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CNN NEWSROOM

Russia Invades Georgia; Beijing's Air Quality; McCain Holds Town Hall Meeting in Iowa; Troop Withdrawal Deal in Iraq?

Aired August 8, 2008 - 11:00   ET

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


TONY HARRIS, CNN ANCHOR: Good morning again, everyone. You're informed with CNN.
I'm Tony Harris.

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

Developments keep coming into the CNN NEWSROOM on this Friday, August 8th.

Here's what's on the rundown.

Border crossing. Russian tanks move into a neighboring country. Georgia says it is under attack.

HARRIS: A charter bus tumbles off a Texas overpass. Thirteen people confirmed dead, others fighting for their lives this morning.

COLLINS: The 29th Olympiads opens, and Beijing finally gets its day in the sun, if anybody can find it.

Olympic haze -- in the NEWSROOM.

HARRIS: Just in this morning, a get-out-of-jail card for Detroit's mayor, but it is not free. Just moments ago, a judge ordered Mayor Kwame Kilpatrick released on $50,000 cash bond. He's also ordered Kilpatrick not to travel and to wear some type of electronic tether.

Kilpatrick was jailed overnight for violating the terms of his original bond. He took a business trip to Canada without permission. Kilpatrick faces felon charges of perjury, obstruction of justice, and misconduct of office. The charges stem from romantic text messages, as you may remember, with his former chief of staff.

COLLINS: Escalating crisis in the former Soviet Republic of Georgia, now at a boiling point. It's a breaking story we've been following this morning.

Georgia's president says Russia is attacking his country, dropping bombs and move tanks into Georgian territory. President Mikheil Saakashvili says his forces shot down two Russian aircraft. The violence follows clashes this week between Georgian troops and separatist forces in Georgia's breakaway region of South Ossetia.

Georgian President Mikheil Saakashvili gave CNN an exclusive interview just a few hours ago. He had a specific message for the American people.

(BEGIN VIDEO CLIP)

PRES. MIKHEIL SAAKASHVILI, GEORGIA: Wake up. Wake up. This is what is happening now.

It's not about Georgia. It's about the basic values the West has, the basic values the U.S. has always preached to us.

You know, we are a small country, but, you know, we are attacked because we wanted to be free. We are attacked because we wanted to build genuine democracy. We are attacked because we built a non- corrupt free enterprise society that is prospering and thriving.

We are under attack because we never wanted to accept the old corruption (ph) of game (ph), and wanted to be close to the West and go into the West, and go where we believe we belong, into the European fold. And this is -- and, you know, if the Americans and Europeans don't stand up for their own values, for their own principles, then those principles and values will be in danger today in Georgia, tomorrow elsewhere. And this is -- it will be a never-ending story.

(END VIDEO CLIP)

COLLINS: Saakashvili says dozens of civilians have been killed and injured.

Russia is blaming the confrontation on Georgia, which it says has targeted Russian peacekeepers in the region.

HARRIS: So what is the U.S. saying about these developments in Georgia? Let's go live to Pentagon Correspondent Barbara Starr.

Barbara, good morning.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Good morning, Tony.

Well, statements from the White House, of course, calling for calm and calling for both sides to sit down and talk about this and end the hostilities. But read between the lines as to what the Georgian president is saying, because it underscores why this area, so far from the United States, an area many Americans are not aware of, is so important to the Bush administration.

Georgia contributes a fair number of peacekeepers to the war in Iraq. Georgia also is set to become a member of NATO. And that has the Russian government, by all accounts, deeply upset, to have Georgia become a member of NATO.

One U.S. military official saying the assessment right now is that one of the reasons Russia is causing these problems is they're trying to show Georgia is not a stable country and put a crimp in its plans to join NATO. Perhaps that one of the reasons the Georgian leader is calling for the West to come to the aid of that country.

Here at the Pentagon, they are monitoring this around the clock. There are about 130 U.S. troops and personnel in Georgia right now, part of the long-term training program that the U.S. has for the Georgian military to help them with all of this. All of those personnel are accounted for, but here they are watching very carefully, saying they are monitoring developments and waiting for any direction from the White House on any future steps -- Tony.

HARRIS: Our Pentagon correspondent, Barbara Starr, for us this morning.

Barbara, thank you.

COLLINS: Want to give you a few more facts now about Georgia. It was part of the of the Soviet Union until 1991. South Ossetia declared its independence from Georgia back in the early 1990s. But, South Ossetia's independence is not internationally recognized.

HARRIS: And if you want to know more about what triggered the bad blood in South Ossetia, just log on to CNN.com/world. There you will find what we consider a pretty fascinating historic perspective on this developing story.

COLLINS: Tragedy in Texas. A bus loaded with 55 church members careened over a highway overpass and into a ravine.

It happened overnight, about 60 miles north of Dallas. Police say at least 13 people are dead. They think a flat tire or a blown tire might have set it all in motion.

Last hour, we spoke on the phone with police investigator Lieutenant Bob Fare (ph). He had several things to tell us about the investigation that is ongoing. The passengers were part of that church group traveling from Houston to a fair in Carthage, Missouri.

Certainly a lot of stormy weather out there to talk about. Reynolds Wolf is tracking all of it for us now. Let's go ahead and check in.

(WEATHER REPORT)

COLLINS: The conventions are just days away, as you know. Bill Clinton and Dick Cheney finally get invitations to the party. So what took so long?

(COMMERCIAL BREAK)

HARRIS: My goodness, just difficult to keep up with all the developments with the Kwame Kilpatrick story.

We told you that he was jailed overnight for violating the terms of his original bond. There was a court hearing this morning in which he was ordered released on a new bond of $50,000, a $50,000 cash bond. Also out of that hearing this morning, Kwame Kilpatrick was ordered not to travel and to wear some type of electronic tether.

Now we're learning that Detroit's mayor is facing new felony charges of assaulting or obstructing a police officer in connection with the July 24th incident. This happening as two police officers attempted to serve a subpoena.

Now this ratchets everything up to a whole new level. If convicted, Kilpatrick could face up to two years in prison.

And the other point worth noting here is that with a felony conviction, Kilpatrick would be unable to serve as mayor. So the legal problems just mounting for Detroit's mayor, Kwame Kilpatrick.

We'll continue to follow this, obviously.

COLLINS: Quickly now back to the other breaking story that we've been following all morning long regarding Russia and Georgia, and for the fighting that is going on there, particularly escalated today.

We want to get to our State Department correspondent, Zain Verjee, who now has some reaction from the State Department.

Zain, good morning.

ZAIN VERJEE, CNN STATE DEPARTMENT CORRESPONDENT: Good morning, Heidi.

Spokesman Gonzo Gallegos issued this statement just a short while ago, saying, "We support Georgia's territorial integrity and call for an immediate cease-fire. We urge all parties, including the Georgian South Ossetians and Russians, to deescalate and avoid conflict." The statement goes on, "We're working on mediation efforts to secure a cease-fire. We're sending an envoy to the region to engage in the conflict."

It's unclear exactly when this envoy will get there or how soon. We're working on getting you that information.

We're learning, too, Heidi, that Secretary of State Condoleezza Rice, as well as other senior officials, have already spoken with and continue to work with and speak to all the parties involved here to try to seek an end to these hostilities. But it really, Heidi, is an indication of how seriously the U.S. is taking the situation, sending an envoy. They really do not want all-out war between Russia and Georgia to destabilize the region -- Heidi.

COLLINS: Certainly not. And these tensions, I mean, this is not a new situation. This has been going on for many, many years.

You have to wonder, though, why is Georgia so important to the U.S., and perhaps to other parts of the world?

VERJEE: Well, Georgia's a very strategically important country to the U.S., as well as to Europe. I mean, it is a major transit point of oil, and that's a really key point to understand in all of this.

Georgia provides a practical route to get oil that basically avoids Russia, it avoids Iran. What the key is, is that there's a pipeline from Azerbaijan that goes to Turkey, and in Turkey, that's where all the oil is loaded onto tankers that eventually get to Europe and the U.S. And all of that has to pass through Georgia, just a short distance away from South Ossetia.

Something like probably up to a million barrels of oil a day is pumped, and that's something like more than 1 percent of world oil supplies. So it's significant for that reason, but also, it's a situation that destabilizes the entire region. And that's something, too, that the U.S. certainly doesn't want to see.

COLLINS: All right, understood.

CNN State Department Correspondent Zain Verjee.

Thank you, Zain.

News about the vice president and the Republican convention tops our political roundup.

The McCain campaign has invited Vice President Dick Cheney to speak. A spokeswoman says the vice president will likely address delegates on the first night of the convention next month.

John McCain campaigns in Iowa this hour. We do expect to hear from live within the next hour or so. McCain spent the past few days in Ohio talking about jobs, energy, and the economy.

Barack Obama heads to Hawaii. He's going to visit relatives and enjoy some downtime before the Democratic convention later this month.

Former President Bill Clinton will speak at the convention on Wednesday night, the 27th. Clinton's exact role at the gathering had been the subject of some speculation.

HARRIS: In Beijing, the summer games are under way, but it's more than anticipation looming over the celebration.

(COMMERCIAL BREAK)

HARRIS: You know, it's not just Olympic excitement in the air in Beijing. China has some of the worst air pollution in the world, and that's stirred some serious concerns among athletes and those watching them perform.

More now from Mark Austin from ITN.

(BEGIN VIDEOTAPE)

MARK AUSTIN, REPORTER, ITN (voice-over): A dull, gray haze hangs over the Forbidden City. But for heaven's sake, don't mention the forbidden word, "pollution," because, according to Olympic officials, this isn't toxic smog, just mist. And despite the evidence before us, the chairman of the IOC's Medical Committee insisted it's nothing at all to worry about.

(on camera): I mean, if you look at it, it's a gray mist hanging over Beijing, and for all intents and purposes, it looks like pollution. ARNE LJUNGQVIST, CHAIRMAN, IOC MEDICAL COMMITTEE MALE: No, it's not pollution. Basically, it's humidity. So this is evaporation, for sure. Oh, yes.

AUSTIN: So you're sure that this will be safe?

LJUNGQVIST: Oh, absolutely. For competing athletes, no doubt.

AUSTIN (voice-over): The Chinese have half the number of cars on the road, closed factories, and now blame the media for exaggerating the pollution problem here.

(on camera): But every day we've been in Beijing, we've been monitoring pollution levels with our own piece of equipment. Here it is. This measures particulate matter, and the readings we have got suggest that the athletes should be concerned, because they show pollution levels much, much higher than a city like London, for instance. Just take a look at this.

(voice-over): The World Health Organization says a safe reading of air quality should be around 50 micrograms of particulate matter per cubic meter. Over four days in Beijing, we recorded an average reading of 207. The highest reading during this period was on Monday, 378. And a reading taken in London measured just 53 micrograms.

So, did the American cyclists arriving in masks here have a point? One British athlete thinks it was all unnecessary.

KELLY SOTHERTON, BRITISH HEPTATHLETE: I think some of it is a little bit out of proportion. So I think they're just making a song and dance out of nothing.

AUSTIN: Maybe we should leave the last word to the expert who says everything's fine.

(on camera): Would you like to run a marathon in this?

LJUNGQVIST: I wouldn't like to run a marathon at all. So...

(END VIDEOTAPE)

HARRIS: CNN Chief Medical Correspondent Sanjay Gupta has weighed in on this, and he says it may be the spectators, not the athletes, at greater risk in Beijing. The reason, pollutants thicken the blood and raise the danger of heart attacks and strokes for people at risk.

Our Larry Smith is our tour guide through Beijing. He's going to be joining us in just a couple of minutes.

COLLINS: Teaching hundreds of family schoolchildren in a foreign country, it may not sound very relaxing, but that's the kind of retirement that has given today's CNN's Hero the experience of her lifetime.

(BEGIN VIDEOTAPE) VIOLA VAUGHN, CHAMPIONING CHILDREN: When a girl reaches the age when she can help in the house, the mother starts keeping this girl at home. That girl begins missing school, missing homework, and she starts to fail. It's a downward cycle.

My name is Viola Vaughn. I came to Senegal from Detroit, Michigan.

I started a girls' education and self-sufficiency program. I have put a limitation of 100 girls. I said that's the maximum, that's all I was going to do.

I came to the Senegal to retire. And the girls said no. We want to take it to 10,000.

We take girls who have already failed in school. They learn how to perfect a skill, to produce products for export.

We have the pastry shops. In the sewing workshops, they make sheets, they make dolls, they make any kind of household linens. Half of the funds goes back to them. The other remainder goes into the education program.

Come on, give me hug. We do this all the time.

They are passing schools. They are opening businesses. I see the success. Right now, we already have seven girls in universities. It's their program and they run everything. I'm there just to make sure all the Is are dots and the T's are crossed.

Here I am retired, and this is the best job I have ever had in my life.

(END VIDEOTAPE)

COLLINS: To get involved with Viola Vaughn's organization, or with any CNN hero, you can always go to CNN.com/heroes. The most outstanding CNN heroes will be honored at an all-star tribute. It will happen Thanksgiving night, right here on CNN.

As you know, the summer games now under way in Beijing, China. But beyond the games and behind the scenes, the mystery and magic of what had once been known as the Forbidden City.

CNN's Larry Smith is joining us now live from Beijing.

Exciting days here, Larry.

LARRY SMITH, CNN SPORTS CORRESPONDENT: It really has, you know. And this is a very special day in Chinese culture, because 8 is the luckiest number. And so we are now closing in on the end of this Friday, here at the 11:00 hour, on the eighth day of the eight month of 2008, 8/8/08. And the opening ceremony beginning at 8:08 p.m. as well.

In fact, it began with another number, 29. A series of 29 fireworks going off in a footprint pattern from Tiananmen Square, all the way to the Bird's Nest, where more than 90,000 spectators watched this open ceremony. The local people here counting down the clock until the games officially arrived here, the 29th Olympiad here in the Beijing Summer Olympics.

We cannot show you the fireworks and things like that because of rights issues. We're prohibited from doing so.

However, we can let you know the USA looked mighty dapper in what they were wearing: blue blazers, white pants, with a matching white beret. In fact, Kobe Bryant, one of the people who they showed there on camera as he took in the spectacle, his first Olympics.

Do we have time for the piece I believe -- are we showing the piece today about the Forbidden City? Is that correct?

COLLINS: I do not believe that we do.

SMITH: We are not showing that.

COLLINS: I'm so sorry, Larry, but it's awesome to hear about all the things going on around you. What were you going to say?

SMITH: No, I just was going to say -- I remember you mentioned a moment ago, I did get a chance to go there, and it was really something special to see.

COLLINS: Yes. All right, Larry. We're going to come back and we're going to visit with you again over the course of several days here, your days in Beijing. So appreciate it.

Larry Smith for us, live from Beijing.

A quick programming note now. Olympic gold medalist Joey Cheek joins T.J. Holmes live tomorrow on "CNN SATURDAY MORNING." That will be cool.

Cheek was supposed to be in Beijing, but China pulled his visa at the last minute. It's a pretty incredible story. It may because of Cheek's stance on the crisis in Darfur.

We're going to ask him about it -- T.J. will -- tomorrow morning at 10:00 Eastern, on "CNN SATURDAY MORNING."

HARRIS: Tracers in the night. A former Soviet republic says it's under attack, prompting emergency diplomacy at the Olympics.

(COMMERCIAL BREAK)

COLLINS: Good Friday morning once again, everybody. I'm Heidi Collins.

HARRIS: And I'm Tony Harris.

Welcome back to the CNN NEWSROOM. A breaking story we have been following this morning for several hours now, a major military confrontation in the former Soviet Republic of Georgia. Georgia's president says his country is under attack by Russia and Russian tanks are moving in. The violence follows clashes this week between Georgian troops and separatist forces in Georgia's breakaway region of South Ossetia.

Let's go live now to Washington and CNN's Jill Dougherty.

Jill, good morning to you.

You have to answer a real basic question for me here: Why are Russian troops in Georgia?

JILL DOUGHERTY, CNN CORRESPONDENT: Well, Russian troops are in Georgia because they are peacekeepers. They are in this breakaway region -- well, actually, it depends on which Russian troops you're talking about, Tony. Sorry.

Why are they invading?

HARRIS: Yes. Sorry that about. I should have been more clear.

DOUGHERTY: Oh, OK. Because there are peacekeepers there who have been there for quite a while trying to keep the peace. Obviously not working.

But why the Russians are moving in is they would say that the people of this breakaway region, very small, who consider themselves essentially part of Russia, although technically they're part of Georgia, that they have to protect them because they are under attack. Now, the Georgians are saying much the same thing, that the Russians are invading because they are trying to take over this region that's called South Ossetia and annex it, make it part of Russia.

And so the president of Georgia is calling on the international community to do something about this. And specifically, he would like the United States to do something.

But, Tony, you know, this is a very dangerous situation because it immediately brings into, at least verbal, conflict the United States and Russia. And that is what we have to keep our eye on the ball here for, because this could escalate. Not that Russia and the United States would go to war.

HARRIS: Sure.

DOUGHERTY: But they could have a very, very tense relationship.

HARRIS: Well, Jill, let me jump in on that point. So we've got a statement into us the last couple of minutes shared with us by our Zain Verjee at the State Department, from the acting State Department spokesman who says -- and you can see it here -- "We support Georgia's territorial integrity and call for an immediate cease fire."

The statement goes on, but what we don't see or hear in this statement is any language suggesting that Russia should retreat, to move those new troops, those new forces, back out of the sovereign territory of Georgia.

DOUGHERTY: Right. Well, right now this is a very fast-moving situation.

They may ultimately, the United States may ultimately say that. But right now what they're trying to do is get both sides to cool it and to sit down. Ultimately, what would probably happen, obviously, would be the Georgians pull back to the positions that they had before, and the Russians pull out. But it is not that easy simply to give the order and say that should happen because there are a lot of people on both sides, you know. There are people in the south of Russia who feel that their cohorts are under attack and they are coming over the border, we understand, as a kind of supporting the people in South Ossetia. So it's a very volatile situation.

HARRIS: OK. And I just love talking to you about this because -- and the audience may not know, but most do, you have spent so much time in your career in Russia.

Let me ask you this --

DOUGHERTY: And in Georgia, Tony.

HARRIS: And in Georgia, that's right.

Georgia president says Russia has launched these attacks in hopes of crushing democracy there. Is there anything to suggest, in your time in reporting from that region, that Russia has been supporting the separatists' desires in South Ossetia?

DOUGHERTY: Well definitely. There's no question. Some people who live in that region use Russian passports, use Russian money, de facto, they think they're part of Russia, although technically they're part of Georgia. So, yes.

But, you know, Tony, there's kind of the emotional or ideological level to this, and then there's the military level, and there's a political level. And don't forget, just go back a few years, the Rose Revolution, Mikheil Saakashvili, democracy, et cetera. So for the United States, the kind of default position is to say the Georgians are democratic and Russia is the aggressor. But there are some who would make the point that the Georgians have been spoiling for a fight, too.

HARRIS: That's -- what perspective. Thank you. It's great to talk to you, Jill Dougherty for us in Washington.

COLLINS: Fighting in the Republic of Georgia has caught many Americans offguard, but this conflict, as you just heard of course, has been running hot and cold for many, many years. Veronica De La Cruz is in New York now and taking a look at some of the things online for us.

Hi there, Veronica. VERONICA DE LA CRUZ, CNN CORRESPONDENT: Hey, Heidi.

Yes, Jill did a really, really good job of breaking it down. But if you want to do so on your own, you want to take a closer look and figure out what led up to today's military action by Russia, then you can go to CNN.com right now.

Let's take a look. There you're going to find a map. It's going to give you a really good explanation of the geography of the region, the epicenter of the conflict, a region within the Republic of Georgia called South Ossetia, like Jill was just saying. Historically, Heidi, this region identifies more strongly with Russia to the north. And for years it's been trying to gain its independence from Georgia, which is more aligned with the west.

These recent tensions started escalating back in November 2006, and that is when Ossetians declared their independence from Georgia in a referendum. Now Russian peacekeepers have been working to keep both sides apart, but as you know shooting erupted several days ago between the two sides. Each side blames the other for firing first.

And now this. We've been watching the pictures and video coming in all morning long, the situation now escalating to the point where Russia has sent in tanks and warplanes.

So, again, Heidi, if you want to get more on the geography of the region, about all the nuts and bolts on the conflict, of course you can head to CNN.com.

COLLINS: Very good.

All right. Veronica De La Cruz, thank you.

HARRIS: A troop withdrawal deal. Iraqi officials say it is close at hand. U.S. combat forces leaving Iraq by the end of 2010. Live now to CNN's Arwa Damon in Baghdad.

And if you would, Arwa -- good to see you again. What are the Iraqis saying about this tentative -- in quotes and underlined here -- tentative timeline?

ARWA DAMON, CNN CORRESPONDENT: Well, Tony, to be completely honest, if you ask the Iraqis about how tentative this timeline is, they will tell you that they're actually just days away from signing a deal with Washington. And not only does that deal mention the date of 2010 that you just mentioned for the withdrawal of combat troops from Iraq, it also mentions the date of June 30, 2009. That is the date they're saying there will be no more U.S. forces on the streets, in the cities in Iraq. They would have withdrawn to their bases. It also mentions the date of 2011. By then they are saying that all U.S. troops would be gone.

Of course, there are caveats, even the Iraqis are saying that they want to be able to renegotiate these deadlines. And the Iraqis are saying that really they are only away from finalizing some remaining issues before this deal goes forward. (BEGIN VIDEO CLIP)

MOHAMMED AL-HAJ MAHMOUD, IRAQI DEPUTY FOREIGN MINISTER: Well, according to our position, we would like to have a complete jurisdiction on the Iraqi territories except on the American soldiers during the military operations. But outside of that, we would like to have Iraqi control.

(END VIDEO CLIP)

DAMON: Now, U.S. officials that we spoke to are saying that there actually is much more work that has to be done before any sort of deal is signed. They're saying that controversial issues like contractor immunity, the jurisdiction that we just heard mentioned there, as well as the authority to detain Iraqis are all still under negotiation. And realistically speaking, privately, some Iraqi officials are telling us that such a hasty timeline might be unrealistic. Iraq is going to need America for years, Tony.

HARRIS: OK. Arwa Damon for us in Baghdad.

Arwa, thank you.

COLLINS: The homeless manipulated, federal and state governments ripped off. Los Angeles hospitals accused.

(COMMERCIAL BREAK)

COLLINS: Prices in the grocery store have been steadily rising. The problem is we are probably going to have to get used to it. It is a trend that's not a very fun one. Susan Lisovicz is at the New York Stock Exchange now with more details on all of this.

And why, oh, why Susan, are we going to have to get used to it?

SUSAN LISOVICZ, CNN CORRESPONDENT: Well it comes down to commodities, like the price of grain. And obviously that is a key ingredient in so many foods, Heidi. Corn, a key component as well. Many food items have stayed below $3 a bushel for a decade. But in the past two years, it's surged as high as $7. Many food companies are simply passing it along to us. Others are coming up with more creative alternatives.

The "Wall Street Journal" says Sara Lee is shrinking its product lineup and reducing the amount of meat in its Hillshire Farm deli packages. Kellogg's reduced the size of many of its cereal boxes. General Mills did the same with its Cheerios box. But even though the box shrank, the price didn't. We're not fooled, Heidi. I've seen it --

COLLINS: No, no, no, no.

LISOVICZ: -- time and time again. Potato chips, yogurt, cereal.

COLLINS: Yes, the air in there. You open them up and there's like five potato chips in there. Yes, I hear you. LISOVICZ: Like three teaspoons of yogurt.

COLLINS: Corn prices, let's go back to that real quickly. This is because of ethanol, or at least part of it is that, right?

LISOVICZ: It's part of it, and it is a big part of it, Heidi.

We've been reporting about it for a while, but demand in emerging countries where they want to adopt a Western lifestyle, you know, as the middle class grows in some big countries, that's also part of it. And farmers can't keep up. Many are actually losing money because it costs so much to feed their livestock. (INAUDIBLE) says consumers should brace themselves for sticker shock in the meat aisle. One economist says beef and pork prices could increase by as much as 10 percent by next year. You can't stock up on that too much in advance.

(STOCK MARKET REPORT)

LISOVICZ: So go enjoy your weekend. Go to Europe. Your dollar will get you a little bit further. Just a little bit.

COLLINS: One more tube ride maybe.

All right, Susan, thank you.

LISOVICZ: Your welcome.

HARRIS: In Southern California, charges that criminals are preying on the homeless and your pocketbook. And the accused -- the very people you trust when you desperately need them. It is a story you have to see to believe.

Reporter Kara Finnstrom has the details.

(BEGIN VIDEOTAPE)

KARA FINNSTROM, CNN CORRESPONDENT: Three L.A.-area hospitals are raided, a hospital owner and a clinic recruiter arrested, slapped with a 21-count federal indictment. And authorities say it's just the beginning.

THOMAS O'BRIEN, U.S. ATTORNEY: A scheme that ranged from street- level operatives to the chief executive of a hospital.

FINNSTROM: This police videotape started it all. Ambulances caught returning five homeless patients to Skid Row. Authorities say they were some of the hundreds, possibly thousands, of homeless recruits allegedly offered about $20 and a warm bed to undergo bogus medical treatment.

ROCKY DELGADILLO, LOS ANGELES CITY ATTORNEY: They would basically take these individuals, determine whether they were qualified for Medical or Medicare, give them false diagnoses. These individuals might have ailments, but the diagnosis that they received was actually false. FINNSTROM: L.A. city attorney has also filed a civil lawsuit against the hospitals and others. He says some homeless patients treated there were harmed.

DELGADILLO: Recruit X was diagnosed falsely with cardio pulmonary disease. She goes to the hospital, she gets a nitroglycerin patch on her chest. Her blood pressure drops so low that her life is in peril.

FINNSTROM: All this comes on the heels of a separate investigation last year that revealed other hospitals dumped homeless patients, who may have been uninsured or inconvenient, on Skid Row. The charges here? The exact opposite, but with one common denominator.

DELGADILLO: I think these folks felt that no one would complain because they were homeless individuals. Well, they were dead wrong.

FINNSTROM: CNN did contact officials with all three hospitals and the clinic to get their responses. They issued statements saying they are continuing to cooperate with authorities. Pacific Health Corporation, which owns two of the hospitals, also says it believes it, "will be cleared of any illegal actions."

(on camera): We've been unable to reach anyone with the clinic to get their response to charges.

Kara Finstrom for CNN, Los Angeles.

(END VIDEOTAPE)

COLLINS: John McCain on the trail in Iowa, live shot for you there, and speaking out on the economy. Hear what he says about fixing it shortly.

(COMMERCIAL BREAK)

HARRIS: When you play the game of golf, sometimes the players win, and sometimes the course wins. Well, I guess you could say the course at Oakland Hills took the first round of the PGA Championship in Michigan yesterday. Blistered greens, rain delay and finally nightfall over came -- hey, hey, yesterday's play leaving some players to finish up -- hey, hey, that's Heidi Collins.

COLLINS: Oh, yes.

HARRIS: That's Heidi quality there.

Robert Carlson and Milka Singh atop the leader board. They are tied at 2-under par.

COLLINS: Did you mention second place in the CNN golf tournament?

HARRIS: Several times.

COLLINS: Now is a fine time to remind.

HARRIS: Repeatedly.

COLLINS: OK. To the true Olympians now, the heart of an Olympian, in fact, never hardened by the horrors of war. He was one of the Lost Boys adrift in Sudan. Today, he lives south of Syracuse, New York, and is serving as a U.S. flag bearer in the Beijing Olympics. His remarkable story now from Kevin Maher of CNN affiliate, WTVH.

(BEGIN VIDEOTAPE)

KEVIN MAHER, WTVH REPORTER: If it's possible to fit a tiny town's Olympic love into a parking lot behind a church surrounded by a cornfield, the people of Tully get a gold medal.

UNIDENTIFIED FEMALE: It's pretty exciting, to say the least.

MAHER: Hundreds of people showed up at Saint Leo's Church to support the local kid whose Olympic dreams are unfolding before their eyes.

UNIDENTIFIED MALE: Kind of surreal to see a kid who, you know, I rode school buses with to competitions and sat in the back with and talked about whatever was going on in school and now I see him on TV.

MAHER: But this was small town mingling with a mission. They all came to wish Lopez Lomong good luck at the Olympic games and to raise money to send his foster mom and dad to Beijing.

ROBERT ROGERS, FOSTER FATHER: Literally everyone was calling us saying, you guys are going; we're sending you.

BARBARA ROGERS, FOSTER MOTHER: Everyone was telling us, you have to go, you have to go, we'll have to have a fundraiser. We weren't really interested in doing a fundraiser; it's not a good economy. Once we talked about it and everyone said it's for Lopez, you need to be there for Lopez.

MAHER: And while the guest of honor was on the other side of the world, he was at the party in spirit and on T-shirts and on paper and on cardboard, and shortly before 8:30, he was on the phone.

VOICE OF LOPEZ LOMONG, U.S. FLAG BEARER: You guys are great. What a wonderful people of Tully, putting this thing together. And thank you very much. I'm about to go to the track right now and thank you and enjoy yourselves. And -- I'm just glad you're there.

MAHER: But this won't be the last party in town for the former Lost Boy, because next Friday, every TV in Tully will be tuned into the games as Lomong goes for gold.

(on camera): How hard is this town going to be rooting when that gun goes off?

UNIDENTIFIED MALE: Are you kidding me? He'll probably be able to hear us, at least in Buffalo.

MAHER (voice-over): And if Lopez wins the gold medal and the story of his incredible life goes from the Sudan to the silver screen, apparently they won't have to look very far to find someone to write the movie.

(END VIDEOTAPE)

HARRIS: John McCain on the trail in Iowa. We are expecting to hear from him, actually any minute now. He is at the Iowa State Fair. And we will bring those comments to you live.

(COMMERCIAL BREAK)

COLLINS: A closer look now at what the presidential candidates are saying as part of our effort to help you make an informed decision come Election Day. Here's what Barack Obama said to reporters aboard his campaign plane about the economy.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: Well, we've been talking about the economy the entire campaign. And the stories that I hear on the campaign trail -- single moms who can't afford groceries or don't have health care, folks who have lost their jobs and if they find a new job, they're getting paid two-thirds of what they were making before with fewer benefits. That's been the constant refrain of this election season.

The American people are hurting and they're anxious. And our economic plans specifically provide them relief, in the (ph) short- term, putting more money into the pockets. And long-term relief in terms of a serious health care policy, an energy policy that can drive down gas prices, making sure that we are investing in roads and bridges and schools and other infrastructure here in the United States that can put people back to work.

So, my sense is that during the summer months, you know, people are not --

(END VIDEO CLIP)

COLLINS: All right. Giving you just a little bit of flavor of some words directly -- in his own words, I should say, by Senator Barack Obama on his campaign plane. That was a while ago.

We want to make sure we get to a live event for you right now. Senator John McCain standing by talking about energy right now at the Iowa State Fair. Let's listen in for just a moment.

(JOINED IN PROGRESS)

SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: ... He doesn't want us to drill offshore, and the other day he mentioned that what we need to do is inflate our tires. My friends, I'm all in favor of inflating our tires, don't get me wrong, but that's a public service announcement, it's not an energy policy.

(APPLAUSE)

So we're having fun in this campaign, my friends. And I want you to have fun too. I want you to enjoy this campaign. I want you to ask Senator Obama to come to the town hall meetings with me and come here to Iowa. And we'll stand here together, we'll stand here together and answer your questions and listen to your comments and hear your concerns.

America's hurting right now, I don't have to tell you that. We've got a lot of work to do. And I want to tell you I will reach across the aisle and I'll work with the Democrats. I will work with them to help America, because I'll put my country first and I'll put America first.

(APPLAUSE)

So let me just end up -- I've had the great honor, as I've been walking around here and meeting people and saying hello, to run into our great men and women who have served in our military. And that includes the Iowa guard and reserve (ph). Thank you for their service, thank you for all of our veterans, thank you for what you've done in Iraq, thank you for what you've done in Afghanistan, thank you for your service to our country, I'm honored. I'm honored to know that the bravest and best and most professional military is the one we have today. And they have served and they have sacrificed.

And my friends, we are winning in Iraq and we have succeeded and we will bring our troops home, but we'll bring them home with honor and victory and not in defeat, as would have happened with my --

(APPLAUSE)

So can I conclude by telling you a brief story that helped me put everything in priority? You know, we politicians need that from time to time. It happened to me last August. Wolfborough (ph), New Hampshire, a woman stood up at a town hall meeting and said, Senator McCain, will you do me the honor of wearing a bracelet with my son's name on it? His name was Matthew Stanley (ph), he was 22-years-old, he was killed in combat outside of Baghdad just before Christmas last year. I said I'd be honored to wear this bracelet with your son's name on it. And she said but Senator McCain, I want you to promise me one thing, I want you to promise me that you'll do everything in your power to make sure that my son's death was not in vain.

My friends, I want to be president of the United States because I want to inspire a generation of Americans to serve a cause greater than their self-interest. That's what America's all about. Our best days are ahead of us. America's greatness is ahead of us. We can -- we can recover our economy, we will lead the world, and when I'm here, and I'm here in the great state of Iowa, it is affirmed by every single citizen I meet here.

I'm honored to be in your company. I'm honored what you do for America and the world. And I want to tell you, we will disagree from time to time. I believe in renewable fuels, I don't believe in ethanol subsidies, but I believe in renewable fuels. I believe we have to do all of those things to restore our economy. But my friends, and we will disagree on a specific issue, and that's healthy. But I want to tell you all my life, since I raised my hand at age 17 as a midship in the United States Naval Academy, I have put my country first. And I promise you I will put my country first and I will never let you down.

Thank you and God bless. I need your support. I need your vote. Thank you very much.

UNIDENTIFIED FEMALE: Thank you for coming to the Des Moines Register's Political Soap Box.