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CNN Live At Daybreak

Preview of Day Three of Democratic National Convention; Latest Violence in Iraq

Aired July 28, 2004 - 06:00   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.


CAROL COSTELLO, CNN ANCHOR: The theme of the night could have been Democrats old and new. The convention brings a variety of voices to the stage.
It is Wednesday, July 28.

This is DAYBREAK.

And good morning to you.

From the CNN Global Headquarters in Atlanta, I'm Carol Costello.

Now in the news, a morning shattered by a suicide car bomb. It happened a little more than four hours ago in Ba'qubah, which is north of Baghdad. At least 51 people are dead this morning, 68 more wounded. Many of the victims were waiting to sign up as police officers. We'll take you live to Iraq in 10 minutes.

A military hearing is being held this morning at Fort Carson, Colorado. It's to see if three soldiers with the 4th Infantry Division will be court-martialed in the case of an assault on two Iraqis, one of whom died.

Search crews have been at it for a second straight night in a row, looking in a Salt Lake City landfill for a woman missing more than a week. These are live pictures we're bringing you from Salt Lake City now. Lori Hacking was reported missing July 19.

Millions of people across South Asia have been forced out of their homes by flooding, the worst in Bangladesh in six years. At least 1,100 people have been killed in India, Nepal, Pakistan and Bangladesh.

Keeping you informed, CNN, the most trusted name in news -- good morning, Rob.

ROB MARCIANO, CNN CORRESPONDENT: Good morning, Carol.

That's the monsoon, but as you said, the worst in over a decade.

(WEATHER REPORT)

COSTELLO: John Edwards is in Boston this morning. He has written his acceptance speech, checked out the podium and now he's just waiting for his turn in the spotlight. It is day three of the DNC. So let's head live to Boston and our national correspondent, Bob Franken -- good morning, Bob.

BOB FRANKEN, CNN NATIONAL CORRESPONDENT: Well, he's decided to show us he does things a little bit differently. He decided he'd come here late at night last night and check out the podium. We're talking about the main event of the night, and that would be John Edwards.

He came in around midnight, came to check the hall where he's going to be speaking to the delegates this evening. He will be presenting his family and, of course, speaking laudably about his running mate, John Kerry.

A load of speakers last night. And probably the one who gained the most attention -- no probably about it -- the most curiosity certainly was the last one of the night, Teresa Heinz Kerry.

(BEGIN VIDEO CLIP)

TERESA HEINZ KERRY, JOHN KERRY'S WIFE: And John is a fighter. He earned his medals the old-fashioned way, by putting his life on the line for his country. And no one will defend this nation more vigorously than he will. And he will always, always be first in the line of fire.

(END VIDEO CLIP)

FRANKEN: Well, in Philadelphia, the husband of was watching his wife. John Kerry said, "Nice job." Of course he's going to say nice job. He expressed his approval, of course.

Meanwhile, back here at the convention, quite an interesting lineup of speakers. Barack Obama was the keynote speaker, rather. He is such an interesting story. He is the one who was born of a Kenyan and an American and now is running for the Senate in Illinois. Not the only speaker of the night.

There was Howard Dean, you remember him, the man who was going to fight? Well, he's going to carry the fight for John Kerry. He says he would love to have been speaking on Thursday night, but this will just have to do.

And there was Edward Kennedy. Edward Kennedy sort of the sentimental speaker of the evening, telling the people that he, too, must work very, very hard, everybody must work very hard and be very united in the cause for John Kerry.

And Carol, on Thursday night it's John Kerry, but there's quite this huge buildup and so far, for the most part, the Democrats are being true to their orders from above, which is to be nice, not say very many nasty things about President Bush. Not many, anyway.

COSTELLO: Not many, anyway.

Bob, let's go back to Teresa Heinz Kerry for just a minute. It's very unusual for a candidate's wife to speak in such a prominent place.

What was the reasoning behind that?

FRANKEN: Well, I think there's a big curiosity about Teresa Heinz Kerry and they believe, probably, that she would probably draw an audience. We'll have to see. They're going to do whatever they can to draw an audience.

COSTELLO: Now, you would think Mr. Obama would be put there, because he was great.

FRANKEN: He was the keynote speaker. He was where the keynote speaker usually speaks.

COSTELLO: All right, Bob Franken live in Boston this morning.

Among tonight's speakers, New Mexico Governor Bill Richardson, former presidential candidates Al Sharpton and Dennis Kucinich, and John Edwards, who will give his speech accepting the nomination for vice president. John Edwards gives his V.P. speech at 10:00 Eastern tonight. Of course, we'll be there for you. At 11:00, Aaron Brown wraps up tonight's happenings and Larry King follows at midnight with a live show from the floor of the Fleet Center.

The Senate is wasting little time in considering the 9/11 Commission's report. The Senate Governmental Affairs Committee moved up next week's planned hearing to Friday. Among the recommendations they'll consider is a new intelligence chief and a counter-terrorism command center.

CNN congressional correspondent Ed Henry has more on the report and the pressure to act immediately.

(BEGIN VIDEOTAPE)

ED HENRY, CNN CORRESPONDENT (voice-over): On his way to Boston, John Kerry is hammering President Bush over the 9/11 commission's final report.

KERRY: You can't treat the commission's report as something that you hope will go away, because this threat won't go away and the recommendations of the commission make sense and they should be implemented now.

(APPLAUSE)

HENRY: Republicans stress the president is on top of the situation, discussing the 9/11 report with National Security Adviser Condoleezza Rice in Texas. And in a visit with Marines at Camp Pendleton, Vice President Cheney said the administration's approach to the war on terror is the right one.

DICK CHENEY, VICE PRESIDENT OF THE UNITED STATES: Terrorist attacks are not caused by the use of strength. They are invited by the perception of weakness.

HENRY: The Kerry camp released a memo charging -- quote -- "In an act of political gymnastics remarkable even for this White House, the Bush campaign is using the report it has yet to embrace written by a commission that it originally opposed to justify its reelection effort."

And Kerry wants the commission, whose mandate expires in August, to get an 18-month extension to oversee, monitor and track implementation of the reform proposals, a move the White House refused to endorse. The jockeying over who will embrace the commission's proposals first has gotten intense.

DR. PAUL LIGHT, BROOKINGS INSTITUTION: I think there's just tremendous political pressure for both parties to get ahead on the issue. National security is a big campaign issue for John Kerry, and it's a big strength for George Bush. And the party that gets there first is going to be the party that gets some votes.

(END VIDEOTAPE)

COSTELLO: And the 9/11 Commission's report is a success, at least for publishers. Another 200,000 copies have been ordered. The book has hit the top of Amazon.com's non-fiction best seller lists and it's number one at Barnes & Noble, as well. There's also a plan to translate the report into four languages, including Arabic. For those who don't want to spend the $10, the full text of the report is available both on the commission's Web site and on cnn.com.

America On Alert this morning. An Islamic charity and seven of its officials have been charged in a terror financing probe of Hamas. The U.S. has designated the Palestinian group as a terrorist organization. The Holy Land Foundation is based in Richardson, Texas. The government froze the group's assets shortly after the 9/11 attacks, when it was identified as a major financial backer of Hamas.

Updating you now on a story we told you about yesterday, a United Airlines plane returned safely to Sydney, Australia after a possible bomb threat was discovered on the flight heading to L.A. Transportation security officials say that what caused all the commotion was an air sickness bag with either "bomb" or "Bob" written on the outside. "Bomb" or "Bob," they don't know which.

The National Transportation Safety Board wants all civilian planes to be equipped with cameras in the cockpit. They're holding hearings today on that issue. But airline pilots are strongly opposed to such a plan, saying a camera is intrusive and can affect their ability to work. The NTSB says cameras produce the fastest and most accurate information about aviation crashes.

A driver pulled over for a traffic stop in Iowa tells state troopers he knows about a terrorist plan to shoot up trains in San Diego. He also told police he has knowledge of people and groups tied to al Qaeda and the Taliban. Forty-four-year-old Michael Wagner is being held without bail this morning. A search of his vehicle turned up light training manuals and software, bulletproof vests, night vision goggles, a gun and some ammunition. Terror has struck again in Iraq. More than 100 people are dead and wounded in a suicide car bomb attack in the City of Ba'qubah.

We take you live to Baghdad for more and Michael Holmes -- bring us up to date, Michael.

MICHAEL HOLMES, CNN CORRESPONDENT: Hi, Carol.

Yes, it happened at 9:40 a.m. local time, just a few hours ago. A very busy time of day in a very busy part of town. Now, Ba'qubah is about 55 kilometers northeast of us here in Baghdad. What happened was a bus loaded with explosives drove into the crowd of people and detonated.

Now, this is an area where there is a police station. There were about 200 or so people lining up to join the police force, recruits. And they were among the casualties. But also a lot of other people, too. There is a market nearby, shops and businesses. And among the dead, I can tell you, 21 passengers on board another bus that was caught up in this as it drove past the bomb scene.

Now, Ba'qubah is a mixed Sunni and Shia town. It is a place that has seen numerous attacks -- bombings, suicide missions, shootings and the like -- over the last days and months. And, as I say, this was in the middle of town, in a very busy part of town.

There's been a lot of other smaller explosions around Iraq today. And perhaps one reason might be that this, Carol, is the one month anniversary of the hand over of power to the Iraqi interim administration.

COSTELLO: You know, Michael, I was just wondering about security, not that you can really stop a suicide car bomber.

But was there Iraqi security around that police recruit station?

HOLMES: There usually is a perimeter of sorts. It's certainly not as big or as effective as you'll see around U.S. military bases. Usually there is some level of security barriers and the like, but it's nothing like what you'd see with the military bases, no. And, as you say, a lot of these places are on streets and all it takes is somebody to just drive up and detonate. It's the most difficult thing to protect against when you're at that first line of defense and the defenses aren't all that great to start with -- Carol.

COSTELLO: Michael Holmes live in Baghdad.

Thank you.

Well, there is much more DAYBREAK ahead for you this Wednesday morning.

We're going to get the view from the Arab world on news that Egypt may have paid a huge ransom to kidnappers in Iraq.

The jury in the Scott Peterson murder trial gets a close look at a key piece of evidence. We'll get you an update.

And a frisky killer whale improvises during a show at Sea World.

This is DAYBREAK for Wednesday, July 28.

(COMMERCIAL BREAK)

COSTELLO: The Dow was up more than 123 points at the closing bell. This morning's open sees the Dow's biggest percentage gain since early June. For constant market updates throughout your day, just keep an eye on our futures plug in the lower right hand corner of your screen.

Time for a little business buzz right now.

U.S. Airways is preparing for a major overhaul of its operations.

Carrie Lee has that story.

She's live at the Nasdaq market site -- good morning.

CARRIE LEE, CNN CORRESPONDENT: Hi, Carol.

Well, we knew this was going to come sooner or later, big carriers really shifting the way they do business. And that's what's happening at U.S. Airways, planning a major overhaul. The carrier is going to concentrate on direct flights to and from major airports on the East Coast, such as Boston, New York, Washington and Philadelphia, which is its busiest destination.

Also, they're going to dismantle their hub in Pittsburgh, which is one of its key hubs, and they're going to move into the highly competitive New York to Florida market.

So really U.S. Airways mimicking some of the low fare carriers such as Southwest and JetBlue, which, in general, have been more successful than the big names.

Now, there is a but in this story. If the airline doesn't get $800 million a year in wage concessions, then these plans may not follow through.

Interesting to note, U.S. Airways did report a $34 million profit in the recent quarter, usually the carrier's strongest. We'll see what happens. If they don't get these cuts and if these plans don't go through, they may have to go back into bankruptcy protection.

But, Carol, the fact that they are kind of getting rid of this hub and spoke system, revamping their business model, well, it will be interesting to see if other big carriers do the same, take a cue from their low cost brethren -- back to you.

COSTELLO: Well, it will be interesting to see what their employees do, because they already took a pay cut, didn't they?

LEE: They did. And this is happening across the board. High labor costs, high fuel costs really dragging down, if you will, this whole sector, at least the big names.

Quickly, turning to stocks, we are expecting a pretty weak open to this morning right now, especially for technology issues. Time Warner, our parent company, though, is moving a bit higher in the pre- market. The company did better than expected on the bottom line for profits, earning $0.19 a share versus $0.12 last year.

We'll see what it does today -- Carol.

COSTELLO: Thank you.

Carrie Lee live from the Nasdaq market site.

Your news, money, weather and sports.

It is 6:17 Eastern.

Here's what's all new this morning.

At least 51 Iraqis are dead following a suicide bomb attack on a crowded marketplace. Another 68 people were injured in the blast in Ba'qubah. Ba'qubah is about 30 miles north of Baghdad.

Foam insulation will no longer be used on some parts of the fuel tanks that go on future space shuttle missions. A falling piece of that foam was blamed for causing the Shuttle Columbia disaster.

In money news, First Energy has agreed to pay nearly $90 million to settle two lawsuits brought by shareholders. The suits stem from last summer's huge blackouts in the Northeast and Midwest and from disputed accounting practices.

In culture, pop star Usher announced the MTV nominations Tuesday and rapper Jay-Z just may be the new king of pop. Jay-Z got six MTV Video Music Award nominations. His some time girlfriend, Beyonce, pulled down five nominations of her own. The awards will be broadcast live on August 29.

In sports, first round draft pick Sean Taylor signed a deal with the Washington Redskins. After incentives, get this, the deal could be worth as much as $40 million over the next seven years. Taylor is the highest draft pick to be signed so far.

Training camp opens soon, Rob.

MARCIANO: Yes. It's almost football season. $40 million, you know, but their life span or career is only about 10 years, so that's, you know, that's really not a whole lot.

COSTELLO: Oh, no, not at all.

MARCIANO: They have to stock it away.

COSTELLO: Yes.

MARCIANO: God bless him. Good for him.

(WEATHER REPORT)

COSTELLO: Those are the latest headlines for you.

An Egyptian diplomat being held captive in Iraq was freed this week. Egyptian officials in Cairo and Washington are strongly denying that any ransom was paid. Also, for the first time ever, the Arab world is getting a ringside seat from the inside of the American political conventions.

CNN's senior editor for Arab affairs, Octavia Nasr, joins us now with the Arab voice -- good morning.

OCTAVIA NASR, CNN CORRESPONDENT: Good morning to you, Carol.

COSTELLO: Let's talk about this ransom first off, because there's some controversy surrounding that, whether they paid it or not.

NASR: Right. The Arab media picked up on something very interesting. The first thing out of the mouth of this former hostage is "no ransom was paid." And as soon as that happened, CNN got two sources to confirm that hundreds of thousands of dollars exchanged hands in order to release the hostage. You're looking at him here. His name is Mohammed Mamdouh. He is number three at the Egyptian embassy in Baghdad.

Now, of course, as you mentioned, the Egyptian government is denying that any ransom was paid. The U.S. government is repeating that line because they're getting their information from the Egyptian government. Now, our sources indicated hundreds of thousands of dollars did exchange hands.

Arab media are saying is it believable? Could a ransom have been paid? They're saying of course, it could be believed, but we may never know.

COSTELLO: But isn't the latest word from the kidnappers, I mean they let this guy go because he was polite? That's really not very believable either.

NASR: Arab media, again, are not buying this business of releasing him on good behavior, sort of, he was polite and well behaved. This whole scenario is, you know, going to be looked at much, much closer. You know, this whole business of hostage taking in Iraq is getting a little bit out of hand.

If you watch Arab media and you read Arab press, they're saying this is becoming a business, people take anybody hostage, anybody they can get their hands on is going to be taken hostage then tapes are released. Who knows if these tapes are being sold on the streets of Baghdad, how much money these hostage takers are making out of this whole business?

And then if ransoms are going to be paid, Arab observers are warning that this business could become a very dangerous one.

COSTELLO: Boy, you're not kidding.

We want to talk about the conventions, because I know Al Jazeera is covering the Democratic national convention and it's airing on Arab television.

What's it like?

NASR: Well, Al Jazeera is covering the DNC convention in a big, big way. They got a sky box seat, just like CNN and the other major networks. They're covering the story in a big way. They have entire shows around the convention. They've taken some of the speeches live. You can guess sort of which speeches, you know, the Carter speech, the Clinton speech. These are very popular men in the Middle East and the Arab media are picking on it, of course, Al Jazeera especially.

COSTELLO: And so their viewers are really quite interested in this?

NASR: Very interested. Now, again, you know, we have to put things into perspective. They're not covering the Democratic national convention wall to wall, every hour on the hour. They have reports here, they have live shots there. But their main shows, especially on Al Jazeera, is going full speed with the convention, taking some of the speeches, analyzing the convention, where the Democrats are, what they offer the Arab world and so forth. Extensive coverage.

COSTELLO: Are they going to cover the Republican national convention?

NASR: I bet.

COSTELLO: You can bet. OK.

NASR: Yes.

COSTELLO: Octavia Nasr, thank you for joining DAYBREAK this morning.

NASR: Thank you.

COSTELLO: A moral and ethical dilemma for some plays out on the political stage. Ron Reagan, Jr. speaks out about stem cell research to the Democratic national convention. What's the science behind that debate?

Plus, amazing video. If you haven't seen it yet, a Sea World struggle between a killer whale and its trainer.

And our DAYBREAK Photo of the Day. What is it? We'll tell you after the break.

(COMMERCIAL BREAK)

COSTELLO: We're going to take you live to Egypt right now. The Egyptian foreign minister is talking to reporters, along with Secretary of State Colin Powell.

He's talking about the hostage takers in Iraq and the alleged ransom paid to free an Egyptian diplomat.

Let's listen in.

AHMED MAHER, EGYPTIAN FOREIGN MINISTER: And most probably you will also be attending the quartet's meeting in York when the quartets would meet. And there is that kind of willingness and determination to pursue the peace process and to prepare the ground for the withdrawal of the Israeli forces from Gaza and the Egyptian initiative to be implemented toward helping that withdrawal.

Secretary?

COLIN POWELL, SECRETARY OF STATE: Well, thank you very much, Ahmed, Mr. Minister.

It's a great pleasure to be back in Cairo and I congratulate you on your assumption of the office of foreign minister.

MAHER: Thank you.

POWELL: We've known each other for quite a while.

MAHER: A while, yes.

POWELL: For many years. And now to have the privilege of working with you as a foreign minister is really a privilege and I look forward to it.

MAHER: Thank you.

POWELL: As the minister mentioned, we had very good discussions. I had excellent discussions earlier in the day with President Mubarak and excellent discussions, as well, with the new prime minister. And I was particularly impressed at the commitment that the new prime minister has made to economic reform. And we had a good discussion on issues relating to privatization and other forms of reform within the economic environment of Egypt.

The minister and I, as he noted, as well as with the president earlier, we discussed the Middle East peace process, we discussed Iraq. I expressed my thanks and appreciation to Egypt for their offer to help train Iraqi forces as part of the whole process of getting the Iraqis up to the point to where they can protect and defend themselves against these forces that are trying to deny the Iraqi people a life of hope and a life of peace and a society and political system resting on a solid foundation of democracy.

We also talked about the desperate situation in the Darfur region of Sudan and the president and the minister have assured me that they will be playing an active role in doing everything that we can within the international community to help these people in need and to encourage the government in Sudan to do more.

On a bilateral basis, our relationship is very sound. I think that is evidence...

COSTELLO: OK, we're going to jump away right now.

This is Secretary of State Colin Powell, speaking along with the Egyptian foreign minister in Cairo, Egypt.

We'll keep monitoring this press conference.

If anything comes out of it, of course, we'll pass it along to you.

Here's what's all new in the next half hour.

The woman who hopes to be the first lady took center stage last night. But keynote address is what many people in Boston are still talking about. We'll recap some of last night's convention speeches for you.

And a medical issue turned political -- what exactly is stem cell research and why are the Democrats so in favor of it?

And instant details from reporters on the scene -- not CNN correspondents, but Web bloggers. The fascination with this new technology, coming up.

This is DAYBREAK.

(COMMERCIAL BREAK)

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Aired July 28, 2004 - 06:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL COSTELLO, CNN ANCHOR: The theme of the night could have been Democrats old and new. The convention brings a variety of voices to the stage.
It is Wednesday, July 28.

This is DAYBREAK.

And good morning to you.

From the CNN Global Headquarters in Atlanta, I'm Carol Costello.

Now in the news, a morning shattered by a suicide car bomb. It happened a little more than four hours ago in Ba'qubah, which is north of Baghdad. At least 51 people are dead this morning, 68 more wounded. Many of the victims were waiting to sign up as police officers. We'll take you live to Iraq in 10 minutes.

A military hearing is being held this morning at Fort Carson, Colorado. It's to see if three soldiers with the 4th Infantry Division will be court-martialed in the case of an assault on two Iraqis, one of whom died.

Search crews have been at it for a second straight night in a row, looking in a Salt Lake City landfill for a woman missing more than a week. These are live pictures we're bringing you from Salt Lake City now. Lori Hacking was reported missing July 19.

Millions of people across South Asia have been forced out of their homes by flooding, the worst in Bangladesh in six years. At least 1,100 people have been killed in India, Nepal, Pakistan and Bangladesh.

Keeping you informed, CNN, the most trusted name in news -- good morning, Rob.

ROB MARCIANO, CNN CORRESPONDENT: Good morning, Carol.

That's the monsoon, but as you said, the worst in over a decade.

(WEATHER REPORT)

COSTELLO: John Edwards is in Boston this morning. He has written his acceptance speech, checked out the podium and now he's just waiting for his turn in the spotlight. It is day three of the DNC. So let's head live to Boston and our national correspondent, Bob Franken -- good morning, Bob.

BOB FRANKEN, CNN NATIONAL CORRESPONDENT: Well, he's decided to show us he does things a little bit differently. He decided he'd come here late at night last night and check out the podium. We're talking about the main event of the night, and that would be John Edwards.

He came in around midnight, came to check the hall where he's going to be speaking to the delegates this evening. He will be presenting his family and, of course, speaking laudably about his running mate, John Kerry.

A load of speakers last night. And probably the one who gained the most attention -- no probably about it -- the most curiosity certainly was the last one of the night, Teresa Heinz Kerry.

(BEGIN VIDEO CLIP)

TERESA HEINZ KERRY, JOHN KERRY'S WIFE: And John is a fighter. He earned his medals the old-fashioned way, by putting his life on the line for his country. And no one will defend this nation more vigorously than he will. And he will always, always be first in the line of fire.

(END VIDEO CLIP)

FRANKEN: Well, in Philadelphia, the husband of was watching his wife. John Kerry said, "Nice job." Of course he's going to say nice job. He expressed his approval, of course.

Meanwhile, back here at the convention, quite an interesting lineup of speakers. Barack Obama was the keynote speaker, rather. He is such an interesting story. He is the one who was born of a Kenyan and an American and now is running for the Senate in Illinois. Not the only speaker of the night.

There was Howard Dean, you remember him, the man who was going to fight? Well, he's going to carry the fight for John Kerry. He says he would love to have been speaking on Thursday night, but this will just have to do.

And there was Edward Kennedy. Edward Kennedy sort of the sentimental speaker of the evening, telling the people that he, too, must work very, very hard, everybody must work very hard and be very united in the cause for John Kerry.

And Carol, on Thursday night it's John Kerry, but there's quite this huge buildup and so far, for the most part, the Democrats are being true to their orders from above, which is to be nice, not say very many nasty things about President Bush. Not many, anyway.

COSTELLO: Not many, anyway.

Bob, let's go back to Teresa Heinz Kerry for just a minute. It's very unusual for a candidate's wife to speak in such a prominent place.

What was the reasoning behind that?

FRANKEN: Well, I think there's a big curiosity about Teresa Heinz Kerry and they believe, probably, that she would probably draw an audience. We'll have to see. They're going to do whatever they can to draw an audience.

COSTELLO: Now, you would think Mr. Obama would be put there, because he was great.

FRANKEN: He was the keynote speaker. He was where the keynote speaker usually speaks.

COSTELLO: All right, Bob Franken live in Boston this morning.

Among tonight's speakers, New Mexico Governor Bill Richardson, former presidential candidates Al Sharpton and Dennis Kucinich, and John Edwards, who will give his speech accepting the nomination for vice president. John Edwards gives his V.P. speech at 10:00 Eastern tonight. Of course, we'll be there for you. At 11:00, Aaron Brown wraps up tonight's happenings and Larry King follows at midnight with a live show from the floor of the Fleet Center.

The Senate is wasting little time in considering the 9/11 Commission's report. The Senate Governmental Affairs Committee moved up next week's planned hearing to Friday. Among the recommendations they'll consider is a new intelligence chief and a counter-terrorism command center.

CNN congressional correspondent Ed Henry has more on the report and the pressure to act immediately.

(BEGIN VIDEOTAPE)

ED HENRY, CNN CORRESPONDENT (voice-over): On his way to Boston, John Kerry is hammering President Bush over the 9/11 commission's final report.

KERRY: You can't treat the commission's report as something that you hope will go away, because this threat won't go away and the recommendations of the commission make sense and they should be implemented now.

(APPLAUSE)

HENRY: Republicans stress the president is on top of the situation, discussing the 9/11 report with National Security Adviser Condoleezza Rice in Texas. And in a visit with Marines at Camp Pendleton, Vice President Cheney said the administration's approach to the war on terror is the right one.

DICK CHENEY, VICE PRESIDENT OF THE UNITED STATES: Terrorist attacks are not caused by the use of strength. They are invited by the perception of weakness.

HENRY: The Kerry camp released a memo charging -- quote -- "In an act of political gymnastics remarkable even for this White House, the Bush campaign is using the report it has yet to embrace written by a commission that it originally opposed to justify its reelection effort."

And Kerry wants the commission, whose mandate expires in August, to get an 18-month extension to oversee, monitor and track implementation of the reform proposals, a move the White House refused to endorse. The jockeying over who will embrace the commission's proposals first has gotten intense.

DR. PAUL LIGHT, BROOKINGS INSTITUTION: I think there's just tremendous political pressure for both parties to get ahead on the issue. National security is a big campaign issue for John Kerry, and it's a big strength for George Bush. And the party that gets there first is going to be the party that gets some votes.

(END VIDEOTAPE)

COSTELLO: And the 9/11 Commission's report is a success, at least for publishers. Another 200,000 copies have been ordered. The book has hit the top of Amazon.com's non-fiction best seller lists and it's number one at Barnes & Noble, as well. There's also a plan to translate the report into four languages, including Arabic. For those who don't want to spend the $10, the full text of the report is available both on the commission's Web site and on cnn.com.

America On Alert this morning. An Islamic charity and seven of its officials have been charged in a terror financing probe of Hamas. The U.S. has designated the Palestinian group as a terrorist organization. The Holy Land Foundation is based in Richardson, Texas. The government froze the group's assets shortly after the 9/11 attacks, when it was identified as a major financial backer of Hamas.

Updating you now on a story we told you about yesterday, a United Airlines plane returned safely to Sydney, Australia after a possible bomb threat was discovered on the flight heading to L.A. Transportation security officials say that what caused all the commotion was an air sickness bag with either "bomb" or "Bob" written on the outside. "Bomb" or "Bob," they don't know which.

The National Transportation Safety Board wants all civilian planes to be equipped with cameras in the cockpit. They're holding hearings today on that issue. But airline pilots are strongly opposed to such a plan, saying a camera is intrusive and can affect their ability to work. The NTSB says cameras produce the fastest and most accurate information about aviation crashes.

A driver pulled over for a traffic stop in Iowa tells state troopers he knows about a terrorist plan to shoot up trains in San Diego. He also told police he has knowledge of people and groups tied to al Qaeda and the Taliban. Forty-four-year-old Michael Wagner is being held without bail this morning. A search of his vehicle turned up light training manuals and software, bulletproof vests, night vision goggles, a gun and some ammunition. Terror has struck again in Iraq. More than 100 people are dead and wounded in a suicide car bomb attack in the City of Ba'qubah.

We take you live to Baghdad for more and Michael Holmes -- bring us up to date, Michael.

MICHAEL HOLMES, CNN CORRESPONDENT: Hi, Carol.

Yes, it happened at 9:40 a.m. local time, just a few hours ago. A very busy time of day in a very busy part of town. Now, Ba'qubah is about 55 kilometers northeast of us here in Baghdad. What happened was a bus loaded with explosives drove into the crowd of people and detonated.

Now, this is an area where there is a police station. There were about 200 or so people lining up to join the police force, recruits. And they were among the casualties. But also a lot of other people, too. There is a market nearby, shops and businesses. And among the dead, I can tell you, 21 passengers on board another bus that was caught up in this as it drove past the bomb scene.

Now, Ba'qubah is a mixed Sunni and Shia town. It is a place that has seen numerous attacks -- bombings, suicide missions, shootings and the like -- over the last days and months. And, as I say, this was in the middle of town, in a very busy part of town.

There's been a lot of other smaller explosions around Iraq today. And perhaps one reason might be that this, Carol, is the one month anniversary of the hand over of power to the Iraqi interim administration.

COSTELLO: You know, Michael, I was just wondering about security, not that you can really stop a suicide car bomber.

But was there Iraqi security around that police recruit station?

HOLMES: There usually is a perimeter of sorts. It's certainly not as big or as effective as you'll see around U.S. military bases. Usually there is some level of security barriers and the like, but it's nothing like what you'd see with the military bases, no. And, as you say, a lot of these places are on streets and all it takes is somebody to just drive up and detonate. It's the most difficult thing to protect against when you're at that first line of defense and the defenses aren't all that great to start with -- Carol.

COSTELLO: Michael Holmes live in Baghdad.

Thank you.

Well, there is much more DAYBREAK ahead for you this Wednesday morning.

We're going to get the view from the Arab world on news that Egypt may have paid a huge ransom to kidnappers in Iraq.

The jury in the Scott Peterson murder trial gets a close look at a key piece of evidence. We'll get you an update.

And a frisky killer whale improvises during a show at Sea World.

This is DAYBREAK for Wednesday, July 28.

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COSTELLO: The Dow was up more than 123 points at the closing bell. This morning's open sees the Dow's biggest percentage gain since early June. For constant market updates throughout your day, just keep an eye on our futures plug in the lower right hand corner of your screen.

Time for a little business buzz right now.

U.S. Airways is preparing for a major overhaul of its operations.

Carrie Lee has that story.

She's live at the Nasdaq market site -- good morning.

CARRIE LEE, CNN CORRESPONDENT: Hi, Carol.

Well, we knew this was going to come sooner or later, big carriers really shifting the way they do business. And that's what's happening at U.S. Airways, planning a major overhaul. The carrier is going to concentrate on direct flights to and from major airports on the East Coast, such as Boston, New York, Washington and Philadelphia, which is its busiest destination.

Also, they're going to dismantle their hub in Pittsburgh, which is one of its key hubs, and they're going to move into the highly competitive New York to Florida market.

So really U.S. Airways mimicking some of the low fare carriers such as Southwest and JetBlue, which, in general, have been more successful than the big names.

Now, there is a but in this story. If the airline doesn't get $800 million a year in wage concessions, then these plans may not follow through.

Interesting to note, U.S. Airways did report a $34 million profit in the recent quarter, usually the carrier's strongest. We'll see what happens. If they don't get these cuts and if these plans don't go through, they may have to go back into bankruptcy protection.

But, Carol, the fact that they are kind of getting rid of this hub and spoke system, revamping their business model, well, it will be interesting to see if other big carriers do the same, take a cue from their low cost brethren -- back to you.

COSTELLO: Well, it will be interesting to see what their employees do, because they already took a pay cut, didn't they?

LEE: They did. And this is happening across the board. High labor costs, high fuel costs really dragging down, if you will, this whole sector, at least the big names.

Quickly, turning to stocks, we are expecting a pretty weak open to this morning right now, especially for technology issues. Time Warner, our parent company, though, is moving a bit higher in the pre- market. The company did better than expected on the bottom line for profits, earning $0.19 a share versus $0.12 last year.

We'll see what it does today -- Carol.

COSTELLO: Thank you.

Carrie Lee live from the Nasdaq market site.

Your news, money, weather and sports.

It is 6:17 Eastern.

Here's what's all new this morning.

At least 51 Iraqis are dead following a suicide bomb attack on a crowded marketplace. Another 68 people were injured in the blast in Ba'qubah. Ba'qubah is about 30 miles north of Baghdad.

Foam insulation will no longer be used on some parts of the fuel tanks that go on future space shuttle missions. A falling piece of that foam was blamed for causing the Shuttle Columbia disaster.

In money news, First Energy has agreed to pay nearly $90 million to settle two lawsuits brought by shareholders. The suits stem from last summer's huge blackouts in the Northeast and Midwest and from disputed accounting practices.

In culture, pop star Usher announced the MTV nominations Tuesday and rapper Jay-Z just may be the new king of pop. Jay-Z got six MTV Video Music Award nominations. His some time girlfriend, Beyonce, pulled down five nominations of her own. The awards will be broadcast live on August 29.

In sports, first round draft pick Sean Taylor signed a deal with the Washington Redskins. After incentives, get this, the deal could be worth as much as $40 million over the next seven years. Taylor is the highest draft pick to be signed so far.

Training camp opens soon, Rob.

MARCIANO: Yes. It's almost football season. $40 million, you know, but their life span or career is only about 10 years, so that's, you know, that's really not a whole lot.

COSTELLO: Oh, no, not at all.

MARCIANO: They have to stock it away.

COSTELLO: Yes.

MARCIANO: God bless him. Good for him.

(WEATHER REPORT)

COSTELLO: Those are the latest headlines for you.

An Egyptian diplomat being held captive in Iraq was freed this week. Egyptian officials in Cairo and Washington are strongly denying that any ransom was paid. Also, for the first time ever, the Arab world is getting a ringside seat from the inside of the American political conventions.

CNN's senior editor for Arab affairs, Octavia Nasr, joins us now with the Arab voice -- good morning.

OCTAVIA NASR, CNN CORRESPONDENT: Good morning to you, Carol.

COSTELLO: Let's talk about this ransom first off, because there's some controversy surrounding that, whether they paid it or not.

NASR: Right. The Arab media picked up on something very interesting. The first thing out of the mouth of this former hostage is "no ransom was paid." And as soon as that happened, CNN got two sources to confirm that hundreds of thousands of dollars exchanged hands in order to release the hostage. You're looking at him here. His name is Mohammed Mamdouh. He is number three at the Egyptian embassy in Baghdad.

Now, of course, as you mentioned, the Egyptian government is denying that any ransom was paid. The U.S. government is repeating that line because they're getting their information from the Egyptian government. Now, our sources indicated hundreds of thousands of dollars did exchange hands.

Arab media are saying is it believable? Could a ransom have been paid? They're saying of course, it could be believed, but we may never know.

COSTELLO: But isn't the latest word from the kidnappers, I mean they let this guy go because he was polite? That's really not very believable either.

NASR: Arab media, again, are not buying this business of releasing him on good behavior, sort of, he was polite and well behaved. This whole scenario is, you know, going to be looked at much, much closer. You know, this whole business of hostage taking in Iraq is getting a little bit out of hand.

If you watch Arab media and you read Arab press, they're saying this is becoming a business, people take anybody hostage, anybody they can get their hands on is going to be taken hostage then tapes are released. Who knows if these tapes are being sold on the streets of Baghdad, how much money these hostage takers are making out of this whole business?

And then if ransoms are going to be paid, Arab observers are warning that this business could become a very dangerous one.

COSTELLO: Boy, you're not kidding.

We want to talk about the conventions, because I know Al Jazeera is covering the Democratic national convention and it's airing on Arab television.

What's it like?

NASR: Well, Al Jazeera is covering the DNC convention in a big, big way. They got a sky box seat, just like CNN and the other major networks. They're covering the story in a big way. They have entire shows around the convention. They've taken some of the speeches live. You can guess sort of which speeches, you know, the Carter speech, the Clinton speech. These are very popular men in the Middle East and the Arab media are picking on it, of course, Al Jazeera especially.

COSTELLO: And so their viewers are really quite interested in this?

NASR: Very interested. Now, again, you know, we have to put things into perspective. They're not covering the Democratic national convention wall to wall, every hour on the hour. They have reports here, they have live shots there. But their main shows, especially on Al Jazeera, is going full speed with the convention, taking some of the speeches, analyzing the convention, where the Democrats are, what they offer the Arab world and so forth. Extensive coverage.

COSTELLO: Are they going to cover the Republican national convention?

NASR: I bet.

COSTELLO: You can bet. OK.

NASR: Yes.

COSTELLO: Octavia Nasr, thank you for joining DAYBREAK this morning.

NASR: Thank you.

COSTELLO: A moral and ethical dilemma for some plays out on the political stage. Ron Reagan, Jr. speaks out about stem cell research to the Democratic national convention. What's the science behind that debate?

Plus, amazing video. If you haven't seen it yet, a Sea World struggle between a killer whale and its trainer.

And our DAYBREAK Photo of the Day. What is it? We'll tell you after the break.

(COMMERCIAL BREAK)

COSTELLO: We're going to take you live to Egypt right now. The Egyptian foreign minister is talking to reporters, along with Secretary of State Colin Powell.

He's talking about the hostage takers in Iraq and the alleged ransom paid to free an Egyptian diplomat.

Let's listen in.

AHMED MAHER, EGYPTIAN FOREIGN MINISTER: And most probably you will also be attending the quartet's meeting in York when the quartets would meet. And there is that kind of willingness and determination to pursue the peace process and to prepare the ground for the withdrawal of the Israeli forces from Gaza and the Egyptian initiative to be implemented toward helping that withdrawal.

Secretary?

COLIN POWELL, SECRETARY OF STATE: Well, thank you very much, Ahmed, Mr. Minister.

It's a great pleasure to be back in Cairo and I congratulate you on your assumption of the office of foreign minister.

MAHER: Thank you.

POWELL: We've known each other for quite a while.

MAHER: A while, yes.

POWELL: For many years. And now to have the privilege of working with you as a foreign minister is really a privilege and I look forward to it.

MAHER: Thank you.

POWELL: As the minister mentioned, we had very good discussions. I had excellent discussions earlier in the day with President Mubarak and excellent discussions, as well, with the new prime minister. And I was particularly impressed at the commitment that the new prime minister has made to economic reform. And we had a good discussion on issues relating to privatization and other forms of reform within the economic environment of Egypt.

The minister and I, as he noted, as well as with the president earlier, we discussed the Middle East peace process, we discussed Iraq. I expressed my thanks and appreciation to Egypt for their offer to help train Iraqi forces as part of the whole process of getting the Iraqis up to the point to where they can protect and defend themselves against these forces that are trying to deny the Iraqi people a life of hope and a life of peace and a society and political system resting on a solid foundation of democracy.

We also talked about the desperate situation in the Darfur region of Sudan and the president and the minister have assured me that they will be playing an active role in doing everything that we can within the international community to help these people in need and to encourage the government in Sudan to do more.

On a bilateral basis, our relationship is very sound. I think that is evidence...

COSTELLO: OK, we're going to jump away right now.

This is Secretary of State Colin Powell, speaking along with the Egyptian foreign minister in Cairo, Egypt.

We'll keep monitoring this press conference.

If anything comes out of it, of course, we'll pass it along to you.

Here's what's all new in the next half hour.

The woman who hopes to be the first lady took center stage last night. But keynote address is what many people in Boston are still talking about. We'll recap some of last night's convention speeches for you.

And a medical issue turned political -- what exactly is stem cell research and why are the Democrats so in favor of it?

And instant details from reporters on the scene -- not CNN correspondents, but Web bloggers. The fascination with this new technology, coming up.

This is DAYBREAK.

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