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Anthrax Attacks: A Look Back; In Their Own Words: Obama Responds to Hecklers, McCain's Urban League Speech; GM Loses $15.5 Billion in Last Quarter
Aired August 01, 2008 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KYRA PHILLIPS, CNN ANCHOR: Well, a lawmaker's work is never done, but August is August, recess is recess, and the energy crisis will just have to wait.
Was the anthrax horror of 2001 a twisted plot by a researcher to test a vaccine? The suspect's suicide may close the case.
(BEGIN VIDEO CLIP)
SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: Hold on a second. What's happening now? Hold on a second.
(END VIDEO CLIP)
PHILLIPS: Well, so much for the stump speech. Hecklers interrupt Barack Obama at a town hall meeting in Florida. We'll see who got the last word.
Hello, everyone. I'm Kyra Phillips live in New York. And you're in the CNN NEWSROOM.
Hello, August. Goodbye, Congress. You're elected representatives are starting their five-week summer recess with zero to show for their long and bitter battle over energy. Both sides managed to get in some parting shots, too.
(BEGIN VIDEO CLIP)
REP. JOHN BOEHNER (R), MINORITY LEADER: I have to express my deepest disappoint in the fact that the Democrats have adjourned the House without allowing a vote on our "all of the above" energy plan. I give the Democrats high marks for excuses to avoid voting on our American energy plan. But I give them an "F" for their failure to actually bring a bill up and allow the members of Congress to vote.
REP. STENY HOYER (D), MAJORITY LEADER: We tried to accelerate and urge the administration and legislation to work with Alaska and others to get those pipelines from Alaska Dam both for natural gas and for oil. So we've got a tax extender bill that's pending in the Senate, been pending for months in the Senate, which wants to invest in alternative sources of energy: wind, water, geothermal, technologies that will make us energy independent. We passed in 2007, an energy bill designed to do that as well.
So we've taken a lot of action. Unfortunately, the Republicans have thwarted us at almost every turn that they could possibly do so.
(END VIDEO CLIP)
PHILLIPS: Well, the offshore oil debate boils down to this, and time: How quickly new oil could get to the market and safety. How big a risk would it pose to the oceans and beaches? Democrats favor a crackdown on oil market speculators who essentially bet on future prices and cash in if they're right.
And Americans aren't betting on big cuts in gas prices ever. A new CNN/Opinion Research Corporation poll shows that the country almost evenly split on the simple question: Will gas prices ever come down?
Three out of four say $4 gas has been a hardship. Only one in four has taken the spike in stride.
Your money, your concerns, be sure to check out CNNMoney.com for in-depth coverage and analysis. And every day, noon Eastern, it's "ISSUE #1" with Ali Velshi and Gerri Willis, right here on CNN.
Seven years after a series of anthrax attacks that shocked America, a key suspect is now dead. Sources say that 62-year-old Bruce Ivins, who lived in Maryland, committed suicide just as the Justice Department was ready to indict him. They say prosecutors probably would have sought the death penalty.
Letters laced with anthrax were sent to Capitol Hill and to several news organizations in late 2001, shortly after the September 11th attacks. Five people died, 17 others became ill.
Before his retirement two years ago, Ivins worked at an Army bioweapons lab at Fort Detrick, Maryland, believed to be the source of the anthrax. His lawyers say that Ivins was innocent, and now that he's dead, he'll never have the chance to clear his name.
The anthrax attacks fueled fears of terrorism just weeks after 9/11. CNN's Joe Johns takes a look back.
(BEGIN VIDEOTAPE)
JOE JOHNS, CNN CORRESPONDENT (voice-over): The FBI code-named the case Amerithrax, the first major bioterror attack in the U.S., and it's still very much an open case. Highly potent anthrax sent in childlike, though menacing, letters to high-profile destinations. One to then NBC Anchorman Tom Brokaw and two to senators -- Democrats Tom Daschle and Patrick Leahy, both of whom escaped injury.
But the hidden substance that passed through the mail, apparently originating from the Trenton, New Jersey, area, still killed five people and injured 18 others in Washington, D.C., Florida, New York, and Connecticut.
The U.S. Postal Service, which handled the letters, was hit hard. Hundreds of workers put on antibiotics, especially at this plant, known as the Brentwood facility, where 2,000 people worked. Not far from the U.S. Capitol.
DENA BRISCOE, POSTAL EMPLOYEE: This was an American terrorist attack, as they say. I don't feel as though they had concerns about the public, the employees, or anyone else.
JOHNS: Dena Briscoe was working at Brentwood at the time. Two employees here, Joseph Curseen and Thomas Morris, died from inhalation anthrax they contracted while working with mail at the contaminated Brentwood facility. At least three others recovered, after being diagnosed with anthrax infection.
BRISCOE: None of us were being tested for anthrax. We were only being treated for whatever symptoms we had.
JOHNS: Briscoe helped start a support group for Brentwood's workers who say the government failed to protect them.
BRISCOE: They let us down -- this country down, tremendously. We still haven't got the case resolved. My coworkers haven't even dealt with that. they haven't even dealt with the fact that someone put anthrax in the mail. We're still dealing with how we were treated during that time.
JOHNS: The postal workers have long complained that hundreds of people on Capitol Hill were getting powerful antibiotics, just in case they'd been exposed, and that the government took a week to shut down Brentwood, which had been contaminated.
The FBI's Washington office, the lead agency in charge of the Amerithrax investigation, says, it cannot comment on the case, other than to say that 18 FBI special agents and 10 postal inspectors are working on it full-time.
Newspaper Editor and Former Reporter Marilyn Thompson, who wrote a book about the case, thinks it may never be solved.
MARILYN THOMPSON, AUTHOR, "THE KILLER STRAIN": But my feeling after years of watching and waiting and talking to people, is that they're lost. It's a cold case, and the hope of solving it is very slim.
JOHNS: One of the key unanswered questions has been whether this was in fact a case of international terrorism, which was suggested in the odd language of the enclosed handwritten notes. Or if the crime was more likely committed by a U.S. national with access to anthrax or the means of making it.
Marilyn Thompson is not alone in her assessment that the suspect may have been an American.
THOMPSON: I felt it was almost certainly a domestic bad actor, because the evidence that they were able to retrieve from some of the sites where people died of anthrax poisoning, you know, they were able to do a very extensive DNA analysis of that anthrax, and link it back to U.S. biodefense labs.
JOHNS: But what they haven't been able to do is charge a suspect.
Joe Johns, CNN, Washington.
(END VIDEOTAPE)
PHILLIPS: Well, we now know the name of that suspect in last night's riverbank shooting in Wisconsin. Thirty-eight-year-old Scott Johnson was taken into custody last night. Authorities think that he was the gunman who shot at a group of young people who had gathered for a swim near the town of Niagara.
Three teens 17, 18 and 19 years old were killed. A 20-year-old was wounded. The sheriff says that Johnson was dressed in camouflage clothing when he walked out of the woods near the shooting scene and surrendered.
The trial of three men connected to London's mass transit bombing three years ago ends without a verdict. A London jury failed to reach a unanimous decision today, three months after the conspiracy trial began.
Four bombers died in the 2005 explosions that killed 52 people on three subway trains and a bus. The men tried in London were charged with helping the bombers. Prosecutors now have to decide whether to try them again.
And two bombings in eastern Afghanistan today killed five soldiers of the NATO-led force and one civilian. We don't know the nationalities of those killed, but many troops in those area are American. The bombs went off in the Kunar and Khost provinces, on the rugged border with Afghanistan. Fighting between NATO forces and the Taliban has ticked up and increased in recent months.
Minneapolis is remembering the victories of the Interstate 35 West bridge collapse. Today is the one-year anniversary of that tragedy. This was just one of several memorial services planned in the area.
A moment of silence is planned at 6:05 p.m. Central Time today to mark the exact time that that bridge fell into the Mississippi river. Thirteen people died in that collapse. More were hurt. The bridge put the health of America's infrastructure in the headlines for months.
And tonight, a CNN special report, "Roads to Ruin: Why America is Falling Apart." Campbell Brown investigates the nation's crumbling highways and bridges. Don't miss "Roads to Ruin," tonight, on CNN, 8:00 Eastern.
What the heckler happened to Barack Obama today?
(BEGIN VIDEO CLIP)
OBAMA: You'll have a chance to ask your questions, but you don't want to disrupt the whole meeting. Just be courteous, that's all. All you've got to do is be courteous. That's all. (END VIDEO CLIP)
PHILLIPS: They actually ended up being a little courteous. They finally sat down.
Heckler Handling 101 with your professor, Barack Obama, straight ahead.
And John McCain on the stump in Florida. What's his plan to save our ailing education system?
(COMMERCIAL BREAK)
PHILLIPS: Well, time now to check in with the presidential hopefuls and to hear more of what they have to say in their own words.
Barack Obama heckled today at a town hall meeting. We showed you that last hour.
And a little later, Obama took some time to respond to the hecklers' comments.
(BEGIN VIDEO CLIP)
OBAMA: I made a promise to you, but that means, also, I want you to give the mike back after you ask your question or make your comment.
Go ahead. Go ahead.
UNIDENTIFIED MALE: So, my question is, in the face of the numerous attacks that are made against the African community, or the black community, by the same U.S. government that you aspire to lead -- and we're talking about attacks like the subprime mortgage that you spoke of, that wasn't just a general ambiguous kind of phenomenon, but a phenomena that targeted the African community and Latino community, attacks like the killing of Sean Bell by the New York Police Department, and Javan Dawson (ph) right here in St. Petersburg by the St. Pete Police, and the Jena 6 and Hurricane Katrina, and the list goes on.
In the face of all these attacks that are clearly being made on the African community, why is it that you have not had the ability to not one time speak to the interests and even speak on behalf of the oppressed and exploited African community or black community in this country?
OBAMA: All right. All right.
Well, I guess -- hold on a second, everybody. I want everyone to be respectful. That's why we're having a town hall meeting. This is democracy at work, and he asked a legitimate question. So I want to give him an answer.
I think you're misinformed about -- when you say not one time. Every issue that you've spoken about, I actually did speak out on. (APPLAUSE)
When it came to -- hold on. I just -- I'm going go through the very specific examples.
I've been talking about predatory lending for the last two years in the United States Senate and worked to pass legislation to prevent it when I was in the state legislature.
(APPLAUSE)
And I have repeatedly said that many of the predatory loans that were made in the mortgage system did target African-American and Latino communities. I've said that repeatedly.
Number two, Jena 6, I was the first candidate to get out there and say this is wrong, there's an injustice that's been done, and we need to change it. That's number two.
(APPLAUSE)
When Sean Bell got shot, I put out a statement immediately saying this is a problem.
So all I'm -- all I'm -- I'm sorry. Wait, wait, wait. Don't start -- hold on. Hold on. Don't start, you know, shouting back. I'm just answering your question.
On each of -- on each of these issues I've spoken out.
Now, I may not have spoken out the way you would have wanted me to speak out.
(END VIDEO CLIP)
PHILLIPS: And let's turn our focus now to Republican John McCain. He spoke at the National Urban League Conference today in Florida, and he spent a lot of time talking about education reform.
(BEGIN VIDEO CLIP)
SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: Over the years, Americans have heard a lot of tired rhetoric about education. We've heard it in the endless excuses of people who seem more concerned about their own position than about our children. We've heard it from politicians who accept the status quo rather than stand up for real change in our public schools.
Parents ask only for schools that are safe, teachers who are competent, and diplomas that open the doors of opportunity. When a public school fails repeatedly to meet these minimal objectives, parents ask only for a choice in the education of their children.
Some parents may choose a better public school. Some may choose a private school. Many will choose a charter school. No entrenched bureaucracy or union should deny parents that choice and our children that opportunity.
We should also offer more choices to those who wish to become teachers. Many thousands, highly qualified men and women, have great knowledge, wisdom and experience to offer public school students. But a monopoly on teacher certification prevents them from getting that chance.
You can be today a Nobel laureate and not qualified to teach in most public schools today because they don't have all the proper credits and educational theory or methodology. All they have is learning and the desire and ability to share it. If we're putting the interest of students first, then those qualifications should be enough.
If I'm elected president, school choice for all who want it, an expansion of opportunity scholarships and alternative certification for teachers will be part of a serious agenda for education reform. I will target funding to recruit teachers who graduate in the top 25 percent of their class, or who participate in an alternative teacher recruitment program such as Teach for America, the American Board for Certification of Teacher Excellence, and the New Teacher Project.
We'll pay bonuses to teachers who take on the challenge -- and it's a great challenge of working in our most troubled schools -- because we need their fine minds and good hearts to help turn those schools around. We'll award bonuses as well to our highest achieving teachers, and no longer will we measure teacher achievement by conformity to process. We'll measure it by the success of their students.
(END VIDEO CLIP)
PHILLIPS: And that was John McCain today at the National Urban League Conference in Florida. We'll hear more later from both Senators McCain and Obama.
And check out our Political Ticker for all the latest campaign news. Just log on to CNNPolitics.com, your source for all things political.
(BEGIN VIDEO CLIP)
PHILLIPS: Stressed out, not knowing how long the security lines are going to be.
DON LEMON, CNN ANCHOR: Did you see the guy that cut us off? Weenie.
(END VIDEO CLIP)
PHILLIPS: "The Great Race." Don and I take a trip to a great vacation paradise. I travel by air, he hits the road.
Travel with us to see who saves the most money.
(COMMERCIAL BREAK) UNIDENTIFIED MALE: Britney, the last couple of days, just started wearing clothes again. And basically paparazzi are leaving town because she's not as interesting when she's not running around without her underwear on.
And Lindsay's out of town, evidently found a new love life. So she's in New York, hanging out there.
And Paris, god knows where Paris is. She's thankfully disappeared from the scene.
(END VIDEO CLIP)
PHILLIPS: Say what? That was the L.A. police chief, folks.
You know, when Britney Spears wears underwear, people get hurt. Paparazzi had to start looking for snapshots elsewhere.
Cracking down photographers, if you know what I mean, straight ahead in the CNN NEWSROOM.
And the red ink keeps spilling at the world's largest automobile company. That's actually not funny. It lost a huge pile of money in the second quarter.
Susan Lisovicz at the New York Stock Exchange with more on the serious news. We won't talk about Britney Spears' underwear.
SUSAN LISOVICZ, CNN FINANCIAL CORRESPONDENT: That is one hard turn that you just made, Kyra.
(LAUGHTER)
PHILLIPS: All right.
LISOVICZ: I thought you were talking about driving.
PHILLIPS: I actually thought we were going to a break. And then I realized we had to go to you.
LISOVICZ: I did too.
PHILLIPS: Sorry.
LISOVICZ: But this is a serious story. Unfortunately, it's a story that we've become accustomed to.
Lots of red ink for GM. It lost a stunning $15.5 billion in the last quarter. That's nearly five times as much as it did in the previous quarter.
U.S. sales dropped like a stone. GM also cited strikes, labor cuts, production cuts as reasons for such heavy losses.
It's the latest in a string of disappointing results going back to '05. Since then, CEO Rick Wagoner has laid out and made changes to restructuring plans. It's taken extensive action this year. It's closing Ford trucks and SUV plants, and it's buying out thousands of workers -- Kyra.
PHILLIPS: But what else can GM do?
LISOVICZ: That's a good question. Really, it's just more pain.
The CFO says another round of buyouts could be on the way. Of course, GM announced yesterday cuts of 5,000 white-collar jobs, part of its previously-announced plan to trim salary costs by 15 percent.
But its big bet in Latin America is paying off. GM sales there jumped 50 percent. It's got high hopes for the Volt, its electric call.
Unfortunately, we also got monthly auto sales today. And Ford and Toyota posted big declines. And GM said sales last month fell 26 percent. BMW and Nissan reported big profit declines on the U.S. slowdown. GM shares right now down 6 percent, and that's pressuring the Dow.
(STOCK MARKET REPORT)
LISOVICZ: And we're going to go from big losses to big profits. We're talking big oil in the next hour -- black gold, Texas tea. We're going to drink it up -- Kyra.
PHILLIPS: OK. Sounds good. I'll be drinking with you.
See you, Susan.
(WEATHER REPORT)
PHILLIPS: Well, millions of dollars of household supplies intended for Katrina victims gathering dust for the past two years. Well, now FEMA is talking to CNN about it for the very first time and even admitting that they made mistakes. It's amazing what some SIU can do for you.
And a horrible scene on a passenger train in India. How did this fire start, and why couldn't dozens of people get out?
(COMMERCIAL BREAK)
PHILLIPS: Hello, everyone. I'm Kyra Phillips live in New York. You're in the CNN NEWSROOM.
2:30 Eastern time. Right now here are some of the stories we're working on.
A suspect in the 2001 anthrax attack is dead. Anthrax-laced letters were sent to congressional offices and news organizations, and sources say that former army scientist Bruce Ivins committed suicide after learning that prosecutors were getting ready to indictment him.
And a massive manhunt is over. Officers have captured a gunman accused of killing three swimmers at a river near the border between Wisconsin and upper Michigan. The motive for the attack is unclear.
Congress is adjourning today for a five-week recess without passing energy legislation. Democrats and Republicans agreed that something needs to be done about high gas prices but they couldn't agree on what.
Fire fully engulfing a passenger train car in southern India. At least 32 people couldn't get out in time and were killed. That fire broke out in the sleeper car and witnesses say it spread to four other coaches, which also burned. It was past midnight when it happened. Investigators say that faulty wiring may be the cause.
A disaster in central Turkey. A three-story dormitory at a girls' school collapsed after a mysterious explosion early this morning. At least 15 girls are dead, more than 20 are hurt. Rescuers are still hoping to find more survivors too. Officials believe that a gas canister somewhere in the building had blown up.
Horror aboard a bus on a Canadian highway. A passenger is accused of killing the guy next to him and then cutting off his head. We told you about this yesterday. And today, we know who the suspect is -- 40-year old Vince Lee, of Edmonton. He said nothing in court this morning. He's charged with second degree murder. Witnesses say that Lee calmly stabbed the victim dozens of times, cut off his head, showed it off, then began to cut up the rest of the body. Other passengers say the victim did nothing to provoke anybody. Authorities haven't released the victim's name. But friends who created a Facebook page in his memory identify him as 22-year-old Tim McClean Jr. of Winnipeg.
Radovan Karadzic puts it in writing. The war-time leader of the Bosnian Serbs now arrested and facing trial in the Hague is telling his side of the arrest. He claims that he had a diplomatic deal with U.S. Ambassador Richard Holbrooke. A deal that would have left him a free man. Richard Holbrooke joins me now by phone to set the record straight.
Ambassador, great to have you. Yesterday, Karadzic came forward, said that you offered him a deal. Now, today, he's saying that you wanted him liquidated. What's the deal?
VOICE OF RICHARD HOLBROOKE, FMR. SPECIAL ENVOY TO BOSNIA & KOSOVO: Well, I guess I should be flattered in a backward way that he thinks I have so much influence that I can reach out and liquidate him while he's in jail.
But the truth is that the fabrication you just mentioned is something he's putting out for well over a decade to pretend that he had an arrangement. There was no such arrangement obviously. And obviously, I have nothing to do with his future fate. He's in the hands of the Hague. He should have been there more than a decade ago.
I deeply regret that NATO didn't capture him in 1996 when they should have and really could have. Kudos to the Serbian president, Boris Tadic, for taking enormous personal risk in shipping him to the Hague. He is really, Kyra, the world's worst -- not the worst -- there's always Osama bin Laden -- but the worst European war criminal since World War II.
PHILLIPS: Well, and you have even said that he was worse than Slobodan Milosevic. What made him, in your eyes, more vicious even than a Milosevic?
HOLBROOKE: There were three people who were the arch, arch criminals. One, General Mladic, is still at large. He is the hands on mass murderer. He is a terrible man. But the truth is there were plenty of other military people in the Bosnian-Serb organization that were ready to kill people. Milosevic was the opportunistic person who bankrolled everything.
But man on the screen now, Radovan Karadzic, that was the intellectual architect of a racial hatred , a.k.a, ethnic cleansing. And let's call it by its real name; it was genocide. And of the three, all my Bosnian friends say this man was the single worst. He was responsible directly or indirectly, I would say, for up to 300,000 deaths, 2.5 million homeless. He's just putting out more lies.
Listen, Kyra, he's the guy who when the Bosnian Serbs killed people in the Sarajevo marketplace, he said -- and Christiane Amanpour was there reporting it -- he said the Muslims shelled (ph) themselves to get world sympathy. That's the level of his lying.
PHILLIPS: You just -- you monitor and you read about the history behind these mad men, the Hitlers and the Karadzics and the Slobodan Milosevic. And you wonder, did he change at all in the 10 years that he was in hiding? Once a madman, always a madman. But I can just imagine hiding for a decade, he became even more crazy.
HOLBROOKE: I think you're absolutely right.
How do you look in the face of evil and figure it out? The poet, the psychiatrist with a degree from Columbia University -- he strikes me in yesterday's behavior as nuts, frankly. But that's up to the Hague. I have nothing more to do with his fate. I'm glad he's been brought to justice.
PHILLIPS: Finally, he was actually filmed watching the civilian massacres at Srebrenica. Is this going to be a shoe-in to convict him?
HOLBROOKE: Well, he's going to be convicted, I assume. He's -- the case against him is stronger than it is against anyone else. He's the architect.
But I think the really important thing, Kyra, is down there in Darfur. The International Criminal Court has just indicted the President of Sudan, President Bashir. And although 12 years is a long time to bring Karadzic to justice, he was under pressure the whole time. He wasn't able to get out in public. And he finally has been brought to justice.
I think that President Bashir and the other thugs in Sudan who are doing these terrible things in Darfur, should be very aware now that you can run, and you may be able to run for 12 years, but in the end, you can't hide once you're indicted.
PHILLIPS: Former Ambassador Richard Holbrooke, always appreciate your time, sir.
HOLBROOKE: Thank you, Kyra.
PHILLIPS: We want to get straight now to other developing news at this hour. Sean Callebs standing by for us in New Orleans. Apparently some news coming forward about the Jena 6 case.
Sean, bring us up to date.
SEAN CALLEBS, CNN CORRESPONDENT: This case is still going on. We know that the juvenile case against Mychal Bell has played out. But there are still criminal charges pending against the five remaining teenagers in that Jena 6 case.
Now, the defense attorneys have long argued that the judge in that case, JP Mauffray, has been anything but impartial. At times, he has called the group troublemakers and a violent bunch. Well, an appeals court has removed Judge JP Mauffray from continuing on with the criminal case against the five teenagers.
I spoke with the attorney representing one, Bryant Purvis, and he said this is great news for our case. Dale Hickman, the attorney representing Bryant Purvis, said that the judge tended to look as these kids as a group, not as individuals. And he went as far as to say that the judge looked at them as six thugs. And one thing that Hickman had a concern about -- if they waive the right to a jury, what kind of trial would they get if this went up before Judge Mauffray?
Well apparently, it won't go that far. However, we know Reed Walters, the D.A. in this case who has unflinchingly moved toward prosecution against members of the Jena 6, has told the "Associated Press" that he may petition to have Mauffray once again reinstated to hear this case. So we may not have heard the final arguments in that.
One final note, Kyra, one hint of good news -- Bryant Purvis, who has also had trouble since he moved to Dallas, is now apparently going to Kansas on a basketball scholarship. His attorney says he has turned his life around, looking forward to starting his collegiate basketball -- standing as well as a student. So let's see how that works for him.
PHILLIPS: Well it's amazing to think it has been almost one year since we were in Jena, Louisiana, when the thousands of people converged on that small town for sort of a mini civil rights movement, Sean.
CALLEBS: Really, and two years exactly -- two years -- since the original incident of the noose hanging in front of the high school and then the fight that precipitated all of this. So this is something that was played out over a very long time.
And Mychal Bell, by the way, is still serving his time as a juvenile. Right now he's at a halfway house. He is attending school. I spoke with his attorney, Carol Powell Lexing. And she hoped to have him released as early as Thursday. But she said Mauffray, who is still ruling in that case, just handed down a note saying that it has been stayed until at least September. So she's not happy about that and plans to petition to have Bell released. So this case still going on, still making news.
PHILLIPS: And we'll be following up too, updating our documentary in a month.
Sean Callebs, thank you so much.
Straight ahead, Lindsay is gone, Britney is dressed, Paris is out of town. A possible legal crackdown. Whatever is the paparazzo to do?
(COMMERCIAL BREAK)
PHILLIPS: FEMA in the hot seat as lawmakers demand answers at a joint hearing by the House and Senate Subcommittees on Homeland Security. All of this after a CNN investigation exposed millions of dollars of household supplies intended for Katrina victims just sat unused in warehouses for the past two years.
CNN Special Investigations Unit Correspondent Abbie Boudreau joins us now from Washington with the latest on her investigation -- Abbie
ABBIE BOUDREAU, CNN SPECIAL INVESTIGATIONS UNIT CORRESPONDENT: Kyra, this was the first time FEMA agreed to talk on camera about the details of what happened in this case. It was also the first time FEMA acknowledged it made mistakes.
(BEGIN VIDEOTAPE)
BOUDREAU (voice-over): Congresswoman Sheila Jackson Lee scolded FEMA, saying it failed the American public.
REP. SHEILA JACKSON LEE (D), TEXAS: We need legislation to reorder the structuring of the distribution of aid to the needy because every state government that has gotten this distribution gets an F, particularly in Hurricane Katrina.
BOUDREAU: In June, CNN first reported FEMA had given away 121 truck loads of brand-new household supplies, all meant for Katrina victims. Those items had been stockpiled in warehouses, and then declared surplus. FEMA told CNN no one was asking for those supplies and that's why they were ultimately given away to 16 states and other federal agencies.
U.S. Senator Mary Landrieu pressed FEMA about why it sat on the supplies.
SEN. MARY LANDRIEU (D), LOUISIANA: You didn't contact your regional office. You didn't contact the state office. You didn't contact the nonprofit. How did you determine that these items were not needed? ERIC SMITH, FEMA ASSISTANT ADMINISTRATOR: If we don't have demands on them, no one asks for them, we have no requisitions for them -- we determine if there is an ongoing need to keep them.
BOUDREAU: Landrieu produced a letter the Louisiana Recovery Authority sent to FEMA, dated one week before the supplies were made available to states and federal agencies. The letter requested millions of dollars for, "...household establishment assistance" for Katrina victims moving into permanent housing.
But Landrieu says the request never made it to top FEMA officials. Leaders of recovery groups told the panel they had no idea the household supplies were being stored.
PAUL RAINWATER, LOUISIANA DEVELOPMENT AUTHORITY: What is troubling to me is that the state would have never known about the supplies if CNN had not reported on the issue.
BILL STALLWORTH, BILOXI, MISSISSIPPI HOPE CENTER: Those millions could have gone toward those people who are in need. I don't mean just those folks who are still in the FEMA trailers, I'm talking about those folks who were pushed out of the trailers.
BOUDREAU: Our investigation found nonprofit groups helping to rehouse Katrina victims were in constant contact with FEMA officials about their needs.
We caught up with the FEMA assistant administrator responsible for handling the supplies.
(on camera): Why didn't the people working with the nonprofit groups -- that were part of FEMA -- why didn't they come back to the leaders of FEMA saying, there is an obvious need, let's get them some of those supplies?
SMITH: I would think that because the people that they were working with did not relay that need to them. Because if they did, they would have issued it to them.
BOUDREAU: Did FEMA let the victims of Katrina down in this particular case?
SMITH: No.
BOUDREAU: That is shocking for people. That is shocking for people to hear that, that FEMA is not acknowledging that you guys made mistakes in this case. You're saying you did not let the people of this hurricane down?
SMITH: You asked me did I let them down versus make a mistake.
Did we make a mistake? Yes. And we all make a mistake, and we acknowledge that.
Can we do better? Yes.
But did we let them down? No.
(END VIDEOTAPE)
BOUDREAU: The leaders of the nonprofit groups helping Katrina victims say they still need all those supplies and hope (ph) the victims of the storm are not forgotten.
PHILLIPS: Boy, talk about talking in circles.
Did anyone ask FEMA if they would be prepared for the next big disaster?
BOUDREAU: Actually they did. FEMA says it has a new system that tracks supplies coming in after a disaster, it's called aid matrix (ph). And they also say they have a better coordination effort with the states.
The lawmakers, at least some of them at yesterday's hearing, aren't necessarily convinced of that. But FEMA insists it is ready if another hurricane strikes -- Kyra.
PHILLIPS: Abbie Boudreau, fantastic job as usual.
BOUDREAU: Thank you.
PHILLIPS: Straight ahead, outrage at the pump. We're not talking about high gas prices, but about gas pumps intentionally rigged to cheat you.
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PHILLIPS: It's bad enough that gas is as expensive as it is, and even worse, some people aren't even getting what they pay for. Felicia Taylor has our "Energy Fix" from New York.
Hi, Felicia.
FELICIA TAYLOR, CNN CORRESPONDENT: Hey, Kyra.
Well you got it. At a time when people are struggling to make ends meet and gas prices are soaring, it seems one company has been cheating customers. The attorney general of Texas has filed suit against the owner of Sunmart gas stations in Texas. He claims nearly a thousand of their pumps were miscalibrated in the company's favor on purpose. In other words, customers were allegedly paying for a gallon but actually getting far less. The attorney general says he is going for the financial death penalty.
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GREGG ABBOTT, TEXAS ATTORNEY GENERAL: I will be surprised if the number of violations is less than 1,000. So you can kind of do the math of what this could cost Sunmart in petroleum wholesale if you multiply 1,000 times $20,000. It could be a very stiff penalty.
(END VIDEO CLIP) TAYLOR: And we did the math. If they get the full amount in damages, the penalties could be in excess of $20 million. And that is a pretty costly fine for a pretty small company -- Kyra.
PHILLIPS: Well perhaps this was just an accident on the company's part?
TAYLOR: I don't think so.
PHILLIPS: Wishful thinking, Kyra.
TAYLOR: At least that's what investigators are saying.
They say all of the miscalibrations they found were in the company's favor. No coincidence, right? And that Sunmart went to great lengths to deceive investigators.
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TODD STAPLES, TEXAS AGRICULTURE COMMISSIONER: We were told at some stations that the stations were out of fuel. We instructed the station owners to give us access to those tanks and we discovered that there was fuel in those tanks. And so we conducted that inspection process in spite of those efforts to -- what appears to me, to cover up these egregious violations that were occurring.
(END VIDEO CLIP)
TAYLOR: Investigators aren't yet saying how far off the calibrations were. Petroleum Wholesale, which is the parent company of Sunmart, is so far denying the allegations. It says, it is concerned that some of the testing methods don't actually comply with protocol. And that it has and will continue to cooperate with the investigation -- Kyra.
PHILLIPS: Well, here's the million dollar question. How do we know if we're getting cheated?
TAYLOR: Exactly. I mean, that's what every consumer wants to know when they go to the pump.
And the truth is, it's hard to know. But, here's what you don't know. In many states, the pumps are allowed to be just slightly off. In Texas, that amounts to nearly two cents a gallon at today's price. But we do have an Energy Fix for you.
Know the size of your tank. If the fill-up is bigger than the size of your tank, then obviously, you've got a problem. Also, look for the price jumping before any gas actually comes out. And then, let the authorities know because complaints led to this Texas investigation.
But we want to hear your stories. Do send us your photos, videos and ideas to ireport.com/energyfix.
Kyra, back to you. PHILLIPS: Felicia, thanks.
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LEMON: So far, not so bad. $32, $33. What's up with all these gnats?
PHILLIPS: Security took forever. Now, we only have about 20 minutes until our flight.
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PHILLIPS: Well, which is cheaper for the family vacation? Flying or driving? Don and I put it to a real life test.
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PHILLIPS: Well, have you taken your family vacation yet? Did you fly, drive, which is a better deal for your family?
Don Lemon and I decided to put it a real live test.
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LEMON (voice-over): Our trip from Atlanta to vacation destination Orlando -- that is about 450 miles. I went by car, Kyra by plane. And for added realism, we both brought along one of those dolls programmed to cry just like a real baby.
(on camera): Oh, the baby is crying. It's 8:45 and the baby is crying.
PHILLIPS (on camera): I have a feeling this baby is going to be more difficult than anything else, so here we go.
(voice-over): And flying for the average family can be difficult and expensive if you start adding extra bags per person.
(on camera): So if you're traveling with a family of three and each person has two bags and the second bag costs $20 --
UNIDENTIFIED FEMALE: Yes, if you do that at the airport.
PHILLIPS (voice-over): But for the families I met along the way, it was still worth it.
(on camera): So whose idea was it to fly?
UNIDENTIFIED CHILD: Mom's.
PHILLIPS: Mom's. All right, and why did you pick flying, mom?
UNIDENTIFIED FEMALE: Well it's easier than a 16-hour drive from Ohio.
PHILLIPS: So I'm curious, why fly instead of driving? UNIDENTIFIED FEMALE: Gas prices.
PHILLIPS: Too expensive?
UNIDENTIFIED FEMALE: And I have a 7-year-old, so a lot less time in the car.
LEMON (voice-over): Speaking of time in the car, we're back on the road from Atlanta to Orlando.
(on camera): 12:22, and we are in -- I'm not exactly sure where we are. I guess we're getting close to Valdosta, Georgia. When you get on a plane, it's just to -- it's go all about getting there. When you're in a car, part of it's getting there but a lot of it's what's in the middle.
Hey. I'm shopping for peanut clusters.
(voice-over): For the families I met along the way, driving had some definite payoffs.
UNIDENTIFIED FEMALE: Well, we did have the choice and we chose driving.
LEMON: Why did you chose driving? Gas prices are high. Why are you driving?
UNIDENTIFIED FEMALE: Because airline tickets are even higher, and it's educational for the kids.
LEMON: So why did you drive to Tampa instead of fly?
AURELIA LANE, DRIVING ON VACATION: Well you know, we carpooled. So it was faster to carpool.
LEMON: It's more economical, you think?
LANE: Yes.
PHILLIPS: All right. This is where I get stressed out -- not knowing how long the security lines are going to be. I have never seen it like this in a really long time.
(voice-over): But getting through security with a baby, even a fake one, can be a little tricky.
UNIDENTIFIED MALE: This baby has got a metal head.
UNIDENTIFIED FEMALE: Oh, lord.
UNIDENTIFIED MALE: Stop that. Stop. Stop.
PHILLIPS (on camera): OK. That was an experience. Security took forever. Now we only have about 20 minutes till our flight.
LEMON: You see that guy cut us off? Weeny. We've got a child on board, mister. Slow it down.
I wouldn't have stopped for a couple of hours. But I think the baby needs changing.
PHILLIPS: OK. Here is one advantage of flying. Don has to drive, right? Seven hours. Well, he can't have a cocktail.
Jeff, what do you have there?
UNIDENTIFIED MALE: Chardonnay and Merlot here.
PHILLIPS: What do you recommend?
UNIDENTIFIED FEMALE: The Chardonnay.
LEMON (singing): The wheels on the bus go round and round, round and round, round and round.
PHILLIPS (voice-over): The miles are adding up and so are the costs. So which one was cheaper, flying or driving?
Well, for a family of three, our airfare added up to $891. When you add in the $8-a-day parking at the airport for a five-day vacation that tacks on another $40. Grand total, $931.
LEMON(voice-over): And now let's do the math on the road trip. We spent about $80 round trip for gas, and lunch for two adults was about $30. If you take your own car, that's pretty cheap, just $110. But if you decide to rent the SUV, that can tack on another $641 more for five days for a grand total of $751. So it costs more to fly either way. But, Kyra's flight took a lot less time.
So which is better? Well it all depends on who you ask.
UNIDENTIFIED MALE: It's a lot cheaper today to drive.
PHILLIPS: (on camera): So do you like flying or driving better when you take a trip?
UNIDENTIFIED CHILD: Flying.
PHILLIPS: Flying. How come?
UNIDENTIFIED CHILD: Because it's faster.
PHILLIPS: It's faster.
(END VIDEOTAPE)
PHILLIPS: So, while Don spent much less money on a trip to Orlando, he did spend a lot more time than I did getting there. So, the bottom line for just about everyone we talked with along the way was this: Would you rather save time or money? For people who wanted to save money, driving was a better deal. Timesavers want to fly.
The next hour of CNN NEWSROOM starts now.
