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Lou Dobbs Tonight

Saudi Arabia Requests 9/11 Report be Declassified; Hung Jury in California Beating Trial

Aired July 29, 2003 - 18:00   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.


LOU DOBBS, HOST: Tonight: The Saudis want the White House to declassify the September 11 intelligence report. The president says, no way. What's at stake? Senator Richard Shelby joins us, as well as former Ambassador to Saudi Arabia Richard Murphy.
Saddam speaks. When will he be caught or killed?

Gay high schools: tolerance or segregation, progress or retreat?

Western states are in a drought, Europe and Asia in the grip of record heat waves. Are these new world weather patterns global warming?

And advertisers targeting kids, are there any limits? Our special report, "Selling America."

ANNOUNCER: This is LOU DOBBS TONIGHT for Tuesday, July 29. Here now, Lou Dobbs.

DOBBS: Good evening.

Tonight: a dramatic end to a police beating trial in California that provoked a storm of protests in the community. A judge declared a hung jury after jurors said they were hopelessly deadlocked. Former Inglewood police officer Jeremy Morse was caught on videotape slamming a teenage suspect on to the trunk of a patrol car and punching him in the face.

Thelma Gutierrez joins me live now from the courthouse in Los Angeles -- Thelma.

THELMA GUTIERREZ, CNN CORRESPONDENT: Lou, that count was 7-5. Seven jurors declared today that they found former police officer Jeremy Morse not guilty of assault under the color of authority.

Now, five said not guilty. Seven said they felt that he was guilty. Now, they told the judge that they were not able to reach a verdict, and so the judge declared a mistrial. Now, on count down, Officer Bijan Darvish was found not guilty of filing a false police report. Of course, all of this goes back more than a year ago to when this boy, at that time, 16-year-old Donovan Jackson was punched and thrown, slammed on top of a police car outside of a Thrifty gas station when his father was questioned for an expired license.

(BEGIN VIDEO CLIP) WILLIAM HOLLINGSWORTH JR., SUPERIOR COURT JUDGE: Count one, I'm going to declare the jury unable to reach a verdict and further deliberations would not resolve that problem. So I am declaring a hung jury as to count one.

UNIDENTIFIED MALE: People of the state of California vs. Bijan Darvish. We, the jury, in the above entitled action, find the defendant, Bijan Darvish, not guilty of the crime of filing a false report in violation of Penal Code section 118.1, as charged in count two of the information.

(END VIDEO CLIP)

GUTIERREZ: When the verdict was read, Bijan Darvish pounded his fists on the desk and screamed "Yes" in a sigh of relief. Now, the judge told him, "You will stop this." Darvish's mother sat right beside the mother of Jeremy Morse. They held hands throughout the whole time. They looked at each other. They breathed a sigh of relief.

And the mother did tell me that she felt that her son was innocent all along. She choked back tears. The father sat behind. He also had tears in his eyes, he said, of relief. At that point, several members of the community walked out of the courtroom. One screamed: "This is a joke. There is no justice for our people." Another woman, as she walked out, screamed, "Pig."

Now at that point, I turned around. I looked at Donovan Jackson. I noticed that he sat quietly. He did not show much response at all. Donovan Jackson's mother spoke a short time ago. She said that she will ask for a mistrial. And that is exactly what the attorney said as well as she presented herself outside here at the courthouse -- back to you, Lou.

DOBBS: Thelma, thank you very much -- Thelma Gutierrez reporting from outside the courtroom in Los Angeles.

The verdict, of course, as is always the case with hung juries, a surprise.

Now with his analysis, CNN's Jeffrey Toobin.

Jeffrey, good to have you here.

JEFFREY TOOBIN, CNN LEGAL ANALYST: Hi, Lou.

DOBBS: This verdict, 7-5, a surprising outcome, without question.

TOOBIN: Even for a hung jury, it's a surprise, because most hung juries tend to be 10-2, 11-1; 7-5 is a complete deadlock. It's no wonder the judge threw in the towel today.

DOBBS: Many people who have watched that videotape would have said, just on the basis of that tape itself, that officer Morse had to be -- former Officer Morse -- had to be guilty. What goes into the defense attorney's approach here that would render this kind of result?

TOOBIN: The defense in this case was much like the defense in the Rodney King case. It was a meticulous reconstruction of every single second, trying to justify the officer's actions at each point in the process, saying that he was responding to Mr. Donovan's actions.

That may be -- that was obviously good enough for five people. It wasn't good enough for 12. But also, in a larger sense, I think it just shows, again, that jurors tend to be very reluctant to find cops guilty of any sort of crimes.

DOBBS: But, in this case, Morse is a former cop, fired.

TOOBIN: He's been fired because of this incident. He's lost his job. That much is clear. But there is no criminal penalty coming to him yet.

Now, of course, the ball is in the court of the district attorney, Steve Cooley. Does he retry the officer? Does he try to work out a plea bargain? Or does he throw in the towel?

DOBBS: And with the verdict against Darvish being not guilty for filing a false report, doesn't that make the prosecution's efforts difficult indeed?

TOOBIN: It sure does.

And he's still an officer. He goes back on the force. And it's also a signal that this jury did not love this case. This was a problematic prosecution. Certainly, today counts overall as a win for the defense.

DOBBS: Jeffrey Toobin, thank you very much.

The message of defiance today in an audiotape attributed to Saddam Hussein: An Arab television network aired a tape calling upon Iraqis to avenge the deaths of Saddam Hussein's sons. There is no confirmation that this recording is authentic. Coalition forces in Iraq today arrested one of Saddam Hussein's bodyguards.

Senior Pentagon correspondent Barbara Starr joins me now with the story -- Barbara.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, Lou, indeed, more raids in Iraq today, that senior bodyguard seized, other security officials, including the man they believe to be the head of the Saddam Fedayeen, the paramilitary organization that officials believe has been responsible for so many of those attacks against U.S. soldiers.

Now, here at the Pentagon and on the ground in Iraq, officials do believe the noose is tightening. More information is coming in, these raids that they are staging every day and every night leading to better intelligence, more information about where Saddam may be hiding, but here at the Pentagon today, a press conference expressing just a serious note of caution about getting too excited just yet. (BEGIN VIDEO CLIP)

LT. GEN. NORTON SCHWARTZ, DIRECTOR FOR OPERATIONS, J-3 JOINT STAFF: I think we should not focus excessively on Saddam Hussein here. He is a high-value target, of course, of great interest. But the bottom line is, we're continuing to develop information. And we will pursue that information as it comes in. And do I believe that we will ultimately apprehend Saddam Hussein? I think that is the case.

(END VIDEO CLIP)

STARR: Now, officials, Lou, also said at the Pentagon today that there were no special instructions in anticipation of the day they do come across Saddam Hussein about trying to take him alive necessarily, to capture him alive to make sure they get any intelligence out of him, no special instructions one way or the other, that it would be up to Saddam whether he is taken alive or killed in a firefight with U.S. forces, if he refuses to surrender.

And General Schwartz also confirmed publicly for the first time that the U.S. now believes Saddam Hussein is relocating many times during the day and during the night, constantly on the move in Iraq. And they believe that they will eventually get him -- Lou.

DOBBS: And, Barbara, the raids and the search, the hunt, for Saddam Hussein are intensifying almost daily, are they not?

STARR: That's right.

The thing that has really changed, apparently, in the last several days since the killing of the two Hussein brothers is, the Iraqi people, apparently, feel much more confident coming to U.S. forces with information and intelligence. Many officials are saying now that they are getting better intelligence, more leads, more tips, and they are following up on all of them. And that's why they believe it will only be a matter of time until they get him.

DOBBS: Barbara Starr, thank you very much, reporting from the Pentagon.

Well, the Pentagon's policy in Iraq today came under severe criticism from several Democratic senators, their target, Deputy Defense Secretary Paul Wolfowitz, who gave testimony to the Senate Foreign Relations Committee . The senior Democrat on that committee, Senator Joe Biden, led the attack.

(BEGIN VIDEO CLIP)

SEN. JOSEPH BIDEN (D), DELAWARE: Give me a break, will you? When are going to you guys starting to be honest with us? Come on. This is ridiculous. You're not even...

PAUL WOLFOWITZ, DEPUTY DEFENSE SECRETARY: Senator, to suggest that this is an issue of honesty really is very misleading.

BIDEN: It is a suggestion of candor, of candor, of candor. You know there's going to be at least 100,000 American forces there for the next calendar year and you're not asking us for any money.

WOLFOWITZ: Senator, I don't know -- I don't know what we're going to have there.

BIDEN: Let me finish please. Let me finish.

WOLFOWITZ: OK.

BIDEN: And you are not asking us for any money in next year's budget for those troops. Now, what do you call that?

(END VIDEOTAPE)

DOBBS: Still ahead tonight: The Pentagon cancels a controversial program that might have been the best predictor of terrorism. Lisa Sylvester will report from Washington.

Also ahead: President Bush says classified portions of the September 11 report will remain sealed for national security reasons. Senior White House correspondent John King will report. And Senator Richard Shelby says those pages were classified only because the information might be embarrassing to certain countries. Senator Shelby is our guest tonight.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: The Pentagon today canceled a controversial program to establish a futures market on terrorist attacks before investors could in fact place their first investment. The idea was part of a program led by retired Admiral John Poindexter, no stranger to controversy, he, of course, a leading figure in the Iran-Contra scandal in the 1980s.

Lisa Sylvester reports from Washington.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): With the click of a button, investors could have been online at this Web site, when they thought the next terrorist attack would happen, the odds of a North Korea missile launch, or the number of American soldiers to be killed. The Pentagon's Defense Advanced Research Projects Agency, or DARPA, wanted to use the futures trading market to watch trends and track public opinion. Congressional lawmakers were flabbergasted when they heard the idea.

SEN. TOM DASCHLE (D-SD), MINORITY LEADER: For the life of me, I can't believe that anybody would seriously propose that we trade in death.

SYLVESTER: By mid-morning, the Pentagon yanked the online futures trading market.

LAWRENCE DI RITA, PENTAGON SPOKESMAN: The director has determined that this is a program that, under further scrutiny, probably doesn't deserve continued support.

SYLVESTER: But one economist who worked with the Pentagon on this program says the idea is not that farfetched, based on economic theory. If you want to predict an outcome, let the markets decide.

ROBIN HANSON, GEORGE MASON UNIVERSITY: Markets have consistently beat the alternatives at aggregating information. That doesn't mean we won't ever find something that works better. But in comparison to the National Weather Service forecast, orange juice futures have beat it.

SYLVESTER: In fact, the University of Iowa runs a futures market that, since 1988, has successfully predicted who will be the next president. But critics say terrorists could have manipulated the Pentagon's futures market and cashed in on the attacks.

And this is not DARPA's only controversial program. Another project called Total Information Awareness, also run by John Poindexter, a key figure in the 1980s Iran-Contra scandal, would allow the government to tap into databases to collect personal information, including medical and financial records. Now DARPA's critics have set their sights on killing this wide-ranging program.

SEN. RON WYDEN (D), OREGON: Much more needs to be done to rein in the runaway horse that is this terrorism information program.

(END VIDEOTAPE)

SYLVESTER: John Poindexter may have to worry about his job. Democrats are having a field day with this one. They say the people who thought up the futures trading proposal ought to not be on the public payroll -- Lou.

DOBBS: Lisa, thank you very much -- Lisa Sylvester reporting from Washington.

Well, still ahead, we'll be going back to Los Angeles, California. The two defendants in the beating case today, in which one officer was -- faced a hung jury and the other acquitted, will be moving to the microphones that you see there in those live pictures.

And former U.S. Ambassador to Saudi Arabia Richard Murphy says the Saudis are cooperating with the United States, despite serious questions about their involvement in September 11, Ambassador Murphy our guest.

And many of you wrote in to share your thoughts on the nation's first public high school for gay students. We'll have your thoughts.

And Heather McDonald, a fellow at the Manhattan Institute, joins us to discuss why high schools for gays is, in her opinion, a bad idea.

Also ahead: Those Texas Democrats are on the run again. They're hiding out this time trying to avoid a vote on -- yes -- redistricting. We'll have those stories and a great deal more still ahead.

Stay with us.

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

LARRY HAMILTON, BUREAU OF LAND MANAGEMENT NATIONAL DIRECTOR OF FIRE: If we get a lightning event, there is a real good possibility that we will get multiple fire starts.

BILL TUCKER, CNN CORRESPONDENT (voice-over): Prompted by severe weather and its potentially devastating consequences, the Bush administration announced an initiative to study climate change. The initiative involves 1,200 scientists and representatives from over 35 countries.

VICE ADMIRAL CONRAD LAUTENBACHER, NOAA: Obviously, there is a major concern around the world about climate variability and the potential for climate change and what it means in terms of economic and social impact.

TUCKER: The need for international cooperation is being underlined, as fires sweep through the French Riviera, roughly 20,000 acres of southern France's vacation region on fire, leaving four dead, as thousands of firefighters struggle and tens of thousands of people have been evacuated from their homes, the conditions exacerbated by no rain in two months, France suffering its worst drought in 25 years, the fires, inexplicably, apparently started by arsonists.

Europe is burning both literally and figuratively, caught in the throes of a devastating heat wave, a heat wave that has dried up parts of the Danube, sending it to its lowest level in 160 years, with 40 percent of the river's wetlands evaporated.

DAN BASSE, AG RESOURCE: It's been the worst drought in Europe and through Eastern Europe since 1976. Grain crops over there are under pressure. The E.U., which used to be a tremendous grain exporter, now looks to be an importer. And so that, along with a severe winter through the Ukraine and Russia, is producing some real supply pressures on the grain market over in Europe.

(END VIDEOTAPE)

TUCKER: Now, there is some relief for Arizona. July brought well-above-average rainfall, but it is nowhere near enough to bring an end to the drought -- Lou.

DOBBS: Bill, thank you very much -- Bill Tucker.

Taking a look now at some of your thoughts. We received a lot of e-mail about the story on this nation's first public high school for gay and lesbian students in New York City.

Ryan Davis of Atlanta said: "Gay rights will be achieved when people see gay and lesbians as an integral part of society, not as outcasts that have special needs."

Beth Serenbetz of Tacoma, Washington, said: "Every school should provide a safe place for every student. If kids are being made fun of, for whatever reason, then get the bully out of the school and put them in a reform school. Those schools are already in place."

Richard Case of Grand Blanc, Michigan, said: "Separate but equal is an idea that was killed many years ago. And it is not one that we need to revive now."

Rick Brandt of Santa Ana, California, said: "If this school is allowed in New York City, next will be a school for right-handed people only, then maybe for people with brown hair, and so and so on."

David Petrilla from Allentown, Pennsylvania, disagrees: "Tax dollars of gay people without children have been going to support other people's kids for way too long. It's about time some of this money is justly invested back into the gay community."

And Scott Eaton of Toledo, Ohio, applauded the idea, saying: "Kudos to the mayor of New York for his compassion and modern insight."

And Paul Gygi of San Jose wrote about the crackdown on corporate fraud, asking: "Why aren't the senior executives from J.P. Morgan and Citigroup listed in SEC settlements going to prison for the next 20 years? If you want to restore investor confidence," he says, "give these miscreants what they justly deserve."

Well, Paul, among other things, the SEC doesn't have that power. That's up to the Justice Department. So you'll have to talk to Larry Thompson, deputy attorney general.

We love hearing from you. Send us your thoughts at LouDobbs@CNN.com.

As we continue: state secrets. Former Senate Intelligence Committee Chairman Senator Richard Shelby says classified pages on Saudi Arabia and the al Qaeda should be made public. Senator Shelby is our guest.

Also ahead: our series of special reports on "Selling America" -- advertisers targeting your children. Kitty Pilgrim will have the report.

And the nation's first public high school for gay and lesbian students, progress or segregation? Heather McDonald of the Manhattan Institute joins us.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: A warning tonight that radical Islamists may be planning to launch suicide airliner attacks before the end of this summer. The Department of Homeland Security has information that the al Qaeda network may target the East Coast of the United States, Britain, Italy or Australia. The warning says the hijackers may try to modify everyday travel items such as cameras for use as weapons.

CNN has learned tonight that the Bush administration will eliminate the transit without visa program. That program allows visitors to enter the country without a visa if they're just making a connecting flight. The announcement of the program's elimination is expected tomorrow.

President Bush today rejected calls to release classified sections of a congressional report on the September 11 terrorist attacks. Members of Congress say parts of that report link the Saudi government to the al Qaeda.

Senior White House correspondent John King has more on the story -- John.

JOHN KING, CNN SR. WHITE HOUSE CORRESPONDENT: And, Lou, because of those allegations from members of Congress that somehow the Bush administration is trying to protect the Saudi regime by keeping incriminating information classified and out of the public domain, the Saudi foreign minister made an extraordinary visit to the White House today, Prince Saud al-Faisal coming here to complain.

He says his government is being smeared by some members of Congress. He says his government in no way had anything to do with, supported, or knew anything in advance about the September 11 attacks. But Prince Saud al-Faisal said his government cannot answer the criticisms because it does not know what is in those 28 pages kept classified and out of the document, the report Congress released last week on the 9/11 attacks.

Prince Saud al-Faisal came to President Bush, raised his complaints, and said the best way so that Saudi Arabia can answer those questions is for the administration to make those documents public.

(BEGIN VIDEO CLIP)

PRINCE SAUD AL-FAISAL, SAUDI FOREIGN MINISTER: We have nothing to hide. And we do not seek, nor do we need to be shielded. We believe that releasing the missing 28 pages would allow us to respond to any allegations in a clear and credible manner.

(END VIDEO CLIP)

KING: President Bush was asked about this earlier in the day. He was in the Rose Garden with the Israeli prime minister, Ariel Sharon. Mr. Bush is well aware of the political controversy. But he says he makes his decision based simply on this, the president saying he will not allow those documents to be released right now because, he says, to do so would undermine the still-ongoing criminal investigation of the September 11 attacks.

(BEGIN VIDEO CLIP) GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: But it makes no sense to declassify when we've got an ongoing investigation that could jeopardize that investigation. And it made no sense to declassify if -- during the war on terror.

(END VIDEO CLIP)

KING: More and more members of Congress saying that the president should release this material. Democratic Senator Joseph Lieberman, among those running for president, says the administration is giving the impression it has something to hide and is protecting the Saudis.

Republican Senator Olympia Snowe, who is on the Intelligence Committee, joining the former chairman, Senator Richard Shelby, as among the Republicans who are saying most, if not all, of this material could be made public. So, Lou, the political debate continues. But the administration says its bottom line is, it will not make public anything that might undermine an FBI and other investigations or, as some administration officials -- give the bad guys some of the evidence that we know -- Lou.

DOBBS: At the same time, John, a very sophisticated White House, CIA and Congress surely could come up with the conclusions without divulging the sources and methods by which they reached those conclusions, could they not?

KING: Well, there is a debate now about whether perhaps you can release some of this material, not all of it. The administration says it would like to wait a few more months, at least, as the investigations go. But there is some talk on Capitol Hill of lawmakers using the power the Senate Intelligence Committee has or powers that the Congress as a whole has to perhaps release more of this material.

So the president gave a pretty tough reason today as to why he says no. But it is unlikely to be the final word. This debate will continue.

DOBBS: John, thank you very much. We're going to be talking about Senator Richard Shelby right now to get -- get his views.

John King, senior White House correspondent, thank you.

Well, Senator Shelby has been amongst the most vocal members of Congress calling for the release of those documents. Senator Richard Shelby is the former chairman of the Senate Select Committee on Intelligence, which compiled the September 11 report. He chairs the Senate Banking Committee and joins us now from Capitol Hill.

Senator, good to have you with us.

SEN. RICHARD SHELBY (R), ALABAMA: Good evening, Lou.

DOBBS: The idea that this White House does not choose to declassify those 28 pages and would prefer several months in which to apparently prepare the American public for whatever they contain, how does that sit with you?

SHELBY: Lou, last week, I spent a number of hours, most of the day, looking through the intelligence report that was classified.

I specifically read the 28 pages very, very thoroughly. In my judgment, I believe 90 percent, 95 percent of the 28 pages could be declassified without harming national security in any way. Now, I know there are some things in there that we should not declassify. But it's only a small part of the report.

DOBBS: A small part. And you've taken this up with the administration, the president today adamant that he will not declassify those pages because of national security concerns. There is no way to give here, no way to compromise?

SHELBY: Well, you know, I have a lot of respect for the president. I'm one of his supporters, and I like a lot of his policies. But I would disagree on that particular point. And I think there will be a lot of other people, once they read those 28 pages, which I'd say every senator ought to do and every member of Congress, they can make their own judgments.

DOBBS: Well, Senator, every senator on your committee with whom I've spoken, Democrat and Republican, is taken aback by the classification of those 28 pages. Is there not a way -- and the Saudi Foreign Minister Faisal today outraged that his country would be facing 28 blank pages rather than charges to which the Saudis could respond, is there not some way we can deal with the conclusions here specifically on Saudi Arabia without divulging information within those 28 pages?

SHELBY: Well, my judgment is that you can, but...

DOBBS: Then let's do.

SHELBY: But ultimately, it will be up to the administration to declassify this information unless we go through the laborious and tortuous process, which we can do, through the Senate. We could do it that way. It's the hard way. I think we ought to try to do it the easier way.

DOBBS: Well, let me ask you point blank then. Is there a reason that the Saudis should fear what is reported in those 28 pages?

SHELBY: Well, I'm not going to reference a particular country, but I can say that what's in the 28 pages, in my judgment, after spending eight years on the Intelligence Committee, 90, 95 percent of it would not compromise, in my judgment, anything in national security.

DOBBS: And not referencing the Saudis in particular, is there any nation, unnamed, amongst those catalogued in those 28 pages who would find their contents embarrassing?

SHELBY: Well, the embarrassment is one thing. I think it -- I think you'll have to wait and see if that's declassified or not. But I'm just going to stay with my judgment that most of it ought to be declassified and let the American people know what's in it.

DOBBS: Well, let me turn to the committee that you do chair, the Senate Banking Committee. The funding of terrorists in nearly every instance from the Saudi royal families or members of the Saudi royal families, not to approach the Saudi royal family as a monolith, has gone from charities to terrorists, the predominant amount of that money. Is your committee investigating that, and how rigorously?

SHELBY: Well, we are getting under way in investigating who funds terrorists. We have that oversight responsibility. We have the jurisdiction on the Banking Committee. And I've said before, Lou, that money is the key to terrorists. Without money, without financing they can't go far. They can't exist. They can't buy the proper weapons, and they can't sustain attacks.

DOBBS: Senator, no one in the U.S. Congress has better credentials in intelligence and in finance than yourself. Is it your judgment at this point that enough is being done to end, to curtail the funding of al Qaeda?

SHELBY: We're doing a lot, and we've come a long way. And I'll have to say this administration is really working Treasury and others in the right direction. But we could have more cooperation, better cooperation. There are a lot of countries in the world that we don't have today, certainly didn't have a year-and-a-half ago.

DOBBS: Senator Richard Shelby, we appreciate your being here.

SHELBY: Thank you. Lou.

DOBBS: Thank you.

That brings us to the topic of tonight's poll question.

Do you believe the White House should declassify those 28 pages of the September 11 report, yes or no?

Cast your vote at cnn.com/lou. We'll have the results later in the show.

The final results of yesterday's poll. The question, do you think taxpayers should fund a public school specifically for gay students?

Fifty-two percent said yes, 48 percent said no.

Coming up next, schools out for students of the nation's first public high school for gay and lesbian students.

Is it a step towards progress or a step backwards toward segregation?

Heather Mac Donald of the Manhattan Institute says she is opposed to the idea. She's our guest next.

In "Selling America," our series of special reports this week on advertising. Tonight, targeting children. Kitty Pilgrim with a report.

And state secrets: is the White House hiding information that links Saudi Arabia to terrorist funding?

Former U.S. Ambassador to Saudi Arabia, Richard Murphy, says the Saudis are cooperating. He joins us. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Two months ago Democratic members of the Texas House fled to Oklahoma to fight Republican plans to redistrict. Now 11 of the state's Democratic senators have again fled across the state border, this time they are in New Mexico. They're hold up there tonight. They hoping to kill the GOP's redistricting plans again. Those which would result in more Congressional seats for Republicans.

Meanwhile, the Texas House today approved that Republican- sponsored Congressional redistricting bill. The plan goes to the Senate which, without the Democrats, again will not have a quorum.

New York City. He is causing controversy with its plans to open the country's first all-gay public high school. My next guest says identity politics has simply no place in high school. Heather Mac Donald is a fellow at the Manhattan institute Joining us tonight from Los Angeles.

Heather, good to have you with us.

HEATHER MAC DONALD, MANHATTAN INSTITUTE: Thanks, Lou.

DOBBS: The idea of a high school for gays is set off more e-mail here. Most -- we were just flooded with people on both sides of the issue. On the one hand, respect for this need, the special needs, of certain students. On the other hand, outrage that tax dollars would be spent to segregate students who most people would prefer be assimilated into the student body.

How do you get here?

I think it's a sign, Lou, that your viewers are well aware that education is in crisis and this is a symptom, not a solution, to that crisis. For the last two decades, education has told students it's all about identity politics. The curriculum has been bulkenized into gay studies, black studies, women's studies, graduation ceremonies have bulkenized into race, ethnicity and sometimes gender. And this is just another step in the wrong direction. The fact is we're falling all students in teaching them the basics of American history. That doesn't -- there is not a gay history, there is not a black history, there is not a white history. Everybody needs to learn the basics of history, of math and English.

DOBBS: You're talking about as a secondary level or would you include African-American studies at college and university level?

MAC DONALD: I think it includes at the college and university level. I think really, there should be common histories. Everybody should be interested in black history. It should not be carved out of the common curriculum.

DOBBS: What do you say to those gays, Heather, who say as Mayor Bloomberg -- that these gay students are often teased, they are harassed, and in some cases, assaulted. And the mayor advanced that as an argument for this segregated school.

MAC DONALD: The mayor has advanced that as an excuse for his own failure to keep safe schools. The fact is, many schools are far too violent. That's a failure of the adults who should be responsible for discipline. The problem is not the victims, it's the perpetrators. Rather than giving a life boat out for a special interest group of students, the people that should be removed from the schools are the troublemakers that are causing violence. There are lots of people who are the subject of violence in schools. That's a travesty. That's an educational failure. But it's not just gays that should be taken out. If you're going to do that, then basically the whole student body is going to be removed from your school and all you're going to have left are the thugs that are making life miserable for everybody else. They're the ones who should be out and as well the principals that are simply incapable of keeping order in their schools.

DOBBS: Heather, you know as you advance these words, in just raising the discussion, will create a reaction on the part of certain interest groups that would be associated with the gay and the lesbian community in this country.

MAC DONALD: Of course.

DOBBS: At this point, what can be done to make our schools safer? No matter where I travel in this country, one of the greatest concerns in public education is the safety of students and the lack of discipline that can be brought to bear in the classroom. What is this country to do?

MAC DONALD: As you say, Lou, it's not a gay issue. It's a discipline issue. You remove the students.

Unfortunately, we are now -- principals are saddled with a set of Supreme Court precedents that makes it very difficult to exercise common sense discipline. Teachers and principals fear that they're going to be sued by parents, that students are going to invoke a totally fictitious set of due process rights which should not be applied in a school setting. This is one setting where authority should matter.

Again, we need to cure this problem for all schools and for all students and not see it as a gay issue, which, again, bulcanizes (ph) students and...

DOBBS: What's the solution?

MAC DONALD: It merely encourages students in their solipsism of thinking of themselves as different and special, where students should be seen as a common student body.

DOBBS: You're talking about assimilation and education in society. What should we do in both the local level in dealing with our schools and as a nation to create that assimilation, that tolerance of diversity, and certainly that safety and discipline for all students?

MAC DONALD: Schools should focus on the basics. If you demand students that they do their homework, that they learn history, that they learn their mathematics tables and you don't fool around with all this identity politics nonsense, but actually have high expectations for all students.I think a lot of the problem will take care of itself.

Right now, schools are not very demanding and they're wasting their time on a lot of side issues like trying to promote gay consciousness or ethnic consciousness, which is not the mission of schools. The mission of schools is to create educated citizens who know American history, who know the history of the world.

This is, again, a sad distraction. It's a massive waste of money. Violence is a problem in our schools. I grant that you, Lou. But we shouldn't carve out a special victim group. All students deserve protection from violence.

DOBBS: Heather Mac Donald of the Manhattan Institute, we thank you.

MAC DONALD: Thank you, Lou.

DOBBS: Tonight we continue our series of special reports on advertising in this country, "Selling America." Increasingly, it means selling to children.

Advertisers are now targeting preteens. In fact, it's one of the fastest growing niche markets in the country, overwhelming children with commercials that turns wants into needs.

Kitty Pilgrim reports.

(BEGIN VIDEOTAPE)

(SINGING)

KITTY PILGRIM, CNNfn CORRESPONDENT (voice-over): Britney is just the beginning. Before parents were finished complaining about how their young daughters were copying everything the star wore and ate, marketers decided it was the next big wave. Now the Olsen twins make every young preteen, or tween, aspire to their coolness, selling clothing and a fragrance line at Wal-Mart.

Seventy-percent of kids watch what stars on TV wear. Top of the list is Hilary Duff, the star of "Lizzy McGuire." Tween boys are into skateboarding and other sports. Tween girls are into sports and clothes.

UNIDENTIFIED FEMALE: Let's get dirty.

PILGRIM: Plenty of impact from stars like "Charlie's Angels" and other bubble gum girls.

UNIDENTIFIED FEMALE: Cameron Diaz is really pretty. I have a lot of different friends. Some like being dressed up. Like, one of my friends, Lauren (ph), she likes being dressed up.

PILGRIM: Kid buying power is the obsession of Tim Coffey, head of the WonderGroup, a youth marketing and advertising consulting firm.

They point out this market of 20 million preteen customers is barely tapped. Spending power, mostly from allowance, is about $300 a year. But building customers is key.

Last year, full-fledged teens spent $170 billion on stuff. Tweens influence other purchases. For example, 65 percent of tweens help with the grocery shopping.

UNIDENTIFIED MAKE: Introducing Airheads Extremes.

PILGRIM: Airheads is an example of the kind of sell that makes a success and goes to the core of the demographic.

TIMOTHY COFFEY, CHAIRMAN & CEO, WONDERGROUP: Airheads is one of those candies that most adults don't know about, but every kid does. They're uniquely formulated for kids' taste, and we portray that brand in a way that, you know, speaks to their, again, this notion of power and freedom, that, you know, eating an Airheads allows you to do things you might not be able to do all the time.

PILGRIM: Some see the messages as manipulative, too subtle for kids to see through and too powerful to resist.

SUSAN LINN, HARVARD MEDICAL SCHOOL: It's exploiting their vulnerabilities. I mean, and why should we eat because it's cool? You know? We should eat because we're hungry or because it tastes good. But the notion of eating to be cool or to fit in is actually really problematic.

PILGRIM: Nonsense, say marketers like WonderGroup. The firm was hired by Chiquita to make bananas cool. They point out healthy products like yogurt and cereal fall into basic food groups.

But boring is not necessary. A trip through the grocery aisle finds Incredible Hulk Jell-O, highly animated yogurt and cereal bars for kids to grab on the way to the car pool instead of kids skipping breakfast altogether.

(END VIDEOTAPE)

PILGRIM: Marketers say it's a question of getting through the program. Kids do drive purchases, and a typical customer in a grocery store or anywhere else is a parent and a child. And the most asked question in America, is, "What do you want to eat?" And the kids decide -- Lou.

DOBBS: Good enough on the purchasers. That's remarkable -- $170 billion teenage market. PILGRIM: That is, and when they get them really young so when they become teenagers, then they'll have brand loyalty.

DOBBS: Kitty Pilgrim, thank you very much.

Tomorrow, we continue our series of special reports on "Selling America." Jan Hopkins looks at the way foreign advertising differs from advertising in this country and why celebrities who won't do commercials here gladly do them overseas.

Tonight's thought on the importance of youth, selling to them or otherwise: "The right way to begin is to pay attention to the young and make them just as good as possible." That from Socrates.

Speaking of advertising, Tiger Woods is paid about $20 million a year to endorse the Nike brand. But nothing in his contract says he must use Nike's products. In fact, he's made a commercial about that very fact. Woods, who defends his Buick Open title this week, is bagging his Nike driver in favor of his old Titlist model. Woods says the old club gives him more control. Nike says the move was not totally unexpected and certainly not for golf fans who have watched Tiger win only four tournaments this year. The saving grace for Nike is the Titlist club that Tiger is using is no longer on the market.

When we continue, is there a Saudi link to al Qaeda? the answer lies in classified documents that the White House will not reveal. Richard Murphy, former U.S. ambassador to Saudi Arabia, joins us next.

And job market fears undercut consumer confidence. Stock prices end the day lower. Christine Romans will have the market for us.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: Saudi Arabia's foreign minister today said he is disappointed that the White House will not declassify documents on an alleged Saudi link to al Qaeda. Prince Saud Al-Faisal said Saudi Arabia has nothing to hide and called the allegations outrageous.

Joining me now, former ambassador to Saudi Arabia, Richard Murphy. Good to have you with us.

RICHARD MURPHY, FORMER AMBASSADOR TO SAUDI ARABIA: Thank you.

DOBBS: It's remarkable, the Saudi foreign minister calling for a meeting with the president, and within 24 hours being in the White House to discuss this. Did he really expect that President Bush would reverse his decision based on his interest (ph), or is this public relations?

MURPHY: Today was the first day I think that the president invoked sources and methods as the reason for not releasing it. At least that's the first I've heard of it. But he's the -- it's where the buck stops. And if he decide there are sources and methods that have to be protected, that's it. DOBBS: You know the Saudis very well. You know the Middle East well. The idea that Faisal would think that he had any hope in the world of overthrowing a decision by the White House on the basis of his own interest, he had to understand were remote at best.

MURPHY: I think it shows just how raw the feelings have gotten in Saudi Arabia after being beaten up by the American media and the American Congress ever since 9/11, as guilty as charged or as suspected. And they feel they've come a long way in cooperating, and particularly ever since the bombings in Riyadh last May, they've come on like gangbusters with their own people.

DOBBS: Yet at the same time, the Saudis, it was a rather extravagant public relations effort, about five weeks ago, went on the offensive. It seems that the Saudis have not in the minds of most done enough to cooperate. They have attacked the al Qaeda within their own country, who carried out -- the al Qaeda who were suspected. They've killed six...

MURPHY: Just yesterday.

DOBBS: Just yesterday. They have been aggressive in that respect. But the cooperation and the upfront position of the Saudis, with the Islamic community worldwide, has not been something with which they have to be immensely proud.

MURPHY: Lou, this is -- I'm speculating, but I'm looking back over the period of cooperation between our investigative agency, the FBI, and theirs. And it was a poor start back in the mid-'90s, with the Khobar bombing...

DOBBS: Correct.

MURPHY: As you remember, files never been closed, and there was a lot of complaints in the FBI at that time that there wasn't cooperation. Ever since 9/11, it's been on the upswing, and we've learned how to deal with each other much better than we did then in the '90s.

DOBBS: Well, the Saudi decision not to permit U.S. troops to fly from Saudi soil against Saddam Hussein was not exactly an embrace.

MURPHY: They did more than they've admitted publicly.

DOBBS: I understand that, but publicly is what much of this battle against terrorism is about, Mr. Ambassador, as you well know.

MURPHY: They have a public opinion, just as we do. And they're very attentive to it.

DOBBS: Attentive to it, and surely they are keenly aware of the precipice that they face. They have a population that is young, that is volatile, that is unemployed. And they are fomenting Wahhabi terrorism in more than Saudi Arabia, but throughout the Middle East and a good part of Asia. MURPHY: Well, they stand accused in our country of educating their kids in terror and violence and exporting it through their missionaries. Now, they're a very evangelistic society. They believe they've got hold of the best practice of Islam, and they want the world to know it and they've spent millions in spreading it. But are they training in terrorism? No.

DOBBS: Are they supporting financially, either directly or indirectly, through the Saudi royal family? We know they are.

MURPHY: The royal family -- now, if we're going to talk about the government...

DOBBS: I didn't say the government. I said members of the royal family.

MURPHY: Members of the royal family numbering 7,000 princes, I'm sure there is a bad apple among the 7,000.

DOBBS: I get nervous every time I hear that expression, bad apple. The last time I heard it was when we were talking about corporate corruption in this country.

MURPHY: Well, a lemon. Would that help?

DOBBS: I'm not sure that produce or fruit is the way to get to it. But we thank you for trying to eliminate the subject for us, as always. Ambassador Richard Murphy, thanks for being here.

MURPHY: Thank you.

DOBBS: When we continue, the preliminary results of our poll tonight. Also, stock prices sink; consumer confidence falls. Christine Romans will have the market next. Stay with us.

(COMMERCIAL BREAK)

DOBBS: The preliminary results of our poll. The question, do you believe the White House should declassify the 28 pages of the September 11 report? Only 86 percent of you think so. So far. Fourteen percent said no.

Stock prices tumbled today on word of a big drop in consumer confidence. The Dow down 62 points. The Nasdaq down 4. The S&P off seven. Bonds also continued a recent slide, a dramatic slide I might point out. Christine Romans is here with the market for us, as always -- Christine.

CHRISTINE ROMANS, CNN FINANCIAL NEWS CORRESPONDENT: Well, you know that the consumer confidence number yanks the Dow down about 90 points, people are concerned, because, you know, the stock market has been doing well, and why would consumer confidence be weak? Then there was a rumor that maybe Saddam Hussein has been captured -- a rumor, of course -- but then that drove stocks up again. In the end, it was really volatile and mixed earnings news and higher bond yields eventually just kept the lid on stocks today. Let's give you an update on the earnings. Three hundred and seventy-one S&P 500 companies have reported earnings so far, Lou. They show profit growth of 6.8 percent. Revenue growth of 5.4 percent. McDonald's profit fell 5 percent. And DuPont mustered earnings growth even as its sales fell there.

Meanwhile, Verizon operating profit fell 9 percent, but sales rose thanks to strengths in its wireless business, and Verizon said it will cut up to 5,000 more jobs this year.

OK, back to bonds. This is where really the action was today. Initially they rallied.

DOBBS: Bonds are always exciting.

ROMANS: They are. Well, the bond prices rallied on that surprise weakness. And then they turned around. Look at the 10-year yield, 4.44 percent. Unbelievable. We were just at 3.1 about a month ago.

DOBBS: Almost 1.5 points. All right. Christine Romans, thank you.

And finally tonight, an elephant at a safari park in England gave visitors something of a surprise. The elephant picked up a rock. Here is the elephant. There is the rock. He hurled it at a car, shattering a window. The woman in the car was slightly injured. A zoo keeper said the elephant probably didn't mean any harm, just thought he would throw the rock when he realized it wasn't food. Threw it in disgust, I suppose. As far as technique goes, you have to admit, this is pretty good.

That's our show tonight. Thanks for being with us. Tomorrow, we continue our series of special reports, "Selling America." Senator Paul Sarbanes joins us to discuss the advances in corporate reform and the fight against corporate corruption. For all of us here, good night from New York. "LIVE FROM THE HEADLINES" with Anderson Cooper is next.

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





Jury in California Beating Trial>


Aired July 29, 2003 - 18:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
LOU DOBBS, HOST: Tonight: The Saudis want the White House to declassify the September 11 intelligence report. The president says, no way. What's at stake? Senator Richard Shelby joins us, as well as former Ambassador to Saudi Arabia Richard Murphy.
Saddam speaks. When will he be caught or killed?

Gay high schools: tolerance or segregation, progress or retreat?

Western states are in a drought, Europe and Asia in the grip of record heat waves. Are these new world weather patterns global warming?

And advertisers targeting kids, are there any limits? Our special report, "Selling America."

ANNOUNCER: This is LOU DOBBS TONIGHT for Tuesday, July 29. Here now, Lou Dobbs.

DOBBS: Good evening.

Tonight: a dramatic end to a police beating trial in California that provoked a storm of protests in the community. A judge declared a hung jury after jurors said they were hopelessly deadlocked. Former Inglewood police officer Jeremy Morse was caught on videotape slamming a teenage suspect on to the trunk of a patrol car and punching him in the face.

Thelma Gutierrez joins me live now from the courthouse in Los Angeles -- Thelma.

THELMA GUTIERREZ, CNN CORRESPONDENT: Lou, that count was 7-5. Seven jurors declared today that they found former police officer Jeremy Morse not guilty of assault under the color of authority.

Now, five said not guilty. Seven said they felt that he was guilty. Now, they told the judge that they were not able to reach a verdict, and so the judge declared a mistrial. Now, on count down, Officer Bijan Darvish was found not guilty of filing a false police report. Of course, all of this goes back more than a year ago to when this boy, at that time, 16-year-old Donovan Jackson was punched and thrown, slammed on top of a police car outside of a Thrifty gas station when his father was questioned for an expired license.

(BEGIN VIDEO CLIP) WILLIAM HOLLINGSWORTH JR., SUPERIOR COURT JUDGE: Count one, I'm going to declare the jury unable to reach a verdict and further deliberations would not resolve that problem. So I am declaring a hung jury as to count one.

UNIDENTIFIED MALE: People of the state of California vs. Bijan Darvish. We, the jury, in the above entitled action, find the defendant, Bijan Darvish, not guilty of the crime of filing a false report in violation of Penal Code section 118.1, as charged in count two of the information.

(END VIDEO CLIP)

GUTIERREZ: When the verdict was read, Bijan Darvish pounded his fists on the desk and screamed "Yes" in a sigh of relief. Now, the judge told him, "You will stop this." Darvish's mother sat right beside the mother of Jeremy Morse. They held hands throughout the whole time. They looked at each other. They breathed a sigh of relief.

And the mother did tell me that she felt that her son was innocent all along. She choked back tears. The father sat behind. He also had tears in his eyes, he said, of relief. At that point, several members of the community walked out of the courtroom. One screamed: "This is a joke. There is no justice for our people." Another woman, as she walked out, screamed, "Pig."

Now at that point, I turned around. I looked at Donovan Jackson. I noticed that he sat quietly. He did not show much response at all. Donovan Jackson's mother spoke a short time ago. She said that she will ask for a mistrial. And that is exactly what the attorney said as well as she presented herself outside here at the courthouse -- back to you, Lou.

DOBBS: Thelma, thank you very much -- Thelma Gutierrez reporting from outside the courtroom in Los Angeles.

The verdict, of course, as is always the case with hung juries, a surprise.

Now with his analysis, CNN's Jeffrey Toobin.

Jeffrey, good to have you here.

JEFFREY TOOBIN, CNN LEGAL ANALYST: Hi, Lou.

DOBBS: This verdict, 7-5, a surprising outcome, without question.

TOOBIN: Even for a hung jury, it's a surprise, because most hung juries tend to be 10-2, 11-1; 7-5 is a complete deadlock. It's no wonder the judge threw in the towel today.

DOBBS: Many people who have watched that videotape would have said, just on the basis of that tape itself, that officer Morse had to be -- former Officer Morse -- had to be guilty. What goes into the defense attorney's approach here that would render this kind of result?

TOOBIN: The defense in this case was much like the defense in the Rodney King case. It was a meticulous reconstruction of every single second, trying to justify the officer's actions at each point in the process, saying that he was responding to Mr. Donovan's actions.

That may be -- that was obviously good enough for five people. It wasn't good enough for 12. But also, in a larger sense, I think it just shows, again, that jurors tend to be very reluctant to find cops guilty of any sort of crimes.

DOBBS: But, in this case, Morse is a former cop, fired.

TOOBIN: He's been fired because of this incident. He's lost his job. That much is clear. But there is no criminal penalty coming to him yet.

Now, of course, the ball is in the court of the district attorney, Steve Cooley. Does he retry the officer? Does he try to work out a plea bargain? Or does he throw in the towel?

DOBBS: And with the verdict against Darvish being not guilty for filing a false report, doesn't that make the prosecution's efforts difficult indeed?

TOOBIN: It sure does.

And he's still an officer. He goes back on the force. And it's also a signal that this jury did not love this case. This was a problematic prosecution. Certainly, today counts overall as a win for the defense.

DOBBS: Jeffrey Toobin, thank you very much.

The message of defiance today in an audiotape attributed to Saddam Hussein: An Arab television network aired a tape calling upon Iraqis to avenge the deaths of Saddam Hussein's sons. There is no confirmation that this recording is authentic. Coalition forces in Iraq today arrested one of Saddam Hussein's bodyguards.

Senior Pentagon correspondent Barbara Starr joins me now with the story -- Barbara.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, Lou, indeed, more raids in Iraq today, that senior bodyguard seized, other security officials, including the man they believe to be the head of the Saddam Fedayeen, the paramilitary organization that officials believe has been responsible for so many of those attacks against U.S. soldiers.

Now, here at the Pentagon and on the ground in Iraq, officials do believe the noose is tightening. More information is coming in, these raids that they are staging every day and every night leading to better intelligence, more information about where Saddam may be hiding, but here at the Pentagon today, a press conference expressing just a serious note of caution about getting too excited just yet. (BEGIN VIDEO CLIP)

LT. GEN. NORTON SCHWARTZ, DIRECTOR FOR OPERATIONS, J-3 JOINT STAFF: I think we should not focus excessively on Saddam Hussein here. He is a high-value target, of course, of great interest. But the bottom line is, we're continuing to develop information. And we will pursue that information as it comes in. And do I believe that we will ultimately apprehend Saddam Hussein? I think that is the case.

(END VIDEO CLIP)

STARR: Now, officials, Lou, also said at the Pentagon today that there were no special instructions in anticipation of the day they do come across Saddam Hussein about trying to take him alive necessarily, to capture him alive to make sure they get any intelligence out of him, no special instructions one way or the other, that it would be up to Saddam whether he is taken alive or killed in a firefight with U.S. forces, if he refuses to surrender.

And General Schwartz also confirmed publicly for the first time that the U.S. now believes Saddam Hussein is relocating many times during the day and during the night, constantly on the move in Iraq. And they believe that they will eventually get him -- Lou.

DOBBS: And, Barbara, the raids and the search, the hunt, for Saddam Hussein are intensifying almost daily, are they not?

STARR: That's right.

The thing that has really changed, apparently, in the last several days since the killing of the two Hussein brothers is, the Iraqi people, apparently, feel much more confident coming to U.S. forces with information and intelligence. Many officials are saying now that they are getting better intelligence, more leads, more tips, and they are following up on all of them. And that's why they believe it will only be a matter of time until they get him.

DOBBS: Barbara Starr, thank you very much, reporting from the Pentagon.

Well, the Pentagon's policy in Iraq today came under severe criticism from several Democratic senators, their target, Deputy Defense Secretary Paul Wolfowitz, who gave testimony to the Senate Foreign Relations Committee . The senior Democrat on that committee, Senator Joe Biden, led the attack.

(BEGIN VIDEO CLIP)

SEN. JOSEPH BIDEN (D), DELAWARE: Give me a break, will you? When are going to you guys starting to be honest with us? Come on. This is ridiculous. You're not even...

PAUL WOLFOWITZ, DEPUTY DEFENSE SECRETARY: Senator, to suggest that this is an issue of honesty really is very misleading.

BIDEN: It is a suggestion of candor, of candor, of candor. You know there's going to be at least 100,000 American forces there for the next calendar year and you're not asking us for any money.

WOLFOWITZ: Senator, I don't know -- I don't know what we're going to have there.

BIDEN: Let me finish please. Let me finish.

WOLFOWITZ: OK.

BIDEN: And you are not asking us for any money in next year's budget for those troops. Now, what do you call that?

(END VIDEOTAPE)

DOBBS: Still ahead tonight: The Pentagon cancels a controversial program that might have been the best predictor of terrorism. Lisa Sylvester will report from Washington.

Also ahead: President Bush says classified portions of the September 11 report will remain sealed for national security reasons. Senior White House correspondent John King will report. And Senator Richard Shelby says those pages were classified only because the information might be embarrassing to certain countries. Senator Shelby is our guest tonight.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: The Pentagon today canceled a controversial program to establish a futures market on terrorist attacks before investors could in fact place their first investment. The idea was part of a program led by retired Admiral John Poindexter, no stranger to controversy, he, of course, a leading figure in the Iran-Contra scandal in the 1980s.

Lisa Sylvester reports from Washington.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): With the click of a button, investors could have been online at this Web site, when they thought the next terrorist attack would happen, the odds of a North Korea missile launch, or the number of American soldiers to be killed. The Pentagon's Defense Advanced Research Projects Agency, or DARPA, wanted to use the futures trading market to watch trends and track public opinion. Congressional lawmakers were flabbergasted when they heard the idea.

SEN. TOM DASCHLE (D-SD), MINORITY LEADER: For the life of me, I can't believe that anybody would seriously propose that we trade in death.

SYLVESTER: By mid-morning, the Pentagon yanked the online futures trading market.

LAWRENCE DI RITA, PENTAGON SPOKESMAN: The director has determined that this is a program that, under further scrutiny, probably doesn't deserve continued support.

SYLVESTER: But one economist who worked with the Pentagon on this program says the idea is not that farfetched, based on economic theory. If you want to predict an outcome, let the markets decide.

ROBIN HANSON, GEORGE MASON UNIVERSITY: Markets have consistently beat the alternatives at aggregating information. That doesn't mean we won't ever find something that works better. But in comparison to the National Weather Service forecast, orange juice futures have beat it.

SYLVESTER: In fact, the University of Iowa runs a futures market that, since 1988, has successfully predicted who will be the next president. But critics say terrorists could have manipulated the Pentagon's futures market and cashed in on the attacks.

And this is not DARPA's only controversial program. Another project called Total Information Awareness, also run by John Poindexter, a key figure in the 1980s Iran-Contra scandal, would allow the government to tap into databases to collect personal information, including medical and financial records. Now DARPA's critics have set their sights on killing this wide-ranging program.

SEN. RON WYDEN (D), OREGON: Much more needs to be done to rein in the runaway horse that is this terrorism information program.

(END VIDEOTAPE)

SYLVESTER: John Poindexter may have to worry about his job. Democrats are having a field day with this one. They say the people who thought up the futures trading proposal ought to not be on the public payroll -- Lou.

DOBBS: Lisa, thank you very much -- Lisa Sylvester reporting from Washington.

Well, still ahead, we'll be going back to Los Angeles, California. The two defendants in the beating case today, in which one officer was -- faced a hung jury and the other acquitted, will be moving to the microphones that you see there in those live pictures.

And former U.S. Ambassador to Saudi Arabia Richard Murphy says the Saudis are cooperating with the United States, despite serious questions about their involvement in September 11, Ambassador Murphy our guest.

And many of you wrote in to share your thoughts on the nation's first public high school for gay students. We'll have your thoughts.

And Heather McDonald, a fellow at the Manhattan Institute, joins us to discuss why high schools for gays is, in her opinion, a bad idea.

Also ahead: Those Texas Democrats are on the run again. They're hiding out this time trying to avoid a vote on -- yes -- redistricting. We'll have those stories and a great deal more still ahead.

Stay with us.

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

LARRY HAMILTON, BUREAU OF LAND MANAGEMENT NATIONAL DIRECTOR OF FIRE: If we get a lightning event, there is a real good possibility that we will get multiple fire starts.

BILL TUCKER, CNN CORRESPONDENT (voice-over): Prompted by severe weather and its potentially devastating consequences, the Bush administration announced an initiative to study climate change. The initiative involves 1,200 scientists and representatives from over 35 countries.

VICE ADMIRAL CONRAD LAUTENBACHER, NOAA: Obviously, there is a major concern around the world about climate variability and the potential for climate change and what it means in terms of economic and social impact.

TUCKER: The need for international cooperation is being underlined, as fires sweep through the French Riviera, roughly 20,000 acres of southern France's vacation region on fire, leaving four dead, as thousands of firefighters struggle and tens of thousands of people have been evacuated from their homes, the conditions exacerbated by no rain in two months, France suffering its worst drought in 25 years, the fires, inexplicably, apparently started by arsonists.

Europe is burning both literally and figuratively, caught in the throes of a devastating heat wave, a heat wave that has dried up parts of the Danube, sending it to its lowest level in 160 years, with 40 percent of the river's wetlands evaporated.

DAN BASSE, AG RESOURCE: It's been the worst drought in Europe and through Eastern Europe since 1976. Grain crops over there are under pressure. The E.U., which used to be a tremendous grain exporter, now looks to be an importer. And so that, along with a severe winter through the Ukraine and Russia, is producing some real supply pressures on the grain market over in Europe.

(END VIDEOTAPE)

TUCKER: Now, there is some relief for Arizona. July brought well-above-average rainfall, but it is nowhere near enough to bring an end to the drought -- Lou.

DOBBS: Bill, thank you very much -- Bill Tucker.

Taking a look now at some of your thoughts. We received a lot of e-mail about the story on this nation's first public high school for gay and lesbian students in New York City.

Ryan Davis of Atlanta said: "Gay rights will be achieved when people see gay and lesbians as an integral part of society, not as outcasts that have special needs."

Beth Serenbetz of Tacoma, Washington, said: "Every school should provide a safe place for every student. If kids are being made fun of, for whatever reason, then get the bully out of the school and put them in a reform school. Those schools are already in place."

Richard Case of Grand Blanc, Michigan, said: "Separate but equal is an idea that was killed many years ago. And it is not one that we need to revive now."

Rick Brandt of Santa Ana, California, said: "If this school is allowed in New York City, next will be a school for right-handed people only, then maybe for people with brown hair, and so and so on."

David Petrilla from Allentown, Pennsylvania, disagrees: "Tax dollars of gay people without children have been going to support other people's kids for way too long. It's about time some of this money is justly invested back into the gay community."

And Scott Eaton of Toledo, Ohio, applauded the idea, saying: "Kudos to the mayor of New York for his compassion and modern insight."

And Paul Gygi of San Jose wrote about the crackdown on corporate fraud, asking: "Why aren't the senior executives from J.P. Morgan and Citigroup listed in SEC settlements going to prison for the next 20 years? If you want to restore investor confidence," he says, "give these miscreants what they justly deserve."

Well, Paul, among other things, the SEC doesn't have that power. That's up to the Justice Department. So you'll have to talk to Larry Thompson, deputy attorney general.

We love hearing from you. Send us your thoughts at LouDobbs@CNN.com.

As we continue: state secrets. Former Senate Intelligence Committee Chairman Senator Richard Shelby says classified pages on Saudi Arabia and the al Qaeda should be made public. Senator Shelby is our guest.

Also ahead: our series of special reports on "Selling America" -- advertisers targeting your children. Kitty Pilgrim will have the report.

And the nation's first public high school for gay and lesbian students, progress or segregation? Heather McDonald of the Manhattan Institute joins us.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: A warning tonight that radical Islamists may be planning to launch suicide airliner attacks before the end of this summer. The Department of Homeland Security has information that the al Qaeda network may target the East Coast of the United States, Britain, Italy or Australia. The warning says the hijackers may try to modify everyday travel items such as cameras for use as weapons.

CNN has learned tonight that the Bush administration will eliminate the transit without visa program. That program allows visitors to enter the country without a visa if they're just making a connecting flight. The announcement of the program's elimination is expected tomorrow.

President Bush today rejected calls to release classified sections of a congressional report on the September 11 terrorist attacks. Members of Congress say parts of that report link the Saudi government to the al Qaeda.

Senior White House correspondent John King has more on the story -- John.

JOHN KING, CNN SR. WHITE HOUSE CORRESPONDENT: And, Lou, because of those allegations from members of Congress that somehow the Bush administration is trying to protect the Saudi regime by keeping incriminating information classified and out of the public domain, the Saudi foreign minister made an extraordinary visit to the White House today, Prince Saud al-Faisal coming here to complain.

He says his government is being smeared by some members of Congress. He says his government in no way had anything to do with, supported, or knew anything in advance about the September 11 attacks. But Prince Saud al-Faisal said his government cannot answer the criticisms because it does not know what is in those 28 pages kept classified and out of the document, the report Congress released last week on the 9/11 attacks.

Prince Saud al-Faisal came to President Bush, raised his complaints, and said the best way so that Saudi Arabia can answer those questions is for the administration to make those documents public.

(BEGIN VIDEO CLIP)

PRINCE SAUD AL-FAISAL, SAUDI FOREIGN MINISTER: We have nothing to hide. And we do not seek, nor do we need to be shielded. We believe that releasing the missing 28 pages would allow us to respond to any allegations in a clear and credible manner.

(END VIDEO CLIP)

KING: President Bush was asked about this earlier in the day. He was in the Rose Garden with the Israeli prime minister, Ariel Sharon. Mr. Bush is well aware of the political controversy. But he says he makes his decision based simply on this, the president saying he will not allow those documents to be released right now because, he says, to do so would undermine the still-ongoing criminal investigation of the September 11 attacks.

(BEGIN VIDEO CLIP) GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: But it makes no sense to declassify when we've got an ongoing investigation that could jeopardize that investigation. And it made no sense to declassify if -- during the war on terror.

(END VIDEO CLIP)

KING: More and more members of Congress saying that the president should release this material. Democratic Senator Joseph Lieberman, among those running for president, says the administration is giving the impression it has something to hide and is protecting the Saudis.

Republican Senator Olympia Snowe, who is on the Intelligence Committee, joining the former chairman, Senator Richard Shelby, as among the Republicans who are saying most, if not all, of this material could be made public. So, Lou, the political debate continues. But the administration says its bottom line is, it will not make public anything that might undermine an FBI and other investigations or, as some administration officials -- give the bad guys some of the evidence that we know -- Lou.

DOBBS: At the same time, John, a very sophisticated White House, CIA and Congress surely could come up with the conclusions without divulging the sources and methods by which they reached those conclusions, could they not?

KING: Well, there is a debate now about whether perhaps you can release some of this material, not all of it. The administration says it would like to wait a few more months, at least, as the investigations go. But there is some talk on Capitol Hill of lawmakers using the power the Senate Intelligence Committee has or powers that the Congress as a whole has to perhaps release more of this material.

So the president gave a pretty tough reason today as to why he says no. But it is unlikely to be the final word. This debate will continue.

DOBBS: John, thank you very much. We're going to be talking about Senator Richard Shelby right now to get -- get his views.

John King, senior White House correspondent, thank you.

Well, Senator Shelby has been amongst the most vocal members of Congress calling for the release of those documents. Senator Richard Shelby is the former chairman of the Senate Select Committee on Intelligence, which compiled the September 11 report. He chairs the Senate Banking Committee and joins us now from Capitol Hill.

Senator, good to have you with us.

SEN. RICHARD SHELBY (R), ALABAMA: Good evening, Lou.

DOBBS: The idea that this White House does not choose to declassify those 28 pages and would prefer several months in which to apparently prepare the American public for whatever they contain, how does that sit with you?

SHELBY: Lou, last week, I spent a number of hours, most of the day, looking through the intelligence report that was classified.

I specifically read the 28 pages very, very thoroughly. In my judgment, I believe 90 percent, 95 percent of the 28 pages could be declassified without harming national security in any way. Now, I know there are some things in there that we should not declassify. But it's only a small part of the report.

DOBBS: A small part. And you've taken this up with the administration, the president today adamant that he will not declassify those pages because of national security concerns. There is no way to give here, no way to compromise?

SHELBY: Well, you know, I have a lot of respect for the president. I'm one of his supporters, and I like a lot of his policies. But I would disagree on that particular point. And I think there will be a lot of other people, once they read those 28 pages, which I'd say every senator ought to do and every member of Congress, they can make their own judgments.

DOBBS: Well, Senator, every senator on your committee with whom I've spoken, Democrat and Republican, is taken aback by the classification of those 28 pages. Is there not a way -- and the Saudi Foreign Minister Faisal today outraged that his country would be facing 28 blank pages rather than charges to which the Saudis could respond, is there not some way we can deal with the conclusions here specifically on Saudi Arabia without divulging information within those 28 pages?

SHELBY: Well, my judgment is that you can, but...

DOBBS: Then let's do.

SHELBY: But ultimately, it will be up to the administration to declassify this information unless we go through the laborious and tortuous process, which we can do, through the Senate. We could do it that way. It's the hard way. I think we ought to try to do it the easier way.

DOBBS: Well, let me ask you point blank then. Is there a reason that the Saudis should fear what is reported in those 28 pages?

SHELBY: Well, I'm not going to reference a particular country, but I can say that what's in the 28 pages, in my judgment, after spending eight years on the Intelligence Committee, 90, 95 percent of it would not compromise, in my judgment, anything in national security.

DOBBS: And not referencing the Saudis in particular, is there any nation, unnamed, amongst those catalogued in those 28 pages who would find their contents embarrassing?

SHELBY: Well, the embarrassment is one thing. I think it -- I think you'll have to wait and see if that's declassified or not. But I'm just going to stay with my judgment that most of it ought to be declassified and let the American people know what's in it.

DOBBS: Well, let me turn to the committee that you do chair, the Senate Banking Committee. The funding of terrorists in nearly every instance from the Saudi royal families or members of the Saudi royal families, not to approach the Saudi royal family as a monolith, has gone from charities to terrorists, the predominant amount of that money. Is your committee investigating that, and how rigorously?

SHELBY: Well, we are getting under way in investigating who funds terrorists. We have that oversight responsibility. We have the jurisdiction on the Banking Committee. And I've said before, Lou, that money is the key to terrorists. Without money, without financing they can't go far. They can't exist. They can't buy the proper weapons, and they can't sustain attacks.

DOBBS: Senator, no one in the U.S. Congress has better credentials in intelligence and in finance than yourself. Is it your judgment at this point that enough is being done to end, to curtail the funding of al Qaeda?

SHELBY: We're doing a lot, and we've come a long way. And I'll have to say this administration is really working Treasury and others in the right direction. But we could have more cooperation, better cooperation. There are a lot of countries in the world that we don't have today, certainly didn't have a year-and-a-half ago.

DOBBS: Senator Richard Shelby, we appreciate your being here.

SHELBY: Thank you. Lou.

DOBBS: Thank you.

That brings us to the topic of tonight's poll question.

Do you believe the White House should declassify those 28 pages of the September 11 report, yes or no?

Cast your vote at cnn.com/lou. We'll have the results later in the show.

The final results of yesterday's poll. The question, do you think taxpayers should fund a public school specifically for gay students?

Fifty-two percent said yes, 48 percent said no.

Coming up next, schools out for students of the nation's first public high school for gay and lesbian students.

Is it a step towards progress or a step backwards toward segregation?

Heather Mac Donald of the Manhattan Institute says she is opposed to the idea. She's our guest next.

In "Selling America," our series of special reports this week on advertising. Tonight, targeting children. Kitty Pilgrim with a report.

And state secrets: is the White House hiding information that links Saudi Arabia to terrorist funding?

Former U.S. Ambassador to Saudi Arabia, Richard Murphy, says the Saudis are cooperating. He joins us. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Two months ago Democratic members of the Texas House fled to Oklahoma to fight Republican plans to redistrict. Now 11 of the state's Democratic senators have again fled across the state border, this time they are in New Mexico. They're hold up there tonight. They hoping to kill the GOP's redistricting plans again. Those which would result in more Congressional seats for Republicans.

Meanwhile, the Texas House today approved that Republican- sponsored Congressional redistricting bill. The plan goes to the Senate which, without the Democrats, again will not have a quorum.

New York City. He is causing controversy with its plans to open the country's first all-gay public high school. My next guest says identity politics has simply no place in high school. Heather Mac Donald is a fellow at the Manhattan institute Joining us tonight from Los Angeles.

Heather, good to have you with us.

HEATHER MAC DONALD, MANHATTAN INSTITUTE: Thanks, Lou.

DOBBS: The idea of a high school for gays is set off more e-mail here. Most -- we were just flooded with people on both sides of the issue. On the one hand, respect for this need, the special needs, of certain students. On the other hand, outrage that tax dollars would be spent to segregate students who most people would prefer be assimilated into the student body.

How do you get here?

I think it's a sign, Lou, that your viewers are well aware that education is in crisis and this is a symptom, not a solution, to that crisis. For the last two decades, education has told students it's all about identity politics. The curriculum has been bulkenized into gay studies, black studies, women's studies, graduation ceremonies have bulkenized into race, ethnicity and sometimes gender. And this is just another step in the wrong direction. The fact is we're falling all students in teaching them the basics of American history. That doesn't -- there is not a gay history, there is not a black history, there is not a white history. Everybody needs to learn the basics of history, of math and English.

DOBBS: You're talking about as a secondary level or would you include African-American studies at college and university level?

MAC DONALD: I think it includes at the college and university level. I think really, there should be common histories. Everybody should be interested in black history. It should not be carved out of the common curriculum.

DOBBS: What do you say to those gays, Heather, who say as Mayor Bloomberg -- that these gay students are often teased, they are harassed, and in some cases, assaulted. And the mayor advanced that as an argument for this segregated school.

MAC DONALD: The mayor has advanced that as an excuse for his own failure to keep safe schools. The fact is, many schools are far too violent. That's a failure of the adults who should be responsible for discipline. The problem is not the victims, it's the perpetrators. Rather than giving a life boat out for a special interest group of students, the people that should be removed from the schools are the troublemakers that are causing violence. There are lots of people who are the subject of violence in schools. That's a travesty. That's an educational failure. But it's not just gays that should be taken out. If you're going to do that, then basically the whole student body is going to be removed from your school and all you're going to have left are the thugs that are making life miserable for everybody else. They're the ones who should be out and as well the principals that are simply incapable of keeping order in their schools.

DOBBS: Heather, you know as you advance these words, in just raising the discussion, will create a reaction on the part of certain interest groups that would be associated with the gay and the lesbian community in this country.

MAC DONALD: Of course.

DOBBS: At this point, what can be done to make our schools safer? No matter where I travel in this country, one of the greatest concerns in public education is the safety of students and the lack of discipline that can be brought to bear in the classroom. What is this country to do?

MAC DONALD: As you say, Lou, it's not a gay issue. It's a discipline issue. You remove the students.

Unfortunately, we are now -- principals are saddled with a set of Supreme Court precedents that makes it very difficult to exercise common sense discipline. Teachers and principals fear that they're going to be sued by parents, that students are going to invoke a totally fictitious set of due process rights which should not be applied in a school setting. This is one setting where authority should matter.

Again, we need to cure this problem for all schools and for all students and not see it as a gay issue, which, again, bulcanizes (ph) students and...

DOBBS: What's the solution?

MAC DONALD: It merely encourages students in their solipsism of thinking of themselves as different and special, where students should be seen as a common student body.

DOBBS: You're talking about assimilation and education in society. What should we do in both the local level in dealing with our schools and as a nation to create that assimilation, that tolerance of diversity, and certainly that safety and discipline for all students?

MAC DONALD: Schools should focus on the basics. If you demand students that they do their homework, that they learn history, that they learn their mathematics tables and you don't fool around with all this identity politics nonsense, but actually have high expectations for all students.I think a lot of the problem will take care of itself.

Right now, schools are not very demanding and they're wasting their time on a lot of side issues like trying to promote gay consciousness or ethnic consciousness, which is not the mission of schools. The mission of schools is to create educated citizens who know American history, who know the history of the world.

This is, again, a sad distraction. It's a massive waste of money. Violence is a problem in our schools. I grant that you, Lou. But we shouldn't carve out a special victim group. All students deserve protection from violence.

DOBBS: Heather Mac Donald of the Manhattan Institute, we thank you.

MAC DONALD: Thank you, Lou.

DOBBS: Tonight we continue our series of special reports on advertising in this country, "Selling America." Increasingly, it means selling to children.

Advertisers are now targeting preteens. In fact, it's one of the fastest growing niche markets in the country, overwhelming children with commercials that turns wants into needs.

Kitty Pilgrim reports.

(BEGIN VIDEOTAPE)

(SINGING)

KITTY PILGRIM, CNNfn CORRESPONDENT (voice-over): Britney is just the beginning. Before parents were finished complaining about how their young daughters were copying everything the star wore and ate, marketers decided it was the next big wave. Now the Olsen twins make every young preteen, or tween, aspire to their coolness, selling clothing and a fragrance line at Wal-Mart.

Seventy-percent of kids watch what stars on TV wear. Top of the list is Hilary Duff, the star of "Lizzy McGuire." Tween boys are into skateboarding and other sports. Tween girls are into sports and clothes.

UNIDENTIFIED FEMALE: Let's get dirty.

PILGRIM: Plenty of impact from stars like "Charlie's Angels" and other bubble gum girls.

UNIDENTIFIED FEMALE: Cameron Diaz is really pretty. I have a lot of different friends. Some like being dressed up. Like, one of my friends, Lauren (ph), she likes being dressed up.

PILGRIM: Kid buying power is the obsession of Tim Coffey, head of the WonderGroup, a youth marketing and advertising consulting firm.

They point out this market of 20 million preteen customers is barely tapped. Spending power, mostly from allowance, is about $300 a year. But building customers is key.

Last year, full-fledged teens spent $170 billion on stuff. Tweens influence other purchases. For example, 65 percent of tweens help with the grocery shopping.

UNIDENTIFIED MAKE: Introducing Airheads Extremes.

PILGRIM: Airheads is an example of the kind of sell that makes a success and goes to the core of the demographic.

TIMOTHY COFFEY, CHAIRMAN & CEO, WONDERGROUP: Airheads is one of those candies that most adults don't know about, but every kid does. They're uniquely formulated for kids' taste, and we portray that brand in a way that, you know, speaks to their, again, this notion of power and freedom, that, you know, eating an Airheads allows you to do things you might not be able to do all the time.

PILGRIM: Some see the messages as manipulative, too subtle for kids to see through and too powerful to resist.

SUSAN LINN, HARVARD MEDICAL SCHOOL: It's exploiting their vulnerabilities. I mean, and why should we eat because it's cool? You know? We should eat because we're hungry or because it tastes good. But the notion of eating to be cool or to fit in is actually really problematic.

PILGRIM: Nonsense, say marketers like WonderGroup. The firm was hired by Chiquita to make bananas cool. They point out healthy products like yogurt and cereal fall into basic food groups.

But boring is not necessary. A trip through the grocery aisle finds Incredible Hulk Jell-O, highly animated yogurt and cereal bars for kids to grab on the way to the car pool instead of kids skipping breakfast altogether.

(END VIDEOTAPE)

PILGRIM: Marketers say it's a question of getting through the program. Kids do drive purchases, and a typical customer in a grocery store or anywhere else is a parent and a child. And the most asked question in America, is, "What do you want to eat?" And the kids decide -- Lou.

DOBBS: Good enough on the purchasers. That's remarkable -- $170 billion teenage market. PILGRIM: That is, and when they get them really young so when they become teenagers, then they'll have brand loyalty.

DOBBS: Kitty Pilgrim, thank you very much.

Tomorrow, we continue our series of special reports on "Selling America." Jan Hopkins looks at the way foreign advertising differs from advertising in this country and why celebrities who won't do commercials here gladly do them overseas.

Tonight's thought on the importance of youth, selling to them or otherwise: "The right way to begin is to pay attention to the young and make them just as good as possible." That from Socrates.

Speaking of advertising, Tiger Woods is paid about $20 million a year to endorse the Nike brand. But nothing in his contract says he must use Nike's products. In fact, he's made a commercial about that very fact. Woods, who defends his Buick Open title this week, is bagging his Nike driver in favor of his old Titlist model. Woods says the old club gives him more control. Nike says the move was not totally unexpected and certainly not for golf fans who have watched Tiger win only four tournaments this year. The saving grace for Nike is the Titlist club that Tiger is using is no longer on the market.

When we continue, is there a Saudi link to al Qaeda? the answer lies in classified documents that the White House will not reveal. Richard Murphy, former U.S. ambassador to Saudi Arabia, joins us next.

And job market fears undercut consumer confidence. Stock prices end the day lower. Christine Romans will have the market for us.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: Saudi Arabia's foreign minister today said he is disappointed that the White House will not declassify documents on an alleged Saudi link to al Qaeda. Prince Saud Al-Faisal said Saudi Arabia has nothing to hide and called the allegations outrageous.

Joining me now, former ambassador to Saudi Arabia, Richard Murphy. Good to have you with us.

RICHARD MURPHY, FORMER AMBASSADOR TO SAUDI ARABIA: Thank you.

DOBBS: It's remarkable, the Saudi foreign minister calling for a meeting with the president, and within 24 hours being in the White House to discuss this. Did he really expect that President Bush would reverse his decision based on his interest (ph), or is this public relations?

MURPHY: Today was the first day I think that the president invoked sources and methods as the reason for not releasing it. At least that's the first I've heard of it. But he's the -- it's where the buck stops. And if he decide there are sources and methods that have to be protected, that's it. DOBBS: You know the Saudis very well. You know the Middle East well. The idea that Faisal would think that he had any hope in the world of overthrowing a decision by the White House on the basis of his own interest, he had to understand were remote at best.

MURPHY: I think it shows just how raw the feelings have gotten in Saudi Arabia after being beaten up by the American media and the American Congress ever since 9/11, as guilty as charged or as suspected. And they feel they've come a long way in cooperating, and particularly ever since the bombings in Riyadh last May, they've come on like gangbusters with their own people.

DOBBS: Yet at the same time, the Saudis, it was a rather extravagant public relations effort, about five weeks ago, went on the offensive. It seems that the Saudis have not in the minds of most done enough to cooperate. They have attacked the al Qaeda within their own country, who carried out -- the al Qaeda who were suspected. They've killed six...

MURPHY: Just yesterday.

DOBBS: Just yesterday. They have been aggressive in that respect. But the cooperation and the upfront position of the Saudis, with the Islamic community worldwide, has not been something with which they have to be immensely proud.

MURPHY: Lou, this is -- I'm speculating, but I'm looking back over the period of cooperation between our investigative agency, the FBI, and theirs. And it was a poor start back in the mid-'90s, with the Khobar bombing...

DOBBS: Correct.

MURPHY: As you remember, files never been closed, and there was a lot of complaints in the FBI at that time that there wasn't cooperation. Ever since 9/11, it's been on the upswing, and we've learned how to deal with each other much better than we did then in the '90s.

DOBBS: Well, the Saudi decision not to permit U.S. troops to fly from Saudi soil against Saddam Hussein was not exactly an embrace.

MURPHY: They did more than they've admitted publicly.

DOBBS: I understand that, but publicly is what much of this battle against terrorism is about, Mr. Ambassador, as you well know.

MURPHY: They have a public opinion, just as we do. And they're very attentive to it.

DOBBS: Attentive to it, and surely they are keenly aware of the precipice that they face. They have a population that is young, that is volatile, that is unemployed. And they are fomenting Wahhabi terrorism in more than Saudi Arabia, but throughout the Middle East and a good part of Asia. MURPHY: Well, they stand accused in our country of educating their kids in terror and violence and exporting it through their missionaries. Now, they're a very evangelistic society. They believe they've got hold of the best practice of Islam, and they want the world to know it and they've spent millions in spreading it. But are they training in terrorism? No.

DOBBS: Are they supporting financially, either directly or indirectly, through the Saudi royal family? We know they are.

MURPHY: The royal family -- now, if we're going to talk about the government...

DOBBS: I didn't say the government. I said members of the royal family.

MURPHY: Members of the royal family numbering 7,000 princes, I'm sure there is a bad apple among the 7,000.

DOBBS: I get nervous every time I hear that expression, bad apple. The last time I heard it was when we were talking about corporate corruption in this country.

MURPHY: Well, a lemon. Would that help?

DOBBS: I'm not sure that produce or fruit is the way to get to it. But we thank you for trying to eliminate the subject for us, as always. Ambassador Richard Murphy, thanks for being here.

MURPHY: Thank you.

DOBBS: When we continue, the preliminary results of our poll tonight. Also, stock prices sink; consumer confidence falls. Christine Romans will have the market next. Stay with us.

(COMMERCIAL BREAK)

DOBBS: The preliminary results of our poll. The question, do you believe the White House should declassify the 28 pages of the September 11 report? Only 86 percent of you think so. So far. Fourteen percent said no.

Stock prices tumbled today on word of a big drop in consumer confidence. The Dow down 62 points. The Nasdaq down 4. The S&P off seven. Bonds also continued a recent slide, a dramatic slide I might point out. Christine Romans is here with the market for us, as always -- Christine.

CHRISTINE ROMANS, CNN FINANCIAL NEWS CORRESPONDENT: Well, you know that the consumer confidence number yanks the Dow down about 90 points, people are concerned, because, you know, the stock market has been doing well, and why would consumer confidence be weak? Then there was a rumor that maybe Saddam Hussein has been captured -- a rumor, of course -- but then that drove stocks up again. In the end, it was really volatile and mixed earnings news and higher bond yields eventually just kept the lid on stocks today. Let's give you an update on the earnings. Three hundred and seventy-one S&P 500 companies have reported earnings so far, Lou. They show profit growth of 6.8 percent. Revenue growth of 5.4 percent. McDonald's profit fell 5 percent. And DuPont mustered earnings growth even as its sales fell there.

Meanwhile, Verizon operating profit fell 9 percent, but sales rose thanks to strengths in its wireless business, and Verizon said it will cut up to 5,000 more jobs this year.

OK, back to bonds. This is where really the action was today. Initially they rallied.

DOBBS: Bonds are always exciting.

ROMANS: They are. Well, the bond prices rallied on that surprise weakness. And then they turned around. Look at the 10-year yield, 4.44 percent. Unbelievable. We were just at 3.1 about a month ago.

DOBBS: Almost 1.5 points. All right. Christine Romans, thank you.

And finally tonight, an elephant at a safari park in England gave visitors something of a surprise. The elephant picked up a rock. Here is the elephant. There is the rock. He hurled it at a car, shattering a window. The woman in the car was slightly injured. A zoo keeper said the elephant probably didn't mean any harm, just thought he would throw the rock when he realized it wasn't food. Threw it in disgust, I suppose. As far as technique goes, you have to admit, this is pretty good.

That's our show tonight. Thanks for being with us. Tomorrow, we continue our series of special reports, "Selling America." Senator Paul Sarbanes joins us to discuss the advances in corporate reform and the fight against corporate corruption. For all of us here, good night from New York. "LIVE FROM THE HEADLINES" with Anderson Cooper is next.

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