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CNN Newsnight Aaron Brown

Impact of Latest Terror Warnings

Aired August 02, 2004 - 22:00   ET

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

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


DARYN KAGAN, CNN ANCHOR: Good evening everyone. I'm Daryn Kagan. Aaron Brown is off tonight.
After so many warnings from the government saying little more than be alert and by extension be afraid, Americans now have some specifics. Three cities, a handful of locations, perhaps more and something else.

What that something else is though we don't really yet know. It could be a sign that authorities have disrupted a major plot or that they have only scratched the surface. We won't know until we get a lot more specifics than we did today.

So, until then, the whip begins in Washington, D.C. with our Kelli Arena, Kelli your headline please.

KELLI ARENA, CNN JUSTICE CORRESPONDENT: Daryn, New York's mayor told the city's corporations that not being named as a target doesn't mean they can rest easy. In fact, CNN has learned the new intelligence did indicate there were more than five targets but the government has yet to reveal them.

KAGAN: Kelli, thank you. We'll be with you in just a moment.

Now on to New York where business as usual it was not today but it was as usual to get the job done. Our Deborah Feyerick is handling that angle, Deb your headline please.

DEBORAH FEYERICK, CNN CORRESPONDENT: Well, Daryn, New Yorkers are used to having lots of police carrying lots of big guns but tonight it took on an even greater sense of urgency -- Daryn.

KAGAN: And thank you for that.

And finally on a day when both the president and the challenger made news on national security we have two reports, one from the campaign trail and our Candy Crowley, Candy your headline.

CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT: Daryn, John Kerry says he would make America safer than George Bush has. He didn't necessarily want to talk about terrorism today but this is the kind of subject that has a way of changing the talk.

KAGAN: Candy, thank you, back to you in just a moment and also to the rest of you shortly.

Also on the program tonight doing business under a high security alert and why it's making big trouble for truckers.

Plus they are out fighting a war putting their lives on the line and back at home their livelihoods are in danger as well, a look at returning reservists who own and are losing their own businesses.

And another ugly day in Iraq as insurgents target Iraqi Christians and their places of worship, all that and more we will get to in the hour ahead.

We're going to begin tonight with the terror alert, the facts behind it, the dimensions of it which are broader than were first reported. For tens of thousands of people who live and work in three American cities, the fallout from a police raid in Pakistan began hitting home over the weekend and at the office today.

We have several reports for you tonight. We begin with CNN's Kelli Arena.

(BEGIN VIDEOTAPE)

ARENA (voice-over): With enhanced security in place around named targets, senior government sources tell CNN there are unnamed ones as well. Sources describe them as financial targets like the rest. A homeland security official acknowledges there are a number of what he called minute mentions without any detail but would not elaborate.

TOM RIDGE, HOMELAND SECURITY SECRETARY: It certainly indicates that they've taken a long, hard look at several sites.

ARENA: Counterterrorism officials believe al Qaeda conducted surveillance inside the target buildings. They say there are indications the intelligence was updated in the last few months but they do not know if that means the recent surveillance was done in person.

Sources say there are event and date references in the material confiscated in Pakistan along with about 500 computer images, including photographs, drawings and layouts. These are helping investigators determine precisely when the surveillance was conducted.

RAY KELLY, NEW YORK POLICE COMMISSIONER: This is an intelligence report by the enemy you might say but not tied at this moment in time to any operational plan that we're aware of.

ARENA: Investigators are also trying to find out who carried out the surveillance and whether they are still in the United States. Investigators are scanning employee and visitor records from the various sites and officials say the FBI has several investigations underway stemming from the new intelligence.

The level of surveillance was extremely detailed, including information about parking garages, security personnel and cameras and pedestrian traffic but officials say no information suggesting the timing of a possible attack.

CHIEF CHARLES RAMSEY, METROPOLITAN D.C. POLICE: We don't have any real concrete information around how long this is going to last.

ARENA: Officials say it was the arrest of an alleged al Qaeda computer expert that led investigators to the new information and ultimately to accused terrorist Ahmed Ghailani.

(END VIDEOTAPE)

ARENA: Now, interrogations of those individuals could provide even more details in the weeks ahead or perhaps we'll hear more from Homeland Secretary Tom Ridge, who is due in New York City tomorrow -- Daryn.

KAGAN: So, Kelli, if there was nothing about the plot or nothing about the timing why the feeling, the sense of urgency that this might be happening, that this might be imminent?

ARENA: Well because they found all of the documents together. Ahmed Ghailani was apparently carrying huge sums of money which could suggest that he was ready to go into an operational phase according to some sources. Others disagree with that but they had something specific.

For the first time they had an unbelievable level of detailed surveillance before anything happened and the decision was made to get that out to the public -- Daryn.

KAGAN: Kelli Arena in Washington, thank you.

New Yorkers now are already accustomed to heightened security. They got more of the same today, more dogs, more cops, more inconvenience on the way into work and, for the most part, New Yorkers took it, well kind of like you would expect New Yorkers to do.

Here's CNN's Deborah Feyerick.

(BEGIN VIDEOTAPE)

FEYERICK (voice-over): Tracy Williams made his way to a Wall Street firm as he does every day. The investment banker unfazed even in the face of the newest target intelligence.

TRACY WILLIAMS, INVESTMENT BANKER: I like to think that we are much more prepared today than we were three years ago.

FEYERICK: But for this financial consultant, a new dad, going to work brought up memories of 9/11.

UNIDENTIFIED MALE: It was a little difficult this morning, you know, giving a kiss goodbye but I'm confident that nothing will happen.

FEYERICK: At the New York Stock Exchange, on the list of terror targets, the head of the big board tried calming global markets.

UNIDENTIFIED MALE: We are open for business. FEYERICK: Inside the exchange, cheers, outside a show of force, a scene repeated at Citigroup offices in Midtown and Prudential Financial in northern New Jersey. At points in Manhattan, police searched trucks, rerouting commercial vehicles away from certain bridges and tunnels leading into Lower Manhattan.

UNIDENTIFIED MALE: You got to do what you got to do. I've been sitting three hours on the highway.

FEYERICK: The new sense of urgency did put some people on edge.

KEVIN FLANDERS, NYSE MEMBER: It puts us under a lot more pressure than we were already under.

FEYERICK: But streets that could have been deserted were anything but. Even the first lady, scheduled to be in New York anyway, stopped into Citigroup to get coffee and give comfort. New York City's mayor reminding everyone the new warning doesn't mean a strike is imminent.

MAYOR MICHAEL BLOOMBERG, NEW YORK CITY: It is certainly a good wakeup call to everybody in every building. Just because your name wasn't on the list doesn't mean you shouldn't take precautions and the more precautions you take the safer you will be.

FEYERICK: Investment banker Tracy Williams certain it would be a day like any other.

WILLIAMS: As I observe today so far it's just a normal day in New York City in August.

(END VIDEOTAPE)

FEYERICK: Now, one law enforcement source said rather than feel scared by the new information people should really feel reassured that the system is working -- Daryn.

KAGAN: So, Deb, would you say overall there was more of a sense of defiance of the workers that were showing up?

FEYERICK: There was a sense of defiance but there was also a sense that we're going to be getting these warnings a lot. They're going to be coming at different paces, sometimes fast, sometimes slower. You've got to do what you've got to do and hope that perhaps intelligence will be there to prevent any sort of an attack.

KAGAN: Deborah Feyerick in New York City, thank you.

Doug Jehl now, his reporting on homeland security appears in the "New York Times," he joins us tonight from Washington, Doug good to see you.

DOUGLAS JEHL, "NEW YORK TIMES" REPORTER: Thank you.

KAGAN: You're looking at this stuff over and over again. This particular set of threats what strikes you about it? JEHL: Well, it's certainly the detailed and precise nature of the information that was found in Pakistan. The surveillance that was conducted on these buildings in New York and Washington was really intensive and sophisticated. People who have been in this business, the intelligence business, for a long time say they've never seen anything like it.

KAGAN: But there's nothing about the plot and Kelli Arena was talking about this, nothing about the plot, nothing about the timing.

JEHL: That's right. What this was, was surveillance. It was, as you heard from an earlier intelligence operation. What they have is a good bit of information about these targets, a plan that could be put into effect perhaps in the future but nothing to indicate a plot underway now.

KAGAN: But is part of what makes it so chilling is just how long the surveillance must have been going on to collect this much information?

JEHL: Well, that's chilling as well as the access that some of these people apparently got to the building. But we need to emphasize that this was surveillance apparently conducted quite a while ago. This is information dating back three or four years and the question that people are dealing with now is whether that old information really presents a current threat.

KAGAN: Let's talk about what kind of led up to this threat and to the information, this computer expert that was captured in Pakistan. What do we know about him?

JEHL: He's a 25-year-old man, Muhammad Naeem Khan, a person almost unknown to U.S. authorities until this spring. They knew only his alias as recently as May. He turns out, we think, to have been a kind of clearinghouse for communications, a middle man in relaying information sent by couriers from the Afghan-Pakistan border region onto others via e-mail and Internet Web sites, the kind of person at the center of a lot of information and when they got him they got quite a trove of electronic documentation.

KAGAN: And so not just him, himself, but the actual computer and the programs that came with it.

JEHL: That's right. His account would just be the account of one individual. We don't know exactly what was found with him but clearly it involved correspondence between quite a number of people, those who were conducting the surveillance in New York and Washington and others, so you have a real blend of many, many different accounts.

KAGAN: So, maybe some of the ties leading to people who might already be here in the U.S. but the inevitable question when you're talking about somebody like this and al Qaeda any evidence that he has ties back to Osama bin Laden?

JEHL: Well, what he's told the Pakistani interrogators, we're told, is that he doesn't know where Osama bin Laden is and nobody in the leadership really knows. He's a person who was not at a high level of al Qaeda but has told his Pakistani interrogators that he has met some in the middle to upper ranks. He was not a nobody certainly.

KAGAN: But you can't do these stories and watch as things have unfolded in this part of the world without asking the question how reliable would be the information coming from any single source?

JEHL: Well, information from any single source is always suspect. What's different about this apparently is that it's not single threaded. It really reflects the intersection of many communication streams, which gives it a lot more credibility in the eyes of intelligence officials.

KAGAN: So, his capture was actually more significant than Ahmed Ghailani, who was much more publicized over the last week?

JEHL: That's right and I think one thing that one learns from watching this business is it's the events that are not announced that often turn out to be the most significant. Neither the Pakistanis nor the Americans said a word about Muhammad Naeem Khan and were reluctant to do so until very late today.

KAGAN: Interesting and as you're doing this and as you're learning on the job and covering all this when a country such as Pakistan does make a big deal of a capture, let's say like Ghailani, do you typically look at that as a red herring that actually there's something more interesting going on behind the scenes?

JEHL: It's hard to tell in this business. There are lots of levels and lots of layers to peel back, different motivations involved here but generally the events that are kept quiet has turned out to be the most interesting.

KAGAN: Interesting. Well, your comments are interesting as well. Doug Jehl with the "New York Times" thank you for your time this evening.

JEHL: Thank you.

KAGAN: Appreciate your insight.

A lot more is ahead on the program, including the president taking the advice of the 9/11 Commission and makes his own decisions while his opponent speaks out against the president for taking too long to make a decision, a break first.

This is NEWSNIGHT.

(COMMERCIAL BREAK)

KAGAN: Welcome back.

We have more now on homeland security. This latest terror alert comes with copies of the 9/11 report still flying off store shelves. Meanwhile, lawmakers are scrambling to address the recommendations against the backdrop of election year politics. Today, the president joined them.

From the White House here's CNN's Elaine Quijano.

(BEGIN VIDEOTAPE)

ELAINE QUIJANO, CNN CORRESPONDENT (voice-over): Less than two weeks after the September 11th Commission released its report, President Bush asked Congress to create a new national intelligence director and called for establishing a national counterterrorism center as the panel recommended.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: We are a nation in danger. We're doing everything we can in our power to confront the danger.

QUIJANO: Senior administration officials say the new director would coordinate 15 intelligence agencies, now a job handled in theory by the head of the CIA but not in effect, officials agree.

MICHAEL O'HANLON, BROOKINGS INSTITUTION: I'm hopeful that this will actually be helpful and unifying, allowing one person to supervise the whole intelligence community but also allowing debate within that community.

QUIJANO: But in a departure from the commission's recommendations, Mr. Bush said that new position should remain outside the White House, in part to ensure autonomy. 9/11 Commission member Tim Roemer said the director position might be too weak.

TIMOTHY ROEMER, 9/11 COMMISSION MEMBER: We need to make sure that the national intelligence director is a director with strength and authority and presidential access, not a czar.

QUIJANO: The president's announcements come against the backdrop of criticism by his Democratic opponent John Kerry, who says the White House has not moved quickly enough to reform the intelligence community. Kerry also says the administration's actions in carrying out the war on terror have focused animosity and anger against the U.S. an idea the president rejects.

BUSH: It is a ridiculous notion to assert that because the United States is on the offense more people want to hurt us. We are on the offense because people do want to hurt us.

(END VIDEOTAPE)

QUIJANO: Now in another development late today, the chair and the vice-chair of the 9/11 Commission issued a statement basically saying that they welcome President Bush's support of some of their recommendations; however, they added they look forward to discussing the substance of the ideas saying: "The fate of these reform ideas turns vitally on the specifics" -- Daryn.

KAGAN: Elaine, what kind and when, what kind of executive orders do you think we should see announced later in the week? QUIJANO: Well, one of the things that the president has certainly said he supports is the idea that in Congress there needs to be some restructuring going on that the committees that are in place right now simply overlap too much.

Now that would not necessarily be covered under the executive order but the president has made very clear that he does share the ideas put forth in these recommendations. As to what specifics, we simply don't know yet. We'll have to wait and see -- Daryn.

KAGAN: Although I imagine to those in the White House it would be tempting to be able to rearrange Congress simply by executive order.

QUIJANO: That would be, Daryn.

KAGAN: It will be interesting to see what comes out of the White House later this week. Elaine Quijano thank you for that.

On the campaign trail now, Democratic presidential candidate John Kerry was quick to tailor his message to the day's focus on national security.

Reporting that part of the story our Candy Crowley.

(BEGIN VIDEOTAPE)

CROWLEY (voice-over): As the East Coast adjusts to a new terrorist threat and the president calls for an intelligence czar, John Kerry busses through the Midwest arguing not the substance but the calendar.

SEN. JOHN KERRY (D), PRESIDENTIAL CANDIDATE: September 11, 2002 came and went. September 11, 2003 came and went. September 11, 2004 is almost here and only finally are we doing some of the things that some of us have been calling for all that period of time. We need leadership.

CROWLEY: It is sticky business mixing terrorism and politics, trying not to look like you're using a terrorist threat for political purposes without ceding the issue.

KERRY: If the president had a sense of urgency about this director of intelligence and about the needs to strengthen America, he would call the Congress back and get the job done now.

CROWLEY: Kerry has been pretty much absent for Senate business this year and late last year but he says he'll return for the debate and votes about terrorism.

The Democratic candidate was briefed Sunday evening on the new threat and no one inside Camp Kerry sees any political motivation, though one senior adviser did find some politics in the way Tom Ridge talked to the country.

RIDGE: We must understand that the kind of information available to us today is the result of the president's leadership in the war against terror. The reports that have led to this alert are the result of offensive intelligence and military operations overseas, as well as strong partnerships with our allies around the world.

CROWLEY: The Bush campaign says the Democratic challenger has a bad case of need-to-ism pointing out that even before today the president was implementing 31 of the 33 proposals John Kerry says will make the country safer.

(END VIDEOTAPE)

CROWLEY: To which, Daryn, of course the Kerry campaign replies, George Bush has done too little and far too late -- Daryn.

KAGAN: Candy, despite the specifics that are out there of this latest terror threat there are still many in America who believe this is politically motivated but it seems like the Kerry campaign is using surrogates, like Howard Dean outside the campaign to make that argument.

CROWLEY: Well, you can make that leap but let me tell you this. John Kerry said, look, Howard Dean can talk for himself but I don't believe that this is -- that the terrorism warning itself was politically motivated.

John Kerry did have a briefing by top level administration intelligence officials last night and they told us then, look, no, we don't think this is politically motivated.

That's not where they want to argue this particular issue on whether or not a terrorism alert is politics. What they want to argue is that over the whole course of three years George Bush just simply hasn't done enough to make the country safer.

KAGAN: And just it seems like there's an interesting story just in Senator Kerry being able to get that briefing. It shows you how this is a new day and age. I understand there was some bit of scrambling so the Senator could get to a secure phone line in Northern Ohio.

CROWLEY: Right. We're bussing it from coast-to-coast, a little bit of train but have been doing busses and they obviously needed a secure phone, so they did have to scramble when it came up that there was going to be a terrorism, that news conference from Tom Ridge but they ultimately did. Obviously, the Secret Service was here. They ultimately did get a secure phone and Kerry was able to get that intelligence briefing on the bus while we were in Ohio.

KAGAN: All right, Candy Crowley, we'll let you get back on the bus.

CROWLEY: Sorry, we were in Michigan.

KAGAN: Michigan.

CROWLEY: Yes. KAGAN: It's that time of the campaign where you don't even know the state where you are.

CROWLEY: Yes.

KAGAN: Well, we'll let you get back on the bus. It's been a long day and we'll check back with you at the next stop.

CROWLEY: Thank you.

KAGAN: Candy Crowley thank you so much.

Well, Candy's not the only one following John Kerry. Our Bill Hemmer also talked to John Kerry today about a range of campaign issues. Tomorrow on "AMERICAN MORNING" Bill will have part two of that interview. Among other things, Bill asked Senator Kerry about what he thinks will be the main issue in the November election. Here's a peak.

(BEGIN VIDEO CLIP)

KERRY: It's one word, security, national security, physical personal security, job security, wage income security, health security, security. People want to know that the government is doing everything in its power to protect and provide the possibilities of the American dream to our families.

I can do a better job than George Bush is of putting people back to work, restoring our alliances, making us stronger in the world and stronger at home and respected in the world and I can do a better job of fighting the war on terrorism.

(END VIDEO CLIP)

KAGAN: Once again, more of Bill's interview tomorrow 7:00 a.m. Eastern on "AMERICAN MORNING."

Coming up tonight more on the latest security threats, the author of "American the Vulnerable" joins us.

And later, Iraq, where Iraqi Christians now find themselves the target of terror attacks.

From Atlanta tonight, this is NEWSNIGHT.

(COMMERCIAL BREAK)

KAGAN: It is probably fair to say that a lot of people spent today wondering how worried they should be.

We turn now to Stephen Flynn, the author of "America the Vulnerable." Mr. Flynn served for two decades as a commissioned officer in the U.S. Coast Guard, also worked in the first Bush White House and for President Clinton as well. Steve, good evening. Thanks for being here with us.

STEPHEN FLYNN, AUTHOR, "AMERICAN THE VULNERABLE": I am delighted to be with you.

KAGAN: Your general assessment of these latest terror threats please.

FLYNN: Well, I think they help remind us what this war is all about and it is a war, of course. Our enemy is not just involved with terrorist acts going after symbols of our democracy or things like the conventions or the White House or Congress but is really geared towards attacking the infrastructure that underpins our power, in this case the financial infrastructure but there are a lot more.

There are the transportation systems, the food supplies, the chemical industry, all these networks are essentially wide open soft targets and these folks are staking them and their goal is to cause real damage to them.

KAGAN: Well, boy are they ever staking them out. What about the specificity of what we learned?

FLYNN: Well, it just shows the extent to which also they're willing to prepare, that these acts are not just random suicide bombings, that they intend to be successful when they carry them out and so they will spend time staking a place out.

And for me, you know, the broader theme that I've been trying to advance here for some time is that placing so much reliance on your efforts to go at the enemy over there, overseas, to take the battle to the enemy, as the president and vice president often say, without having much defense is a high risk strategy.

KAGAN: So, you're saying more focus at home.

FLYNN: Yes, certainly. Let me just give a straightforward figure here.

KAGAN: OK.

FLYNN: We are spending more every three to four days in the war in Iraq than we've spent for the last three years in federal grant monies to our 361 commercial seaports and that kind of asymmetry between about three cents on the dollar for defense versus offense I argue doesn't make much sense when our enemies are not going to take us on, on the traditional force to force.

They're coming after the non-military elements of our power, the things that underpin our power, our economy and our civil society. That is something that we're still struggling post 9/11 to come to grips with.

KAGAN: Well, I think one thing that people are really struggling with as a society and we saw it come home again today is how do you balance having homeland security and open society? It was chilling to see how many of these buildings had been cased, yet how do you keep people from casing a building that you can do simply by walking by or walking in as public buildings? FLYNN: Well, my main argument here is you need to take a deep breath. Security isn't all about being moats and castles and throwing our civil liberties out the door. It's a lot like safety. Safety is, you know, if you drive a car it's a dangerous thing but we integrate safety measures into trying to manage that risk.

I think one of the biggest things that the terrorists get out of carrying out these acts on our soil is I guess (UNINTELLIGIBLE) because we don't believe there's baseline security. We tend to see that if they could do it over there why can't they do it here?

I think America is pretty pragmatic. We are about things like automobile safety and other issues but when we sense that there isn't even a baseline to begin with that should reassure us or that we can turn to our families and point to, we've got a problem.

So, my overarching message is, one, you've got to talk more ongoing to the American people about the threat, about our vulnerabilities, about what the costs are of managing this.

We get this sort of cards close to the chest approach and then we wait until we get so much intelligence and then we sort of spurt it out and the public understandably sort of blows the circuits.

KAGAN: But, to be fair, you say they have to talk about it more.

The Bush administration comes under fire when that happens if they don't come up with specifics like they did this time around, saying, you're crying Wolf. You said something bad was going to happen. Nothing bad happened, kind of, tell us on a need-to-know basis. The public does not want to hear this all the time.

FLYNN: I think that what we need to know is that we will not have specific intelligence probably for another 10 years that will allow us to guide protective measures.

So what you need to do is essentially say, are there things in our society that are really valuable? If they are, by definition we're in a state of war. There's likely folks here who target it. Based on its value, what prudent measures should be put into place to manage the risks that somebody with malicious intent will target it?

Now, it is not going to a failsafe approach, but it has got be something we're working on over time. And some things really make sense to do even if there wasn't a terrorist threat. I've been a big advocate of trying to just put tracking devices on containers that monitor their position and their integrity. Well, that helps with not just keeping a terrorist from using a weapon of mass destruction, but, when you have intelligence, being able to stop it without shutting everything else down.

But it is something Wal-Mart wants to know where its inventory is. So there actually are potential win-wins here. But we haven't really engaged in this conversation seriously because we have a focus of a war on terrorism as over there, as shaping the international environment, going after state who would harbor terrorists. The reality is, the terrorists -- there is no central front. The terrorists are here, as the secretary of homeland security and the attorney general have told us.

And so we must balance our efforts over there with more efforts here. And we haven't really done that yet, I would argue.

KAGAN: Your point is to bring it home. And you definitely give us something to think about on this Monday night.

Steve Flynn, thanks for your time this evening.

FLYNN: Thanks so much for having me.

KAGAN: We still have a lot more to come tonight.

The price of the new normal, as paid by truckers doing business, or trying to at least, in New York.

And still later, the citizen soldiers who return home from war to the possibility of bankruptcy.

Around the world, this is NEWSNIGHT.

(COMMERCIAL BREAK)

KAGAN: Even as potential targets opened under heavy security today, government officials were urging Americans to go about their business as usual. It has become a familiar mixed message in the war on terror. But the specifics that triggered this latest warning are something new.

Earlier, I had a chance to speak with James Kallstrom. He's is senior adviser for counterterrorism in the state of New York and former director of the FBI's Manhattan office.

(BEGIN VIDEOTAPE)

KAGAN: Jim, what do you make of the specific nature of these threats?

JIM KALLSTROM, SENIOR ADVISER FOR COUNTERTERRORISM TO NEW YORK STATE: Well, Daryn, for the first time, we've actually got some specificity. We've got addresses, names of buildings named.

So this is just a continuation of the war that's been going on for decades. But, since 9/11, this is the first time where the intelligence community has actually come up with specific locations. So it is a bit different.

KAGAN: And not just locations, but so much information about those locations, which strikes me that these people have been able to case these buildings. I don't know how you go against that if you want to have a free society.

KALLSTROM: Well, it appears that that's the case, that -- we don't have all the definitive detail, but the federal government has shared a lot of information with the state.

We have a very close working relationship with my old FBI office, the terrorist task force, three of which are in New York state. So our job in the state is to bring all the state resources, Daryn, to bear, so that the 70,000 cops, for instance, that patrol the streets and towns are trip wires for the FBI.

The corporate security people throughout the state become more aware of indications and warnings of terrorism and terrorism surveillance and terrorists casing certain places. So through communications and through us working together in this wide open society called America, we have a better chance of protecting our people.

KAGAN: And so my question becomes how long in terms of true dollars, the expense of keeping a terror alert up at this level, or just even people's interest without wearing them out. How long can you keep it going?

KALLSTROM: Well, Daryn, we've been at a very high level of alert, certainly New York City and New York state, ever since 9/11.

The financial services community, the New York Stock Exchange and all the different attributes of the financial services in the United States, has been a target generically from the very beginning. So this is nothing new. What is new is the fact that a few particular buildings were named, a few particular companies were named. But we've been at a very high state of alert, real good communications with those security companies and the security directors of those companies.

So this is a little more specific as to some physical locations. But it's not that much different than what we've been doing for some time now.

KAGAN: As a former FBI guy, I also want to get your take on the other news of the day. And that's President Bush coming out and asking Congress to create this position of a national security director.

When you talk about that, when you talk about a counterterrorism office, you're talking about taking away turf from some longtime established groups. How do you think that is going to go over?

KALLSTROM: Well, the devil will be in the details.

Moving the deck chairs around necessarily isn't going to help anything. If we actually empower people to prioritize things and put money, people, hiring behind that, then that's a different question. I think the biggest challenge will be overcoming the multitude of congressional oversight committees and subcommittees that look over this thing and have something to say about it.

KAGAN: That's kind of what President Bush said earlier today as well. And I'm just wondering if you can explain to us laypeople out there, how big, just how big is the job of protecting New York City, especially leading up into the Republican Convention?

KALLSTROM: It's a big job.

I start at the borders of the country. How big is the job of protecting the United States when we have generally open borders? We've done a better job, but they're generally open. We know that, Daryn. The ports are generally open. The gateway airports are pretty much generally open because we have a plague of fictitious identification around the world.

So you can be anybody you want to be. So in this loosey-goosey free society, this great America that we love so much, how do we stop homicidal maniacs from coming and going into the United States? And how do we find the ones that are here? That's the challenge for the FBI and for law enforcement.

KAGAN: A difficult one, indeed.

Jim Kallstrom, thank you for your time.

KALLSTROM: Thank you, Daryn.

(END VIDEOTAPE)

KAGAN: Well, going about business as usual in spite of the new terror alert was easier for some people than it was for others today. If you were driving a truck into Manhattan, for instance, or waiting for a truck, it was anything but a normal day.

Our Jason Bellini has that piece of the story.

(BEGIN VIDEOTAPE)

JASON BELLINI, CNN CORRESPONDENT (voice-over): It is a moral imperative that New Yorkers conduct business as usual, said Senator Charles Schumer.

NEIL, TRUCKER DRIVER: We went probably 90 feet in 45 minutes.

BELLINI: The increased security should give everybody comfort, said Mayor Michael Bloomberg.

NEIL: This is like a line to the men's room at a Led Zeppelin concert and there's only two urinals.

(LAUGHTER)

BELLINI: Monday, the city closed the Holland Tunnel, the Williamsburg Bridge and the northbound Battery Tunnel to trucks entering Manhattan. Truck driver Neil doesn't know when he'll have his next normal day.

NEIL: We're here. The checkpoint is up here. And that's where we're going to go. And if I was allowed to use the Williamsburg Bridge, we never would have met.

BELLINI: In Manhattan, a frustrated foreman waits for Neil and his load of gravel. The contract is to pave a school sidewalk.

ROB CHARLES, CONSTRUCTION FOREMAN: What's usually a 40-minute round-trip turned into six hours.

(on camera): That hurts.

CHARLES: Tell me about it. I'm going broke real quick here.

BELLINI (voice-over): Idle time is time when Neil contemplates why he's here in the first place.

NEIL: That's Gina (ph).

BELLINI (on camera): Gina?

NEIL: That's who I do this for six days a week, 60, 70 hours. That's what it's all about, so she don't have to do what I do.

BELLINI (voice-over): At the entrance to the Brooklyn Bridge, police check trucks one by one.

NEIL: I got gravel on.

Be careful up there.

BELLINI: After making it to the bridge, Neil is home-free. Foreman Rob Charles is still waiting. But most of his workers had already left for the day.

CHARLES: It's killing us. It's killing us; 40 other guys relying on this truck to get here with materials.

BELLINI: Charles points out his labor costs come to $20,000 a day.

(on camera): Neil was supposed to complete six round-trips today. He only ended up making one. And now, on his way back, he's not carrying back any debris with him, as he planned to, because the dump is already closed.

Frustrated?

NEIL: No. The clock is running.

BELLINI (voice-over): As Neil sees it, that's now the cost of doing business.

Jason Bellini, CNN, New York.

(END VIDEOTAPE)

KAGAN: Still more to get to tonight on NEWSNIGHT, including the increasing religious warfare in Iraq and why Christians and their businesses and places of worship are the latest targets.

Plus, we'll introduce you to two Army Reservists fighting not to be the financial casualties of the war.

From Atlanta, this is NEWSNIGHT.

(COMMERCIAL BREAK)

KAGAN: From the beginning, the administration has tried to assure the Muslim world that the war in Iraq is not a war on Islam -- easier said than done. And where Muslim extremists are concerned, perhaps that is actually impossible. For them at least, it is a holy war. And over the weekend, they opened a new front, targeting churches, four in Baghdad, one in Mosul.

Reporting from Baghdad, CNN's John Vause.

(BEGIN VIDEOTAPE)

JOHN VAUSE, CNN CORRESPONDENT (voice-over): The day after the carnage, and Christians everywhere across Iraq were asking the same question: Why us?

FATIN HANNA, IRAQI CHRISTIAN (through translator): Who's purpose would this serve? Who would benefit from this?

VAUSE: The attacks were coordinated, the churches were full, the Iraqi government believes it has all the trademarks of Abu Musab Al- Zarqawi, the Jordanian militant linked to al Qaeda.

CANNON ANDREW WHITE, ANGLICAN CHURCH: I think one of the very sad realities of what we're seeing is an increasing religious dimension in this whole conflict. And sadly the Christians are seen as being party to the West.

VAUSE: The first blast rocked an Assyrian church just as the bells were ringing and mass was ending. Luay Nair saw it all.

LUAY NAIR, IRAQI CHRISTIAN (through translator): I saw two cars approach the church, a mini bus and a sedan. The driver of the mini bus parked next to the church, got in the other car and drove away. The mini bus exploded 10 seconds later.

VAUSE: Over the last 15 months, there were warning signs this small community was in danger. Almost all the liquor stores here are owned by Christians. A few have been burnt to the ground by Islamic extremists enforcing their strict interpretation of the Koran, which outlaws alcohol. And women no longer feel safe in the beauty parlor.

SARA ADAM, BEAUTY PARLOR OWNER (through translator): Customers come into the shop and ask us to finish them really fast because they are scared to be in here.

VAUSE: At one of the churches, tribal and Islamic leaders met with Christian leaders promising to stand together. And leading Muslim clerics were quick to condemn the attacks. AHMED ABDUL GHAFUR AL SAMIRAL, SUNNI CLERIC (through translator): These killers are like a knife at the throat of all Iraqis.

VAUSE: Iraq's Christian population has halved in a decade, now about 800,000, less than three percent.

FATHER BASHAR WARDA, ST. ELIYA CATHOLIC CHURCH: I will not be surprised that if other people will decide to leave because of the situation.

VAUSE: Those who stay behind will now be met with razor wire at some churches and a reminder that no one is safe. The day after the blast, police here found three sticks of dynamite outside a Baghdad mosque.

(END VIDEOTAPE)

VAUSE: And Iraqi Christians say it has never been this bad. Under Saddam, they were mostly protected and relatively free to worship. For them, the new Iraq is emerging as a dangerous, intolerant place -- Daryn.

KAGAN: And, John, speaking of danger, as I understand it, as we were running your story, you actually heard a large explosion somewhere behind you?

VAUSE: Yes, we heard a very loud boom. A number of booms, we found, had rocked this building, not uncommon for that to happen. It could be a controlled explosion. We think -- we're not too sure. We're checking. We think it could be some kind of mortar explosion in the Green Zone. That's very initial reports.

But we hear explosions here all the time. That one, though, was a particularly powerful blast, which probably just means that it is closer to our location here than the other blasts have been, Daryn.

KAGAN: I think a lot of people at home are shaking their head thinking he's awfully calm for being in that situation. You and I were together during the war in Kuwait City. I would think, though, that where you are and what you are experiencing now is a whole different type of situation.

VAUSE: Yes, it changes here on a daily basis.

And the situation is, you do hear explosions five, six times a day. And depending on how close they are to our location here at the hotel is how you basically feel it. Sometimes, you can actually feel the vibrations from the explosion. We felt that explosion here just before we felt the building shake as the vibrations and that shockwave came towards us.

This is definitely a different situation to Kuwait. Kuwait, you were under attack from missiles. Here, you're worried about a suicide bomber driving into the hotel or rocket-propelled grenades being launched into your room, or mortar fire, that kind of thing. This is a lot more dangerous than Kuwait ever was -- Daryn. KAGAN: Absolutely. And with all due respect, I say, be safe, my friend. Thank you for that report from Baghdad.

VAUSE: Daryn.

KAGAN: Let's take a look now at some other stories making news around the country.

Mark Hacking, the husband of a missing Utah woman, was arrested today and charged with aggravated murder. Lori Hacking disappeared two weeks ago, setting off an intensive search. Police said today they believe she was killed in the couple's apartment. Her body has not been found.

James Yee, the Muslim Army chaplain who was accused of espionage, imprisoned for more than two months, but later cleared, resigned today, the West Point graduate saying that military officials never apologized or allowed him to retrieve his belongings from Guantanamo Bay, Cuba, where he had ministered to detainees.

And Alex, that being the first named storm of the Atlantic hurricane season, is heading towards North Carolina's Outer Banks tonight. The storm is expected to reach hurricane level in the next 24 hours -- a hurricane warning today issued for the North Carolina coast.

Still ahead on NEWSNIGHT, the price of war. Here at home, soldiers who returned from Iraq to a small business that only got smaller while they were away, and how they're handling it and what can we done -- when we come back.

That story is just ahead. This is NEWSNIGHT on CNN.

(COMMERCIAL BREAK)

KAGAN: As the mission in Iraq stretches on, a growing number of Reservists and National Guard members are being called up. These citizen soldiers face the risks that all troops face in Iraq, but they also bear another burden.

Aaron Brown reports tonight on a casualty of war that's far from the battlefield.

(BEGIN VIDEOTAPE)

MICHAEL MALONE, FOUNDER, STAR TECHNOLOGIES: We lost a lot of clients.

TED CURTIS, FOUNDER, CURTIS CONSTRUCTION: I lost everybody.

AARON BROWN, CNN ANCHOR (voice-over): Captain Michael Malone and Sergeant Ted Curtis are fighting to save their businesses.

CURTIS: I had to shut my business down in 48 hours, tell my employees I'm leaving, you have to go find another job someplace else. And then I was gone. MALONE: I was gone for 16 months. It is probably going to take three years before I get back to where I was.

BROWN: They are Army Reservists, but they were deployed in Iraq for more than a year.

CURTIS: Koreen (ph), you want to ride with me?

BROWN: They are now trying to save a way of life.

CURTIS: Our lifestyle for my wife and my kids changed drastically while I was gone. We basically went from a fairly -- living financially stable, I would say, to just scraping by.

BROWN: For Ted Curtis, it is a construction company, for Michael Malone, an Internet consulting firm. What's left of both companies sits in their garages collecting dust.

CURTIS: This is all that's left.

MALONE: This is the remnants of our office.

BROWN: Malone left his partner, Erik Johnson, to run the business, while he served back-to-back deployments.

ERIK JOHNSON, STAR TECHNOLOGIES: It was the final nail in the coffin, really.

MALONE: And when I left, my partner had no choice, because I do a lot of the marketing for the firm. But he had no choice but to lay everybody off. So you have 23 people who end up without jobs.

BROWN: The law insures that companies will hold a job for deployed Reservists, but there's no guarantee for a small business owner. They can apply for a low-interest government loan. They can get deferments from creditors under the Soldiers and Sailors Civil Relief Act, but, otherwise, they fend for themselves.

MALONE: You come back as a small business owner, well, there is new revenues guaranteed to you. You're not coming back to a paycheck. You're coming back to whatever the company can afford to pay you.

BROWN: As an officer in charge of personnel issues for his unit, Malone believes his story is fairly common. He says he counseled at least 15 other Reservists who businesses have suffered because of long deployments.

MALONE: The 15-, 16-month deployments that you have now, small business owners can't survive those. And we're going to get out. Although we like to serve the country, we also need to earn a living. And right now, you just can't do both.

BROWN: Both men are staying in the Reserves for now, and both could be deployed again. But despite their losses, they say that, for now, they have no regrets. CURTIS: I signed up to do that. And I was proud to do that and proud to be able to do my part. You live in America. You know, and it's the best country in the world to live in. And I have the capability still to come back here and restart my business and build it back up to where it was. And that's what I'm going to do.

BROWN: Aaron Brown, CNN, New York.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

KAGAN: Before I step out of here, a quick programming note for you -- well, more than that. It's a very cool thing to tell you about. The Statue of Liberty reopens to the public tomorrow for the first time since 9/11. Aaron is the master of ceremonies. And CNN covers the celebrations live beginning tomorrow morning at 11:00 Eastern.

Then on NEWSNIGHT, a special take on Lady Liberty and what she means to so many people, their stories, her stories, and a tear or two besides that -- NEWSNIGHT, CNN, 10:00 p.m. Eastern.

That's going to do it for me. I'm Daryn Kagan. I'll see you right back in this chair, 10:00 tomorrow. Have a good night.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com


Aired August 2, 2004 - 22:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
DARYN KAGAN, CNN ANCHOR: Good evening everyone. I'm Daryn Kagan. Aaron Brown is off tonight.
After so many warnings from the government saying little more than be alert and by extension be afraid, Americans now have some specifics. Three cities, a handful of locations, perhaps more and something else.

What that something else is though we don't really yet know. It could be a sign that authorities have disrupted a major plot or that they have only scratched the surface. We won't know until we get a lot more specifics than we did today.

So, until then, the whip begins in Washington, D.C. with our Kelli Arena, Kelli your headline please.

KELLI ARENA, CNN JUSTICE CORRESPONDENT: Daryn, New York's mayor told the city's corporations that not being named as a target doesn't mean they can rest easy. In fact, CNN has learned the new intelligence did indicate there were more than five targets but the government has yet to reveal them.

KAGAN: Kelli, thank you. We'll be with you in just a moment.

Now on to New York where business as usual it was not today but it was as usual to get the job done. Our Deborah Feyerick is handling that angle, Deb your headline please.

DEBORAH FEYERICK, CNN CORRESPONDENT: Well, Daryn, New Yorkers are used to having lots of police carrying lots of big guns but tonight it took on an even greater sense of urgency -- Daryn.

KAGAN: And thank you for that.

And finally on a day when both the president and the challenger made news on national security we have two reports, one from the campaign trail and our Candy Crowley, Candy your headline.

CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT: Daryn, John Kerry says he would make America safer than George Bush has. He didn't necessarily want to talk about terrorism today but this is the kind of subject that has a way of changing the talk.

KAGAN: Candy, thank you, back to you in just a moment and also to the rest of you shortly.

Also on the program tonight doing business under a high security alert and why it's making big trouble for truckers.

Plus they are out fighting a war putting their lives on the line and back at home their livelihoods are in danger as well, a look at returning reservists who own and are losing their own businesses.

And another ugly day in Iraq as insurgents target Iraqi Christians and their places of worship, all that and more we will get to in the hour ahead.

We're going to begin tonight with the terror alert, the facts behind it, the dimensions of it which are broader than were first reported. For tens of thousands of people who live and work in three American cities, the fallout from a police raid in Pakistan began hitting home over the weekend and at the office today.

We have several reports for you tonight. We begin with CNN's Kelli Arena.

(BEGIN VIDEOTAPE)

ARENA (voice-over): With enhanced security in place around named targets, senior government sources tell CNN there are unnamed ones as well. Sources describe them as financial targets like the rest. A homeland security official acknowledges there are a number of what he called minute mentions without any detail but would not elaborate.

TOM RIDGE, HOMELAND SECURITY SECRETARY: It certainly indicates that they've taken a long, hard look at several sites.

ARENA: Counterterrorism officials believe al Qaeda conducted surveillance inside the target buildings. They say there are indications the intelligence was updated in the last few months but they do not know if that means the recent surveillance was done in person.

Sources say there are event and date references in the material confiscated in Pakistan along with about 500 computer images, including photographs, drawings and layouts. These are helping investigators determine precisely when the surveillance was conducted.

RAY KELLY, NEW YORK POLICE COMMISSIONER: This is an intelligence report by the enemy you might say but not tied at this moment in time to any operational plan that we're aware of.

ARENA: Investigators are also trying to find out who carried out the surveillance and whether they are still in the United States. Investigators are scanning employee and visitor records from the various sites and officials say the FBI has several investigations underway stemming from the new intelligence.

The level of surveillance was extremely detailed, including information about parking garages, security personnel and cameras and pedestrian traffic but officials say no information suggesting the timing of a possible attack.

CHIEF CHARLES RAMSEY, METROPOLITAN D.C. POLICE: We don't have any real concrete information around how long this is going to last.

ARENA: Officials say it was the arrest of an alleged al Qaeda computer expert that led investigators to the new information and ultimately to accused terrorist Ahmed Ghailani.

(END VIDEOTAPE)

ARENA: Now, interrogations of those individuals could provide even more details in the weeks ahead or perhaps we'll hear more from Homeland Secretary Tom Ridge, who is due in New York City tomorrow -- Daryn.

KAGAN: So, Kelli, if there was nothing about the plot or nothing about the timing why the feeling, the sense of urgency that this might be happening, that this might be imminent?

ARENA: Well because they found all of the documents together. Ahmed Ghailani was apparently carrying huge sums of money which could suggest that he was ready to go into an operational phase according to some sources. Others disagree with that but they had something specific.

For the first time they had an unbelievable level of detailed surveillance before anything happened and the decision was made to get that out to the public -- Daryn.

KAGAN: Kelli Arena in Washington, thank you.

New Yorkers now are already accustomed to heightened security. They got more of the same today, more dogs, more cops, more inconvenience on the way into work and, for the most part, New Yorkers took it, well kind of like you would expect New Yorkers to do.

Here's CNN's Deborah Feyerick.

(BEGIN VIDEOTAPE)

FEYERICK (voice-over): Tracy Williams made his way to a Wall Street firm as he does every day. The investment banker unfazed even in the face of the newest target intelligence.

TRACY WILLIAMS, INVESTMENT BANKER: I like to think that we are much more prepared today than we were three years ago.

FEYERICK: But for this financial consultant, a new dad, going to work brought up memories of 9/11.

UNIDENTIFIED MALE: It was a little difficult this morning, you know, giving a kiss goodbye but I'm confident that nothing will happen.

FEYERICK: At the New York Stock Exchange, on the list of terror targets, the head of the big board tried calming global markets.

UNIDENTIFIED MALE: We are open for business. FEYERICK: Inside the exchange, cheers, outside a show of force, a scene repeated at Citigroup offices in Midtown and Prudential Financial in northern New Jersey. At points in Manhattan, police searched trucks, rerouting commercial vehicles away from certain bridges and tunnels leading into Lower Manhattan.

UNIDENTIFIED MALE: You got to do what you got to do. I've been sitting three hours on the highway.

FEYERICK: The new sense of urgency did put some people on edge.

KEVIN FLANDERS, NYSE MEMBER: It puts us under a lot more pressure than we were already under.

FEYERICK: But streets that could have been deserted were anything but. Even the first lady, scheduled to be in New York anyway, stopped into Citigroup to get coffee and give comfort. New York City's mayor reminding everyone the new warning doesn't mean a strike is imminent.

MAYOR MICHAEL BLOOMBERG, NEW YORK CITY: It is certainly a good wakeup call to everybody in every building. Just because your name wasn't on the list doesn't mean you shouldn't take precautions and the more precautions you take the safer you will be.

FEYERICK: Investment banker Tracy Williams certain it would be a day like any other.

WILLIAMS: As I observe today so far it's just a normal day in New York City in August.

(END VIDEOTAPE)

FEYERICK: Now, one law enforcement source said rather than feel scared by the new information people should really feel reassured that the system is working -- Daryn.

KAGAN: So, Deb, would you say overall there was more of a sense of defiance of the workers that were showing up?

FEYERICK: There was a sense of defiance but there was also a sense that we're going to be getting these warnings a lot. They're going to be coming at different paces, sometimes fast, sometimes slower. You've got to do what you've got to do and hope that perhaps intelligence will be there to prevent any sort of an attack.

KAGAN: Deborah Feyerick in New York City, thank you.

Doug Jehl now, his reporting on homeland security appears in the "New York Times," he joins us tonight from Washington, Doug good to see you.

DOUGLAS JEHL, "NEW YORK TIMES" REPORTER: Thank you.

KAGAN: You're looking at this stuff over and over again. This particular set of threats what strikes you about it? JEHL: Well, it's certainly the detailed and precise nature of the information that was found in Pakistan. The surveillance that was conducted on these buildings in New York and Washington was really intensive and sophisticated. People who have been in this business, the intelligence business, for a long time say they've never seen anything like it.

KAGAN: But there's nothing about the plot and Kelli Arena was talking about this, nothing about the plot, nothing about the timing.

JEHL: That's right. What this was, was surveillance. It was, as you heard from an earlier intelligence operation. What they have is a good bit of information about these targets, a plan that could be put into effect perhaps in the future but nothing to indicate a plot underway now.

KAGAN: But is part of what makes it so chilling is just how long the surveillance must have been going on to collect this much information?

JEHL: Well, that's chilling as well as the access that some of these people apparently got to the building. But we need to emphasize that this was surveillance apparently conducted quite a while ago. This is information dating back three or four years and the question that people are dealing with now is whether that old information really presents a current threat.

KAGAN: Let's talk about what kind of led up to this threat and to the information, this computer expert that was captured in Pakistan. What do we know about him?

JEHL: He's a 25-year-old man, Muhammad Naeem Khan, a person almost unknown to U.S. authorities until this spring. They knew only his alias as recently as May. He turns out, we think, to have been a kind of clearinghouse for communications, a middle man in relaying information sent by couriers from the Afghan-Pakistan border region onto others via e-mail and Internet Web sites, the kind of person at the center of a lot of information and when they got him they got quite a trove of electronic documentation.

KAGAN: And so not just him, himself, but the actual computer and the programs that came with it.

JEHL: That's right. His account would just be the account of one individual. We don't know exactly what was found with him but clearly it involved correspondence between quite a number of people, those who were conducting the surveillance in New York and Washington and others, so you have a real blend of many, many different accounts.

KAGAN: So, maybe some of the ties leading to people who might already be here in the U.S. but the inevitable question when you're talking about somebody like this and al Qaeda any evidence that he has ties back to Osama bin Laden?

JEHL: Well, what he's told the Pakistani interrogators, we're told, is that he doesn't know where Osama bin Laden is and nobody in the leadership really knows. He's a person who was not at a high level of al Qaeda but has told his Pakistani interrogators that he has met some in the middle to upper ranks. He was not a nobody certainly.

KAGAN: But you can't do these stories and watch as things have unfolded in this part of the world without asking the question how reliable would be the information coming from any single source?

JEHL: Well, information from any single source is always suspect. What's different about this apparently is that it's not single threaded. It really reflects the intersection of many communication streams, which gives it a lot more credibility in the eyes of intelligence officials.

KAGAN: So, his capture was actually more significant than Ahmed Ghailani, who was much more publicized over the last week?

JEHL: That's right and I think one thing that one learns from watching this business is it's the events that are not announced that often turn out to be the most significant. Neither the Pakistanis nor the Americans said a word about Muhammad Naeem Khan and were reluctant to do so until very late today.

KAGAN: Interesting and as you're doing this and as you're learning on the job and covering all this when a country such as Pakistan does make a big deal of a capture, let's say like Ghailani, do you typically look at that as a red herring that actually there's something more interesting going on behind the scenes?

JEHL: It's hard to tell in this business. There are lots of levels and lots of layers to peel back, different motivations involved here but generally the events that are kept quiet has turned out to be the most interesting.

KAGAN: Interesting. Well, your comments are interesting as well. Doug Jehl with the "New York Times" thank you for your time this evening.

JEHL: Thank you.

KAGAN: Appreciate your insight.

A lot more is ahead on the program, including the president taking the advice of the 9/11 Commission and makes his own decisions while his opponent speaks out against the president for taking too long to make a decision, a break first.

This is NEWSNIGHT.

(COMMERCIAL BREAK)

KAGAN: Welcome back.

We have more now on homeland security. This latest terror alert comes with copies of the 9/11 report still flying off store shelves. Meanwhile, lawmakers are scrambling to address the recommendations against the backdrop of election year politics. Today, the president joined them.

From the White House here's CNN's Elaine Quijano.

(BEGIN VIDEOTAPE)

ELAINE QUIJANO, CNN CORRESPONDENT (voice-over): Less than two weeks after the September 11th Commission released its report, President Bush asked Congress to create a new national intelligence director and called for establishing a national counterterrorism center as the panel recommended.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: We are a nation in danger. We're doing everything we can in our power to confront the danger.

QUIJANO: Senior administration officials say the new director would coordinate 15 intelligence agencies, now a job handled in theory by the head of the CIA but not in effect, officials agree.

MICHAEL O'HANLON, BROOKINGS INSTITUTION: I'm hopeful that this will actually be helpful and unifying, allowing one person to supervise the whole intelligence community but also allowing debate within that community.

QUIJANO: But in a departure from the commission's recommendations, Mr. Bush said that new position should remain outside the White House, in part to ensure autonomy. 9/11 Commission member Tim Roemer said the director position might be too weak.

TIMOTHY ROEMER, 9/11 COMMISSION MEMBER: We need to make sure that the national intelligence director is a director with strength and authority and presidential access, not a czar.

QUIJANO: The president's announcements come against the backdrop of criticism by his Democratic opponent John Kerry, who says the White House has not moved quickly enough to reform the intelligence community. Kerry also says the administration's actions in carrying out the war on terror have focused animosity and anger against the U.S. an idea the president rejects.

BUSH: It is a ridiculous notion to assert that because the United States is on the offense more people want to hurt us. We are on the offense because people do want to hurt us.

(END VIDEOTAPE)

QUIJANO: Now in another development late today, the chair and the vice-chair of the 9/11 Commission issued a statement basically saying that they welcome President Bush's support of some of their recommendations; however, they added they look forward to discussing the substance of the ideas saying: "The fate of these reform ideas turns vitally on the specifics" -- Daryn.

KAGAN: Elaine, what kind and when, what kind of executive orders do you think we should see announced later in the week? QUIJANO: Well, one of the things that the president has certainly said he supports is the idea that in Congress there needs to be some restructuring going on that the committees that are in place right now simply overlap too much.

Now that would not necessarily be covered under the executive order but the president has made very clear that he does share the ideas put forth in these recommendations. As to what specifics, we simply don't know yet. We'll have to wait and see -- Daryn.

KAGAN: Although I imagine to those in the White House it would be tempting to be able to rearrange Congress simply by executive order.

QUIJANO: That would be, Daryn.

KAGAN: It will be interesting to see what comes out of the White House later this week. Elaine Quijano thank you for that.

On the campaign trail now, Democratic presidential candidate John Kerry was quick to tailor his message to the day's focus on national security.

Reporting that part of the story our Candy Crowley.

(BEGIN VIDEOTAPE)

CROWLEY (voice-over): As the East Coast adjusts to a new terrorist threat and the president calls for an intelligence czar, John Kerry busses through the Midwest arguing not the substance but the calendar.

SEN. JOHN KERRY (D), PRESIDENTIAL CANDIDATE: September 11, 2002 came and went. September 11, 2003 came and went. September 11, 2004 is almost here and only finally are we doing some of the things that some of us have been calling for all that period of time. We need leadership.

CROWLEY: It is sticky business mixing terrorism and politics, trying not to look like you're using a terrorist threat for political purposes without ceding the issue.

KERRY: If the president had a sense of urgency about this director of intelligence and about the needs to strengthen America, he would call the Congress back and get the job done now.

CROWLEY: Kerry has been pretty much absent for Senate business this year and late last year but he says he'll return for the debate and votes about terrorism.

The Democratic candidate was briefed Sunday evening on the new threat and no one inside Camp Kerry sees any political motivation, though one senior adviser did find some politics in the way Tom Ridge talked to the country.

RIDGE: We must understand that the kind of information available to us today is the result of the president's leadership in the war against terror. The reports that have led to this alert are the result of offensive intelligence and military operations overseas, as well as strong partnerships with our allies around the world.

CROWLEY: The Bush campaign says the Democratic challenger has a bad case of need-to-ism pointing out that even before today the president was implementing 31 of the 33 proposals John Kerry says will make the country safer.

(END VIDEOTAPE)

CROWLEY: To which, Daryn, of course the Kerry campaign replies, George Bush has done too little and far too late -- Daryn.

KAGAN: Candy, despite the specifics that are out there of this latest terror threat there are still many in America who believe this is politically motivated but it seems like the Kerry campaign is using surrogates, like Howard Dean outside the campaign to make that argument.

CROWLEY: Well, you can make that leap but let me tell you this. John Kerry said, look, Howard Dean can talk for himself but I don't believe that this is -- that the terrorism warning itself was politically motivated.

John Kerry did have a briefing by top level administration intelligence officials last night and they told us then, look, no, we don't think this is politically motivated.

That's not where they want to argue this particular issue on whether or not a terrorism alert is politics. What they want to argue is that over the whole course of three years George Bush just simply hasn't done enough to make the country safer.

KAGAN: And just it seems like there's an interesting story just in Senator Kerry being able to get that briefing. It shows you how this is a new day and age. I understand there was some bit of scrambling so the Senator could get to a secure phone line in Northern Ohio.

CROWLEY: Right. We're bussing it from coast-to-coast, a little bit of train but have been doing busses and they obviously needed a secure phone, so they did have to scramble when it came up that there was going to be a terrorism, that news conference from Tom Ridge but they ultimately did. Obviously, the Secret Service was here. They ultimately did get a secure phone and Kerry was able to get that intelligence briefing on the bus while we were in Ohio.

KAGAN: All right, Candy Crowley, we'll let you get back on the bus.

CROWLEY: Sorry, we were in Michigan.

KAGAN: Michigan.

CROWLEY: Yes. KAGAN: It's that time of the campaign where you don't even know the state where you are.

CROWLEY: Yes.

KAGAN: Well, we'll let you get back on the bus. It's been a long day and we'll check back with you at the next stop.

CROWLEY: Thank you.

KAGAN: Candy Crowley thank you so much.

Well, Candy's not the only one following John Kerry. Our Bill Hemmer also talked to John Kerry today about a range of campaign issues. Tomorrow on "AMERICAN MORNING" Bill will have part two of that interview. Among other things, Bill asked Senator Kerry about what he thinks will be the main issue in the November election. Here's a peak.

(BEGIN VIDEO CLIP)

KERRY: It's one word, security, national security, physical personal security, job security, wage income security, health security, security. People want to know that the government is doing everything in its power to protect and provide the possibilities of the American dream to our families.

I can do a better job than George Bush is of putting people back to work, restoring our alliances, making us stronger in the world and stronger at home and respected in the world and I can do a better job of fighting the war on terrorism.

(END VIDEO CLIP)

KAGAN: Once again, more of Bill's interview tomorrow 7:00 a.m. Eastern on "AMERICAN MORNING."

Coming up tonight more on the latest security threats, the author of "American the Vulnerable" joins us.

And later, Iraq, where Iraqi Christians now find themselves the target of terror attacks.

From Atlanta tonight, this is NEWSNIGHT.

(COMMERCIAL BREAK)

KAGAN: It is probably fair to say that a lot of people spent today wondering how worried they should be.

We turn now to Stephen Flynn, the author of "America the Vulnerable." Mr. Flynn served for two decades as a commissioned officer in the U.S. Coast Guard, also worked in the first Bush White House and for President Clinton as well. Steve, good evening. Thanks for being here with us.

STEPHEN FLYNN, AUTHOR, "AMERICAN THE VULNERABLE": I am delighted to be with you.

KAGAN: Your general assessment of these latest terror threats please.

FLYNN: Well, I think they help remind us what this war is all about and it is a war, of course. Our enemy is not just involved with terrorist acts going after symbols of our democracy or things like the conventions or the White House or Congress but is really geared towards attacking the infrastructure that underpins our power, in this case the financial infrastructure but there are a lot more.

There are the transportation systems, the food supplies, the chemical industry, all these networks are essentially wide open soft targets and these folks are staking them and their goal is to cause real damage to them.

KAGAN: Well, boy are they ever staking them out. What about the specificity of what we learned?

FLYNN: Well, it just shows the extent to which also they're willing to prepare, that these acts are not just random suicide bombings, that they intend to be successful when they carry them out and so they will spend time staking a place out.

And for me, you know, the broader theme that I've been trying to advance here for some time is that placing so much reliance on your efforts to go at the enemy over there, overseas, to take the battle to the enemy, as the president and vice president often say, without having much defense is a high risk strategy.

KAGAN: So, you're saying more focus at home.

FLYNN: Yes, certainly. Let me just give a straightforward figure here.

KAGAN: OK.

FLYNN: We are spending more every three to four days in the war in Iraq than we've spent for the last three years in federal grant monies to our 361 commercial seaports and that kind of asymmetry between about three cents on the dollar for defense versus offense I argue doesn't make much sense when our enemies are not going to take us on, on the traditional force to force.

They're coming after the non-military elements of our power, the things that underpin our power, our economy and our civil society. That is something that we're still struggling post 9/11 to come to grips with.

KAGAN: Well, I think one thing that people are really struggling with as a society and we saw it come home again today is how do you balance having homeland security and open society? It was chilling to see how many of these buildings had been cased, yet how do you keep people from casing a building that you can do simply by walking by or walking in as public buildings? FLYNN: Well, my main argument here is you need to take a deep breath. Security isn't all about being moats and castles and throwing our civil liberties out the door. It's a lot like safety. Safety is, you know, if you drive a car it's a dangerous thing but we integrate safety measures into trying to manage that risk.

I think one of the biggest things that the terrorists get out of carrying out these acts on our soil is I guess (UNINTELLIGIBLE) because we don't believe there's baseline security. We tend to see that if they could do it over there why can't they do it here?

I think America is pretty pragmatic. We are about things like automobile safety and other issues but when we sense that there isn't even a baseline to begin with that should reassure us or that we can turn to our families and point to, we've got a problem.

So, my overarching message is, one, you've got to talk more ongoing to the American people about the threat, about our vulnerabilities, about what the costs are of managing this.

We get this sort of cards close to the chest approach and then we wait until we get so much intelligence and then we sort of spurt it out and the public understandably sort of blows the circuits.

KAGAN: But, to be fair, you say they have to talk about it more.

The Bush administration comes under fire when that happens if they don't come up with specifics like they did this time around, saying, you're crying Wolf. You said something bad was going to happen. Nothing bad happened, kind of, tell us on a need-to-know basis. The public does not want to hear this all the time.

FLYNN: I think that what we need to know is that we will not have specific intelligence probably for another 10 years that will allow us to guide protective measures.

So what you need to do is essentially say, are there things in our society that are really valuable? If they are, by definition we're in a state of war. There's likely folks here who target it. Based on its value, what prudent measures should be put into place to manage the risks that somebody with malicious intent will target it?

Now, it is not going to a failsafe approach, but it has got be something we're working on over time. And some things really make sense to do even if there wasn't a terrorist threat. I've been a big advocate of trying to just put tracking devices on containers that monitor their position and their integrity. Well, that helps with not just keeping a terrorist from using a weapon of mass destruction, but, when you have intelligence, being able to stop it without shutting everything else down.

But it is something Wal-Mart wants to know where its inventory is. So there actually are potential win-wins here. But we haven't really engaged in this conversation seriously because we have a focus of a war on terrorism as over there, as shaping the international environment, going after state who would harbor terrorists. The reality is, the terrorists -- there is no central front. The terrorists are here, as the secretary of homeland security and the attorney general have told us.

And so we must balance our efforts over there with more efforts here. And we haven't really done that yet, I would argue.

KAGAN: Your point is to bring it home. And you definitely give us something to think about on this Monday night.

Steve Flynn, thanks for your time this evening.

FLYNN: Thanks so much for having me.

KAGAN: We still have a lot more to come tonight.

The price of the new normal, as paid by truckers doing business, or trying to at least, in New York.

And still later, the citizen soldiers who return home from war to the possibility of bankruptcy.

Around the world, this is NEWSNIGHT.

(COMMERCIAL BREAK)

KAGAN: Even as potential targets opened under heavy security today, government officials were urging Americans to go about their business as usual. It has become a familiar mixed message in the war on terror. But the specifics that triggered this latest warning are something new.

Earlier, I had a chance to speak with James Kallstrom. He's is senior adviser for counterterrorism in the state of New York and former director of the FBI's Manhattan office.

(BEGIN VIDEOTAPE)

KAGAN: Jim, what do you make of the specific nature of these threats?

JIM KALLSTROM, SENIOR ADVISER FOR COUNTERTERRORISM TO NEW YORK STATE: Well, Daryn, for the first time, we've actually got some specificity. We've got addresses, names of buildings named.

So this is just a continuation of the war that's been going on for decades. But, since 9/11, this is the first time where the intelligence community has actually come up with specific locations. So it is a bit different.

KAGAN: And not just locations, but so much information about those locations, which strikes me that these people have been able to case these buildings. I don't know how you go against that if you want to have a free society.

KALLSTROM: Well, it appears that that's the case, that -- we don't have all the definitive detail, but the federal government has shared a lot of information with the state.

We have a very close working relationship with my old FBI office, the terrorist task force, three of which are in New York state. So our job in the state is to bring all the state resources, Daryn, to bear, so that the 70,000 cops, for instance, that patrol the streets and towns are trip wires for the FBI.

The corporate security people throughout the state become more aware of indications and warnings of terrorism and terrorism surveillance and terrorists casing certain places. So through communications and through us working together in this wide open society called America, we have a better chance of protecting our people.

KAGAN: And so my question becomes how long in terms of true dollars, the expense of keeping a terror alert up at this level, or just even people's interest without wearing them out. How long can you keep it going?

KALLSTROM: Well, Daryn, we've been at a very high level of alert, certainly New York City and New York state, ever since 9/11.

The financial services community, the New York Stock Exchange and all the different attributes of the financial services in the United States, has been a target generically from the very beginning. So this is nothing new. What is new is the fact that a few particular buildings were named, a few particular companies were named. But we've been at a very high state of alert, real good communications with those security companies and the security directors of those companies.

So this is a little more specific as to some physical locations. But it's not that much different than what we've been doing for some time now.

KAGAN: As a former FBI guy, I also want to get your take on the other news of the day. And that's President Bush coming out and asking Congress to create this position of a national security director.

When you talk about that, when you talk about a counterterrorism office, you're talking about taking away turf from some longtime established groups. How do you think that is going to go over?

KALLSTROM: Well, the devil will be in the details.

Moving the deck chairs around necessarily isn't going to help anything. If we actually empower people to prioritize things and put money, people, hiring behind that, then that's a different question. I think the biggest challenge will be overcoming the multitude of congressional oversight committees and subcommittees that look over this thing and have something to say about it.

KAGAN: That's kind of what President Bush said earlier today as well. And I'm just wondering if you can explain to us laypeople out there, how big, just how big is the job of protecting New York City, especially leading up into the Republican Convention?

KALLSTROM: It's a big job.

I start at the borders of the country. How big is the job of protecting the United States when we have generally open borders? We've done a better job, but they're generally open. We know that, Daryn. The ports are generally open. The gateway airports are pretty much generally open because we have a plague of fictitious identification around the world.

So you can be anybody you want to be. So in this loosey-goosey free society, this great America that we love so much, how do we stop homicidal maniacs from coming and going into the United States? And how do we find the ones that are here? That's the challenge for the FBI and for law enforcement.

KAGAN: A difficult one, indeed.

Jim Kallstrom, thank you for your time.

KALLSTROM: Thank you, Daryn.

(END VIDEOTAPE)

KAGAN: Well, going about business as usual in spite of the new terror alert was easier for some people than it was for others today. If you were driving a truck into Manhattan, for instance, or waiting for a truck, it was anything but a normal day.

Our Jason Bellini has that piece of the story.

(BEGIN VIDEOTAPE)

JASON BELLINI, CNN CORRESPONDENT (voice-over): It is a moral imperative that New Yorkers conduct business as usual, said Senator Charles Schumer.

NEIL, TRUCKER DRIVER: We went probably 90 feet in 45 minutes.

BELLINI: The increased security should give everybody comfort, said Mayor Michael Bloomberg.

NEIL: This is like a line to the men's room at a Led Zeppelin concert and there's only two urinals.

(LAUGHTER)

BELLINI: Monday, the city closed the Holland Tunnel, the Williamsburg Bridge and the northbound Battery Tunnel to trucks entering Manhattan. Truck driver Neil doesn't know when he'll have his next normal day.

NEIL: We're here. The checkpoint is up here. And that's where we're going to go. And if I was allowed to use the Williamsburg Bridge, we never would have met.

BELLINI: In Manhattan, a frustrated foreman waits for Neil and his load of gravel. The contract is to pave a school sidewalk.

ROB CHARLES, CONSTRUCTION FOREMAN: What's usually a 40-minute round-trip turned into six hours.

(on camera): That hurts.

CHARLES: Tell me about it. I'm going broke real quick here.

BELLINI (voice-over): Idle time is time when Neil contemplates why he's here in the first place.

NEIL: That's Gina (ph).

BELLINI (on camera): Gina?

NEIL: That's who I do this for six days a week, 60, 70 hours. That's what it's all about, so she don't have to do what I do.

BELLINI (voice-over): At the entrance to the Brooklyn Bridge, police check trucks one by one.

NEIL: I got gravel on.

Be careful up there.

BELLINI: After making it to the bridge, Neil is home-free. Foreman Rob Charles is still waiting. But most of his workers had already left for the day.

CHARLES: It's killing us. It's killing us; 40 other guys relying on this truck to get here with materials.

BELLINI: Charles points out his labor costs come to $20,000 a day.

(on camera): Neil was supposed to complete six round-trips today. He only ended up making one. And now, on his way back, he's not carrying back any debris with him, as he planned to, because the dump is already closed.

Frustrated?

NEIL: No. The clock is running.

BELLINI (voice-over): As Neil sees it, that's now the cost of doing business.

Jason Bellini, CNN, New York.

(END VIDEOTAPE)

KAGAN: Still more to get to tonight on NEWSNIGHT, including the increasing religious warfare in Iraq and why Christians and their businesses and places of worship are the latest targets.

Plus, we'll introduce you to two Army Reservists fighting not to be the financial casualties of the war.

From Atlanta, this is NEWSNIGHT.

(COMMERCIAL BREAK)

KAGAN: From the beginning, the administration has tried to assure the Muslim world that the war in Iraq is not a war on Islam -- easier said than done. And where Muslim extremists are concerned, perhaps that is actually impossible. For them at least, it is a holy war. And over the weekend, they opened a new front, targeting churches, four in Baghdad, one in Mosul.

Reporting from Baghdad, CNN's John Vause.

(BEGIN VIDEOTAPE)

JOHN VAUSE, CNN CORRESPONDENT (voice-over): The day after the carnage, and Christians everywhere across Iraq were asking the same question: Why us?

FATIN HANNA, IRAQI CHRISTIAN (through translator): Who's purpose would this serve? Who would benefit from this?

VAUSE: The attacks were coordinated, the churches were full, the Iraqi government believes it has all the trademarks of Abu Musab Al- Zarqawi, the Jordanian militant linked to al Qaeda.

CANNON ANDREW WHITE, ANGLICAN CHURCH: I think one of the very sad realities of what we're seeing is an increasing religious dimension in this whole conflict. And sadly the Christians are seen as being party to the West.

VAUSE: The first blast rocked an Assyrian church just as the bells were ringing and mass was ending. Luay Nair saw it all.

LUAY NAIR, IRAQI CHRISTIAN (through translator): I saw two cars approach the church, a mini bus and a sedan. The driver of the mini bus parked next to the church, got in the other car and drove away. The mini bus exploded 10 seconds later.

VAUSE: Over the last 15 months, there were warning signs this small community was in danger. Almost all the liquor stores here are owned by Christians. A few have been burnt to the ground by Islamic extremists enforcing their strict interpretation of the Koran, which outlaws alcohol. And women no longer feel safe in the beauty parlor.

SARA ADAM, BEAUTY PARLOR OWNER (through translator): Customers come into the shop and ask us to finish them really fast because they are scared to be in here.

VAUSE: At one of the churches, tribal and Islamic leaders met with Christian leaders promising to stand together. And leading Muslim clerics were quick to condemn the attacks. AHMED ABDUL GHAFUR AL SAMIRAL, SUNNI CLERIC (through translator): These killers are like a knife at the throat of all Iraqis.

VAUSE: Iraq's Christian population has halved in a decade, now about 800,000, less than three percent.

FATHER BASHAR WARDA, ST. ELIYA CATHOLIC CHURCH: I will not be surprised that if other people will decide to leave because of the situation.

VAUSE: Those who stay behind will now be met with razor wire at some churches and a reminder that no one is safe. The day after the blast, police here found three sticks of dynamite outside a Baghdad mosque.

(END VIDEOTAPE)

VAUSE: And Iraqi Christians say it has never been this bad. Under Saddam, they were mostly protected and relatively free to worship. For them, the new Iraq is emerging as a dangerous, intolerant place -- Daryn.

KAGAN: And, John, speaking of danger, as I understand it, as we were running your story, you actually heard a large explosion somewhere behind you?

VAUSE: Yes, we heard a very loud boom. A number of booms, we found, had rocked this building, not uncommon for that to happen. It could be a controlled explosion. We think -- we're not too sure. We're checking. We think it could be some kind of mortar explosion in the Green Zone. That's very initial reports.

But we hear explosions here all the time. That one, though, was a particularly powerful blast, which probably just means that it is closer to our location here than the other blasts have been, Daryn.

KAGAN: I think a lot of people at home are shaking their head thinking he's awfully calm for being in that situation. You and I were together during the war in Kuwait City. I would think, though, that where you are and what you are experiencing now is a whole different type of situation.

VAUSE: Yes, it changes here on a daily basis.

And the situation is, you do hear explosions five, six times a day. And depending on how close they are to our location here at the hotel is how you basically feel it. Sometimes, you can actually feel the vibrations from the explosion. We felt that explosion here just before we felt the building shake as the vibrations and that shockwave came towards us.

This is definitely a different situation to Kuwait. Kuwait, you were under attack from missiles. Here, you're worried about a suicide bomber driving into the hotel or rocket-propelled grenades being launched into your room, or mortar fire, that kind of thing. This is a lot more dangerous than Kuwait ever was -- Daryn. KAGAN: Absolutely. And with all due respect, I say, be safe, my friend. Thank you for that report from Baghdad.

VAUSE: Daryn.

KAGAN: Let's take a look now at some other stories making news around the country.

Mark Hacking, the husband of a missing Utah woman, was arrested today and charged with aggravated murder. Lori Hacking disappeared two weeks ago, setting off an intensive search. Police said today they believe she was killed in the couple's apartment. Her body has not been found.

James Yee, the Muslim Army chaplain who was accused of espionage, imprisoned for more than two months, but later cleared, resigned today, the West Point graduate saying that military officials never apologized or allowed him to retrieve his belongings from Guantanamo Bay, Cuba, where he had ministered to detainees.

And Alex, that being the first named storm of the Atlantic hurricane season, is heading towards North Carolina's Outer Banks tonight. The storm is expected to reach hurricane level in the next 24 hours -- a hurricane warning today issued for the North Carolina coast.

Still ahead on NEWSNIGHT, the price of war. Here at home, soldiers who returned from Iraq to a small business that only got smaller while they were away, and how they're handling it and what can we done -- when we come back.

That story is just ahead. This is NEWSNIGHT on CNN.

(COMMERCIAL BREAK)

KAGAN: As the mission in Iraq stretches on, a growing number of Reservists and National Guard members are being called up. These citizen soldiers face the risks that all troops face in Iraq, but they also bear another burden.

Aaron Brown reports tonight on a casualty of war that's far from the battlefield.

(BEGIN VIDEOTAPE)

MICHAEL MALONE, FOUNDER, STAR TECHNOLOGIES: We lost a lot of clients.

TED CURTIS, FOUNDER, CURTIS CONSTRUCTION: I lost everybody.

AARON BROWN, CNN ANCHOR (voice-over): Captain Michael Malone and Sergeant Ted Curtis are fighting to save their businesses.

CURTIS: I had to shut my business down in 48 hours, tell my employees I'm leaving, you have to go find another job someplace else. And then I was gone. MALONE: I was gone for 16 months. It is probably going to take three years before I get back to where I was.

BROWN: They are Army Reservists, but they were deployed in Iraq for more than a year.

CURTIS: Koreen (ph), you want to ride with me?

BROWN: They are now trying to save a way of life.

CURTIS: Our lifestyle for my wife and my kids changed drastically while I was gone. We basically went from a fairly -- living financially stable, I would say, to just scraping by.

BROWN: For Ted Curtis, it is a construction company, for Michael Malone, an Internet consulting firm. What's left of both companies sits in their garages collecting dust.

CURTIS: This is all that's left.

MALONE: This is the remnants of our office.

BROWN: Malone left his partner, Erik Johnson, to run the business, while he served back-to-back deployments.

ERIK JOHNSON, STAR TECHNOLOGIES: It was the final nail in the coffin, really.

MALONE: And when I left, my partner had no choice, because I do a lot of the marketing for the firm. But he had no choice but to lay everybody off. So you have 23 people who end up without jobs.

BROWN: The law insures that companies will hold a job for deployed Reservists, but there's no guarantee for a small business owner. They can apply for a low-interest government loan. They can get deferments from creditors under the Soldiers and Sailors Civil Relief Act, but, otherwise, they fend for themselves.

MALONE: You come back as a small business owner, well, there is new revenues guaranteed to you. You're not coming back to a paycheck. You're coming back to whatever the company can afford to pay you.

BROWN: As an officer in charge of personnel issues for his unit, Malone believes his story is fairly common. He says he counseled at least 15 other Reservists who businesses have suffered because of long deployments.

MALONE: The 15-, 16-month deployments that you have now, small business owners can't survive those. And we're going to get out. Although we like to serve the country, we also need to earn a living. And right now, you just can't do both.

BROWN: Both men are staying in the Reserves for now, and both could be deployed again. But despite their losses, they say that, for now, they have no regrets. CURTIS: I signed up to do that. And I was proud to do that and proud to be able to do my part. You live in America. You know, and it's the best country in the world to live in. And I have the capability still to come back here and restart my business and build it back up to where it was. And that's what I'm going to do.

BROWN: Aaron Brown, CNN, New York.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

KAGAN: Before I step out of here, a quick programming note for you -- well, more than that. It's a very cool thing to tell you about. The Statue of Liberty reopens to the public tomorrow for the first time since 9/11. Aaron is the master of ceremonies. And CNN covers the celebrations live beginning tomorrow morning at 11:00 Eastern.

Then on NEWSNIGHT, a special take on Lady Liberty and what she means to so many people, their stories, her stories, and a tear or two besides that -- NEWSNIGHT, CNN, 10:00 p.m. Eastern.

That's going to do it for me. I'm Daryn Kagan. I'll see you right back in this chair, 10:00 tomorrow. Have a good night.

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