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British Standoff With Iran; Troop Withdrawal?; Daycare Hostages Freed in Philippines; Report Card on Congress

Aired March 28, 2007 - 09:00   ET

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

TONY HARRIS, CNN ANCHOR: And good morning, everyone. You are in the CNN NEWSROOM.
I'm Tony Harris.

HEIDI COLLINS, CNN ANCHOR: And I'm Heidi Collins. Good morning to you.

Watch events come in to the NEWSROOM live.

Here's what's on the rundown for Wednesday, March 28th.

A bus loaded with preschoolers, a man with a gun and grenades. A hostage ordeal comes to an end in the Philippines.

HARRIS: Britain says here's proof, satellite evidence it says shows its ship was never in Iranian waters. Iran holding 15 British sailors and marines.

COLLINS: A boat carrying dozens of Haitians runs aground in the Miami area a short while ago.

Coming to America, in the NEWSROOM.

Some new twists and turns in a heated standoff between Britain and Iran. There's now word the female British sailor being held by Iran may be released in the next day or two. That, as Britain steps up the pressure.

To London now and CNN's Robin Oakley.

Robin, update us on the fast-moving developments in this story.

ROBIN OAKLEY, CNN EUROPEAN POLITICAL EDITOR: Well, certainly, a lot of movement on this story, Heidi. Faye Turvey, who is the one woman among the 15 British sailors and marines being held by the Iranian authorities under the claim they strayed into Iranian territorial waters, we hear from Manouchehr Mottaki, the Iranian foreign minister.

He's been saying at a conference in Riyadh that it is likely she will be released in the next day or two. He's also talking of confidence that this whole issue can be resolved between the two governments. We've had a similar message from the Iranian ambassador in London. Meanwhile, in the House of Commons, Margaret Beckett, Britain's foreign secretary, has been showing her frustration at the lack of progress so far.

(BEGIN VIDEO CLIP)

MARGARET BECKETT, BRITISH FOREIGN SECRETARY: The Iranians have assured us that all our personnel are being treated well. We will hold them to that commitment and continue to press for immediate release.

They have also assured us that there is no linkage between this issue and other issues, bilateral, regional, or international, which, of course, Iraq (ph). But I regret to say that the Iranian authorities have so far failed to meet any of our demands or responded to our desire to resolve this issue quickly and quietly through behind-the-scenes diplomacy.

(END VIDEO CLIP)

OAKLEY: The other development today has been a briefing by British military and foreign office officials confirming their firm evidence, as they see it, using global positioning satellite data, that the British boats who were -- which were apprehended by the Iranians were 1.7 nautical miles within Iraqi waters when that happened. And they've also sought to embarrass the Iranians by saying the Iranians provided their own satellite coordinates, and the first of those provided to the British authorities by the Iranians confirmed that the incident had taken place in Iraqi waters, as the British had suggested. But when they went back to the Iranians, the Iranians corrected their claims and the second claim put the incident within Iranian waters -- Heidi.

COLLINS: So, Robin, spell it out for us, if you could. What happens now as we -- as we hear that, you know, they're going to be freezing all bilateral business with this country -- Britain, that is, with Iran? What is the next step?

OAKLEY: Well, all diplomatic business between the two countries will be frozen for a while until this question is resolved. But certainly, we're getting much more conciliatory noises all of a sudden from the Iranians.

I think there is a growing expectation that this could be solved within a few days now. But arguments still go on about the precise circumstances of how these men -- or where these men were. The Iranians maintaining that they were in Iranian waters when they were apprehended.

One curious question as far as the British public is concerned, people were wondering why the British sailors and marines hadn't fought back when they were taken by the Iranian boats. That's now explained by military officials.

They were apparently climbing down rope ladders from the merchant vessel they'd been inspecting to get into their rigid hull inflatable boats, when two Iranian boats within three minutes came from their side of their territorial waters and first came up in friendly fashion, then became more aggressive. They were heavily armed with RPGs and heavy machine guns, and so the British had absolutely no chance of fighting back and had to accept being escorted into Iranian waters -- Heidi.

COLLINS: All right. I guess understandably so on that.

Robin Oakley, thanks so much.

HARRIS: A showdown over Iraq. Senate Democrats plow ahead, demanding a withdrawal of U.S. combat troops. President Bush refusing to back down. The president due to speak next hour.

So, let's set the stage for you.

CNN Congressional Correspondent Dana Bash is on Capitol Hill, and Elaine Quijano is at the White House.

Ladies, good morning.

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Good morning.

HARRIS: Dana, let's begin with you. How did the Democrats seemingly pull victory from the jaws of defeat on this one?

BASH: Well, if you ask them, they say they're following the strategy that they insist will eventually work, and that is to pick off senators one by one, to keep having these votes, and eventually they will get a majority. And that is really what is significant about this, and that is, what we saw yesterday is, the first time since Democrats took control of the Senate, that they actually did muster a majority of votes for a timeline to withdraw troops from Iraq. And the way they did it was essentially to get a Republican, a key Republican, who's been pretty vocal against the war, Senator Chuck Hagel from Nebraska, to vote their way.

Just 12 days earlier, he voted with the Republicans. This time he voted with the Democrats. That's what allowed them to eke out their very narrow victory, but it was, at least in the short term, for sure, a victory.

HARRIS: Yes. Dana, the president says he's been very clear on this. He's going to veto this.

So, what -- what happens next?

BASH: Well, that is going to be what's certainly interesting to watch in terms of the machinations here on Capitol Hill. Of course, before this even gets to the president's desk for him to actually veto it, as he promises, the House and Senate are going to have to combine what they've done.

Certainly, both of them, both the House and Senate, have now passed bills that have a timeline for a withdrawal. They're slightly different. Some Democrats say it might be hard to work out. Some Democrats say it's not going to be that hard. But they're going to have to come to some kind of agreement there.

Then they're going to send it to the president. He promises to veto. And then comes the big question, Tony. What are Democrats going to do when they have in front of them the problem that the president will lay out just in a short while, which is, they still have to fund the war?

They have the question, will they fund the war? Will they fully fund the war without this -- without this deadline if the president continues to say, "I'm going to veto it"? And especially in the Senate, for the House, too, they don't have is votes to override that veto.

HARRIS: OK. Our congressional correspondent, Dana Bash, this morning.

Dana, thank you.

BASH: Thank you.

HARRIS: And to the White House now and Elaine Quijano.

Elaine, good morning.

We expect the president to talk about this action in a speech next hour. What can you tell us about that?

ELAINE QUIJANO, CNN WHITE HOUSE CORRESPONDENT: Good morning to you, Tony. That's right.

Well, we can expect the president to push back, essentially, on the heels of the Senate vote yesterday. The president has vowed that he will veto any legislation that includes a timetable for withdrawing U.S. troops from Iraq. And you can believe that he will certainly stick to that position.

In fact, the White House releasing excerpts earlier this morning of some of what the president will say. "Some Democrats believe that by delaying funding for our troops, they can force me to accept restrictions on our commanders that I believe would make withdrawal and defeat more likely. That's not going to happen."

The president there drawing some very clear lines, continuing to argue that a time frame would hurt the U.S. efforts in Iraq. And we are told by administration officials that the president will also make very clear that if Congress, led by the Democrats, does not come up with legislation that he views as acceptable, something that he can, in fact, sign, that the American people, the administration feels, will hold members of Congress, not the White House, responsible -- Tony.

HARRIS: And Elaine, last week, after the House vote, the president pointed to the Baghdad security plan to make his case for no timetables.

Might we hear more of that today?

QUIJANO: Absolutely. You can expect the president to talk about that. And what one administration official describes as new data points. But you can read that as what the administration views as signs of progress, encouraging signs that, in fact, the Baghdad security plan is working.

All the more reason, the White House will argue, and continue to argue, that Democrats need to come through with funding again, otherwise the American people, the White House says, will, in fact, hold them, the other end of Pennsylvania Avenue, responsible -- Tony.

HARRIS: CNN White House Correspondent Elaine Quijano this morning.

Elaine, thank you.

COLLINS: A bizarre hostage situation in the Philippines is over. Dozens of preschool children and their teachers now free. The owner of their daycare center is in custody.

CNN's Anjali Rao is in Manila, where the story is unfolding.

(BEGIN VIDEOTAPE)

ANJALI RAO, CNN CORRESPONDENT: The hostage drama finally came to an end after the 32 children and their four teachers were trapped on the bus for 10 hours in the blazing Manila heat by the main hostage- taker, Jun Ducat. The children are now in hospital, being looked at by doctors in case they've suffered any physical ailments while they were on board the bus.

As for Jun Ducat himself, he and his company have been rigorously questioned by police in manila and is expected by doctors in case they suffered any physical ailments while they were on board the bus. As for the school's owner, himself, he and his accomplice have been questioned rigorously by police here in Manila. Tomorrow, they are expected to be charged with kidnapping, abduction and child abuse.

Still, though, it appears that his demands were met. The government has said that they will give the children at the daycare center that he founded, the 145 of them, free education, all the way until they finish college, which is pretty amazing, considering the state of tertiary education in this country. So many children don't make it at all because of the cost of sending your child to further education.

Quite amazingly, though, Jun Ducat has an enormous amount of support here. When he was setting the children free, rather than being berated by the thousands of people gathered there, others were holding up placards saying, "We support Jun Ducat," "Don't punish him."

People were lighting candles to support his drive for better education for this country's poor. And we know that there are so many of them still in this country. Many people still living on less than $2 U.S. a day. In fact, the educational needs are in a very dire state at the moment.

Many children going to school, where they don't have teachers, they don't have resources. Some of them even having to take lessons in toilet blocks and hallways, something that Jun Ducat says he hopes will be a thing of the past, particularly in the run-up here in the Philippines to midterm elections later this year.

Anjali, Rao, CNN, Manila.

(END VIDEOTAPE)

COLLINS: And word from our affiliates in south Florida this morning more than 100 Haitian immigrants have washed ashore near Miami. WPLG says police in Hallandale Beach reported several Haitians tried to swim to shore from a rickety boat. When rescue crews arrived, many had already made their way to land. More than 120 were treated at a nearby fire station. Many were dehydrated.

(WEATHER REPORT)

COLLINS: Want to take you straight now to our correspondent Aneesh Raman, coming to us now from Riyadh, Saudi Arabia.

Aneesh, I know that you've had an opportunity to speak with the Iraqi (sic) foreign minister regarding the situation with the 15 Brits that have been taken hostage by Iran. Tell us what you learned on this.

ANEESH RAMAN, CNN CORRESPONDENT: Yes, Heidi. Good morning.

On the sidelines of an Arab summit that's taking place right now in Riyadh, I just spoke with the Iranian foreign minister, Manouchehr Mottaki, and asked him about reports suggesting that Iran might release the female sailor who is part of the 15 British military personnel seized last week sometime soon. He confirmed to me that that release would be coming " very soon". Earlier, he had suggested it could come as early as Wednesday or Thursday. But again, he confirmed to CNN that the release of the female British personnel among the 15 being held by Iran would happen very soon.

Now, of course, what that means for the fate of the 14 others is unclear. Britain is ratcheting up the pressure, freezing all bilateral business with Tehran until the rest are released, and providing evidence, it says, that these military personnel were in Iraqi, not Iranian waters. Iran, though, has maintained vehemently that they were in Iranian waters, that they have all confessed to illegally entering Iranian waters, and a thorough investigation is taking place.

But again, Heidi, the Iranian foreign minister telling me a short time ago that the female British military personnel will be released "very soon".

COLLINS: All right, Aneesh. Thanks.

And just to clarify, I did say Iraqi. You've obviously spoken within the Iranian foreign minister.

Before we let you go, Aneesh, what was the demeanor? Does it sound like this has been just a big misunderstanding, or is it more than that from what you can tell?

RAMAN: Well, from the body language, if you will, clearly this was a foreign minister that was relaxed and wasn't showing stress. This is a situation Iran is patiently, it seems, deliberating in terms of what to do next.

Iran holds the cards, if you will. They have the British military personnel. They are saying that they have all confessed to illegally entering Iranian waters. And so while Britain is ratcheting up the pressure, at the moment Iran is in control of this situation.

I did try to follow up with what it meant by the fact that the female among the group of 15 was being released, what that meant for the other 14. It's not surprising that they would release the female, given cultural sensitivities.

But that is where he sort of pushed back. And we're hoping to get a longer chance to speak with him tomorrow. But clearly, he didn't seem like a foreign minister under the gun, if you will, feeling the heat that Britain is trying to apply.

COLLINS: Yes. It will be very interesting to hear what he says about the remaining 14, if, indeed, she is released.

All right. Aneesh Raman, thanks so much for that.

Meanwhile, a report card on Congress, what has and has not been accomplished since the Democrats took control. We'll talk with a Democrat and a Republican coming up news in the NEWSROOM.

HARRIS: The battle against cancer. Star power on Capitol Hill this morning demanding more funding for the fight.

TV sells it, kids eat it. Are commercials fueling the boom in childhood obesity?

We'll serve up the findings.

COLLINS: And they're outside. Their friends are inside. Sheep in the House, and the neighbors aren't the only ones raising a stink.

You are in the CNN NEWSROOM.

(COMMERCIAL BREAK)

COLLINS: If Congress were college, lawmakers would be nearing the end of the semester. It sounds like a good time for a report card on the 110th Congress. Joining us from Capitol Hill to talk about what has and has not been accomplished so far, these two gentlemen -- Democratic Congressman Tom Lantos, chairman of the House Foreign Affairs Committee, and Republican Congressman Roy Blunt, the minority whip.

Thank you, Gentlemen, for being with us today.

Let's go ahead and begin, if we could, with last night's Senate vote on Iraq. Listen with me, if you would, to Senator Chuck Schumer, and then I'll get your reaction to what he said in just a moment.

(BEGIN VIDEO CLIP)

SEN. CHARLES SCHUMER (D), NEW YORK: This is not one battle. It's a long-term campaign to persuade the president, to pressure the president to change course. And we will keep at it.

(END VIDEO CLIP)

COLLINS: Congressman Lantos, let me begin with you, if I could.

Will this long-term campaign and the money that is going into it come at the expense of other social programs like Social Security, Medicare, or even the minimum wage increase?

REP. TOM LANTOS (D), CALIFORNIA: Not at all. I fully agree with Chuck Schumer. This is a long-term campaign. And we are following the lead of the American people.

It's self-evident that the president and the administration and some of our Republican colleagues are opposed to the views of the majority of the American people that the time has come to de-escalate in Iraq, not to escalate the struggle. We are not there to referee a civil war based on religious and ethnic hatreds. And yesterday's detection of Chuck Hagel of Nebraska, a very important and prominent Republican leader in the Senate to the Democratic side, is an indication of things to come.

COLLINS: But I'm not sure you answered the question, sir. Maybe you could give me a little more idea of how the moneys will be appropriated to these social programs at the same time.

LANTOS: Well, look, this administration has run up gigantic budget deficits by cutting taxes for the wealthiest Americans. We will not be able to fix this overnight. We have a budget plan which over a number of years will bring about a balanced budget and meet the needs of the American people.

COLLINS: Congressman Blunt, let me go to you now.

It seems like so many people saw last November's election as a referendum on the war, if you will. Even though poll after poll now seems to indicate that most Americans do not support it, how long will your party go at this? How long will they fight the fight? And at what expense? REP. ROY BLUNT (R), MISSOURI: Well, we're prepared to have this fight over whether we lay down a formula for defeat in Iraq or not. And while nobody's happy with the -- with what's happened in Iraq up to now -- and I think that includes the president -- the American people also say they don't want to lose in Iraq, they don't want us to be driven out of Iraq.

How we got there is not nearly as important at this point as to what happens when we leave. We need to have success in Iraq. It's important in the overall war on terror. Another failure to stand up, going back to Beirut, Lebanon, in 1984, right up until today, another failure to stand up just sends the message to our enemies that we are not the strong society that we appear to be, that, in fact, we're the flawed society they say we are.

I think this is a good fight to have, it's a good debate to have. I believe we're on the right side of that debate.

The American people expect the federal government to defend the country, and in a dangerous world, we're in a fight in Iraq that we need to leave successfully, not lay down this formula for defeat.

It looks to me we're headed towards a presidential veto of this micromanaging of the war. That veto will be upheld, and then we have to work together to find a bill that the president will sign that provides the support for the troops that they need. And frankly, they need it right away.

COLLINS: So, you can safely say that your party will not bring home U.S. troops until the United States has won this battle, regardless of any sort of timetable?

BLUNT: I think the Congress setting a timetable is the wrong thing to do. The Iraqis are beginning to step up. Everybody agrees that there's some significant change in what's happened in Iraq with the new plan of General Petraeus.

Chuck Schumer, unless he was absent that day, voted, as all the other senators did who voted that day, to approve the Petraeus selection to lead this fight. We now need to help him do what he said he was going to do when he was chosen to lead the fight in Iraq.

We don't need to do the job of the commanders in the field. And I think the American people understand that. We're more than willing to have that debate and that discussion.

COLLINS: OK.

Let's talk for a minute about some of the issues facing Congress. In particular, some sound bites that have come in to us from House Speaker Nancy Pelosi. This was on January 6th of this year. Let's listen to this for a moment.

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI (D-CA), HOUSE SPEAKER: My colleagues elected me to be speaker of the House, the entire House. We have an obligation to reach beyond partisanship to work for all Americans.

(END VIDEO CLIP)

COLLINS: It seems like an awful long time ago when you hear those words.

Is the honeymoon over, Congressman Lantos?

LANTOS: No, I don't think the honeymoon is over. Nancy Pelosi has done a superb job as speaker of the House, and the six pieces of legislation, ranging from stem-cell research to the long-overdue raising of the minimum wage, were proposals that we presented and passed with considerable Republican support. Nancy will go down in history as one of the great speakers in the United States.

COLLINS: Congressman Blunt, everybody getting along OK and reaching out across those party lines, in your opinion?

BLUNT: Well, if you could see how close I was standing to my good friend, Tom Lantos, here...

COLLINS: Yes. That's because we made you.

BLUNT: ... you'd assume that we have to be getting along very well.

LANTOS: We are good friends.

BLUNT: Well, we are good friends. We're having a good debate. I do think those six things that the House passed, frankly, aren't anywhere close to becoming law yet. And we should have had, could have had, and if we had to go back and do it over again, I hope would have had, a longer debate there.

This week, the budget that the Democrats will bring to the floor has the biggest tax increase in American history in it. It also has the biggest spending increase in American history. And we're going to have a good debate over the differences in the two parties, and the American people are once again beginning to see just how different these parties are and their view of the future.

LANTOS: I don't know what -- I don't know what my friend is smoking, but there is no tax increase in this budget.

COLLINS: Well, we'll have to...

LANTOS: So, when this is over, I will sit down with my friend, Roy Blunt...

COLLINS: OK. And then...

LANTOS: ... give him a strong cup of coffee and explain the budget.

COLLINS: And you will both report back to us after that discussion on camera. (CROSSTALK)

BLUNT: We're standing so close, he'd know if I was smoking anything.

COLLINS: This is true.

To the both of you, we certainly do appreciate your time.

Democratic Congressman Tom Lantos, Republican Congressman Roy Blunt.

Thanks, Gentlemen.

HARRIS: It's a peace pipe is what it is.

COLLINS: That's what it is.

HARRIS: A report of progress in Iraq and a scolding from a presidential candidate.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R), ARIZONA: General Petraeus goes out there almost every day in an unarmed Humvee. I think you ought to catch up.

(END VIDEO CLIP)

HARRIS: Des that view from Washington match reality in Baghdad? We will put that to the test in the NEWSROOM.

(COMMERCIAL BREAK)

COLLINS: Good Wednesday to everybody. I'm Heidi Collins.

HARRIS: Good morning Wednesday to you, Heidi Collins.

COLLINS: Thank you.

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

Among our top stories this morning, Britain stepping up the pressure on Iran to release 15 captured British sailors and Marines. Now word that one of them may soon be released. Iran's foreign minister tells CNN female British detainee Faye Turney (ph) will be released later today, or tomorrow.

In another new development, British officials say they have clear proof that troops from the HMS Cornwall were in Iraqi territory when they were surrounded by Iranian forces and seized. That proof, satellite tracking data, which according to London, shows the troops were nearly two nautical miles inside Iraqi waters. Calling the incident an ambush, British officials now say they're freezing all bilateral business with Iran.

(BEGIN VIDEO CLIP)

MARGARET BECKETT, BRITISH FOREIGN SECRETARY: But as the prime minister indicated yesterday, we are now in a new phase of diplomatic activity.

That is why MOD have today released details of the incident and why I have concluded that we need to focus all our bilateral efforts during this phase on the resolution of this issue.

We will, therefore, be imposing a freeze on all other official, bilateral business with Iran until this situation is resolved.

(END VIDEO CLIP)

HARRIS: Iranian officials still say the British sailors and Marines were in Iran's territory. They say the British troops are in good health, and that they are being treated well.

COLLINS: Revenge killings in Iraq: Authorities in Talafar say gunmen went on a rampage today in a Sunni neighborhood. At least 30 people are dead.

It is believed the killings are in retaliation for yesterday's bombings in Shiite marketplaces, at least 55 people were killed in those attacks, more than 100 wounded.

This morning in Fallujah, Iraqi security forces are credited with repelling a major attack. Two suicide truck bombs loaded with chlorine. The U.S. military says the Iraqis were able to stop both trucks before they reached their target, the city's government center.

About 15 Iraqi and coalition forces were injured in the explosions. A number of soldiers and policemen were treated after they inhaled chlorine fumes.

Progress in Iraq: One leading Republican says the so-called troop surge is already turning things around. Senator and presidential candidate John McCain says the new strategy is, quote, "succeeding as we speak". And on CNN, he said there are promising signs like the improved security enjoyed by the U.S. commander in Iraq.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: General Petraeus goes out there almost every day in an unarmed Humvee. I think you ought to catch up. You see, you are giving the old line of three months ago. I understand it. We certainly don't get it through filter of some of the media.

(END VIDEO CLIP)

COLLINS: We decided to put that claim to the test, with CNN's Michael Ware in Baghdad, about the senator's claim that General Petraeus now moves about more freely in the Iraqi capital.

(BEGIN VIDEOTAPE) MICHAEL WARE, CNN BAGHDAD CORRESPONDENT: It's unclear what part of Neverland that Senator McCain is talking about where Americans can stroll the streets of the capitol Baghdad. If Al Qaeda doesn't get an American, if a Shia militia isn't tipped off, if the Sunni insurgents don't grab them, then a criminal gang will see dollar signs and take them immediately.

(END VIDEO CLIP)

COLLINS: McCain says while the war was badly mismanaged, quote, "There are signs of progress everywhere in Iraq.

HARRIS: All right, let's gets you to the New York Stock Exchange. Sound the bell.

(BELL CLANGING)

The good people there from American Oriental Bioengineering, Heidi. The Dow starts the day at 12,397 after closing down 71 points yesterday.

We were concerned about this, watching the open closely this morning. There are indications -- and you see it here, that the stocks are going to slide a bit, over all these international concerns, the tensions between Iran, Iraq, and the UK. We're going to follow this story throughout the morning with Susan Lisovicz and with Stephanie Elam right now.

Wal-Mart sounding a warning on rising fuel prices and what that could mean for that company's bottom line. Stephanie is "Minding Your Business" this morning.

All right, Stephanie, Wal-Mart has our attention. What are they saying?

STEPHANIE ELAM, CNN FINANCIAL CORRESPONDENT: All right, Tony.

Well, the issue here is, you know, those higher oil prices yesterday. We saw that 8 percent spike during the day, then it drifted back down to close up about 1 percent higher. Part of the issue there is that these higher fuel prices, they're saying we're taking a cautious stance on that. And that's probably going to affect us in 2007.

So, when the world's largest retailer is saying they're concerned about oil prices, obviously that has everybody else paying attention, as well, Tony.

HARRIS: Yes, that sounds like it. So, a cautious stance? What does that mean for a company this the size of Wal-Mart, in terms of its operation, and what it could ultimately mean? Any idea what it could mean for us, the consumers?

ELAM: Well, the main thing is that Wal-Mart points out, the reason why they're concerned is because, let's face it, a lot of people who go into Wal-Mart are going there because they want to find stuff at a discount.

HARRIS: Yep, yep, yep.

ELAM: Therefore, they are not trying to spend all of their money.

HARRIS: Exactly.

ELAM: And that means if they're holding back on their spending because of gas prices, that could affect Wal-Mart's bottom line. And it says something bigger about the overall state of the -- not just the industry -- but also the overall economy right now, if people are holding back at a store like Wal-Mart. That's why we pay attention.

HARRIS: Yes, I guess -- I don't know why I thought Wal-Mart had a store in New York City, but I guess the company doesn't. And it's not going to have one anytime soon.

ELAM: It doesn't look that way. Yesterday the CEO of Wal-Mart was actually talking to a group of editors and reporters at "The New York Times". And he says, he doesn't care if there's ever a Wal-Mart store here. Kind of surprising to just admit finally they just could not get a store here.

He says doing business in New York is exasperating. He also called it expensive. And he just doesn't think it is worth it. The big thing we're seeing is the trend Wal-Mart has tried to get into some urban markets. And they get a lot of resistance.

There's one real big obvious reason they are getting the resistance, and that's the unions. The unions are like, hey, we don't want you here bringing down the cost of -- of our work, so therefore we're not getting as many good benefits as we get out of being unionized. Those unions are huge and they have a lot of power.

HARRIS: If you're a big superstore like Wal-Mart, you go into a city like New York -- I mean, New York is a city with a lot of mom and pop operations. The idea of a Wal-Mart rolling in there. I mean, that can't be something that sits well with a lot of folks in New York City, I would think.

ELAM: There's that. There is also the fact -- also we're not necessarily talking about Manhattan. You got to remember New York City also includes Queens, Staten Island. They were looking out in those regions. But if you also think about the CEO also said that he thinks that part of the reason why people are fighting so hard to keep Wal- Mart outside of New York is because they're snobbish, and they just don't want Wal-Mart as their neighbor.

Now, quickly, after this came out, the spokesperson for Wal-Mart said hey, you know, we're not ruling it out at this point. It may still happen, but you know how that goes.

HARRIS: Yeah. We'll watch. Stephanie Elam, "Minding Your Business" this morning. Stephanie, thanks.

ELAM: Take care.

COLLINS: A bus full of preschoolers and their teachers held hostage in Manila. They're all free now. Bizarre twist, who was holding them, and why he has so many supporters? That straight ahead in the NEWSROOM .

And a fresh call on Capitol Hill, star power arriving today, demanding more funding for cancer research. Details straight ahead in the CNN NEWSROOM.

(COMMERCIAL BREAK)

COLLINS: A bizarre hostage situation in the Philippines is over. Dozens of preschool children and their teachers now free. The owner of their daycare center in custody. Jun Ducat is accused of taking the hostages to call attention to education and housing issues in the Philippines.

The drama began after the group boarded a bus for a field trip. Authorities say Ducat took over the bus and dismissed the driver. He was believed to be armed with grenades, an Uzi and a .45 caliber pistol.

Crowds packed the streets as the drama unfolded. Many lit candles to support Ducat's cause. Police he faces criminal charges.

HARRIS: White House Press Secretary Tony Snow eager to return to work, if he can, following a recurrence of his cancer. He's facing what could be months of chemotherapy. The fight against cancer and funding are the focus on Capitol Hill this morning. CNN'S John Roberts has more.

(BEGIN VIDEOTAPE)

JOHN ROBERTS, CNN CORRESPONDENT (voice over): For all the progress medical science makes against cancer, the statistics are still astounding. According to the National Cancer Institute, more than 10 million Americans are living with the disease.

This year alone, there will be nearly 1.5 million new cases, and more than a half a million people will die from it.

In the past week, a new spotlight has been shone on this often incurable disease with the back-to-back revelations that Elizabeth Edwards and White House Spokesman Tony Snow's cancer is back.

Snow got the bad news just days after he sent out words of encouragement to Edwards on AMERICAN MORNING.

TONY SNOW, PRESS SECRETARY, WHITE HOUSE: My thoughts and prayers are with John and Elizabeth Edwards, because there are a lot of people around the country who have been through the experience not only of cancer, but cancer follow up. I'd like to lay down that because trust me, I know.

ELIZABETH EDWARDS, WIFE OF JOHN EDWARDS: This is what happens to every cancer survivor, not that you ultimately get a bad diagnosis, but every time you get something suspicious, you go into alarm mode.

ROBERTS: On Tuesday, the Edwards offered their praise and prayers, to Snow. At every stop along the campaign trail, Elizabeth Edwards' renewed fight takes center stage.

Other presidential candidates, like skin cancer survivor John McCain, have used their personal stories to bring attention in Washington to fighting the disease. Yet advocates are deeply worried that the federal government is actually reducing funds for cancer research, a move they say could undermine the gains made so far.

For the second year in a row, President Bush has proposed to cut funding for the National Cancer Institute, a reduction of more than $30 million. Today, musician and cancer survivor Sheryl Crow is on Capitol Hill urging more federal dollars for breast cancer research.

SHERYL CROW, BREAST CANCER SURVIVOR: There's so much we don't know about breast cancer. There are so many different kinds of breast cancer. And the more that I learn about it, the more I feel driven to get the message out to women to be diligent about getting their mammograms, and about knowing your family history.

ROBERTS: Cancer survivor and seven-time Tour de France winner Lance Armstrong has long called on Washington to do more. But he says it's not all about funding.

LANCE ARMSTRONG, CANCER SURVIVOR: We can always use more money. Again, I think the biggest issue is leadership. And leadership, you know, that not only starts in the White House but it trickles down through Congress through the NIH.

(END VIDEOTAPE)

HARRIS: He once handled the pressures from the press for the Oval Office. Ahead in the NEWSROOM, Ari Fleisher will be with us to talk about White House Press Secretary Tony Snow and his battle with cancer.

COLLINS: Want to go ahead and show you these pictures we are getting in from Pawtucket, Rhode Island.

This is a mill fire -- apparently also want to let you know, right away -- we are learning from our affiliates on the ground that the mill is abandoned. Not quite sure how many people are responding there, but you see quite a few, so as to try to keep that under control. I would imagine.

Looks like a bit of an industrial area there. Quite a bit of smoke. You still see some flames there. It looks like they have that hopefully under control, at least to the naked eye there. Once again, Pawtucket, Rhode Island; there is a fire in this mill, Central Falls Line. So, we will continue to watch that for you, and make sure that everything is, indeed, under control.

Another check of weather now. Chad Myers in the Weather Center.

(WEATHER REPORT)

COLLINS: She's staying mum and that has lots of folks on Capitol Hill talking. Who is Monica Goodling? And what does she know about the firings of federal prosecutors? We'll talk about that ahead in the NEWSROOM.

HARRIS: Could a TV star pull off a White House surprise? Fred Thompson shakes up the GOP field. Will he enter the presidential race? That story ahead in the NEWSROOM.

(COMMERCIAL BREAK)

COLLINS: Want to show you these pictures once again. A live shot coming in now, you can see from the helicopters up above, our affiliates there, WPRI, Pawtucket, Rhode Island. A huge mill, we understand there are two businesses inside, on fire. You can see quite a bit of smoke and the fire trucks there trying to control any flames, or hotspots, that may still be there.

Not quite sure how long they have been battling this, but we have been watching it for a little while. Once again, this is a fire going on -- we lost the shot for a moment -- but Pawtucket, Rhode Island, at a mill. We'll continue to watch it for you and let you know if anything should change there.

HARRIS: Chips, candy, fast food, the stuff kids love to eat. And a new says TV ads are helping fuel their unhealthy appetite. The Kaiser Family Foundation conducted the largest-ever study of food commercials aimed at children.

Researchers say more than 40 percent of ads they studied for were candy, snacks, and junk food. They looked at more than 2,600 commercials, featuring food and drinks that targeted children. Kids between eight and twelve see the most food commercials on TV, an average of 21 a day, 7600 a year. Last year, several companies pledged to devote more ads to promoting healthy diet and lifestyle.

COLLINS: More twists and turns in a heated stand off. Britain lays out what it says is proof Iran illegally seized 15 of its sailors and Marines. We'll have the latest coming up in the NEWSROOM.

HARRIS: An isolated town, it's priest, a man with a secret addiction.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Your best estimate was that you had five sexual affairs while you were in Alaska?

UNIDENTIFIED MALE: Right.

UNIDENTIFIED MALE: Is that still your testimony today?

UNIDENTIFIED MALE: I would say maybe seven.

(END VIDEO CLIP) HARRIS: The father -- fathering children from his affairs. Hear from a victim in the NEWSROOM

(COMMERCIAL BREAK)

HARRIS: OK. Where is the little gizmo that we have -- in that corner there. You already know to catch us weekday mornings from 9:00 a.m. until noon Eastern, but did you know you can take us with you anywhere on your iPod? Popular with the kids and adults alike, the CNN NEWSROOM Podcast available 24/7 right on your iPod.

COLLINS: Actor/politician, is Fred Thompson looking for a new role? He's had other GOP presidential hopefuls and is not even in the race. Mary Snow explains.

(BEGIN VIDEOTAPE)

FRED THOMPSON, ACTOR: That'll get the DOJ's attention every time.

MARY SNOW, CNN CORRESPONDENT: As Fred Thompson, the man who plays a prosecutor on TV's "Law & Order" made his case for a presidential run, roughly two weeks ago the former senator and current actor said he's considering a run for president. Since then, Thompson has skyrocketed out of nowhere to rank third among GOP White House hopefuls in a new poll. He's even surpassed former Massachusetts Governor Mitt Romney, and Thompson hasn't yet formally announced.

KEATING HOLLAND, CNN POLLING DIRECTOR: One way to read these numbers is that there's a lot of Republicans that are still shopping around for a candidate.

SNOW: Why are Republicans shopping around? Republican strategist David Winston, who is not affiliated with any campaigns, says a key title has alluded candidates Rudy Giuliani, John McCain and Mitt Romney.

DAVID WINSTON, REPUBLICAN STRATEGIST: What has not occurred is someone has not grabbed the sort of conservative mantel piece. The person identified as the lead conservative candidate. And that's been sort of bouncing around and a lot of the candidates have been sort jockeying for that, with no one succeeding.

SNOW: Why hasn't a single candidate pulled ahead with conservatives? Strategists say McCain hasn't gained overall momentum, Giuliani supports abortion and gay rights, and although Romney is now viewed as a conservative, that wasn't always the case.

WINSTON: The one thing that this poll would certainly suggest the Fred Thompson getting in the race, the candidacy that gets hit the hardest will be Romney.

SNOW: Many now see an opening for Fred Thompson among Republicans. Thompson calls himself pro-life and opposes same-sex marriage. (On camera): Thompson hasn't said when he'll make a decision about whether or not he's running. But he has said he wants to see how other Republican candidates do before jumping in. Mary Snow, CNN, New York.

(END VIDEOTAPE)

COLLINS: Is the U.S. upping the ante with Iran?

(BEGIN VIDEO CLIP)

TOM FOREMAN, CNN CORRESPONDENT: Both the United States and Iran say they are not spoiling for a fight, but it doesn't look that way.

(END VIDEOTAPE)

COLLINS: CNN's Tom Foreman will explain in the NEWSROOM.

HARRIS: U.S. troops in Iraq and awaiting marching orders from Washington. Will they start coming home? That story ahead in the NEWSROOM.

COLLINS: He once handled the pressures from the press, for the oval office. Ahead in the NEWSROOM, Ari Fleisher will be with us to talk about White House Press Secretary Tony Snow, and his battle with cancer.

(COMMERCIAL BREAK)

COLLINS: Good morning to you everybody. I'm Heidi Collins.

HARRIS: I'm Tony Harris. You're in the NEWSROOM. Stay informed with us. Here's what's on the rundown.

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