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Fierce Fighting in Iraq Today; Virginia Tech Settlement; John McCain Makes His Case to Voters in California; Rise and Fall of Detroit Mayor Kwame Kilpatrick

Aired March 25, 2008 - 09:00   ET

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

TONY HARRIS, CNN ANCHOR: And good morning, everyone. You are in the CNN NEWSROOM. I'm Tony Harris.
HEIDI COLLINS, CNN ANCHOR: Hi there, everybody. I'm Heidi Collins. Watch events come into the NEWSROOM live on Tuesday, March 25th. Here's what's on your rundown.

"Your Money," "Issue #1" for two presidential candidates today. John McCain and Hillary Clinton zeroing in on the economy.

HARRIS: The mayor of Detroit in court today answering to eight felony counts. This hour with the reporter who broke the text and sex scandal.

COLLINS: When fat free doesn't mean fat free. Are you getting creamed first thing in the morning? Killer breakfast, in the NEWSROOM.

HARRIS: Vote with your wallet. The troubled economy is "Issue #1"for you and for two of the presidential candidates today. We are watching a couple of things for you this morning. At the bottom of the hour, will it be another wild ride on Wall Street after Monday's surge? We'll watch the open of the markets. It's less than 30 minutes away. One reason for some jitters in next hour's report. On Consumer Confidence, that all-important gauge, helps predict future spending. It's the element of the healing of the economy.

And later today, candidate John McCain unveils his economic plan and Hillary Clinton is also telling voters how she'd fix things. So let's step back, take a breath and look at the big picture here.

CNN's senior business correspondent Ali Velshi watching the markets and Dan Lothian following "Issue #1" on the campaign trail.

And Ali, let's begin with you in New York. All right. Some good news yesterday.

ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: I'm going to give you good news.

HARRIS: Yes. Huh?

VELSHI: I'm going to give you good news. I mean -- and this is weird good news. You got to listen to this one for a second.

HARRIS: Are you going into futures? Where are you going with this?

VELSHI: Well, OK. First of all, home sales, existing home sales.

HARRIS: OK.

VELSHI: Existing home sales are the biggest part of homes. They don't have construction jobs attached to them but they're about 85 percent of the homes that are sold. From last February 2007 to February 2008, off a cliff. Dropped almost 24 percent.

HARRIS: Absolutely.

VELSHI: How is that good news? Well, here, I'll tell you why. The good news is that the prices have come down. That's also not necessarily good news, unless you're a buyer.

HARRIS: Exactly.

VELSHI: The median price for an existing home -- median is a price at which half the homes are sold above and half the homes are sold below -- in February it was $193,900. One year ago it was $212,000 and back in July of '06, which was the peak, it was 231,000. We're looking at almost 40,000 less to buy a single family existing home in the United States.

HARRIS: Yes.

VELSHI: Why is that good news? Because, in February we saw a little bit of an uptick from January. And that's the first uptick we've seen since last July. What does than mean? Low mortgage prices, low home prices, some folks are saying, maybe it's time to buy a house. And that, I think in this kind of economy, is good news because as people buy houses it will start to move the prices back up and may mean a little bit of a sliver of a teeny-weeny smidge of a light at the end of the tunnel.

HARRIS: OK. I'll give you that. I'm thinking about the other side of that. If you're selling a home and you're not making a whole lot of money...

VELSHI: Right.

HARRIS: ...and maybe you're losing a little money. But we'll take it as it is.

VELSHI: We already knew that was -- that bad news. And I should tell you, by the way, we are now at the house prices that we were at in 2004. So for everybody who thinks the sky is falling, it has been -- if you bought your house in 2000, 2001, 2004 in some markets, you still made some money. So again...

HARRIS: Yes.

VELSHI: ...we know the bad side of this thing. I'm just trying to sew a little silver lining. HARRIS: No. Appreciate that. Trust me, we appreciate the silver lining here. I'm sort of curious as to what you think might have happened at the open of the markets today. And I know there's a Consumer Confidence number due out this morning.

VELSHI: Yes. 10:00, we're got a Consumer Confidence number. We also have a different housing report that just came outside which shows yet another drop in home prices. We just talked about that.

HARRIS: Yes.

VELSHI: We know that. Consumer Confidence is expected to weaken a little bit. That, of course, is the driver of the economy. But at this point where we are you can't really make too much sense of these things. Some people might think it's a good sign because it's a turn around in the economy.

HARRIS: Yes.

VELSHI: Some people might say it's a bad sign. Hard to know. This is a good time for investors to look at their portfolio and make sure that they are divided into different categories, because when the market starts to turn back up at some point, it will, you want to be equipped for that.

HARRIS: CNN senior business correspondent -- there he is -- Ali Velshi.

See you a little later, Ali.

VELSHI: All right.

HARRIS: Thanks, man.

COLLINS: Now presidential politics and economic fixes. What are the specifics of Hillary Clinton's proposals?

CNN's Dan Lothian now on the campaign trail.

(BEGIN VIDEOTAPE)

SEN. HILLARY CLINTON (D), PRESIDENTIAL CANDIDATE: Our economic crisis is at its core a housing crisis.

DAN LOTHIAN, CNN CORRESPONDENT (voice over): Senator Hillary Clinton tackling the economy on the campaign trail in Philadelphia, unveiling a four-point economic plan that she says will help restore confidence in a battered economy and a housing market drowning in foreclosures.

CLINTON: Our housing crisis is, at heart, an American dream crisis. Your home isn't just your greatest asset, your greatest source of wealth. It's your greatest source of security.

LOTHIAN: Senator Clinton wants President Bush to appoint an emergency working group with top financial experts like Alan Greenspan, Robert Ruben and Paul Volcker, finding new ways to deal with the housing crisis. And she revisited last week's proposal of a second stimulus package, at least $30 billion to help hard-hit states and communities fight foreclosures.

But to Senator Barack Obama, Clinton's plan sounds like a loud echo. Here's what his campaign manager told reporters on a conference call.

DAVID PLOUFFE, OBAMA CAMPAIGN MANAGER: Most of them are repackaged ideas. We've talked about many of the same solutions.

LOTHIAN: And the Obama campaign says Clinton's emergency working group sounds like what they proposed a year ago in this letter to Federal Reserve chairman Ben Bernanke and Treasury Secretary Henry Paulson.

Putting out a strong message on the economy and the mortgage crisis is critical not only for Obama and Clinton, but Senator John McCain, because for voters, both Republicans and Democrats, it's "Issue #1." And opinion pieces in "The Washington Post," advisers for all three campaigns made their case for turning things around. But as what they are offering enough to tackle this monumental problem long term.

Bill Rosenberg is a political science professor at Drexler University.

BILL ROSENBERG, POLITICAL SCIENCE PROFESSOR, DREXLER UNIVERSITY: The candidates are doing somewhat a good a job at addressing this but not a complete great, great job. They need to change the way business is being done that we really can't have a mortgage industry that's left unbridled.

(END VIDEOTAPE)

COLLINS: Dan Lothian is joining us now live with the Election Express in Philadelphia there.

So Dan, Hillary Clinton is under fire for some comments that she made about a trip to Bosnia. What's the latest on that now?

LOTHIAN: Well, that's right. And you know, the reason that she spoke out about Bosnia -- and it's been repeated this story on several occasions -- is because she's really wanted to show that she's very strong on foreign policy, foreign policy issues. She routinely will bring up her resume about how many trips she has taken overseas. And in this particular incident she went to Bosnia as first lady and has talked about how she came under sniper fire while there.

Well, there has been evidence to the contrary. So yesterday she did come out and admit that she misspoke. But what this does raise is this whole issue of credibility and, obviously, now, it gives more fuel to the fire for her critics.

COLLINS: Yes, and, Dan, those people who were saying that it really didn't happen were on the trip with her. Do we know the details of where they were? Is it possible they were not in the same area or do they know -- do we know that they were walking side by side and they just didn't experience the same thing?

LOTHIAN: Right: Well -- clearly now we have some videotape that has emerged and there were people who were right there with her. And by her own admission now that she misspoke means that there really isn't any credibility at all to this story.

COLLINS: Yes.

LOTHIAN: Obviously, she was in an area. It was a hostile area. It was a war zone, but with specific reference to being under sniper fire, clearly, she says, that was not the case now.

COLLINS: All right. CNN's Dan Lothian for us in Philadelphia this morning.

Thank you, Dan.

As you know, the economy "Issue #1" for the presidential candidates now, too. Republican John McCain unveils his economic plan at 1:00 Eastern. We're going to have live coverage of that for you. As well as Hillary Clinton's town hall meeting. That is due to get under way at 1:30 Eastern. We'll have them both for you. So keep watching CNN because our money team has you covered, too, whether it's jobs, debt, housing or savings. You can join us for a special report. It's called "Issue #1: The Economy." All this week at noon Eastern only on CNN.

HARRIS: Senator Barack Obama seems to be enjoying his down time. And why not? The campaign trail can be arduous. Grueling. There he is in the Virgin Islands taking a vacation in friendly territory. Obama won the Virgin Islands caucuses back in February. Now tomorrow it's back on the campaign trail. He has his a stop planned in North Carolina.

In Detroit, more fallout from the mayor's text message sex scandal. This morning, the city's two major newspapers calling for Kwame Kilpatrick to quit. It comes just hours before his arraignment.

Live now to our Susan Roesgen.

Susan, good to see you. What are folks there in Detroit and in the surrounding areas saying about the mess their so-called hip-hop mayor is in?

SUSAN ROESGEN, CNN CORRESPONDENT: Oh, Tony, I mean, they are both fascinated and horrified. I've got the two morning papers here to show you. Look at this. How would you like to wake up and see "Mayor Charged" in banner headlines? And then look at this one. How often is it, Tony, that someone wakes up to see the mug shots...

HARRIS: Oh boy.

ROESGEN: ...of the mayor and his former chief of staff right here on the front of the "Detroit Free Press." You know, this is a case that involves sex, betrayal and money. The case involves the mayor allegedly accused of manipulating the firing of a couple of police officers who had uncovered the fact that he was having an affair with his chief of staff.

Well, because of that firing, the city of Detroit was forced to pay more than $8 million to those officers in a wrongful dismissal, a whistleblower lawsuit. And now the mayor himself is charged with obstruction of justice, misconduct in office and perjury.

(BEGIN VIDEO CLIP)

KYM WORTHY, WAYNE COUNTY PROSECUTOR: You know, the fundamental principles of the justice system are fairly simple. We learned them as children. They aren't hard. Tell the truth. Take responsibility for your actions, admit when you're wrong, play fair and be fair. Don't take or use things that aren't yours and there are consequences for bad behavior. Even children understand that lying is wrong.

(END VIDEO CLIP)

ROESGEN: And the consequences of that bad behavior, Tony, could be many years in prison. The perjury counts alone would carry 15 years in prison for the mayor of Detroit. Now 1:00 this afternoon in that courthouse behind me is where he's supposed to come and be arraigned, his first court appearance. Again, he already was -- had his mug shot taken, had his fingerprints taken. He's already been made aware of the charges. He says absolutely that he will be vindicated. He will be exonerated, though the papers have been printing some of the racy text messages that he sent his chief of staff.

Tony, can you believe it? More than 14,000 messages back and forth between the mayor, who is married, and his former chief of staff, who used to be married, was married at the time of this affair.

HARRIS: Christine Beatty, right?

ROESGEN: 14,000 -- yes, more than 14,000 messages back and forth between these two in about a year and a half period. Love messages to each other.

HARRIS: Wow. Pretty steamy. Pretty racy stuff, huh?

ROESGEN: Remember, it's not the sex that's the issue here. That's the personal issue for them. It's the perjury. But it's not only that, Tony. It's this business of getting rid of those police officers...

HARRIS: Yes.

ROESGEN: ...who had uncovered it and then the city of Detroit had to pay all that money to them. That's where it gets really serious.

HARRIS: Taxpayer dollars.

All right. Susan Roesgen for us in Detroit.

Susan, great to see you. Thanks.

Sex, lies and cover-up. We will go deeper into the investigation of the Detroit mayor's affair -- alleged affair with the reporter who broke the story. That is coming up at the bottom of the hour right here in the CNN NEWSROOM.

COLLINS: Sounds like a good time to go to weather.

HARRIS: Well...

COLLINS: Yes. Rob Marciano is standing by now. And boy, this is actually not a very good situation either because, if you are downstream if you will, Rob...

ROB MARCIANO, CNN METEOROLOGIST: Yes.

COLLINS: ...from all of the flooding that was going on over the past few days and you are the ones that are really suffering now.

(WEATHER REPORT)

COLLINS: No.

HARRIS: Well, yes, because you are ready to donate some money to my kid's college fund on the golf course. That's why you're ready.

COLLINS: I was wondering where that was going. I get it now.

HARRIS: Yes.

MARCIANO: Yes. Yes.

HARRIS: It's time.

MARCIANO: Like you've actually shown up in the past 12 months.

COLLINS: I could bring up the CNN tournament, but, no, we won't do that, Rob, will we?

MARCIANO: No, let's not.

COLLINS: Second place. Anyway -- and you weren't there. We'll check in with you later, Rob.

MARCIANO: That sounds good. OK.

COLLINS: I know you have a lot going on. Thank you.

HARRIS: Could have won.

COLLINS: Breakfast eye opener. Before you take that next bite, how some food makers sneak in fat and calories. Dr. Sanjay Gupta serves it up. Next.

ANNOUNCER: CNN NEWSROOM brought to you by...

(COMMERCIAL BREAK)

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

So you're out of town, but it's your stuff that's taking a road trip.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: They saw a posting on Craigslist saying that the property owner is leaving the country. Has to be get out of town right away and come and get everything. The property is free.

(END VIDEO CLIP)

HARRIS: This is crazy. Craigslist hoax, in the NEWSROOM.

(COMMERCIAL BREAK)

HARRIS: Who is watching your flight? An extensive CNN investigation into the Federal Air Marshal Service finds startling numbers. Less than 1 percent of daily flights have air marshals on board. That's fewer than 280 out of 280,000 flights every day.

CNN investigative correspondent Drew Griffin also found flights out of Washington and New York have seen a big drop in air marshal coverage since the middle of 2003. Drew will have much more of his exclusive report tonight on "ANDERSON COOPER 360." That's at 10:00 Eastern.

COLLINS: Now to your health. Breakfast. We've heard that it's the most important meal of the day. But beware. They can also be loaded with diet busting calories and hidden fat.

Chief medical correspondent Dr. Sanjay Gupta is in New York this morning. He joins us now.

So Sanjay, what's the deal here? Does this actually mean we can't trust labels to tell us how much fat we're consuming?

DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: Well, it's an interesting exercise for sure, Heidi. This is what we found out. For example, if you look at a coffee creamer like this one, for example. You look at the labels, you're going to see...

COLLINS: You're not covering the label or the brand, are you?

HARRIS: No, he wasn't doing that.

COLLINS: That was very inconspicuous.

GUPTA: Yes, we're told to do this. You know, standards and practice covering that up. How that...

COLLINS: You're getting really good at this. Are you a lawyer, too?

GUPTA: I know. I know.

COLLINS: Sorry. Go ahead.

GUPTA: But this says zero grams of trans fats on here. Now when you probe this a little bit deeper what you'll find, in fact, is the FDA says, look, if something has below 0.5 grams of trans fats, they can write no trans fats, zero grams of trans fats on there. The problem is, for example, the coffee creamer -- this is just one example -- that means it has about 0.5 grams in one teaspoon. If you put two teaspoons in your cup of coffee, you drink three cups of coffee throughout the day, just from your coffee creamer alone, you've actually exceeded how much trans fats you should be eating in an entire day.

And that's just from your coffee creamer. These labels can be a little bit deceiving, certainly. And we know trans fats, for example, you can only have two grams, supposedly, throughout the day. Three grams in the coffee creamer alone. It's linked to all sorts of problems, heart disease, strokes, all sorts of problems in the long run. And that's something you may not even know that you're getting -- Heidi.

COLLINS: But it's so good. I can't have coffee without the big fattening creamer in there. But, no, it's good to know. You got to know what you're eating. If it's not on the label, I mean, yes, how would you know?

But I wonder about other breakfast foods. I imagine that this is not the only thing where our labels are not exactly correct?

GUPTA: Well, I mean a lot of people just don't bother reading labels at all. And then you prepare foods at home and you start adding other ingredients, and suddenly things start to add up. A cinnamon muffin, for example, can have almost 30 grams of fat. That's almost half the fat you should get in an entire day.

COLLINS: Wow.

GUPTA: Take a look at some other common breakfast foods as well. Pancakes, for example, 29 grams of fat. Sausage links, 32 grams of fat. In case you're curious, four pieces of sausage, four links of sausage, has about three times as much fat as four strips of bacon. So if you're choosing between the two, go for the bacon instead. Cheese omelet, 33 grams of fat. So these are things that again, you may not realize this because breakfast is the most important meal of the day. But if you're getting almost your entire fat allotment for the entire day at breakfast, you're obviously due your body no good.

COLLINS: Yes. Yes. How about that turkey bacon, though? They make fun of me here because I eat a lot of turkey bacon.

GUPTA: That's what I get.

COLLINS: It's a better choice, right, than the sausage. I like that.

GUPTA: Less fat for sure.

COLLINS: Yes. Yes.

GUPTA: And you know, the thing is you start adding these things up. You know, for example, so you talk about turkey bacon versus regular bacon, versus sausage, you add 100 calories a day extra, which isn't a lot based on what I've just told you. Just 100 calories a day, you're going to gain 10 pounds at the end of the year, even if you're doing everything else the same -- exercising...

HARRIS: Wow.

GUPTA: ...easting regulate throughout the day, 10 more pounds. So you know, that's something to keep in mind as you're hopefully reading those labels and paying attention to what you put in your body.

COLLINS: Yes, yes, that's definitely something to keep in mind, especially if you are female.

All right. Dr. Sanjay Gupta, thanks for the good news. Appreciate it.

GUPTA: Thanks. Yes. Thanks, guys.

HARRIS: Senator Hillary Clinton out with her plan to solve the mortgage crisis. Why she says Congress needs to act now and what our Ali Velshi thinks about it. That's next.

(COMMERCIAL BREAK)

HARRIS: Hillary Clinton says Congress needs to act now to help fix the nation's home mortgage crisis.

Ali Velshi, "Minding Your Business" this morning. And he's back, yey, to help us explain...

VELSHI: Good to see you again.

HARRIS: ...Clinton's plan.

Hey, Ali, chief among the items on the Clinton plans seems to be this call for Congress to provide, what, $30 billion to help states and communities lessen the impact of these foreclosures.

VELSHI: Yes.

HARRIS: The logic there seems to be if you can provide all this money for banks and brokerage houses, why not provide something similar to homeowners in states and communities.

VELSHI: That's how Hillary Clinton put it actually. She said there was a $30 billion that the Fed made available to allow JPMorgan to buy Bear Stearns. HARRIS: Yes.

VELSHI: Could they make some money available for regular people? Hillary Clinton came out with a four-point speech, four-point plan yesterday which, I think, is worthy of some consideration.

Her four points were as follows. One is, she wants the government through the Federal Housing Authority to guarantee to buy up these unwanted mortgages that, you know, we've -- the secondary mortgage, how they're sold to investors and nobody wants to buy those. She wants the government to be able to buy those so that people can get access to money.

Number two, she wants an emergency working group of financial experts, and she named Alan Geenspan.

HARRIS: Yes.

VELSHI: Greenspan's predecessor Paul Volcker and former treasury secretary Bob Ruben as examples of people who can spend about three weeks to examine the problem and report back on what -- to the president on what solutions he can have.

Number three, she wants legal clarity for mortgage lenders. Let's say you got your loan from Countrywide. But Countrywide sold that loan to someone else.

HARRIS: Yes.

VELSHI: Now you're in trouble. You call them up and you want to renegotiate the terms but they don't own your loan so they're scared to give you the best term you can get for fear that the person who owns your loans may sue them. So she wants legal clarity.

And number four is what you said, which is very interesting. $30 billion for states or municipalities either buy up some foreclosed properties or provide security if there's, you know, an area where there have been a high concentration of foreclosures. You know, that can attract crime. Empty houses are fantastic for crime. Or, you know, resell those properties to people as low income or redevelop them.

The interesting thing about this, Tony, is she is suggesting things the president can do right now, not things she would do if elected or once she comes into office which, I think, is an interesting development. She's putting forward a -- something the president is going to have to at least think about and possibly respond to.

Now today at 1:00 we are going to be listening to John McCain who's also going to be speaking about the economy. So I think we're ratcheting up the discussion about what we can actually do to fix these problems right now.

HARRIS: That's interesting. You know you mentioned -- and just something that occurred to me as you were talking, I think I heard something this morning on the way in about these companies that are starting now to sort of bottom fish...

VELSHI: Right.

HARRIS: ...for these unwanted mortgages. Is that an indication, do you think, that maybe we're starting to see the bottom of this?

VELSHI: You know, I think you are starting to see signs. We just talked about, 20 minutes ago, about the fact that we started seeing people getting into the housing market again. A little uptick in home sales. I think you might be saying, look, the bottom line is it's not worth knowing whether this month or next month or three months from now is going to be the bottom.

It's the idea that people are -- some people are...

HARRIS: Yes.

VELSHI: ...saying maybe there's a bottom coming or maybe we're going to start to see that upturn. I think these are generally positive signs. Again, there are lots of signs out there.

HARRIS: Absolutely.

VELSHI: But I'll take the winds when we can get them.

HARRIS: "Minding Your Business" this morning, there he is, Ali Velshi.

Ali, appreciate it. Thank you.

VELSHI: See you, buddy.

HARRIS: And keep watching CNN. Our money team has you covered whether it's jobs, debt, housing or savings. Join us for a special report called "Issue #1: The Economy," all this week noon Eastern, only in CNN.

COLLINS: Sex, lies and cover-up? Detroit's mayor charged with lying under oath. So where does the investigation go from here? The reporter who broke the story coming up next.

(COMMERCIAL BREAK)

HEIDI COLLINS, CNN ANCHOR: And you are in the CNN NEWSROOM. Good morning, everybody. I'm Heidi Collins.

TONY HARRIS, CNN ANCHOR: And good morning, I'm Tony Harris. Let's take you to the New York Stock Exchange right now. And take a look at the opening, just a couple of moments ago.

Boy, what are we anticipating today? Futures up early. Slipping a bit just before the open. Consumer confidence report due out this morning as well. So the early indications are kind of flat, slightly down morning. Just out of the gate, but, boy, if you look back to yesterday. Nice rally yesterday. The Dow closing up 187 points. So we will follow the activity, of course, for you throughout the morning right here in the CNN NEWSROOM.

COLLINS: Fierce fighting in Iraq today. Iraqi security forces tangling with a prominent Shiite militia. CNN's Kyra Phillips is joining us now from Baghdad with today's development.

So, Kyra, where is all this taking place and why now?

KYRA PHILLIPS, CNN CORRESPONDENT: Well, Heidi, assassinations, kidnapping and theft. Basra is immersed in it. Why? Well, it's an oil rich city that everyone within Iraq and in this conflict wants a piece of. So now, Iraq's Prime Minister Nouri al-Maliki is overseeing a massive military operation. His forces are battling Shiite Militia. Here's some of the pictures right now that we've been monitoring all morning and through the afternoon. We've been getting them in all day.

And just to give you a little background on what you are seeing and on these Militia members, they are from the Mahdi Army. And those are the fighters that are loyal to the powerful and radical Shiite cleric Muqtada al-Sadr. Now al-Sadr is very powerful and quite a popular leader in Iraq. And when he speaks, people listen.

The U.S. military and Iraq's prime minister say that when al-Sadr calls for a Militia ceasefire, violence actually goes down in this country. Now, we're just learning, though, that this battle that has turned into something much bigger, al-Sadr supporters are calling for a nationwide civil disobedience campaign. What is that mean? Well, it's going on all across Iraq. Protests and raids and detentions. That's what these supporters are saying they are against. His Militia are coming forward and saying this must stop or the fighting will go on.

Heidi?

COLLINS: So, Kyra, is there any way to know how much Iran might be influencing all of this?

PHILLIPS: A tremendous part. As you know, Iran is influencing all parts of this war. It's splintered, actually, al-Sadr's militia and it's funnelling training and weapons to other factions of that militia. And U.S. and Iraqi Intelligence sources say that Sadr has actually lost a lot of control over his own Mahdi Army.

So when he comes forward and says something, not everybody is listening now. So Iran's influence and power over this is tremendous. And now we're getting reports that Mahdi Army are out on the streets here in Baghdad. And other parts of Iraq showing support for Sadr and its own forces right here in Baghdad.

COLLINS: Wow. All right. Well, Kyra, we know that you'll stay on top of that for us. Let us know shall we need to come back to you. Appreciate it. Kyra Phillips joining us from Baghdad this morning.

PHILLIPS: You bet.

HARRIS: The rise and fall of Detroit Mayor Kwame Kilpatrick. He came into office a rising political star. Now there are calls this morning for him to quit after the mayor was charged with eight felonies.

Jim Schaeffer writes for the "Detroit Free Press." And Jim was part of the writing team that broke this story.

Jim, good to see you. Good morning to you.

JIM SCHAEFFER, DETROIT FREE PRESS: Good morning, Tony.

HARRIS: You know, after, boy, the civics lesson we received from Kym Worthy, the Wayne County prosecutor yesterday and the reading detailing of the charges against Kwame Kilpatrick and Christine Beatty, I was left wondering what the defense might be. Here's an indication from Dan Webb, Kilpatrick's attorney. And then I've got a question for you.

SCHAEFFER: Sure.

(BEGIN VIDEO CLIP)

DAN WEBB, ATTORNEY FOR MAYOR KILPATRICK: I'm as certain as I stand here that the initial production of those text messages was, in fact, illegal. Under Federal law, those messages under the Stored Communications Act absolutely should not have been produced in civil litigation.

(END VIDEO CLIP)

HARRIS: All right, Jim, help me here. Is the idea of squashing these text messages, pretty much the extent of a defense here?

SCHAEFFER: Well, you didn't hear Mr. Webb talk about the veracity of the messages.

HARRIS: That's true.

SCHAEFFER: Nobody is denying that this stuff happened, that it's true. What their defense is, is that you can't use them. And so, that's going to be Kym Worthy's challenge is to argue that she got these things legally. We had a one on one interview with her yesterday after her very interesting press conference. And she pretty much said, I have no qualms that I'm going to be able to get this stuff into court and I'm going to be able to use it as evidence.

HARRIS: All right, we're going to get to Kym Worthy in just a moment here. But let me just sort of back track and try to put this on the record as clearly as I can from your reporting.

Is Kwame Kilpatrick denying the affair with his former chief of staff?

SCHAEFFER: No. And in fact, you know, when we first published our investigation at the end of January, the mayor went into seclusion for a week. We were told trying to figure out how to deal with this situation. Then he came out and did a -- an apology from his church with his wife sitting by his side. He didn't say specifically what he was apologizing for. And a few days after that, Christine Beatty, the woman that he had the affair with resigned her position. So, no, they've never denied that the affair occurred.

HARRIS: OK, Wayne County prosecutor Kym Worthy now on the real serious public ramifications of this case.

(BEGIN VIDEO CLIP)

KYM WORTHY, WAYNE COUNTY PROSECUTOR: Our investigation has clearly shown that public dollars were used. People's lives were ruined. The justice system was severely mocked and the public trust trampled on.

(END VIDEO CLIP)

HARRIS: All right, Jim, given the misconduct in office charge here, I'm wondering, have you been able in your reporting, to uncover anything close to a slush fund that may have been used by the mayor here perhaps to finance the relationship?

SCHAEFFER: Well, I don't know about slush fund, but we have reported that the mayor charged at least one plane ticket and a rental car on a trip that he took with Ms. Beatty to Denver back in 2002 that was listed in his private calendar as a gone fishing vacation. So we're pretty sure no city business took place on that trip.

What is clear from Ms. Worthy's comments and what we have reported is that more than $9 million in public money, taxpayer money, has been used by the mayor to settle a case. You know, this all stand as...

HARRIS: Wait a minute. The jury verdict, decision and settlement in the civil case was it $9 million? Where do you get the $9 million from? Where was this? $6 or $7 million?

SCHAEFFER: Right. There was a jury verdict. There was a police whistleblower trial last summer that is the basis for all these perjury charges.

HARRIS: Yes.

SCHAEFFER: But there was a jury verdict for $6.5 million against the mayor and the city. Since then, he, after vowing to appeal this verdict, suddenly settled. And we were sort of curious what was going on. We filed a freedom of information act request and since then, we've filed a lawsuit that the mayor fought all the way to the Michigan Supreme Court.

We wanted to unseal documents that we believe existed -- that the mayor insisted did not exist. In the end, we got them. The public saw them and they revealed that there was a secret settlement in this case and that a deal was that the mayor would pay $8.4 million in city money to these former police officers who sued him to make his text messages go away forever. HARRIS: Well, Jim, finally, when does the public and Detroit sort of march on city hall here and demand. I'm talking about the people of Detroit, demand the resignation of their mayor. Any indication that that might happen?

SCHAEFFER: Well, the mayor is going to be arraigned today. This is an historic moment. It's a sad moment. No sitting Detroit mayor has ever been charged with a crime. Here, we've got a guy who is accused of eight felonies and he's going to be in a courtroom at 1:00 this afternoon where a judge is going to read the charges and set a bond for him.

We understand there's some calls for protests outside the building. We'll see what happens. This isn't the first of those, though. There have been protests. I mean, this city has a lot of people that are opposing the mayor at the moment.

HARRIS: Well, and I know my friends in Detroit will say, you know, Tony, you sounded like you've just convicted the mayor. He's innocent until proven guilty.

SCHAEFFER: That's right.

HARRIS: So, Jim, let me thank you. As we wrap up our conversation, let's let the mayor have the last word on this.

(BEGIN VIDEO CLIP)

MAYOR KWAME KILPATRICK, DETROIT: I am deeply disappointed in the prosecutor's decision. I can't say that I am surprised, however. This has been a very flawed process from the very beginning. And I believe that there will be a full airing of all the facts in this case that result in my full and complete vindication of all that has been laid before you.

(END VIDEO CLIP)

HARRIS: There you have it. Kwame Kilpatrick to be arraigned later today in Detroit. Jim Schaeffer of the "Detroit Free Press." Great reporting, Jim. Thank you.

SCHAEFFER: Thanks for having me, Tony.

COLLINS: The Supreme Court in action this morning. And for the first time in 12 years, the nation's highest law officer will argue a case. Attorney General Michael Mukasey wants the justices to reverse an Appeals Court ruling in a terror case.

It involves an Algerian man convicted of plotting to attack Los Angeles International Airport before New Year's Day in 2000. The Appeals Court threw out a conviction on an explosives charge. Mukasey says the ruling has made it harder to go after terrorists.

Hillary Clinton's foreign policy experience. A trip to Bosnia while first lady didn't go down quite like she claimed. CNN's Anderson Cooper has the story. (BEGIN VIDEO CLIP)

ANDERSON COOPER, CNN CORRESPONDENT: Hillary Clinton admitting a short time ago the story she told about coming under sniper fire in Bosnia was not true. Clinton says it was a misstatement. Her claim made repeatedly has been contradicted before but this is the first time Senator Clinton has addressed the issue directly. It's already a campaign issue.

The Obama forces have been hammering away what they call, quote, "A growing list of instances in which Senator Clinton has exaggerated her role in foreign and domestic policy making. We'll show you her reply in just a moment. But first here's what she said last week about her trip as first lady to Bosnia in 1996.

SEN. HILLARY CLINTON (D), PRESIDENTIAL CANDIDATE: I remember landing under sniper fire. It was supposed to be some kind of a greeting ceremony at the airport, but instead we just ran with our heads down to get into the vehicles to get to our base.

COOPER: Well, now, here's the video of that arrival in Tuzla. You notice the absence of any ducking or any running or shooting for that matter. There appears they came off the plane rather not particularly fast and there actually was a short greeting ceremony at the airport. It was apparently safe enough for a little child to read a poem to the senator on the tarmac. Chelsea, obviously, is there with her as well.

The video goes on. She stops. She greets the child. Her campaign spokesman said Senator Clinton, quote, "misspoke." Then later she said this at the editorial board of the "Philadelphia Daily News."

A quote, "Now let me tell you what I can remember, OK. Because what I was told was that we had to land a certain way and move quickly because of the threat of sniper fire. So I misspoke. I didn't say that in my book or other times. But if I said something that made it seem as though there was actual fire, that's not what I was told."

She goes on to say, "I was told we had to land a certain way. We had to have our bulletproof stuff on because of the threat of sniper fire. I was also told that the greeting ceremony had been moved away from the tarmac but that there was this 8-year-old girl and, I can't, I can't rush by her, I've got to at least greet her -- so I made a -- I took her stuff and then I left, now that's my memory of it."

So how important was this trip anyway? Well, that's not clear. We do know Senator Clinton was accompanied by singer, Sheryl Crow, and comedian Sinbad. There is Sinbad. He said the scariest part of the trip was wondering where he'd eat next.

(END VIDEO CLIP)

HARRIS: OK. The Virginia Tech settlement. Money for the families of those killed in the school rampage last year.

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HARRIS: The State of Virginia is reportedly offering the families of those killed in the Virginia Tech Massacre $100,000 each. But the Associated Press reports there's a catch. The families who agree cannot sue the state or the school. State officials were also offering to pay the medical and counselling bills of the families and surviving victims. The families have until Monday to decide whether to accept.

COLLINS: The family of an indicted bank executive found killed. A sixth body found inside the wreckage of the family's burning car. It happened in Iowa. Police say the crime may have started here at the family's home. Police responding to a 911 call found a woman and her four children dead. Her husband missing.

Minutes later, police responding to an accident. Found the family's van on fire. A body inside. Police say it may be the missing husband who had recently been indicted on embezzlement charges.

HARRIS: Another check of weather now. Rob Marciano in the severe weather center. And I know, Rob, you are keeping an eye on the white river there in Arkansas. With all this flooding, the idea is to get that water into the gulf as soon as possible, huh?

(WEATHER REPORT)

COLLINS: The message and the money. John McCain getting to work on both in California.

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COLLINS: We want to quickly take you to some pictures that we are getting in from our affiliates in Indianapolis, Indiana. You see that school bus there on its side. Always an upsetting picture to show you. But here is the information that we have. Again, according to our affiliates there in the Indianapolis area.

Eight minor injuries, including the school bus driver. This is Decatur Township that we're talking about in particular. It's the southwest side of Indianapolis. So we will keep our eye on that picture for you and certainly give you any more details should we get them here.

HARRIS: John McCain makes his case to voters in California. He is also looking to pick up some cash. More from CNN's Dana Bash, part of the Best Political Team on Television.

(BEGIN VIDEOTAPE)

DANA BASH, CNN CORRESPONDENT (voice-over): Just back from his eighth trip to Iraq, John McCain returned to the campaign trail with last week's words from Obama bin Laden in hand.

SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: He urged Palestinians and people of Syria, Lebanon, Jordan and Saudi Arabia to, quote, "Help and support of their Mujahedin brothers in Iraq which is the greatest opportunity and the biggest task.

BASH: Proof he argued that Democrats are, quote, "Dead wrong about the war."

MCCAIN: My Democrat opponents who want to pull out of Iraq refuse to understand what's being said. Central battleground is Iraq in this struggle against radical Islamic extremism.

BASH: Absent from McCain's remarks to California veterans was any mention of the new death toll. 4,000 U.S. troops in the war zone he just visited.

(on camera): I'm wondering why in a room of this VFW post, you decided not to mention the new grim death toll in Iraq. The 4,000 dead.

MCCAIN: I wear a bracelet on my hand because not only as a symbol of the sacrifice that a brave young man named Matthew Stanley made but that of nearly 4,000 other brave young Americans who have served and sacrificed.

BASH (voice-over): McCain is stepping up his challenge to Democrats to admit that the military strategy in Iraq is working. Still, privately, some McCain supporters tell CNN they worry the campaign is not using this time Democrats who are still battling each other to develop a clear message. McCain advisers insist they are on track.

MCCAIN: We all know that America is hurting now.

BASH: With plans to unveil new policy ideas this week on the economy, one of McCain's weak spots, and a speech on what aides call his strength, national security.

(on camera): From here, McCain travelled to a California fundraiser, his second of the day. In fact, since McCain effectively locked up the Republican nomination six weeks ago, he's been travelling aggressively to raise campaign cash. And yet last month, Hillary Clinton out raised McCain three to one. Barack Obama out raised him five to one. On the one hand, McCain advisers say this year campaign cash doesn't matter as much as the years past. On the other hand they insist they'll do better this month. Dana Bash, CNN, Chula Vista, California.

(END VIDEOTAPE)

HARRIS: And the economy issue number one for the presidential candidates. Republican John McCain unveils his recovery plan at 1:00 Eastern and we will have live coverage of that for you. As well as Hillary Clinton's town hall meeting. That's due to get under way at 1:30 Eastern.

COLLINS: Hey, that's my stuff! Hoax victim comes home to see people taking away his things.

(COMMERCIAL BREAK) HARRIS: Homeowners horror story. An Oregon man -- I shouldn't be smiling about this. I'm sorry. It's just really.

COLLINS: You really are laughing.

HARRIS: So an Oregon man came home to see people, dozens of people rummaging through his things. Someone posted a false add on the Craigslist Web site. You're familiar with that site? The hoax claim the family had to leave the country and that their belongings were free for the taking, now people are saying I don't know -- police are saying people took all kinds of stuff and they could be prosecuted.

(BEGIN VIDEO CLIP)

RICHARD FOGARTY, JACKSON COUNTY, OREGON SHERIFF'S OFFICE: The people need to return the property. If they don't make an effort to return the property, we make them part of the theft case. It baffles me why people would see something on Craigslist and despite the face value that it was legitimate, and then refuse to obey the demands of the property owner.

(END VIDEO CLIP)

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