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CNN Newsnight Aaron Brown

Where will Hurricane Wilma Go?; Tunnel Scare in Maryland; Attorney's Wife Murdered; Powerball: $340 Million; State of Emergency in Taunton, Massachusetts; Key Small Businesses in New Orleans Are Booming; Saddam Hussein's Day In Court; Arnold Takes On California's Union Bosses

Aired October 18, 2005 - 23:00   ET

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


AARON BROWN, CNN CO-ANCHOR: Well good evening again. We're in New York. Anderson is in New Orleans.
In the hour ahead -- murder is one thing, celebrity is another. This is about both. Both and more. It's family.

ANNOUNCER: A renowned criminal defense attorney now in the middle of his own murder mystery. Who killed Daniel Horowitz's wife? Tonight Nancy Grace in an exclusive one on one with the famed attorney.

Anderson revisits New Orleans, once again asking what exactly happened here and who's accountable?

What if the dam fails and gives way to floods? It's not New Orleans. This time it's residents of a small New England town, evacuating amid fears of flooding.

California's movie star governor was riding high as the people's politician. Now his approval rating plummets to all time low. But the governor is used to playing a come from behind hero. So what's his move?

This is NEWSNIGHT. Live from the CNN Broadcast Center in New York, is Aaron Brown; and live from New Orleans, Anderson Cooper.

ANDERSON COOPER, CNN CO-ANCHOR: And Good evening from New Orleans' French Quarter. It is packed with people this hour in a city largely empty. This is really the only place they can go. And these aren't really tourists, these are people who are working in one way or another in the relief or recovery effort.

We have a lot to show you from this city. But first, here's what's happening around the world at this moment.

Taking a stand on abortion, Supreme Court Justice Nominee Harriet Miers pledged her opposition to abortion in a 1989 questionnaire. Miers wrote she would support a constitutional ban on the procedure. She also promised to appear at pro-life rallies.

Not ready for the deadly Bird Flu -- that is what European leaders said today. They warned the E.U. is ill-prepared to deal with a threat of a pandemic, should the virus pass to people. The Bird Flu has already been detected in three western countries.

Another violent day in Iraq. Two Iraqi government official were killed. An American soldier was also killed. He died in the city of Mosul. To date, the number of U.S. troop deaths in Iraq stands at 1,982.

And the trial of Saddam Hussein -- it official begins tomorrow. If convicted, he could be sentenced to death. Lawyers for the former dictator are asking for a delay. CNN's Christiane Amanpour will have a live report from Baghdad -- Aaron.

BROWN: Well, we begin the hour with Hurricane Wilma. Wilma is number 12 of the hurricane season, now gathering force out in the Gulf of Mexico. Just moments ago, an update from the National Hurricane Center and the news isn't good. So once again, we turn to Meteorologist Jacqui Jeras, who's in Atlanta -- Jacqui.

JACQUI JERAS, CNN METEOROLOGIST: Well, Aaron, it's almost a major hurricane. Winds are now up to 110 miles per hour. It has to 111 to be considered a Category 3, what we consider a major hurricane. But even the National Hurricane Center's discussion said is it may be a conservative estimate. So all intents and purposes, we're looking at a major hurricane that will likely reach Category 4 status by tomorrow. And I think could even reach a Category 5 for a short time as it moves through the northwestern Caribbean and enters into the Gulf of Mexico.

The storm is also getting bigger. It has been moving up to the north and to the west and is expected to curve farther on up to the north, moving through the Yucatan Channel and then taking a right hook towards Florida. However, the last couple of hours, the storm has been mainly moving due west. The computer models have been very good so far. And this is one that we have in house here at CNN. We call it our Titan Wind Forecast. And this model is continuing more of a westerly flow that would bring it towards the Yucatan Peninsula and kind of hug it up towards Cozumel and up near Cancun. If it should stay on that path, that is going to bring the storm more likely to making landfall into the northeastern gulf or more into northern or central parts of Florida.

If it stays on its current expected track, through the Yucatan Channel here, we think it will be more like central or southern Florida. If it moves a little bit farther on off to the east or to the right, we are very concerned about the Florida Keys and parts of south Florida. And that would happen this weekend. We think Saturday will likely be the day, late in the afternoon. The good news is it will be picking up some forward speed as it does that and countering a little wind sheer so that should weaken the storm down a little bit before landfall and it will also move very quickly over the Florida peninsula -- Aaron.

BROWN: Jacqui, thank you very much. Jacqui Jeras in Atlanta.

Tonight, onto terrorism and some words you probably know by heart by know -- explosives and threat incredible, but how credible? Some other words may offer a clue -- abundance of caution. Reporting for us tonight, our Homeland Security Correspondent Jeanne Meserve.

(BEGIN VIDEOTAPE)

JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT (voice-over): The intelligence is uncorroborated. Its credibility unestablished, but it was specific enough for the Maryland transit authority to close one Baltimore tunnel and restrict traffic in another for almost two hours.

UNIDENTIFIED MALE, OFFICER: We're going to error on the side of caution, with an abundance of caution, in order to protect the citizens of this state.

MESERVE: U.S. government sources say the purported plot involved explosives shipped into Baltimore, disguised as cocoa, then put in at least one truck and driven into an unspecified Baltimore tunnel. The operatives? Allegedly a small group of Egyptians. Officials say the information originated in the Netherlands and was passed on to U.S. government officials last week in a phone call from a source who has been reliable before.

So far, no terrorism arrests. But federal law enforcement sources say four have been detained on immigration charges.

UNIDENTIFIED MALE: Interviews are ongoing at this time. The interviews are more along the lines to determine whether or not the threat is credible.

MESERVE: One expert says a disturbing new terrorist tactic may be emerging.

UNIDENTIFIED MALE, EXPERT: If Al Qaeda and its affiliates are learning the recipe -- provide a little bit of somewhat specific information to the United States and they will respond aggressively to home, they could drive us crazy.

MESERVE (on camera): Almost two weeks ago, Homeland Security officials raised questions about New York's decision to ramp up transit security. In contrast, they say they support Maryland's security measures. Although in both cases, some federal officials were very skeptical of the threat information right from the start.

Jeanne Meserve, CNN, Washington

(END VIDEOTAPE)

BROWN: Coming up next in a high profile murder of a high powered lawyer's wife. The lawyer, Daniel Horowitz, could become a suspect if only because at this point the police have yet to rule him out -- or anyone else for that matter. No doubt, he'll be telling his story many times in the days ahead. But he told it first to CNN's Nancy Grace. An extended portion of that interview, in a moment.

First, we set the scene. Here's CNN's Rusty Dornin.

(BEGIN VIDEOTAPE) RUSTY DORNIN, CNN CORRESPONDENT (voice-over): Defense Attorney Daniel Horowitz says he is so distraught, he doesn't care that people might speculate he killed his wife, Pamela Vitale. Horowitz told CNN's Nancy Grace he discovered his wife's body Saturday night, bludgeoned to death inside their mobile home. He says he immediately called police. After police arrived, they first put him inside a police car and then after his wife's body was removed, they took him back inside to look at the crime scene.

DANIEL HOROWITZ, WIFE BLUDGEONED TO DEATH: When I went back there, because they wanted me to look at things, I walked through and I was there as long as I could and then at some point I started shaking a little bit. And when I started shaking, you know, it was time to go. As I walked out the door, I stopped and I looked where she had been. And for that one second, I saw her again.

DORNIN: Horowitz's law partner, Ivan Golde, told CNN's "American Morning," that Daniel Horowitz filed a temporary restraining order four months ago against someone the couple had known for 20 years, Joe Lynch. Horowitz claimed he was an alcoholic drug abuser who was harassing them.

IVAN GOLDE, ATTORNEY: And the police are looking to him, they're talking to him. Things are still up in the air right now. But let me tell you this. The Contra Costa County Sheriff's Department is doing an excellent job investigating this crime.

DORNIN: Horowitz later dropped the restraining order. The sheriff's department has not named Lynch as a suspect or anybody else, and says its investigation is wide open.

Joe Lynch acknowledged to CNN he has abused alcohol and drugs off and on for 20 years and suffered mental health problems related to that abuse. Now he says he's in rehab and in his words, clean and sober. He told us, "I was a real jerk in the past...but I now concerned about the present and the future." When we asked him if he had anything to do with Pamela Vitale's murder, he said, "I didn't do it...I am innocent...I did not go on the premises that day."

Lynch also told us that Horowitz and his wife were very supportive, and the defense attorney even wrote a letter to a judge when Lynch was arrested for a DUI, asking the judge for leniency. Lynch says since he stopped using drugs, he thought he had a good relationship with the couple.

The sheriff's department says it will make no further comments about the investigation until there is a major break in the case.

(END VIDEOTAPE)

DORNIN: Just to clear up something, I want to make sure you know that her body was discovered in a temporary mobile home where they were living while they were building a 7,000 square foot home. In the meantime, Daniel Horowitz, the man who's been always very anxious in the past to talk to the news media about other homicide cases, is very busy talking to reporters. After he talked to Nancy Grace, he did talk to one of the local affiliates, and he told them that he thought he was the intended target and is now fearful for his family. He also told the "San Francisco Chronicle" that he feels his wife fought like hell for her life. Also, police are saying, of course, that the case is still wide open. They just haven't ruled anybody out -- Aaron.

BROWN: Rusty, thank you. Rusty Dornin in California tonight.

More now from Mr. Horowitz and what he told us. He talked with Nancy Grace.

(BEGIN VIDEOTAPE)

HOROWITZ: I walked quickly into the house to the 91 -- to call 911 on my phone, dialed it, and it was like my ears were ringing and I couldn't even hear what I was saying and it didn't matter. I knew then I didn't -- I threw down the phone and I got out of there. I didn't want to -- because there was like two modes going on. Right now you're seeing the -- really the thinking mode. You know, I just -- the mode that I was in, I ran out and then --

NANCY GRACE, CNN CORRESPONDENT: Ran out to where?

HOROWITZ: Just to the front door and I touched her neck again, just to be sure. And then I saw her hand and I just knew from what I know that she wasn't alive. And then I just know and then I pulled out my phone and I knew I had to call the police and tell them. So I dialed the regular police number. And then I just was with her and I just -- I don't know exactly what I said in between, I mean, you scream, you cry, but I know I just basically sat with her and I just told her I love you and you're beautiful and, and, you know just whatever things you say to somebody you love, because to me at that point all that was there was the person I love. I mean, it didn't matter anymore, you know, what I was -- what was around her or the horror. I had just so much time with Pamela, so I just looked at her face and it was beautiful.

GRACE: When police came, Daniel, what did they want from you?

HOROWITZ: At first they just wanted me to just be okay and they just sat me in the back of the police car. I just called my family and when I wanted them, I'd knock on the window and just try to tell them things, but I don't even now really remember what I told them.

GRACE: Knock on the car window?

HOROWITZ: Yes. And then they'd come over.

GRACE: Did you stay there while they processed the scene?

HOROWITZ: They didn't let me see anything. I was far back. And they protected me from that. And then there was so many police cars. They responded -- they did -- Nancy, they sent more police than I've ever seen. And then they took me to the police station and, I mean, they were very kind to me. They put me in the room where they put children who've been hurt.

GRACE: Yes.

HOROWITZ: And they watched me to make sure I didn't try to kill myself, which I wasn't going to do, but they still watched me.

GRACE: These --

HOROWITZ: Not in the room from when --

GRACE: Days have passed now. What is going through your head? What do you want to do now?

HOROWITZ: Sort of, you got me in the stage where I'm starting to accept that she's not coming back. Until maybe today, I just couldn't accept that it was real. You know, I was just constantly -- I don't know, I just wasn't processing anything in a real way.

GRACE: It didn't seem real?

HOROWITZ: Yes, and more than that, I just really be talking about what happened and I'd feel like picking up the phone and calling her. Now today, I'm sort of, I'm really numb stage. You know, I'm just numb. And I see her face in a picture. I went to my office today and I got -- there's only two pictures that I could get off the wall because all the pictures are at home. And at home, Pamela had like every picture of the family on one, you know, big counter in the main room. And then there's pictures all over. And we want all those pictures. I want to make copies of the pictures and we don't have them. But I can't get them because they need them there. They need the house untouched.

GRACE: Untouched.

HOROWITZ: And I appreciate what they're doing, but so what I did was I went to my office where I have my pictures of her and there's one picture of Pamela being licked by one of our puppy dogs, which is a funny one because she did not like dogs to lick her. So it was a picture I purposely kept there just because it was funny to me because she had such a cute look.

GRACE: Daniel, right now, the media is handling you with cue cloths, you know that. We've been there. We've watched it. You know that if this case doesn't crack, people are going to start blaming you. You know that.

HOROWITZ: Probably. I don't care.

GRACE: Respond.

HOROWITZ: I don't care. Right now, Nancy, my wife is gone. The only thing that I want from the media is what they've done, which is they put on her pictures, they put on our friends who talk about how beautiful she was and that's it. Okay, so they've done what I need them to do. What they do with me, doesn't matter. I don't really care what (inaudible) difference.

(END VIDEOTAPE) COOPER: Nancy Grace, interviewing Daniel Horowitz.

Coming up, for a lighter subject, someone in the crowd just handed me these four Powerball tickets. Powerball fever. What would you do with $340 million? Believe it or not, you might be better off not winning. We take a look at past lottery winners and the bad luck that often follows instant wealth.

Also later tonight, looking for ways to cut commuting costs? We'll take a look at public transportation and whether it pays to leave your car at home.

NEWSNIGHT will be right back.

(COMMERCIAL BREAK)

COOPER: Thanks a lot for that. I want to show you where we are here in New Orleans. At the corner of Bourbon and Conte, a couple of different camera angles. Curfew now has been extended to 2:00 o'clock every night. And most of the people -- I mean, when you see this, you think, you know, this city has returned to normal. But, it's sort of an illusion. Most of the people here on the street are not tourists. They are people who are involved in the relief efforts, the recovery efforts, some are National Guard troops who have the night off. There are Red Cross workers, police officers and really this is the only place that they can get a hot meal or get a couple of drinks. From what I'm hearing around me, I think a couple people have had more than a couple of drinks tonight. But curfew is at 2:00 a.m., so another couple hours to go.

A lot of people here in Louisiana and a lot of people all over the country are buying a Powerball ticket and there's a good reason why. Tomorrow's mega jackpot now stands at a staggering $340 million. You never know.

Here's CNN Randi Kaye.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: Their share, which is $181,500,000.

RANDI KAYE, CNN CORRESPONDENT (voice-over): It is the moment most of us only dream about. The moment those numbered bouncing balls bring ordinary people into Powerball heaven, instantly. Mansions, fancy cars, cash to burn. But what if we told you this -- you might actually be better off not winning.

SUSAN BRADLEY, AUTHOR, SUDDEN MONEY: There's a great American myth that money is good and more is better. And it truly is a myth.

KAYE: Susan Bradley is the author of "Sudden Money." She helps instant millionaires cope with confusing emotions and wild impulses that come with turning instantly rich.

BRADLEY: Do you keep working or do you leave? Or do you get divorced or do you stay together? Or do you disinherit your kids or do you embrace your kids? There's so many different choices that normally in the working every day and getting by world, you don't even have to think about those things.

KAYE: And for many instant millionaires, there are Powerball size problems. Deep debt, drugs, divorce, severe paranoia.

BRADLEY: You can have all kinds of negative and weird things that you really can't anticipate. Or you can have really wonderful and lovely things happen. But everything seems to be bigger than life. It's almost like you're living in a TV show, not your own life anymore.

KAYE: Jack Whittaker is the poster boy for post Powerball problems.

JACK WHITTAKER, POWERBALL WINNER: My biggest problem is going to be keep my granddaughter and daughter from spending all their money in one week.

KAYE: Christmas 2002, Whittaker won the biggest Powerball jackpot in history. The 55-year old West Virginia grandfather won a whopping $314 million. His lump sum payout, $117 million.

Related to the money or not, life went downhill from there. In the year since, Jack Whittaker's been charged with drunken driving, sued for sexual assault, charged with threatening to kill a bar manager, had half a million bucks stolen from his car, and lost his granddaughter, Brandi Bradd (ph) -- her body found wrapped in plastic behind a West Virginia home.

BRADLEY: When you win a lottery of this size, the life that you have known up until now is over.

KAYE: Lottery winners think cash buys freedom of choice, confidence. But in reality, sudden riches often only bring fear, isolation, denial and grief. Kenneth Parker's wife won $25 million in New York's mega lotto in 2003, then split. After 16 years of marriage, they're fighting over millions in court.

KENNETH PARKER, LOTTERY WINNER'S SPOUSE: She took all the money and didn't want to give me nothing.

KAYE: In far too many cases, the mighty dollar causes as many problems as it solves. So when you lay out that hard-earned cash to buy those lottery tickets, consider the problems you may actually be purchasing if the numbers fall your way.

Randi Kaye, CNN, Atlanta.

(END VIDEOTAPE)

BROWN: But you'll take your chances, won't you? Yes.

Time to look at some of the others that have made news today.

Christi Paul is in Atlanta. Good evening, again. CHRISTI PAUL, CNN CORRESONDENT: Hi Aaron. it was a bad morning in Baltimore -- not so much because the traffic was awful, but because that awful traffic was the result of a terror threat. Two tunnels were closed after word reached authorities from overseas that explosives might be trucked in to them. Two hours later, after erring on the side of caution, officials opened those tunnels again.

And in New York, which of course had it's own terror scare two weeks ago, the fright today was very real. A fire on the famed 59th Street bridge, which was closed for hours both in and outbound. No injuries and seemingly no damage to the bridge, which as far as anyone can figure out is feeling groovy. Part of that now.

Prepare for sticker shock at the supermarket and wherever else there are cash registers. Inflation in the U.S. rose last month at the wholesale level by the largest amount in more than 15 years. Energy prices, much higher by the gulf coast, hurricanes, seem to be behind that jump.

And finally, again in New York, 18 members of a group called Grandmothers Against the War were arrested when they sat down in front of recruitment center and began chanting that they wanted to enlist. The women ranged in age from 49 to 90. One 74-year old lawbreaker said the police were very nice. They helped us get in and out of the van, she said, which was difficult with our handcuffs on. I guess that's good to know.

Aaron, back to you.

BROWN: Christi, thank you.

Coming up on the program, a town watch is in wait, hoping an old wooden dam manages to hold back raging waters. We'll be live in Taunton, Massachusetts, for the latest there.

And did you know that every time you pump gas in your car, you're helping fund your neighbor's commute on public transportation? That makes you feel better, doesn't it? You may want to reconsider how you get to work in the morning. We'll explain that too as NEWSNIGHT continues in New Orleans and New York.

(COMMERCIAL BREAK)

COOPER: It has lasted for 173 years, but the dam in Taunton, Massachusetts, could burst and wash away an entire town with it and it may happen at any moment. A state of emergency has been declared. Thousands of residents are being ordered out of their homes as everyone there is watching and waiting and worrying about the worst. CNN's Adaora Udoji has the latest.

(BEGIN VIDEOTAPE)

ADAORA UDOJI, CNN CORRESPONDENT (voice-over): Susan Jones sits in a lawn chair 200 yards from the bulging Whittington (ph) Pond Dam, watching. City officials say she's not in the path of a potential catastrophic flood, but she doesn't believe them. SUSAN JONES, RESIDENT: It's just a waiting game and we're all nervous and worried.

UDOJI: Her neighbors closer to the river have been ordered to leave, since they live in low lying areas that would take a direct hit if the old timber dam built in 1832 collapses. The swollen Mill River weaves through this city of 56,000 people, past deserted stores and churches and past the gas station that Jamille Gorgi (ph) owns.

JAMILLE GORGI (ph), GAS STATION OWNER: Honestly, I'm nervous, lie I don't feel like I want to sit down. I just want to stay standing up, you know, in case anything happens, just get out of here.

UDOJI: Did you lock down your pump?

GORGI: Yes, you're to shut down completely the electricity coming in here, the computers, the monitoring system underground, the main pumps.

UDOJI: He's locked the gas storage tanks and barricaded windows in the basement, trying to protect the business he's built since coming from Beirut 25 years ago.

Rescue workers are also ready, should flood waters race in, waiting near threatened areas.

Taunton's mayor says roughly 2,000 people have been asked to evacuate. And judging by the empty streets, most have. Officials are monitoring the dam around the clock -- so are residents who stayed behind, like Susan Jones, who's eyeing the waters.

JONES: We have stuff ready to go if we have to go, but we're really hoping that we'll be able to stay put.

(END VIDEOTAPE)

UDOJI: This is standing in front of the water, the Mill River, excuse me, which is just down river from the Whittington (ph) dam, and water is rushing down. And tonight, late tonight, the mayor said that they have detected excessive vibrations within the dam and they're concerned because they believe it may be that the bottom of the dam has rotted and those vibrations could potentially lead to a collapse.

So tonight, Aaron, again, the citizens here are crossing their fingers and hoping that doesn't happen.

BROWN: Adaora, thank you. Adaora Udoji in Massachusetts tonight.

The way gasoline prices have been going of late, we'll all be walking to work one day. CNN's Tom Foreman on the other hand, will actually walk to work one day this week. That much we know. But for now, his five-day search for a thrifty commute does indeed involve a drive, albeit a short one.

(BEGIN VIDEOTAPE) TOM FOREMAN, CNN CORRESPONDENT (voice-over): Day two of our great commuting odyssey starts with a short suburban drive to the nearest metro station, where I grab a newspaper, buy a ticket -- almost $5 roundtrip, and hurry to watch the latest train to D.C. take off without me.

(on camera): Just missed it. Well, this is one of the things you learn about mass transit, compared to your private car. You're no longer completely in control. The trains and buses will run when they run and you try to hop aboard.

(voice-over): In a few minutes another train comes along and I'm swept into the swaying mass of a great American misunderstanding. Because if you think everyone believes mass transit is good, cost- effective, you're about to be derailed. But first, let's listen to the true believers.

UNIDENTIFIED FEMALE: Well, what's good about it is that you can get where you want to go quickly, regardless of the weather.

UNIDENTIFIED MALE: More convenient. I live relatively close from the metro.

UNIDENTIFIED FEMALE: Driving, it can be difficult for me. I like riding, I love it.

FOREMAN: For decades mass transit has been heralded as a critical key to solving traffic problems everywhere. And most of the largest, oldest cities have systems that undeniably work for many people.

(On camera): You don't have a car?

STEVEN TAUBENKIBEL, METRO: I don't own a car. No, I don't.

FOREMAN (voice over): Steven Taubenkibel is with D.C. metro system. Just this week his office put a calculator on line to show people how much they might save by taking trains. And ridership is up 8 percent from a year ago.

We're averaging about 650,000, 660,000 people on an average weekday several months ago. Last two months now we're averaging well over 700,000 commuters on an average weekday.

FOREMAN: But only a bus ride away, there are heretics near the temple.

(on camera): Is any transit system in the country right paying for itself.

RONALD UTT, HERITAGE FOUNDATION: Not at the present. Not a single one.

FOREMAN: Even close?

UTT: Not even close. FOREMAN (voice over): Ronald Utt with the conservative Heritage Foundation say mass transit nationwide -- get this -- is a testament to failure. He argues that trains and buses handle less than 5 percent of all commuters and the bulk of those riders are in one place, New York City. That's why transit relies so much on government financial support.

UTT: When you pay your federal fuel tax, and you pay your state fuel tax, when you fill up, about 20 percent of what you pay doesn't got to roads for you, but it goes to transit for somebody else.

FOREMAN (on camera): Seven letters, state flower of North Carolina?

(voice over): And even at that, many riders here will tell you they're not saving money either -- or least not much. If I relied entirely on metro buses and trains I could get to work for under $35 a week. But because the bus schedules don't work in a practical way for my job -- or life -- and I choose the convenience of driving to the trains station. It costs about $125 a week. That's almost the same as driving all the way.

UNIDENTIFIED FEMALE: There is no real great way to commute to D.C.

FOREMAN: Maybe not. But as I emerge from Union Station, right by my office. I'm not ready to surrender my quest for a cheaper commute. Tomorrow, the bicycle. Tom Foreman, CNN, Washington.

(END VIDEOTAPE)

BROWN: And we'll not leave you hanging on the crossword puzzle issue. Seven letters, Dogwood. But you knew that didn't you?

Coming up, New Orleans is known for its neighborhood institutions. Family owned shops and restaurants that keep the city alive. Tonight a look at how those businesses are coming back in the Big Easy.

And later, when he was elected Arnold Schwarzenegger was hailed as the person to turn around the Golden State. But now the body builder turned movie actor turned politician is facing serious political problems. That story, too, when NEWSNIGHT returns.

(COMMERCIAL BREAK)

COOPER: And welcome back we are live here in New Orleans, actually live on Bourbon Street, at the corner of Bourbon and Contee. So far nobody has done anything wildly in appropriate, which is certainly something we're all very grateful for. But hey, we have another 30 minutes to go.

Business is returning, as you can see, the streets are kind of returning to normal. Although a lot of that is an illusion. A lot of these are relief workers who are here, they're not really tourists, paying money, paying those tourist dollars, which support this city and support this state.

We're going to have more on the businesses that are returning in a moment, but first, here's your look at what's happening right now at this moment.

Hurricane Wilma is gaining strength and gaining strength fast. It is now over the Caribbean. It is a Category 2 with 110 m.p.h. winds, could turn into a power Category 4 storm with winds of greater than 130 m.p.h., by this weekend when it is expected to make landfall. Forecasted destination? Hurricane weary Florida.

It looks like Supreme Court nominee Harriet Miers does in fact have an opinion on abortion. When running for the Dallas City Council in 1989, Ms. Miers said in questionnaire, she would support a national constitutional amendment banning abortions, except when necessary to save a mother's life.

And finally, a surprise move to help Pakistan's earthquake victims, Pakistan's president has offered to allow people from the Indian side of Kashmir to come to the aid of their fellow Kashmiris on the Pakistan side. He's suggesting opening the ceasefire line, India quickly accepted.

It has been 50 days since Katrina hit and there is still a lot of destruction in New Orleans. So much to rebuild here. There is nothing easy about the Big Easy anymore. But the first signs of business are returning.

(BEGIN VIDEOTAPE)

COOPER (voice over): Think of them as weeds left by Hurricane Katrina. Up and down the streets of New Orleans thousands of little signs fight for attention. Most of them advertising sheet rock, temporary roofing, mold removal, though not all.

With so much destruction one estimate says 74 percent of the city's homes, about 160,000 in all, suffered some sort of damage. Demolition and construction companies are everywhere. But Katrina created all sorts of other needs. Needs that some businesses are meeting like never before.

ROBERT JOHN, SALESMAN, COMEAUX FURNITURE: There has been a tremendous, tremendous boost to the business. We've probably sold over -- oh, well, I'd say a years supply of refrigerators in one month. This is probably the bet buy in the store.

COOPER: At Comeaux's they've moved about 3,000 refrigerators since they reopened.

JOHN: It's not very hard to sell. A lot of people are just taking whatever we have. And yes, I'll take that and just write me up, let's go.

COOPER: With so much flooding New Orleans was filled with thousands of very wet Oriental rugs and Bob's Rue customers are paying him up front to clean and salvage their treasures. BOB RUE, ORIENTAL RUG MERCHANT: This is what salt water does to Oriental rugs. If -- it attacks the cotton. The cotton foundation is rotten, not the wool in the rug.

COOPER: Bob starts with soap and water and says he's using as much soap in a week as he normally uses in several months. And he's preserving more than just floor coverings.

RUE: Try to save this, my grandmother's rug. Or my wife is sitting and weeping, you gotta take care of it. OK. You know. A guy yesterday brought me a little piece and it was $14 to clean, it wasn't very big. And he says, $14? I want you to do the best job, here's $20.

COOPER: And then there are all those signs. Somebody's gotta make'em. Turns out Mike Prechter is keeping very busy at his printing company. Almost all of his employees evacuated and haven't returned.

MIKE PRECHTOR, OWNER, ART-VERTISITNG INC.: The majority of them have moved away for good. I only anticipate having three out of the 10 back.

COOPER: For him the problem is keeping up with demand.

PRECHTER: For instance a roofer will call up, oh can I get my signs? When can I get'em. I'll tell him, well, it's going to be about five days. I can't wait that long. And I know he can't come put a roof on my house tomorrow. So, everybody has just gotta be patient. This is what I've been saying all across the board.

(END VIDEOTAPE)

BROWN: New Orleans coming back.

On to politics now, Arnold Schwarzenegger. Most people are used to seeing Mr. Schwarzenegger fight and win the big battles. But those were movies. Now as governor of California he's facing tough battles on many fronts. His popularity dwindling. This time around the final scene not so predictable. Here's CNN's Jeff Greenfield.

(BEGIN VIDEOTAPE)

(GIRLS SCREAMING)

JEFF GREENFIELD, CNN SR. POLITICAL ANALYST (voice over): When the year began Arnold Schwarzenegger was riding the crest of a wave.

GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: Hello. Hi, good to see you all.

GREENFIELD: The wave that had swept the body builder turned movie star into the governors mansion.

SCHWARZENEGGER: They felt that it was time to create change.

GREENFIELD: Much of California then saw him as he saw himself. SCHWARZENEGGER: I'm an outsider. I'm not a politician. I don't want to be a politician. All I want to do is represent the people.

(CROWD CHANTING ANTI GOVERNOR SLOGANS)

GREENFIELD: Now, in early autumn many of the cheers have turned to jeers. Especially, from nurses, teachers, firefighters and other unionized public employees, but also from many of his one-time supporters.

SCHWARZENEGGER: This is not the ordinary people fighting us. May I remind you, not the ordinary nurse, not the ordinary teacher, not the ordinary law enforcement officer.

GREENFIELD: Which explains why the governor is on the stump this fall, even though he's not up for election until 2006.

(On camera): Schwarzenegger is in the midst of a highly contentious battle over a quartet of ballot initiatives that would change everything from California schools, to its government to its politics. But he's also engaged in an attempt to reverse the effects of a very tough year. A year that has left this larger-than-life figure in serious political trouble.

SCHWARZENEGGER: OK, I changed my mind. I want to go back to acting.

(LAUGHTER)

GREENFIELD (voice over): It did not start out that way for the governor, as even his political opponent acknowledge. Bill Carrick, veteran democratic campaign consultant.

BILL CARRICK, DEMOCRATIC CONSULTANT: Started out the governorship very popular, popular in the way a Republican has to be in California, bipartisan popular. Democrats, Independents, Republicans, all gave him very high numbers.

SCHWARZENEGGER: I do most of my work here. This is where we have the cabinet meetings and all.

GREENFIELD: But after some initial successes, including reforming an out of control worker compensation program and pushing through a program to prevent a budget crisis, the atmosphere began to change.

SCHWARZENEGGER: Those girlie men up there in Sacramento.

GREENFIELD: His language grew tougher and so did his frontal attack on the pensions and perks of public employees. That tactic, says "Los Angeles Times" columnist Steve Lopez, was a major blunder.

STEVE LOPEZ, "THE LOS ANGELES TIMES": When you go after not just the unions but the people who work in them, you run a political risk. And Arnold didn't have the sense to realize you can't bash teachers and nurses, and cops and firefighters and you know, hold them up to ridicule, and get away with that. I mean, those are many of the very people who voted for him. And now in taking on public employee unions, he's gone after all of them. And you know, he's awakened this angry giant.

(BEGIN POLITICAL AD)

ANNOUNCER: He wants to reduce school funding by another $4 billion and get himself the power to make more cuts.

(END POLITICLA AD)

GREENFIELD: The unions and their allies are pouring an estimated $100 million into TV ads and a get out the vote operation to defeat four ballot initiatives backed by Schwarzenegger.

Taken together they would put a limit on government spending, make teachers wait five years, instead of two, for tenure, make public employee unions get permission from each member before spending their dues money on politics, and would give judges, not the legislature, power to draw legislative lines.

SCHWARZENEGGER: I have so many teachers coming up to me saying, Governor, I agree with you, but my union is grabbing my money and is using my money against you.

GREENFIELD: Schwarzenegger makes no secret about the target of his political effort. Here is how he explained his decision to take his fight to the ballot box instead of working with legislators.

SCHWARZENEGGER: The public employee union bosses, their control of what's happening here in this state, and as far as politics is concerned and policy is concerned, so that is why I say look, then we have to go just -- I have to go and have the people behind me and have the people be my partners so to speak, as they have been, all along in the last two years.

GREENFIELD: And here's why he wants the unions to ask their member's permission on politics.

SCHWARZENEGGER: It is all about protecting their paycheck and protecting the workers, because the union bosses have continuously taken huge sums of money out of the workers paycheck and using it for political contributions, without asking the permission of the worker.

GREENFIELD: And when I asked him...

(On camera): What do you think happened to bring you to the point now where a majority of Californians do not approve of the job you are doing and they express disappointment?

SCHWARZENEGGER: Well, first of all, as I have said before, and I say to you again, even if Mother Teresa gets $100 million of beating on television, with one TV ad after another, for months and months and months, her approval rating will go down, too. The public employee union bosses want to stop all this progress. They want to send us backwards. They're not going to -- that's not going to happen, because the people are behind me.

Everyone makes mistakes, and I made mistakes. So I would be wrong to say I didn't make any mistakes. It is on the job training, let's not forget that.

GREENFIELD (voice over): Among those mistakes, an agreement to edit so-called muscle magazines while serving as governor. That deal might have brought Schwarzenegger a multi-million windfall, and it helped undermine his claim to be un-buyable.

LOPEZ: I mean, we know the bread and butter of those magazines is the supplement industry. So what does Arnold do? He vetoes a bill that comes across his desk that would regulate the supplement industry. I mean this kind of blatant hypocrisy has put him in a jam.

GREENFIELD (on camera): Was that one of those things that you would list as a, in retrospect, a mistake, giving your opponent a sword or a club?

SCHWARZENEGGER: I think that I would say that we've given them ammunition. But there was absolutely nothing wrong with my deal. But health food is good, not we'll support them -- it has nothing to do -- if I ever get a penny from that, or not get a penny, it makes no difference.

GREENFIELD: And then there was his fundraising, a practice that helped cost the last governor his job. Political consultant Gale Kaufman, working with the unions to oppose Schwarzenegger's initiatives.

GALE KAUFMAN, POLITICAL CONSULTANT: He's getting million-dollar contributions from individuals he has relationships with. And he is taking more money than Gray Davis ever took in contributions, and Gray Davis was thrown out, supposedly, because he was such a great fundraiser and he connected up his fundraising with things he was doing as governor. This governor has make him into a piker.

GREENFIELD: While the governor's approval rating stands at only 36 percent, a low watermark, it would be a mistake to count him or his battle out. Liberal newspapers like "The LA Times" and the "Sacramento Bee" have endorsed his redistricting reform, as has Common Cause. And "The Times" also backed the so-called paycheck protection bill.

And while Schwarzenegger says this year's fight is not connected with his announced plans to run for re-election next year, it's clear that he believes the force of his personality will carry him through both campaigns.

(On camera): Have there been days, have there been nights, as you have gone through this past year, when you've looked up and said, boy, this isn't always so much fun.

SCHWARZENEGGER: I say this to my wife all the time, and she says, why don't just come home and forget this whole nonsense, you go back to movies. You know, my family is not 100 percent behind all of this.

I have the movie career, the body building career, the millions of dollars that are made here, finding you here, Maria, in America. This is all because of America, all because of California. I say this is my chance to give something back. This is where the great joy comes and the energy comes in. The future of California is worth fighting for and I will fight for that, all the way.

GREENFIELD: Jeff Greenfield, CNN, Santa Barbara, California.

(END VIDEOTAPE)

BROWN: Still ahead tonight, Saddam Hussein's day of reckoning. In Iraq, that day has not arrived. And later, the day a woman in New Orleans is praying for. The day she's reunited with the children she loves. From Baghdad, New Orleans, New York, and around the world, this is NEWSNIGHT.

(COMMERCIAL BREAK)

BROWN: It's tomorrow already in Baghdad, which means Saddam Hussein is just hours away from getting something he never gave many people in his own country, their day in court. Here's our Chief International Correspondent Christiane Amanpour.

(BEGIN VIDEOTAPE)

CHRISTIANE AMANPOUR, CNN CHIEF INT'L. CORRESPONDENT (voice over): Saddam Hussein faces his first trial for crimes against humanity, for allegedly ordering the execution of 143 Shiite men from this village, Dujail (ph). After his motorcade was ambushed there 23 years ago.

But his brutal rule bludgeoned the whole nation's humanities say these Iraqis, who are eager to watch his trial.

"I would cut him up, piece by piece," says Mehdi.

Now a soccer coach, Mehdi's personal hatred of Saddam began when he was on the Air Force soccer team.

"One day I returned from training," he said. "And I learned that my cousin had been executed that morning."

For years Iraqis lived in fear of Saddam and the statues and posters that loomed on every corner. But the fear started to fade when he was pulled, graying and disheveled from a hole in the ground nearly two years ago. And it faded further when he appeared for his first court hearing a year and a half ago.

On patrol with Iraqi troops in one of Baghdad's most dangerous neighborhoods, a new Iraqi soldier tells us --

"This trial will make a difference for all the Iraqi people. Saddam Hussein represents a dark period in our history."

His commander agrees. "If the trial is on television and in the press, it would be good, because Iraqis are thirsty for this. I think if Saddam is executed 80 percent of the so-called resistance or terrorism will be eliminated."

While the majority in Iraq want to see him executed. There are also many, mostly Sunnis, who do not.

"I hope he will be found not guilty and be freed," says Achmed (ph).

"I think he should get a life sentence because execution will be too merciful for him," says another customer.

Amma (ph) is the barber, a Kurd. Saddam could later face trial for genocide for gassing the Kurds in 1988.

"What will he say to defend himself," he asks.

And that is what Mehdi (ph), whose cousin Saddam had executed, wants to know, too.

"This is what I've been waiting for," he says. "I just want to hear what he has to say. How he will answer to all those crimes he committed against the Iraqi people."

(END VIDEOTAPE)

AMANPOUR: So, if the majority of Iraqis want to see him at least face justice and punished, in Tikrit, Saddam's old hometown last night, there were pictures on Arab satellite television of a gathering of several dozen people, at least, if not hundreds, chanting in support of Saddam Hussein and holding up his picture, a sight we very rarely see in Iraq these days, Aaron.

BROWN: Well, what will he say in his own defense or at least, what are -- how are his lawyers planning to defend him?

AMANPOUR: I spoke to his lawyer, Hachlu Delami (ph), on the phone last night, who had just seen Saddam Hussein. He said that he was going to ask for a delay and adjournment of at least months, because he said the lawyers in the case were not sufficiently prepared. The lawyers were not sufficiently experienced in these high level sensitive trials.

But he also said that part of his defense, or the main part of his defense, would be to accuse -- counter accuse, based on what he called the illegal invasion and occupation of Iraq. So they're going to use the U.S. invasion of Iraq, what they call illegal, as their strategy.

BROWN: Christiane, thank you. Whenever it starts it will be fascinating to watch. Christiane Amanpour.

Anderson, New Orleans must seem a long way away from Iraq, but they are going to turn it, if they can, into a political trial. We'll see if the judges, the tribunal allows that.

COOPER: Yes, it will be fascinating to see, just to see Saddam Hussein again for the first time in so many months to see what he looks like. How he's fared in prison these last many months.

We'll have more here from New Orleans in a moment. Seven weeks after Katrina, so many families still searching for loved ones. You'll hear one woman desperately searching to find out what has happened to her, the children she loves. Her story when NEWSNIGHT returns.

(COMMERCIAL BREAK)

COOPER: Welcome back, we are live on Bourbon Street. And there is lot of revelry tonight, but the revelry also masks an awful lot of pain. There are very many people here still in need in this city. I want you to meet a woman named Elaine Malone. Elaine came up to us on the street, she is searching for her sister's grandchildren.

What are their names?

ELAINE MULLONE, LOOKING FOR FAMILY: We have Bryan, seven, and Brandon Jackson, and the mother is Valerie Jackson.

COOPER: Now, when was the last that you saw of them.

MULLONE: I saw Brian and Brandon about a week before school started, in Mississippi when I took them there for a small vacation.

COOPER: We have a picture that we're showing of them. It looks like they're having a lot of fun. You took them to an arcade?

MULLONE: Yes, I did. I took them to the arcade in Beau Revaige (ph), and they enjoyed it so much. And they're the sweetest kids in the world.

COOPER: And they came back to New Orleans, you know they had just moved to the Ninth Ward. Do you know where they were going for the storm?

MULLONE: I don't. I don't know, I have heard from them, their mom, nobody.

COOPER: What -- how have -- you've contacted the Red Cross, you've contacted shelters?

MULLONE: Yes. The shelters, I've searched, I went to the Astrodome. I've been looking everywhere, everywhere.

COOPER: It has to be just a horrific search, especially here, on a street where people are having fun and to be having the search in your heart, it has to be so difficult.

MULLONE: Yes, it -- I think I'm going to cry.

COOPER: OK. I know you want to get your number out and before we give this number out, I just want people to know, please only call if you have any information. Try to look at this photo of these two kids again. Only call this woman if you have information. She appreciates any sympathy, but she does not need those calls. She needs only calls from people who may have seen these two children or their mother.

What is your cell?

MULLONE: The cell is 713-515-0005.

COOPER: Say that again, 713?

MULLONE: 713-515-0005. Anytime, anytime, please help us.

COOPER: I wish you the best and I hope you find these kids. And I know I can't imagine how difficult it is for you. And I wish you luck.

Let's just try to show that, let's just try to show that photo, if we can, one more time. This is the last time she saw these kids. It is a happy memory, she would like to have many more happy memories.

Let's try to -- the number is 713-515 --?

MULLONE: 515-0005.

COOPER: 0005. Please if any one has any information. Please call Elaine.

Elaine, thanks very much.

Aaron, back to you.

BROWN: Thank you. It is unbelievable at some level that almost two months after we're still looking for people and trying to unite people like that.

Quick check on the morning papers from around the country and around the world.

Charlie, how much time we working with? How much? Got it.

"The Washington Post" starts it off, "Miers Once Vowed to Support Ban on Abortion, But Conservatives Still Question Nominee's Views". What exactly do they want? Come on.

That is the right lead today, if I owned the newspaper, but I don't of course. I haven't even paid for my car now that I think about it.

"The Des Moines Register", "A $340 Million Jackpot". I would snatch up tickets for the highest Power Ball, and they list the odds. The odds are 1 in 146 million that you'll win. So try and keep that in perspective. The odds are 1 in 3.7 million that you'll be a victim of a shark attack. And 1 in 106 million you'll win the Publisher's Clearinghouse top prize. I didn't know anyone won that. That's "The Des Moines Register".

"The Dallas Morning News", just because I like this story a lot and I'm glad they put it on the front page, "NBA Players' Rags to Cost them Riches". The NBA is making its players dress up when they're not on the court, whether they're on airplanes or public functions, no more -- yeah, anyway.

Wrap? OK, that went quickly.

The tomorrow in Chicago, if you happen to be traveling the Windy City for the ballgame or anything else, according to "The Sun-Times" is "picture perfect".

Wrap it up in a moment.

(COMMERCIAL BREAK)

COOPER: And that's it for us, here, on Bourbon Street. Aaron, as you said, it is so strange when you see all of this revelry to know that there are people still in pain, still in such sorrow.

And again, I just want to put up this picture. This is Elaine's sister's grandchildren. The number is 713-515-0005. Anyone who has any information about where these kids were before Katrina hit or what might have happened to them. She would really appreciate it.

BROWN: Good to have you with us tonight, Anderson. The truth is we had three to one odds you wouldn't get through the whole program without something untoward happening behind you. We'll see you tomorrow.

And we'll see you all tomorrow. Until then, good night for all of us.

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