who specializes in these kinds of situations, a federal judge in Florida. Now, he has scheduled a hearing for November 19th when they're going to be talking about it. Meantime, the Army Corps of Engineers and the U.S. Fish and Wildlife Service are going to be -- the biologists have been looking at how much water do those mussels need downstream really to survive. So everybody's going to be coming together and say, look, we know we've got to do something and keep everybody happy. How much water do we really have to release from this lake in order to at least give everyone a little bit?

COLLINS: Good luck. All right. Rusty Dornin out there at Lake Lanier for us. Rusty, great job with explaining all of that. Appreciate it. We will talk again soon. Thank you.

(WEATHER REPORT)

COLLINS: Immigration crackdown -- a big California farmer says it forced him to head for the border. Outsourcing farms, in a moment.

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COLLINS: Unfortunately, some very bad news to share with you right now. We've been telling you about this story out of Philadelphia, the one where a guy was holding up a doughnut shop and had a gun, and in walked a patrolman, a veteran patrolman, in the city of Philadelphia. Officer Charles Cassidy was shot in the head by this gunman and was last listed in extremely critical condition. Unfortunately, we have just been told that that officer has died.

So once again, we also know that the Philadelphia police are still searching for this particular gunman who shot one of their own. In fact, Officer Cassidy is the third police officer now that was shot in as many as four days in Philadelphia. So we will continue to follow what happens with this story and whether or not they are able to apprehend this gunman.

HARRIS: Contractors and corruption. Two big issues in Iraq. The fallout felt here at home now, with dozens of criminal investigations under way. The military today is expected to announce plans to fix it.

Pentagon correspondent Barbara Starr working her beat for us this morning. Barbara, good to see you.

What are you hearing?

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

You know, you're right. What we keep hear being in Iraq these days are contractors, contractors, contractors, Problems With those private security contractors, problems with contractors doing reconstruction work in Iraq, billions of dollars at stake. Now a third problem. There are, indeed, about 80 criminal investigations into contractors that are providing basic supplies to the troops in Iraq through the Army -- water, food, tents, those very basic issues. Eighty cases of potential criminal fraud and corruption under investigation now.

Later today the Army plans unveil what it calls it's urgent reform plan to deal with all of it, to try and fix it and get a handle on it. So what is their solution going to be, Tony? sources tell us it is going to be hire more people. They're going to hire about 1,400 new people to try and have better oversight, better handle on the management of these billions of dollars of contracts. They already have 10,000 people in the Army, we are told, working on contracting issues.

What's not clear, of course, is that ultimate question, how many of the new people are going to be contractors themselves. That aside, it really is a very serious issue. Billions of dollars at stake here. A lot of potential criminal prosecution under way, and the military knows it has to get a handle on it -- Tony.

HARRIS: So you could have a situation here where you're hiring more contractors to oversee the contractors.

STARR: Pretty much. That's what it may well come down to. They have, you know, a 10,000-person workforce in the army made up of active-duty personnel as well as civilians, but it turns out an awful lot of that work gets farmed out.

Pentagon correspondent Barbara Starr for us. Barbara, thank you.

STARR: The question has been asked before, can we just all get along? Well, high school club tackles hate by talking.

Kyra Phillips previews a CNN special investigations report on race.

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COLLINS: Are the nation's ports secure this morning? Missed deadlines and faulty figures. Critics take aim at the Department of Homeland Security. Tell you all about it, coming up in the NEWSROOM.

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COLLINS: Can we all just get along? Incidents involving nooses have more people talking about race relations. Our "SPECIAL INVESTIGATIONS UNIT" is on the story. In fact, Kyra Phillips profiles an anti-hate club at a Pennsylvania high school. (BEGIN VIDEOTAPE)

QUAY HANNA, GROUP LEADER: Remember when we were talking about how those two guys had hung nooses off the back of their truck, and they had gone ...

KYRA PHILLIPS, CNN ANCHOR (voice-over): Welcome to Quay's Club.

UNIDENTIFIED MALE: I don't really think they knew what kind of racial stigma it had behind it.

UNIDENTIFIED MALE: They knew it was, even if they were 12.

HANNA: Last time that we met ...

PHILLIPS: It's a discussion group about race at Penn Manor High School in rural Lancaster County, Pennsylvania.

HANNA: We've got black and Puerto Rican, we've got a full- blooded Southerner. We've got just our local homegrown rednecks, including myself.

PHILLIPS: The group leader is 37-year-old Quay Hanna, a self- proclaimed redneck and former racist who changed his views 15 years ago during a bus ride across America.

After one club meeting, I sat down with some members. Nate Irwin, the self-proclaimed country boy, Hunter McBride, who grew up in the south and wants to teach history, Amber Kitch (ph), the ex-city girl who now lives in the country, and Elaine Odhiambo, originally from Kenya.

(on camera): How has this club made an impact on your life?

ELAINE ODHIAMBO, GROUP PARTICIPANT: I used to see people like him and think that like, prejudiced ...

PHILLIPS: People like Nate, the country boy.

ODHIAMBO: Yes, the country boy, the rednecks or whatever, and think they're really racist.

PHILLIPS: So Nate, Elaine stereotyped you. Did you stereotype Elaine because she was black?

NATE IRWIN, GROUP PARTICIPANT: No, I did not, due to the fact that this club has been a big integral part of my life. Eighth grade, Quay caught us. You know, there was a few minority students in our middle school, and it got to the point where we were just being mean to these people on principle, and he nipped it in the bud.

PHILLIPS: You were a bit racist.

IRWIN: A bit, yes, in middle school, I do agree.

PHILLIPS: When you saw what was happening in Jena, Louisiana, did you sit back and think, oh my gosh, that's how I was?

IRWIN: That's how I used to be, not because I didn't just stumble upon this mentality. I was immersed in it.

PHILLIPS: Could a noose ever be used as a prank?

HUNTER MCBRIDE, GROUP PARTICIPANT: I don't think a noose could be used as a prank so because of the stigma behind it. You know, a lot of people know that it was used in lynchings, and there were a lot of lynchings that occurred all throughout the United States.

PHILLIPS: Amber, when you think of a noose or you see a noose, what comes to mind?

AMBER KITCH, GROUP PARTICIPANT: Every time you think of a noose, you automatically think of somebody being hung, and most likely, it always leads to death.

(END VIDEOTAPE)

COLLINS: Kyra Phillips is here now with more on tonight's CNN "SPECIAL INVESTIGATIONS" report, "The Noose, An American Nightmare."

OK, so when we watch that, I mean these are some pretty intelligent comments that are coming out, self-deprecating, as well.

PHILLIPS: Right.

COLLINS: It's a voluntary group, though. These kids have to decided ...

PHILLIPS: Oh, they choose to be ...

COLLINS: ...on their own, right?

PHILLIPS: Right, they choose to be a part of that club. And I was amazed because the conversation was so candid among black, Puerto Rican, American Indian, as Nate says, country boy, rednecks they call themselves, you know, rednecks, and you look at the group, and they even dress the part and they talk about, well, I don't want to be called a redneck. I want to be called a country boy, and then, one of the gals said, well, I don't want to be called ghetto, I want to be called urban.

And it was just an amazing discussion, and such candid -- I mean, do you remember having those kind of conversations in your high school or your middle school? I mean, for me, I went to inner city schools, and you just kind of were. You didn't -- you just kind of existed. You didn't have these kind of conversations. Imagine what that's like.

COLLINS: It wasn't like there were clubs set up like this, definitely not, no, but I think among certain groups, yes, there was discussion about things, and it was still -- even then, it was about knowing the person instead of what you see in front of you. But I wonder if anybody who has joined this club, again voluntarily because I think ...

PHILLIPS: Right.

COLLINS: ...it's important, has completely changed their mind about how they feel on this topic?

PHILLIPS: That's a good point because they have to choose to be a part of this club. And Quay was telling me about one student that -- hard core skinhead, and for some reason, he chose to be a part of this club and never said a peep for three years.

COLLINS: Three years?

PHILLIPS: They wanted him to be a part of it. They wanted to get him in there and they wanted to encourage him to talk. Finally, after three years, he spoke up and started really expressing his views and completely changed his mind from where he was to three years later. It's pretty fascinated story. You'll hear more about it, of course, on the special tonight.

COLLINS: Yes, good, from the bad guy to the good guy.

PHILLIPS: Exactly.

COLLINS: All right, well, very good. We are going to hear more about it, in fact. We'll let you know once again, "The Noose, An American Nightmare" is a CNN Special Investigation. You can catch it tonight 8:00 Eastern only here on CNN.

Also, to read about recent noose incidents across the country or watch online videos on racial issues, just check out a Special Report, The Noose, you can find it at CNN.com/noose.

TONY HARRIS, CNN ANCHOR: A potential death sentence. That's how one State Department worker views assignment in Iraq. Diplomatic revolt, ahead in the NEWSROOM.

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HARRIS: And good morning again, everyone. You're with CNN, you're informed. I'm Tony Harris.

COLLINS: Hi there, everybody, I'm Heidi Collins.

Developments keep coming in to the CNN NEWSROOM on this Thursday, November 1st. Here's what's on the rundown.

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