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Lou Dobbs Tonight

CIA Director Tenet Resigns; OPEC to Increase Oil Production

Aired June 03, 2004 - 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.

KITTY PILGRIM, CNN ANCHOR: Tonight, America's top spy master, George Tenet resigns after months of criticism. President Bush insists Tenet is leaving for personal reasons.
(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: He's been a strong leader in the war on terror, and I will miss him.

(END VIDEO CLIP)

PILGRIM: Lawmakers on Capitol Hill also praised Tenet, but some criticized his record. I'll be joined by two members of the Senate Intelligence Committee, Senators Olympia Snowe and Carl Levin.

"Outta Gas:" Americans struggle to cope with high gasoline prices. OPEC says it will increase oil production. Energy Secretary Spencer Abraham is my guest.

And how safe are America's nuclear power plants? Critics say they are potential dirty bombs, highly vulnerable to terrorist attack.

(BEGIN VIDEO CLIP)

ROBERT KENNEDY JR., AN ATTORNEY AT THE NATURAL RESOURCES DEFENSE COUNCIL: The federal government is doing literally nothing to protect these plants.

(END VIDEO CLIP)

PILGRIM: Tonight, we'll have a special report on nuclear safety.

ANNOUNCER: This is LOU DOBBS TONIGHT for Thursday, June 3. Here now for an hour of news, debate and opinion, sitting in for Lou Dobbs who is on vacation, Kitty Pilgrim.

PILGRIM: Good evening.

CIA Director George Tenet unexpectedly resigned today. Tenet said he decided to quit for personal reasons. His seven-year term as director was the longest in CIA history, but, in recent years, it was marked by the failure to stop the September 11 attacks and the controversy over whether or not Iraq had weapons of mass destruction.

Senior White House Correspondent John King reports from Rome, Italy. It's the first stop in the president's tour of Europe -- John.

JOHN KING, CNN SENIOR WHITE HOUSE CORRESPONDENT: Kitty, good evening to you from Rome.

The president due here shortly. A little more than three days, he will spend in Europe. It was 25 hours ago, 7:00 last night back at the White House, that Mr. Bush met with Director Tenet at George Tenet's request. Mr. Tenet told him he wanted to resign for personal reasons, said he decided it was imperative that he spend more time with his family.

The president, we are told, told Mr. Tenet that he would make the announcement, and Mr. Bush did that this morning outside of the White House just before leaving on this trip for Europe. He said, in his view, George Tenet had done a superb job.

Part of the president's effort today was to make clear that Mr. Tenet was leaving of his own volition, not forced out by the White House.

(BEGIN VIDEO CLIP)

BUSH: He has been a strong and able leader at the agency. He's been a strong leader in the war on terror, and I will miss him.

(END VIDEO CLIP)

KING: Now the president offering those words of support, but, of course, Mr. Tenet is closely identified with the whole debate over the pre-war intelligence in Iraq.

It is George Tenet who told President Bush it was a "slam-dunk case" that Saddam Hussein had weapons of mass destruction. The administration made that case to the American people and to world opinion as well, as the president led the country to war in Iraq.

Because Mr. Tenet is a holdover from the Clinton administration, many Democratic friends in Congress. So not too much criticism today. Some criticizing his record, though most saying they believe Mr. Tenet did the job to the best of his abilities, and the intelligence failures -- most blaming either the Pentagon or hyping the intelligence at the White House for the pre-war debate.

But George Tenet, of course, criticized as well for not connecting the dots, if you will, in the pre-9/11 days before the attacks here.

But, Kitty, the White House insisting that Mr. Tenet decided to leave on his own, that the president was surprised by the decision, but supported his reasoning.

Mr. Tenet's deputy, John McLaughlin, will take the reins of the agency when George Tenet leaves on July 11. The White House says a search for a successor will begin immediately, but no timetable as yet for announcing that new choice announced by the White House -- Kitty.

PILGRIM: All right. Thanks very much.

John King reporting from Rome. Thanks, John.

George Tenet told CIA staff that his decision to resign was based entirely on his own desire to spend more time with his family. Now Tenet said the CIA is much stronger now than it was seven years ago when he became director.

National Security Correspondent David Ensor reports.

David, what else did Tenet say to the CIA staff today?

DAVID ENSOR, CNN NATIONAL SECURITY CORRESPONDENT: Well, he was concerned with burnishing his image, the work that he has done over the last seven years, and, as you say, he feels he's left the intelligence community much stronger than he found it. It had suffered from cuts in the post-Cold War period. He has built it up.

Obviously, the budgets are much larger post 9/11. He's done a lot to bring it into the 21st Century, he feels. He thinks it's a pretty good record. He points also to the quick Afghan war -- a lot of intelligence work went into that; Libya giving up WMD, which Officials say no way that would have happened unless the CIA hadn't pointed out to Libya it already knew what they had; the rolling up of A.Q. Kahn's nuclear black market system and the rounding up of two- thirds of al Qaeda's leaders.

If there is a major disappointment, of course, it is probably that Osama bin Laden has not yet been caught. So he is stressing and senior officials at the intelligence -- at the CIA are stressing that this is a personal decision, and, again, he's trying to present his record as a pretty good one -- Kitty.

PILGRIM: David, Deputy CIA Director John McLaughlin will replace Tenet as acting director. What can you tell us about him and his record at the agency?

ENSOR: John McLaughlin is a career CIA man with a very good reputation in the agency. He's a quiet, careful sort of professional CIA bureaucrat. He happens to be an amateur magician as well, which is -- he does card tricks. He's somebody that has worked very closely with Tenet.

It should be a fairly seamless transition, and the good thing is he doesn't have -- from the Bush administration's point of view, as an acting director, he will not need to go through confirmation hearings. The administration is not, we understand, terribly interested in having bruising confirmation hearings for a new CIA director before the election in November -- Kitty.

PILGRIM: David, there's late word tonight of another resignation to come at the CIA. What do you know about that?

ENSOR: That's right. I gather from U.S. officials that James Pavitt, who is the director of operations at the CIA, the man really in charge of human intelligence, the spies who go out there and recruit agents around the world -- James Pavitt will offer his resignation, will announce that he plans to leave tomorrow to his staff. He plans to leave later in the summer.

Now officials are stressing that this was planned before, several weeks ago, that it has nothing to do with Tenet leaving, and, in fact, he didn't know Tenet was going to announce his resignation, and I have checked with someone outside the agency who knew this several weeks ago. So that's true. He was planning to leave three weeks ago.

PILGRIM: All right. Thanks very much.

David Ensor.

Thanks, David.

Now George Tenet's resignation took lawmakers by surprise. On Capitol Hill, there was plenty of praise for the CIA director, but some lawmakers also criticized Tenet's record.

Senior Political Analyst Bill Schneider reports.

(BEGIN VIDEOTAPE)

WILLIAM SCHNEIDER, CNN POLITICAL ANALYST (voice-over): The issue of intelligence is at the center of the presidential campaign; 9/11, Iraq, and George Tenet, CIA director since 1996, is at the center of the intelligence issue. Why did U.S. intelligence fail to appreciate the al Qaeda threat before 9/11?

RICHARD BEN VENISTE, COMMISSIONER, 9/11 COMMISSION: Why was it that you didn't put the question of prosecuting Moussaoui to the side and go after the information, which may well have led to unraveling this plot?

SCHNEIDER: Tenet wasn't prepared to answer, but, earlier, he acknowledged the CIA wasn't ready.

It will take us another five years to have the kind of clandestine service our country needs.

SCHNEIDER: Reporter Bob Woodward wrote that on the question of whether Iraq had weapons of mass destruction, "it's a slam-dunk case," Tenet told the president, and then, for emphasis, repeated his assurance, "Don't worry. It's a slam dunk." Who's really to blame here?

BOB KERRY, 9/11 COMMISSION MEMBER: It is up to the president to say are you sure, are you sure there's weapons of mass destruction.

SCHNEIDER: Tenet was first appointed by President Clinton, but now he's Bush's man.

SEN. JOHN KERRY (D-MA), PRESIDENTIAL CANDIDATE: I called for George Tenet to resign several months ago. That is not a new call for me.

SCHNEIDER: The Democrats got what they want, but Tenet's resignation is likely to intensify the debate. A former CIA director raises the issue: Is Tenet taking the fall for others?

STANISFIELD TURNER, FORMER CIA DIRECTOR: I think he's being pushed out and made a scapegoat. That is that the president feels he's got to have somebody to blame, and he's doing it indirectly by asking Tenet to leave.

BUSH: He's done a superb job on behalf of the American people.

SCHNEIDER: No one in the Bush administration is saying he was pushed out. Others note he's really been under a lot of pressure lately.

GEORGE TENET, CIA DIRECTOR: It was a personal decision, and it had only one basis in fact: the well-being of my wonderful family, nothing more and nothing less.

SCHNEIDER: Democrats say they know where the buck stops, and it's not on Tenet's desk.

REP. NANCY PELOSI (D-CA), MINORITY LEADER: I think that the responsibility goes far beyond George Tenet.

(END VIDEOTAPE)

SCHNEIDER: Now Democrats are free to raise the big issue. Did the U.S. go to war on the basis of intelligence that was wildly wrong and whose fault was that? Kitty.

PILGRIM: Good questions. Wasn't Tenet at Colin Powell's side during the U.N. Security Council briefing?

SCHNEIDER: February 2003, Powell testified before the U.N. Security Council. He accused Iraq of violating disarmament resolutions. George Tenet was sitting behind him.

Now just one month ago, Powell said sources of allegations when he testified were "inaccurate and wrong and, in some cases, deliberately misleading." Let me emphasize "deliberately misleading." Those are big words.

PILGRIM: Yes. Thanks very much.

Bill Schneider.

Thank you.

And later in the broadcast, I will talk about Tenet's resignation with two members of the Senate Intelligence Committee, Republican Olympia Snow and Democrat Carl Levin.

Well, as lawmakers focused on George Tenet's resignation, the FBI Director, Robert Mueller, was also making news on Capitol Hill. Mueller told a House panel he favored a separate intelligence branch within the FBI to fight terrorists, and he also repeated his opposition to the creation of a new domestic intelligence service modeled on Britain's MI-5.> In Iraq today, more heavy fighting between American troops and Shiite gunmen in the City of Kufa. U.S. soldiers killed 30 insurgents. Four Americans were wounded.

Guy Raz has an exclusive report from southern Iraq.

(BEGIN VIDEOTAPE)

GUY RAZ, CNN CORRESPONDENT (voice-over): Welcome to Kufa, one of the few remaining battlefields in Iraq. U.S. forces rolled in here Thursday morning looking for the men firing mortars at their nearby positions. Fifty mortars were fired at the forward operating base in the past 24 hours.

UNIDENTIFIED MALE: Watch anybody coming around the corner there.

RAZ: Military officials believe the American response killed dozens of insurgents loyal to the Shiite cleric Muqtada al-Sadr.

Rocket-propelled grenades and bullets whizzed by U.S. forces. Scouts searched two buildings where insurgents have camped out. Inside a school, a weapons stash, including 120-millimeter mortars, a miniature missile with a 30-meter kill radius.

Fighting has now definitively shifted from Najaf to neighboring Kufa. Various attempts at a truce have so far failed. U.S. forces say they're responsible for security in Kufa. The insurgents regard U.S. patrols as provocative.

MAJ. GEN. MARTIN DEMPSEY, COMMANDER, 1ST ARMORED DIVISION: The militia claim we're being provocative. They are not a legitimate force, and so it's -- I don't buy into the idea that we can provoke an illegitimate force.

RAZ: As the fighting rages on, senior officers with Task Force 237 say they'll carry on until the militia is destroyed.

Guy Raz, CNN, in Najaf, southern Iraq.

(END VIDEOTAPE)

PILGRIM: Work resumed today at a U.S. military base near the northern Iraqi city of Kirkuk following yesterday's suspected attack near an arms dump that set off dramatic explosions. No injuries were reported in the series of explosions.

The base is known as the Freedom Base. It's located at an airport northwest of Kirkuk, and the base houses about 2,000 U.S. troops.

Well, more on George Tenet's resignation in a moment. I'll be joined by Republican Senator Olympia Snowe, and, later, I will talk with Democratic Senator Carl Levin. Both are leading members of the Senate Intelligence Committee.

"Outta Gas:" working American families face massive fuel bills this summer. Energy Secretary Spencer Abraham will join me.

And crisis in the Middle East. Israeli Prime Minister Ariel Sharon struggles to win support for his plan to withdraw from Gaza, and top Palestinian negotiator Saeb Erakat is my guest.

(COMMERCIAL BREAK)

PILGRIM: Senator Olympia Snowe, a Republican member of the Intelligence Committee, praised George Tenet today. She said Tenet presided over the intelligence community at a time of unprecedented challenges and fundamental shifts in the threats to this country, and Senator Snowe joins us now from Capitol Hill.

And all of that very true. A very tough time to be in that position. What factors do you think contributed to George Tenet's resignation, Senator Snowe?

SEN. OLYMPIA SNOWE (R), INTELLIGENCE COMMITTEE: Well, obviously, Kitty, he indicated that he did this for personal reasons, and I would take him at his word until he indicates otherwise. Obviously, it is a very challenging position, and he's been in that position as director for seven years during some transformational times, and, obviously, I think he recognized that the time was for him to depart.

PILGRIM: It is extremely difficult timing politically and also strategically. As you point out, a tough time to have the helm of the CIA in flux. What challenges do we face on that score?

SNOWE: Well, it would obviously the transition. Clearly, we have some capable people within the CIA, such as the deputy director, John McLaughlin, who will become acting director in July. He is a true professional and skilled. We will, obviously, be working with the intelligence community, as will the president.

Certainly, Director Tenet's resignation is a surprise at this moment in time. I think everybody expected him to leave after the election. So, obviously, we'll all be adjusting and doing everything we can to make sure that there is a stable and continuous transition.

PILGRIM: Some Democrats have said that his resignation -- he's really basically a scapegoat for the mistakes of the Bush administration. What's your reaction to talk like that?

SNOWE: No, I don't believe so. I think, obviously, within the beltway and within Washington, there will be endless speculation as to what was his, you know, true reasons for departure. I think he indicated the real reasons were personal.

But, again, we're underscoring the fundamental changes that are occurring within the intelligence community, and change has to occur within the community in terms of structure and fundamental reformation of the entire intelligence community.

We have to adapt the agencies with the threats of the 21st Century, and that clearly has not happened, and there have been some systemic failings and shortcomings that have to be changed almost immediately.

PILGRIM: Congress has certainly demanded increased oversight in the intelligence process. Is this an opportune time to move forward on that?

SNOWE: We will be. As a member of the Senate Intelligence Committee, I can assure you with the forthcoming report we will be releasing shortly that will investigate in depth the intelligence that was used for the weapons of mass destruction issue in Iraq, and, also, from that, we hope will evolve some fundamental changes and provide the oversight that's absolutely essential.

I think we should have a director of national intelligence that has -- you know, is in the Cabinet. We should have an inspector general for all of the 15 intelligence agencies, so accountability as well as reforming the whole structure that will respond to the 21st Century threats. That hasn't happened, and the time has come for that change, and that change has to occur now.

PILGRIM: All right. Thank you very much.

Senator Olympia Snowe.

Thanks for joining us tonight.

SNOWE: Thank you.

PILGRIM: That brings us to the topic of tonight's poll: What impact do you believe George Tenet's resignation will have on the intelligence community? Will it help, will it hurt or make no difference? Cast your vote at cnn.com/lou. We'll bring you the results later in the show.

Still ahead tonight, the ranking Democrat on the Senate Arms Services Committee will share his reaction to Director Tenet's resignation. Senator Carl Levin will join us.

And then, OPEC says it will raise oil production quotas, but will that translate into a price break for American drivers? Energy Secretary Spencer Abraham will be my guest.

And our special report, "Outta Gas." Tonight, the threat to our nuclear power plants. How secure are they? And we will have a special report on that.

Stay with us.

(COMMERCIAL BREAK)

PILGRIM: Oil prices today fell from the all-time highs reached earlier this week. In New York trading, crude oil closed at $39.28 a barrel. That is down 68 cents. And that decline came after OPEC members meeting in the Middle East agreed to increase oil production.

Brent Sadler reports from Beirut.

(BEGIN VIDEOTAPE)

BRENT SADLER, CNN BEIRUT BUREAU CHIEF (voice-over): Behind polite perhaps, a bruising tug of war within OPEC to combat surging oil prices. Saudi Arabia and core Gulf producers Kuwait and the United Arab Emirates set on pumping more oil starting next month.

But Iran and Venezuela urging restraint, fearing oil prices could collapse if the market gets swamped. And for Iran, politics are at stake.

NASSIR SHIRKHANI, MIDEAST EDITOR, "UPSTREAM": Iranians do not want to be seen as responding to U.S. demands for more oil. So, politically, that's not really convenient for them to do.

SADLER: In real terms, thanks mainly to the Saudis, around one million barrels of oil a day will pour into the market.

ALI AL-NAIMI, SAUDI OIL MINISTER: Already, confidence is too strong, but I believe this reflects an intention, a good intention, to, hopefully, moderate the price.

SADLER: Prices that have seen the cost of oil jump to record highs in the past three months. The quantity of oil is not the only problem, though.

RAFAEL RAMIREZ, VENEZUELAN OIL MINISTER: Clearly, the position is to help political (UNINTELLIGIBLE) important factor that has impacted the price of oil in this market.

SADLER: Specifically, powerhouse producer Saudi Arabia targeted by deadly terrorist attacks on non-Saudi oil workers, the only country with enough spare pumping capacity to seriously boost the worldwide flow of oil. Nothing is certain in a volatile climate.

SHIRKHANI: Nothing. And the only cushion has been Saudi Arabia, and, if there are problems in Saudi Arabia, then, obviously, there is nobody else to step in and provide the extra oil that the world needs.

SADLER (on camera): In the end, it boils down to pricing and politics. OPEC walking a fine line between the two. Ministers hoping that by pumping more oil, it might just take the sting out of hyperactive markets and calm the jitters.

Brent Sadler, CNN, Beirut.

(END VIDEOTAPE)

PILGRIM: Well, my next guest calls OPEC's decision to raise oil production welcome news for the energy markets, but Energy Secretary Spencer Abraham says this country still faces a major energy challenge. American consumers would probably agree. Gasoline prices have been near record levels for more than three weeks.

Energy Secretary Spencer Abraham joins me tonight from Washington.

And thanks for joining us, Mr. Secretary.

SPENCER ABRAHAM, SECRETARY OF ENERGY: Thanks, Kitty.

PILGRIM: Do you think that we'll see some reaction at the pump soon?

ABRAHAM: Well, there'll be some reaction. It's not immediate because this goes into effect in the next few weeks. But we did see today that in another set of reports on the inventories, both for oil and gasoline, that the numbers were higher.

That doesn't usually happen during memorial week. So that indicates that there is already some impact in terms of the marketplace. And so I think that's good news. We also saw gasoline prices for the week come down from last week. That's the first reduction in five weeks.

So all of this is, basically, good news. Obviously, we want to see more of it. We're doing our best to, you know, try to prompt it as we move along.

PILGRIM: You know, many suggest that OPEC's really producing above their quotas already. Is it going to be sufficient, do you think, this agreement to...

ABRAHAM: Well, if -- you know, we're talking about a million additional barrels a day being pumped into the marketplace. That is very significant. It clearly will have an impact. It's always hard to judge what that will be, and that's not something I want to speculate about, but I think those are big numbers.

And, when I was at a recent meeting that included OPEC ministers -- world energy minister, just a week and a half ago, it was made clear to me by a number of the OPEC producers that they're prepared to fulfill orders right up to their limits, and so that's also very good news.

PILGRIM: The (UNINTELLIGIBLE) producer, Saudi Arabia, though, there could be vulnerabilities there. What's your thinking on that?

ABRAHAM: Well, you know, the Saudis -- I think the Saudis are capable of protecting their production assets and, as you know, not only the United States but a number of the major oil-consuming countries have built up our strategic reserves, our emergency supplies. If there is a serious disruption in supply, then those reserves will be tapped.

And so I know there's jitters in the marketplace, but we are prepared, as are the other major countries who have these reserves, to act if we ever had to. I don't think that will be the case, but, if it's necessary, we will. And so I recognize some people are concerned and, obviously, they have to factor all of this in, but we definitely are prepared to act if ever the occasion is called for.

PILGRIM: You know, let's take the flip side of this. The Venezuelan oil minister said basically, if we pump too much, prices will crash. Is there such a thing as oil prices that are too low? And will that happen?

ABRAHAM: Well, I -- with gasoline prices where they are today, you're not going to hear this energy secretary suggest that low -- oil and gasoline prices are too low or that we'll get to that stage. I think -- you know, there's politics involved in these meetings.

We happen -- I think it's quite clear that the demand right now, because of the strong United States economy that we're seeing and growth in the economies in Asia, that that demand is, in fact, really pushing the market, tightening the market, and we need this additional production. I think claims that there's too much oil out there today are just simply off the mark.

PILGRIM: Yes, we certainly do seem to need it.

You know, it's easy to make OPEC a target, but what about Congress? I mean, we do have this energy bill that has not passed.

ABRAHAM: Right. And, you know, we've been calling for Congress to finish the job of passing an energy bill now for three years. You know, the president outlined a 105-point set of recommendations to put our energy house in order three years ago.

Ninety-five of those 105 recommendations we've implemented because we could do it without congressional action. But the last ones require Congress, and I can't imagine that they're not going to get this job done. They have to finish that job, and we'll certainly try to work with them as much as possible. But the ball's in Congress' court. They need to act.

PILGRIM: All right. Thanks very much.

Spencer Abraham.

ABRAHAM: Thank you.

PILGRIM: Thank you very much.

The U.S. Nuclear Regulatory Commission is asking operators of 69 nuclear plants to report on how they inspect their reactors for cracks. Now, this request comes after massive corrosion was discovered at an Ohio plant. And the steps effect about two-thirds of the nation's nuclear reactors.

In our continuing series of special reports "Outta Gas," Peter Viles looks at the security and regulatory issues surrounding the nation's nuclear plants.

(BEGIN VIDEOTAPE)

PETER VILES, CNN CORRESPONDENT (voice-over): At the Davis Besse Nuclear Plant in Ohio, 2 years ago a shocking discovery: a hole the size of a pineapple in the plants steel reactor vessel head, that's a vital barrier against release of radiation. Especially shocking, because the plant had recently inspected by the federal government. VICTOR GILINSKY, FRM. NRC COMMISSIONER: They NRC had evaluated that plant in 18 categories, which is the standard way the NRC does things. They gave them a perfect score in every single category. Now, it tells you that there's something wrong with the oversight system.

VILES: A GAO Report concludes, the Nuclear Regulatory Commission quote, should have, but did not identify or prevent the corrosion at Davis-Besse because inspections yielded inaccurate and incomplete information. Another fear that terrorists may attack a nuclear plant.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: And the depth of their hatred is equaled by the madness of the destruction they design. We have found diagrams of American nuclear power plants and public water facilities.

VILES: The industry says it has taken steps to defend against terrorism.

MARVIN FERTEL, NUCLEAR ENERGY INSTITUTE: We've spent about a billion dollars putting in better vehicle barrier systems other protection things. And every kind of protection you can to make sure that what we can do as a private sector entity is the best it can be to protect the lives of the people on the plants as well as the lives of the people around the plants.

VILES: But critics say the plants are literally dirty bombs waiting to be hit.

ROBERT F. KENNEDY JR. NATURAL RESOURCES DEFENSE COUNCIL: If you ask the Army, the Air Force, the Marines, the Coast Guard, they'll say it's not our job to protect the plant. The federal government is doing literally nothing to protect the plants.

EDWIN LYMAN, UNION OF CONCERNED SCIENTISTS: To this date, there is been no real action to protect them against air attacks. So, they are as vulnerable today as they were on September 10, 2001.

VILES: The NRC says, even if a plane did attack a nuclear plant the likelihood of releasing radioactivity is low.

(END VIDEOTAPE)

VILES: There hasn't been a new plant built in this country in a generation. But the Bush administration has announced a goal of having new plants built and brought online by the end of this decade -- Kitty.

PILGRIM: Thanks very much. Pete Viles.

Coming up, the head of the CIA is out. The ranking Democrat on the Senate Armed Services Committee says that is entirely appropriate. Senator Carl Levin joins us next.

And then a fresh wave of deadly violence on the road to peace in the Middle East. Chief Palestinian peace negotiator, Saeb Erekat will be my guest.

And, one 13-letter word spells success for one very bright 14- year-old. We'll have that story coming up.

(COMMERCIAL BREAK)

PILGRIM: One of the leading Democrats on the Senate Intelligence Committee, Carl Levin, said the resignation of George Tenet is appropriate. But Senator Levin said Tenet's departure must not distract Congress from its investigation into the massive intelligence failures in Iraq. And Senator Levin joins me now from Washington. Thanks very much for joining us.

SEN. CARL LEVIN, (D) MICHIGAN: Kitty, good being with you.

PILGRIM: The resignation, is this necessary, in your mind, to revamping the CIA? Certainly, you've been very publicly critical of the way things are going at the agency?

LEVIN: Well, I think it's appropriate. There have been so many intelligence failures, they have been massive prior to 9/11, prior to the Iraq War when the CIA basically said how certain they were that there were weapons of mass destruction there.

But they don't bear sole responsibility over at the CIA. There were other people who contributed to these failures, including some of the intelligence folks at the Defense Department and also the higher level policy people who took the intelligence given to them, but exaggerated it much beyond what the intelligence community gave to them.

PILGRIM: The timing of this is certainly inopportune in that we are fairly in a crisis of security here in this country, attacks have been warned. We certainly are in the middle of an election year. It is not the most opportune time to have the head of the CIA stepping down. How do we cope with this? How do we not telegraph to the rest of the world that we are vulnerable in some way?

LEVIN: Well, the administration now has to deal with a problem. It is, obviously there's some disarray here. I think that Tenet caught the president by surprise. I don't think he was forced out. Quite the opposite, my hunch is that the administration would have like to have kept him past the election. But now, they're going to have to pick up some pieces and figure out what the best way is to keep the CIA going in some kind of coherent way, hopefully improve their operations.

This is a real chance, a real opportunity here to look at the whole intelligence community and to try to assess failures, change them structurally where necessary.

PILGRIM: Yes, let's talk about that restructuring. In fact, during the 9/11 commission hearings there were many ideas floated on restructuring the intelligence flow of information. One is to put the function, the domestic intelligence functions under the CIA. Where do you come down on this restructuring issue? LEVIN: I'm open to the possibilities that are being looked at. I have not concluded what is the best way to go. We don't want to create another layer of bureaucracy. I think George Tenet is right in pointing that out. On the other hand, we have to do things differently.

We've got to avoid having the head of the CIA being a political person, advising the presidents on policy matters. He should not be in the policy area at all. They ought to be giving intelligence objectively, given it unvarnished and let policy people make use of it.

In Woodward's book when he said that the president, after listening to a presentation of the intelligence said relative to Iraq's weapons of mass destruction, is that all there is. And then Tenet came back and said, well it's a slam dunk. You had Tenet, at that point, saying to the president we're going to produce much more certain intelligence than you just heard from his deputy. That's not the way it should be.

PILGRIM: You've been very publicly critical of the CIA, saying they withheld critical information at a time when we were deciding to go to war in Iraq or not to go to war in Iraq. Can you spell out for a little bit, for our viewer, what your criticisms are?

LEVIN: Well, two things. One is, I believe that they exaggerated the intelligence in many, ways that the public statements and the public reports of the CIA relative to a whole host of issues, including the presence of weapons of mass destruction and having stockpiles in Iraq of weapons of mass destruction went beyond the underlying intelligence. So they exaggerated in their public statements and went beyond what the classified material was.

But also, Tenet misstated, and I think, misled us in terms of the number of suspects sites in Iraq that was shared with the U.N. He exaggerated that directly, despite given an opportunity to correct it. And so I think that we also had some exaggeration.

But again, he doesn't bear sole responsibility here. The intelligence that was given to this administration was exaggerated much further in the area of biological weapons, in terms of the vans. The CIA didn't say those were mobile, biological vans. That was the president and vice president, particularly the vice president, who said that after the CIA decided they couldn't say that those vans that were found were biological weapons vans. Same thing with the uranium, same thing true with the aluminum tubes on the nuclear weapons programs.

So the administration top policy people exaggerated this intelligence beyond what was given to them by the CIA which had also been hyped and exaggerated in the public statements.

PILGRIM: All right. Thanks very much for joining us, Senator Carl Levin. Thank you.

LEVIN: Thank you. PILGRIM: A reminder to vote in tonight's poll. What impact do you believe George Tenet's resignation will have on the intelligence community?

Will it help, hurt, or make no difference?

Do cast your vote, cnn.com/lou. We'll bring you the results later here.

And that brings us to "Tonight's Thought." "There is nothing wrong with America that cannot be cured with what is right with America." And those are the words of the 41st president of the United States, Bill Clinton.

Well, the phrase playing politics will take on an entirely new meaning in a new video game this summer. The game is called the political machine. It will allow players to virtually manage the campaigns of President Bush or Democratic challenger Senator John Kerry. They can play as campaign managers and the players will have to manage a budget, coordinate strategies, even give mock television interviews to a mock show called 60 seconds. It will be released between the Democrat and Republican conventions later this year.

Still to come, Aerial Sharon pushes forward with a major plan. That's despite opposition from his own cabinet. We'll get reaction on that plan from chief Palestinian negotiator Saeb Erakat.

And a student who is used to getting all A's needed one a to spell the winning word at this year's National Spelling Bee. We'll have it.

(COMMERCIAL BREAK)

PILGRIM: Israeli Prime Minister Ariel Sharon is pushing with his plan to withdraw from Gaza, that's despite opposition from much of his cabinet. Sharon says he will present his plan to the cabinet on Sunday. And he expects it will be approved. And Sharon's comments came after an Israeli offensive into the refugee camp in Gaza last month. Israeli soldiers killed 45 Palestinians in that operation.

Joining me from Washington is the top Palestinian peace negotiator, Saeb Erakat. And thank you for joining us, sir.

The second Sharon plan is in the process, in the political process.

Is there anything in that plan that would make it acceptable to Palestinians?

What would you like to see changed?

And what would make it a successful plan, in your view?

SAEB ERAKAT, CHIEF PALESTINIAN NEGOTIATOR: Well, from the beginning we wanted to see if we can maximize the opportunities of this plan and minimize the risks. We (UNINTELLIGIBLE) to break this vicious cycle between the two sides. But at the same time when he is meeting with his Likud party, with his coalition members, with the Americans, I'm the chief negotiator. I want him to come and negotiate with me. After all, it is my future and the future of Palestinians. For Mr. Sharon to declare he will have unilateral withdraw, Gaza, we say we want to maximize the opportunities and the Americans adopt this plan, but the only people who have not adopted his plan is his own government.

So, is this going to be part of the road map?

Is this going to lead to the occupation of the West Bank?

Is this going to lead to a Palestinian state next to Israel?

All the questions must be addressed. The only way to address this is by resuming negotiations. Mr. Sharon's ideas cannot succeed without a full Palestinian partner.

PILGRIM: Let me just interject. After the Bush/Sharon press conference on April 14, you called it a charade and said it was a solution that was imposed on the Palestinians. Yet, we were clearly at an impasse on the peace process.

What would it take to move forward to make your position, again take it into consideration?

What would you need to do and what would you like to do?

How would you reinsert yourself back into this process?

ERAKAT: Kitty, first of all, on the 14th of April I think the decision of the American administration to decide for us as far as settlement, (UNINTELLIGIBLE) on the grounds, and many other issues, they have no right to do it. All I said that day is nobody can make the decisions on our behalf. We're the ones with the Israelis who will negotiate and make the concessions required by both sides. Now how do I see things done? I think today Egypt doing a good draw. I think Egypt should be supported in terms in acquiring first a mutual cessation of violence by Israeli's against Palestinians and Palestinians against Israeli's. That's the road map.

Secondly, we're going to begin a process of rebuilding Palestinian security force which were literally destroyed by the Israeli Army in the last two and a half years in order to resumen our security responsibilities actively.

Thirdly, we want to move into elections. We need elections. That's Palestinians, that's why I'm here in Washington and yesterday in New York, trying to gather as much support for the possible of Palestinian elections. We are ready to carry out major elections, legislative, presidential and local elections in the next 6 months. And we need the United States to help us and to invest in us and with the Europeans to do the same. Same to the United Nations and the Russians. I believe we can package the ideas of Sharon and make it part of the road map, and not an alternative to it. And the first thing we need to do is break this vicious cycle by mutually declaring a cessation violence against the other.

PILGRIM: Let's also talk about Egypt, which is very key. They have stepped forward and said they would -- they have suggest training 200 security advisers to the Gaza Strip this month.

Would that be useful to you?

And they would also help train Palestinian policemen to maintain security in Gaza after an Israeli withdrawal?

Are both of those useful to the Palestinian position?

ERAKAT: They are not only useful, they're essential. And We appreciate the efforts being exerted by Egypt. And we are fully on board with the Egyptian proposals they are trying to make. The Gaza withdrawal as part of the road map and not an alternative to it. The link between the West Bank and Gaza is established. And here I think the United States, Europe and everybody else in must help and assist Egypt. But at the same time the Egyptians are awaiting answer from us. Also we have to give answers as far as our security possibilities, but at the same time Mr. Sharon has to give an answer to stop incursions, assassinations, demolition of homes, settlement activities in order to revive the hope in the minds of Palestinians, and Israelis this is do able. I think today for the first time in three years, Kitty, I have some hope in my heart that we may be going in the right direction with the Egyptians.

PILGRIM: We take heart from that. Thank you for joining us.

Saeb Erakat, thank you sir.

Tomorrow we'll have a different view of the road map and peace and Middle East. We'll talk with Israeli Council General Ambassador Alon Pinkus.

And when we return, we'll share some of your thoughts on the tapping of the strategic petroleum reserve.

Also a 14-year-old spells word most of us can't pronounce and one word in particular won him the title in the National Spelling Bee Championship. We'll have that.

(COMMERCIAL BREAK)

PILGRIM: It was a down day on Wall Street. That's despite some relief in oil prices. The Dow lost just over 67 points. The Nasdaq dropped about 29. The S&P 500 closed down more than 8. Surprising strength last month in stores across the country. Christine Romans has the details.

CHRISTINE ROMANS, CNN CORRESPONDENT: Kitty, really a big surprise here. Record high gas prices did not keep shoppers out of the stores in May. From Costco to Wal-Mart to the luxury retailers, May same-store sales much stronger than anyone had thought. Even after Wal-Mart warned that high gas prices was sucking 7 bucks a week out of its customers' pockets, sales there still grew almost 6 percent.

Also perhaps some relief ahead in gas prices. The government says the average price at the pump should fall back below $2. Wholesale gasoline prices are down 16 cents since mid May. That savings should be passed on eventually. Don't get too excited. A little relief but the government expects prices will remain much hotter than last year. At the same time, high hopes for a recovery in the jobs market. Monster.com reports a surge in help wanted advertising for jobs in agriculture, hotels, restaurants finance, transportation and warehouses but the proof comes tomorrow. More than 600,000 jobs have been created in April and March. 225,000 expected in May. We'll get that report tomorrow.

PILGRIM: We will all be waiting for that. Thanks very much.

Let's take a look at some of your thoughts on whether the United States should tap into its emergency oil stockpile. Eric of Boston, Massachusetts writes, "the Strategic Petroleum Reserve should not be tapped at this point. The recent gasoline price spikes reflect a supply squeeze more than a supply disruption."

And David of New Orleans, Louisiana says, "the Strategic Oil Reserve is just that, a reserve. We need to save the oil in case of a serious emergency."

On broken borders, Rich Kellum of New Jersey writes, "why do we need border security? With 12 million illegal aliens in this country, our borders have already been breached." We do love hearing from you. E-mail us at loudobbs@CNN.com.

A 14-year-old boy from South Bend, Indiana today won the 77th annual Scribbs National Spelling Bee in Washington, D.C. David Tidmarsh beat 264 other spellers aged 9 to 15. We'll let him spell the winning word for you.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: A-U-T-O-C-H-T-H-O-N-O-U-S.

UNIDENTIFIED FEMALE: You are the champion.

(END VIDEO CLIP)

PILGRIM: That is an adjective. It means indigenous native, formed or originating in the place where found. That's new for me. The spellers competing in this year's events are a shining example of America's bright future. But how important is the art of spelling to the rest of the nation's youth? Louise Schiavone reports.

(BEGIN VIDEOTAPE)

LOUISE SCHIAVONE, CNN CORRESPONDENT (voice-over): Most youngsters haven't even heard of words like this.

UNIDENTIFIED MALE: May I please have a definition for this word?

SCHIAVONE: Just thinking about it makes them fear the dreaded bell. In reality, even at the best schools, English teachers are slightly skeptical about the National Spelling Bee.

DAVID HORGAN, ENGLISH TEACHER, PYLE MIDDLE SCHOOL: At the risk of offending generations of Spelling Bee people, as an English teacher I find the whole Spelling Bee thing very remote and almost unrelated to academic -- to spelling and to English because the words that they use are just words that we hardly ever use in the English language. It is more like Trivial Pursuit.

SCHIAVONE: Most youngsters are in awe of Spelling Bee challengers.

MADELINE OLIVER: When I watch that, I'm, like, oh, my god. They have to spend so much time studying for that.

DANIEL FLESHNER: Those are amazing. I couldn't ever imagine spelling those words.

SCHIAVONE: Indeed, teachers say most students are stumped by far less exotic words like beginning, surprise, occasion, and rhythm. That's where a computer's spell check comes in and there is an ongoing debate about whether that hurts or helps and what's more, these 21st Century students say they have already gotten out of the habit of writing longhand.

JULIA DEUTSCH: Now, I can barely do cursive but my mom says when she was a kid, like, everything was in cursive.

NIKKI BRAND: Eventually, there will be no such thing as pens. Everybody will just have their little mini laptops.

SCHIAVONE: Teachers say people notice bad spelling.

CELIA HARPER, ENGLISH DEPT. HEAD, PYLE MIDDLE SCHOOL: It is sort of like smiling with egg on your face if you sent something off that has a misspelled word.

SCHIAVONE: In short, good spelling is a mark of good manners.

(END VIDEOTAPE)

SCHIAVONE: Kitty, I have a feeling that you are probably a good speller but here are some tips for good spelling. Teachers believe that some people are just born with the talent but lots of reading helps. Like so much in life, it also helps to correct your mistakes as you make them.

PILGRIM: I can't claim any great honors in that. Thanks very much.

Still ahead, we'll have the results of tonight's poll.

(COMMERCIAL BREAK)

PILGRIM: Here are the results of tonight's poll. More than half of you believe George Tenet's resignation will make no difference to the intelligence community. Thanks for joining us tonight. Please join us tomorrow. Senator Kerry's military adviser, former joint chiefs chairman, General John Shalikashvili and in our special report "Out of Gas," waste, the next revolution in energy production.

For all of us here, good night from New York. "ANDERSON COOPER 360" 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

Aired June 3, 2004 - 18:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KITTY PILGRIM, CNN ANCHOR: Tonight, America's top spy master, George Tenet resigns after months of criticism. President Bush insists Tenet is leaving for personal reasons.
(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: He's been a strong leader in the war on terror, and I will miss him.

(END VIDEO CLIP)

PILGRIM: Lawmakers on Capitol Hill also praised Tenet, but some criticized his record. I'll be joined by two members of the Senate Intelligence Committee, Senators Olympia Snowe and Carl Levin.

"Outta Gas:" Americans struggle to cope with high gasoline prices. OPEC says it will increase oil production. Energy Secretary Spencer Abraham is my guest.

And how safe are America's nuclear power plants? Critics say they are potential dirty bombs, highly vulnerable to terrorist attack.

(BEGIN VIDEO CLIP)

ROBERT KENNEDY JR., AN ATTORNEY AT THE NATURAL RESOURCES DEFENSE COUNCIL: The federal government is doing literally nothing to protect these plants.

(END VIDEO CLIP)

PILGRIM: Tonight, we'll have a special report on nuclear safety.

ANNOUNCER: This is LOU DOBBS TONIGHT for Thursday, June 3. Here now for an hour of news, debate and opinion, sitting in for Lou Dobbs who is on vacation, Kitty Pilgrim.

PILGRIM: Good evening.

CIA Director George Tenet unexpectedly resigned today. Tenet said he decided to quit for personal reasons. His seven-year term as director was the longest in CIA history, but, in recent years, it was marked by the failure to stop the September 11 attacks and the controversy over whether or not Iraq had weapons of mass destruction.

Senior White House Correspondent John King reports from Rome, Italy. It's the first stop in the president's tour of Europe -- John.

JOHN KING, CNN SENIOR WHITE HOUSE CORRESPONDENT: Kitty, good evening to you from Rome.

The president due here shortly. A little more than three days, he will spend in Europe. It was 25 hours ago, 7:00 last night back at the White House, that Mr. Bush met with Director Tenet at George Tenet's request. Mr. Tenet told him he wanted to resign for personal reasons, said he decided it was imperative that he spend more time with his family.

The president, we are told, told Mr. Tenet that he would make the announcement, and Mr. Bush did that this morning outside of the White House just before leaving on this trip for Europe. He said, in his view, George Tenet had done a superb job.

Part of the president's effort today was to make clear that Mr. Tenet was leaving of his own volition, not forced out by the White House.

(BEGIN VIDEO CLIP)

BUSH: He has been a strong and able leader at the agency. He's been a strong leader in the war on terror, and I will miss him.

(END VIDEO CLIP)

KING: Now the president offering those words of support, but, of course, Mr. Tenet is closely identified with the whole debate over the pre-war intelligence in Iraq.

It is George Tenet who told President Bush it was a "slam-dunk case" that Saddam Hussein had weapons of mass destruction. The administration made that case to the American people and to world opinion as well, as the president led the country to war in Iraq.

Because Mr. Tenet is a holdover from the Clinton administration, many Democratic friends in Congress. So not too much criticism today. Some criticizing his record, though most saying they believe Mr. Tenet did the job to the best of his abilities, and the intelligence failures -- most blaming either the Pentagon or hyping the intelligence at the White House for the pre-war debate.

But George Tenet, of course, criticized as well for not connecting the dots, if you will, in the pre-9/11 days before the attacks here.

But, Kitty, the White House insisting that Mr. Tenet decided to leave on his own, that the president was surprised by the decision, but supported his reasoning.

Mr. Tenet's deputy, John McLaughlin, will take the reins of the agency when George Tenet leaves on July 11. The White House says a search for a successor will begin immediately, but no timetable as yet for announcing that new choice announced by the White House -- Kitty.

PILGRIM: All right. Thanks very much.

John King reporting from Rome. Thanks, John.

George Tenet told CIA staff that his decision to resign was based entirely on his own desire to spend more time with his family. Now Tenet said the CIA is much stronger now than it was seven years ago when he became director.

National Security Correspondent David Ensor reports.

David, what else did Tenet say to the CIA staff today?

DAVID ENSOR, CNN NATIONAL SECURITY CORRESPONDENT: Well, he was concerned with burnishing his image, the work that he has done over the last seven years, and, as you say, he feels he's left the intelligence community much stronger than he found it. It had suffered from cuts in the post-Cold War period. He has built it up.

Obviously, the budgets are much larger post 9/11. He's done a lot to bring it into the 21st Century, he feels. He thinks it's a pretty good record. He points also to the quick Afghan war -- a lot of intelligence work went into that; Libya giving up WMD, which Officials say no way that would have happened unless the CIA hadn't pointed out to Libya it already knew what they had; the rolling up of A.Q. Kahn's nuclear black market system and the rounding up of two- thirds of al Qaeda's leaders.

If there is a major disappointment, of course, it is probably that Osama bin Laden has not yet been caught. So he is stressing and senior officials at the intelligence -- at the CIA are stressing that this is a personal decision, and, again, he's trying to present his record as a pretty good one -- Kitty.

PILGRIM: David, Deputy CIA Director John McLaughlin will replace Tenet as acting director. What can you tell us about him and his record at the agency?

ENSOR: John McLaughlin is a career CIA man with a very good reputation in the agency. He's a quiet, careful sort of professional CIA bureaucrat. He happens to be an amateur magician as well, which is -- he does card tricks. He's somebody that has worked very closely with Tenet.

It should be a fairly seamless transition, and the good thing is he doesn't have -- from the Bush administration's point of view, as an acting director, he will not need to go through confirmation hearings. The administration is not, we understand, terribly interested in having bruising confirmation hearings for a new CIA director before the election in November -- Kitty.

PILGRIM: David, there's late word tonight of another resignation to come at the CIA. What do you know about that?

ENSOR: That's right. I gather from U.S. officials that James Pavitt, who is the director of operations at the CIA, the man really in charge of human intelligence, the spies who go out there and recruit agents around the world -- James Pavitt will offer his resignation, will announce that he plans to leave tomorrow to his staff. He plans to leave later in the summer.

Now officials are stressing that this was planned before, several weeks ago, that it has nothing to do with Tenet leaving, and, in fact, he didn't know Tenet was going to announce his resignation, and I have checked with someone outside the agency who knew this several weeks ago. So that's true. He was planning to leave three weeks ago.

PILGRIM: All right. Thanks very much.

David Ensor.

Thanks, David.

Now George Tenet's resignation took lawmakers by surprise. On Capitol Hill, there was plenty of praise for the CIA director, but some lawmakers also criticized Tenet's record.

Senior Political Analyst Bill Schneider reports.

(BEGIN VIDEOTAPE)

WILLIAM SCHNEIDER, CNN POLITICAL ANALYST (voice-over): The issue of intelligence is at the center of the presidential campaign; 9/11, Iraq, and George Tenet, CIA director since 1996, is at the center of the intelligence issue. Why did U.S. intelligence fail to appreciate the al Qaeda threat before 9/11?

RICHARD BEN VENISTE, COMMISSIONER, 9/11 COMMISSION: Why was it that you didn't put the question of prosecuting Moussaoui to the side and go after the information, which may well have led to unraveling this plot?

SCHNEIDER: Tenet wasn't prepared to answer, but, earlier, he acknowledged the CIA wasn't ready.

It will take us another five years to have the kind of clandestine service our country needs.

SCHNEIDER: Reporter Bob Woodward wrote that on the question of whether Iraq had weapons of mass destruction, "it's a slam-dunk case," Tenet told the president, and then, for emphasis, repeated his assurance, "Don't worry. It's a slam dunk." Who's really to blame here?

BOB KERRY, 9/11 COMMISSION MEMBER: It is up to the president to say are you sure, are you sure there's weapons of mass destruction.

SCHNEIDER: Tenet was first appointed by President Clinton, but now he's Bush's man.

SEN. JOHN KERRY (D-MA), PRESIDENTIAL CANDIDATE: I called for George Tenet to resign several months ago. That is not a new call for me.

SCHNEIDER: The Democrats got what they want, but Tenet's resignation is likely to intensify the debate. A former CIA director raises the issue: Is Tenet taking the fall for others?

STANISFIELD TURNER, FORMER CIA DIRECTOR: I think he's being pushed out and made a scapegoat. That is that the president feels he's got to have somebody to blame, and he's doing it indirectly by asking Tenet to leave.

BUSH: He's done a superb job on behalf of the American people.

SCHNEIDER: No one in the Bush administration is saying he was pushed out. Others note he's really been under a lot of pressure lately.

GEORGE TENET, CIA DIRECTOR: It was a personal decision, and it had only one basis in fact: the well-being of my wonderful family, nothing more and nothing less.

SCHNEIDER: Democrats say they know where the buck stops, and it's not on Tenet's desk.

REP. NANCY PELOSI (D-CA), MINORITY LEADER: I think that the responsibility goes far beyond George Tenet.

(END VIDEOTAPE)

SCHNEIDER: Now Democrats are free to raise the big issue. Did the U.S. go to war on the basis of intelligence that was wildly wrong and whose fault was that? Kitty.

PILGRIM: Good questions. Wasn't Tenet at Colin Powell's side during the U.N. Security Council briefing?

SCHNEIDER: February 2003, Powell testified before the U.N. Security Council. He accused Iraq of violating disarmament resolutions. George Tenet was sitting behind him.

Now just one month ago, Powell said sources of allegations when he testified were "inaccurate and wrong and, in some cases, deliberately misleading." Let me emphasize "deliberately misleading." Those are big words.

PILGRIM: Yes. Thanks very much.

Bill Schneider.

Thank you.

And later in the broadcast, I will talk about Tenet's resignation with two members of the Senate Intelligence Committee, Republican Olympia Snow and Democrat Carl Levin.

Well, as lawmakers focused on George Tenet's resignation, the FBI Director, Robert Mueller, was also making news on Capitol Hill. Mueller told a House panel he favored a separate intelligence branch within the FBI to fight terrorists, and he also repeated his opposition to the creation of a new domestic intelligence service modeled on Britain's MI-5.> In Iraq today, more heavy fighting between American troops and Shiite gunmen in the City of Kufa. U.S. soldiers killed 30 insurgents. Four Americans were wounded.

Guy Raz has an exclusive report from southern Iraq.

(BEGIN VIDEOTAPE)

GUY RAZ, CNN CORRESPONDENT (voice-over): Welcome to Kufa, one of the few remaining battlefields in Iraq. U.S. forces rolled in here Thursday morning looking for the men firing mortars at their nearby positions. Fifty mortars were fired at the forward operating base in the past 24 hours.

UNIDENTIFIED MALE: Watch anybody coming around the corner there.

RAZ: Military officials believe the American response killed dozens of insurgents loyal to the Shiite cleric Muqtada al-Sadr.

Rocket-propelled grenades and bullets whizzed by U.S. forces. Scouts searched two buildings where insurgents have camped out. Inside a school, a weapons stash, including 120-millimeter mortars, a miniature missile with a 30-meter kill radius.

Fighting has now definitively shifted from Najaf to neighboring Kufa. Various attempts at a truce have so far failed. U.S. forces say they're responsible for security in Kufa. The insurgents regard U.S. patrols as provocative.

MAJ. GEN. MARTIN DEMPSEY, COMMANDER, 1ST ARMORED DIVISION: The militia claim we're being provocative. They are not a legitimate force, and so it's -- I don't buy into the idea that we can provoke an illegitimate force.

RAZ: As the fighting rages on, senior officers with Task Force 237 say they'll carry on until the militia is destroyed.

Guy Raz, CNN, in Najaf, southern Iraq.

(END VIDEOTAPE)

PILGRIM: Work resumed today at a U.S. military base near the northern Iraqi city of Kirkuk following yesterday's suspected attack near an arms dump that set off dramatic explosions. No injuries were reported in the series of explosions.

The base is known as the Freedom Base. It's located at an airport northwest of Kirkuk, and the base houses about 2,000 U.S. troops.

Well, more on George Tenet's resignation in a moment. I'll be joined by Republican Senator Olympia Snowe, and, later, I will talk with Democratic Senator Carl Levin. Both are leading members of the Senate Intelligence Committee.

"Outta Gas:" working American families face massive fuel bills this summer. Energy Secretary Spencer Abraham will join me.

And crisis in the Middle East. Israeli Prime Minister Ariel Sharon struggles to win support for his plan to withdraw from Gaza, and top Palestinian negotiator Saeb Erakat is my guest.

(COMMERCIAL BREAK)

PILGRIM: Senator Olympia Snowe, a Republican member of the Intelligence Committee, praised George Tenet today. She said Tenet presided over the intelligence community at a time of unprecedented challenges and fundamental shifts in the threats to this country, and Senator Snowe joins us now from Capitol Hill.

And all of that very true. A very tough time to be in that position. What factors do you think contributed to George Tenet's resignation, Senator Snowe?

SEN. OLYMPIA SNOWE (R), INTELLIGENCE COMMITTEE: Well, obviously, Kitty, he indicated that he did this for personal reasons, and I would take him at his word until he indicates otherwise. Obviously, it is a very challenging position, and he's been in that position as director for seven years during some transformational times, and, obviously, I think he recognized that the time was for him to depart.

PILGRIM: It is extremely difficult timing politically and also strategically. As you point out, a tough time to have the helm of the CIA in flux. What challenges do we face on that score?

SNOWE: Well, it would obviously the transition. Clearly, we have some capable people within the CIA, such as the deputy director, John McLaughlin, who will become acting director in July. He is a true professional and skilled. We will, obviously, be working with the intelligence community, as will the president.

Certainly, Director Tenet's resignation is a surprise at this moment in time. I think everybody expected him to leave after the election. So, obviously, we'll all be adjusting and doing everything we can to make sure that there is a stable and continuous transition.

PILGRIM: Some Democrats have said that his resignation -- he's really basically a scapegoat for the mistakes of the Bush administration. What's your reaction to talk like that?

SNOWE: No, I don't believe so. I think, obviously, within the beltway and within Washington, there will be endless speculation as to what was his, you know, true reasons for departure. I think he indicated the real reasons were personal.

But, again, we're underscoring the fundamental changes that are occurring within the intelligence community, and change has to occur within the community in terms of structure and fundamental reformation of the entire intelligence community.

We have to adapt the agencies with the threats of the 21st Century, and that clearly has not happened, and there have been some systemic failings and shortcomings that have to be changed almost immediately.

PILGRIM: Congress has certainly demanded increased oversight in the intelligence process. Is this an opportune time to move forward on that?

SNOWE: We will be. As a member of the Senate Intelligence Committee, I can assure you with the forthcoming report we will be releasing shortly that will investigate in depth the intelligence that was used for the weapons of mass destruction issue in Iraq, and, also, from that, we hope will evolve some fundamental changes and provide the oversight that's absolutely essential.

I think we should have a director of national intelligence that has -- you know, is in the Cabinet. We should have an inspector general for all of the 15 intelligence agencies, so accountability as well as reforming the whole structure that will respond to the 21st Century threats. That hasn't happened, and the time has come for that change, and that change has to occur now.

PILGRIM: All right. Thank you very much.

Senator Olympia Snowe.

Thanks for joining us tonight.

SNOWE: Thank you.

PILGRIM: That brings us to the topic of tonight's poll: What impact do you believe George Tenet's resignation will have on the intelligence community? Will it help, will it hurt or make no difference? Cast your vote at cnn.com/lou. We'll bring you the results later in the show.

Still ahead tonight, the ranking Democrat on the Senate Arms Services Committee will share his reaction to Director Tenet's resignation. Senator Carl Levin will join us.

And then, OPEC says it will raise oil production quotas, but will that translate into a price break for American drivers? Energy Secretary Spencer Abraham will be my guest.

And our special report, "Outta Gas." Tonight, the threat to our nuclear power plants. How secure are they? And we will have a special report on that.

Stay with us.

(COMMERCIAL BREAK)

PILGRIM: Oil prices today fell from the all-time highs reached earlier this week. In New York trading, crude oil closed at $39.28 a barrel. That is down 68 cents. And that decline came after OPEC members meeting in the Middle East agreed to increase oil production.

Brent Sadler reports from Beirut.

(BEGIN VIDEOTAPE)

BRENT SADLER, CNN BEIRUT BUREAU CHIEF (voice-over): Behind polite perhaps, a bruising tug of war within OPEC to combat surging oil prices. Saudi Arabia and core Gulf producers Kuwait and the United Arab Emirates set on pumping more oil starting next month.

But Iran and Venezuela urging restraint, fearing oil prices could collapse if the market gets swamped. And for Iran, politics are at stake.

NASSIR SHIRKHANI, MIDEAST EDITOR, "UPSTREAM": Iranians do not want to be seen as responding to U.S. demands for more oil. So, politically, that's not really convenient for them to do.

SADLER: In real terms, thanks mainly to the Saudis, around one million barrels of oil a day will pour into the market.

ALI AL-NAIMI, SAUDI OIL MINISTER: Already, confidence is too strong, but I believe this reflects an intention, a good intention, to, hopefully, moderate the price.

SADLER: Prices that have seen the cost of oil jump to record highs in the past three months. The quantity of oil is not the only problem, though.

RAFAEL RAMIREZ, VENEZUELAN OIL MINISTER: Clearly, the position is to help political (UNINTELLIGIBLE) important factor that has impacted the price of oil in this market.

SADLER: Specifically, powerhouse producer Saudi Arabia targeted by deadly terrorist attacks on non-Saudi oil workers, the only country with enough spare pumping capacity to seriously boost the worldwide flow of oil. Nothing is certain in a volatile climate.

SHIRKHANI: Nothing. And the only cushion has been Saudi Arabia, and, if there are problems in Saudi Arabia, then, obviously, there is nobody else to step in and provide the extra oil that the world needs.

SADLER (on camera): In the end, it boils down to pricing and politics. OPEC walking a fine line between the two. Ministers hoping that by pumping more oil, it might just take the sting out of hyperactive markets and calm the jitters.

Brent Sadler, CNN, Beirut.

(END VIDEOTAPE)

PILGRIM: Well, my next guest calls OPEC's decision to raise oil production welcome news for the energy markets, but Energy Secretary Spencer Abraham says this country still faces a major energy challenge. American consumers would probably agree. Gasoline prices have been near record levels for more than three weeks.

Energy Secretary Spencer Abraham joins me tonight from Washington.

And thanks for joining us, Mr. Secretary.

SPENCER ABRAHAM, SECRETARY OF ENERGY: Thanks, Kitty.

PILGRIM: Do you think that we'll see some reaction at the pump soon?

ABRAHAM: Well, there'll be some reaction. It's not immediate because this goes into effect in the next few weeks. But we did see today that in another set of reports on the inventories, both for oil and gasoline, that the numbers were higher.

That doesn't usually happen during memorial week. So that indicates that there is already some impact in terms of the marketplace. And so I think that's good news. We also saw gasoline prices for the week come down from last week. That's the first reduction in five weeks.

So all of this is, basically, good news. Obviously, we want to see more of it. We're doing our best to, you know, try to prompt it as we move along.

PILGRIM: You know, many suggest that OPEC's really producing above their quotas already. Is it going to be sufficient, do you think, this agreement to...

ABRAHAM: Well, if -- you know, we're talking about a million additional barrels a day being pumped into the marketplace. That is very significant. It clearly will have an impact. It's always hard to judge what that will be, and that's not something I want to speculate about, but I think those are big numbers.

And, when I was at a recent meeting that included OPEC ministers -- world energy minister, just a week and a half ago, it was made clear to me by a number of the OPEC producers that they're prepared to fulfill orders right up to their limits, and so that's also very good news.

PILGRIM: The (UNINTELLIGIBLE) producer, Saudi Arabia, though, there could be vulnerabilities there. What's your thinking on that?

ABRAHAM: Well, you know, the Saudis -- I think the Saudis are capable of protecting their production assets and, as you know, not only the United States but a number of the major oil-consuming countries have built up our strategic reserves, our emergency supplies. If there is a serious disruption in supply, then those reserves will be tapped.

And so I know there's jitters in the marketplace, but we are prepared, as are the other major countries who have these reserves, to act if we ever had to. I don't think that will be the case, but, if it's necessary, we will. And so I recognize some people are concerned and, obviously, they have to factor all of this in, but we definitely are prepared to act if ever the occasion is called for.

PILGRIM: You know, let's take the flip side of this. The Venezuelan oil minister said basically, if we pump too much, prices will crash. Is there such a thing as oil prices that are too low? And will that happen?

ABRAHAM: Well, I -- with gasoline prices where they are today, you're not going to hear this energy secretary suggest that low -- oil and gasoline prices are too low or that we'll get to that stage. I think -- you know, there's politics involved in these meetings.

We happen -- I think it's quite clear that the demand right now, because of the strong United States economy that we're seeing and growth in the economies in Asia, that that demand is, in fact, really pushing the market, tightening the market, and we need this additional production. I think claims that there's too much oil out there today are just simply off the mark.

PILGRIM: Yes, we certainly do seem to need it.

You know, it's easy to make OPEC a target, but what about Congress? I mean, we do have this energy bill that has not passed.

ABRAHAM: Right. And, you know, we've been calling for Congress to finish the job of passing an energy bill now for three years. You know, the president outlined a 105-point set of recommendations to put our energy house in order three years ago.

Ninety-five of those 105 recommendations we've implemented because we could do it without congressional action. But the last ones require Congress, and I can't imagine that they're not going to get this job done. They have to finish that job, and we'll certainly try to work with them as much as possible. But the ball's in Congress' court. They need to act.

PILGRIM: All right. Thanks very much.

Spencer Abraham.

ABRAHAM: Thank you.

PILGRIM: Thank you very much.

The U.S. Nuclear Regulatory Commission is asking operators of 69 nuclear plants to report on how they inspect their reactors for cracks. Now, this request comes after massive corrosion was discovered at an Ohio plant. And the steps effect about two-thirds of the nation's nuclear reactors.

In our continuing series of special reports "Outta Gas," Peter Viles looks at the security and regulatory issues surrounding the nation's nuclear plants.

(BEGIN VIDEOTAPE)

PETER VILES, CNN CORRESPONDENT (voice-over): At the Davis Besse Nuclear Plant in Ohio, 2 years ago a shocking discovery: a hole the size of a pineapple in the plants steel reactor vessel head, that's a vital barrier against release of radiation. Especially shocking, because the plant had recently inspected by the federal government. VICTOR GILINSKY, FRM. NRC COMMISSIONER: They NRC had evaluated that plant in 18 categories, which is the standard way the NRC does things. They gave them a perfect score in every single category. Now, it tells you that there's something wrong with the oversight system.

VILES: A GAO Report concludes, the Nuclear Regulatory Commission quote, should have, but did not identify or prevent the corrosion at Davis-Besse because inspections yielded inaccurate and incomplete information. Another fear that terrorists may attack a nuclear plant.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: And the depth of their hatred is equaled by the madness of the destruction they design. We have found diagrams of American nuclear power plants and public water facilities.

VILES: The industry says it has taken steps to defend against terrorism.

MARVIN FERTEL, NUCLEAR ENERGY INSTITUTE: We've spent about a billion dollars putting in better vehicle barrier systems other protection things. And every kind of protection you can to make sure that what we can do as a private sector entity is the best it can be to protect the lives of the people on the plants as well as the lives of the people around the plants.

VILES: But critics say the plants are literally dirty bombs waiting to be hit.

ROBERT F. KENNEDY JR. NATURAL RESOURCES DEFENSE COUNCIL: If you ask the Army, the Air Force, the Marines, the Coast Guard, they'll say it's not our job to protect the plant. The federal government is doing literally nothing to protect the plants.

EDWIN LYMAN, UNION OF CONCERNED SCIENTISTS: To this date, there is been no real action to protect them against air attacks. So, they are as vulnerable today as they were on September 10, 2001.

VILES: The NRC says, even if a plane did attack a nuclear plant the likelihood of releasing radioactivity is low.

(END VIDEOTAPE)

VILES: There hasn't been a new plant built in this country in a generation. But the Bush administration has announced a goal of having new plants built and brought online by the end of this decade -- Kitty.

PILGRIM: Thanks very much. Pete Viles.

Coming up, the head of the CIA is out. The ranking Democrat on the Senate Armed Services Committee says that is entirely appropriate. Senator Carl Levin joins us next.

And then a fresh wave of deadly violence on the road to peace in the Middle East. Chief Palestinian peace negotiator, Saeb Erekat will be my guest.

And, one 13-letter word spells success for one very bright 14- year-old. We'll have that story coming up.

(COMMERCIAL BREAK)

PILGRIM: One of the leading Democrats on the Senate Intelligence Committee, Carl Levin, said the resignation of George Tenet is appropriate. But Senator Levin said Tenet's departure must not distract Congress from its investigation into the massive intelligence failures in Iraq. And Senator Levin joins me now from Washington. Thanks very much for joining us.

SEN. CARL LEVIN, (D) MICHIGAN: Kitty, good being with you.

PILGRIM: The resignation, is this necessary, in your mind, to revamping the CIA? Certainly, you've been very publicly critical of the way things are going at the agency?

LEVIN: Well, I think it's appropriate. There have been so many intelligence failures, they have been massive prior to 9/11, prior to the Iraq War when the CIA basically said how certain they were that there were weapons of mass destruction there.

But they don't bear sole responsibility over at the CIA. There were other people who contributed to these failures, including some of the intelligence folks at the Defense Department and also the higher level policy people who took the intelligence given to them, but exaggerated it much beyond what the intelligence community gave to them.

PILGRIM: The timing of this is certainly inopportune in that we are fairly in a crisis of security here in this country, attacks have been warned. We certainly are in the middle of an election year. It is not the most opportune time to have the head of the CIA stepping down. How do we cope with this? How do we not telegraph to the rest of the world that we are vulnerable in some way?

LEVIN: Well, the administration now has to deal with a problem. It is, obviously there's some disarray here. I think that Tenet caught the president by surprise. I don't think he was forced out. Quite the opposite, my hunch is that the administration would have like to have kept him past the election. But now, they're going to have to pick up some pieces and figure out what the best way is to keep the CIA going in some kind of coherent way, hopefully improve their operations.

This is a real chance, a real opportunity here to look at the whole intelligence community and to try to assess failures, change them structurally where necessary.

PILGRIM: Yes, let's talk about that restructuring. In fact, during the 9/11 commission hearings there were many ideas floated on restructuring the intelligence flow of information. One is to put the function, the domestic intelligence functions under the CIA. Where do you come down on this restructuring issue? LEVIN: I'm open to the possibilities that are being looked at. I have not concluded what is the best way to go. We don't want to create another layer of bureaucracy. I think George Tenet is right in pointing that out. On the other hand, we have to do things differently.

We've got to avoid having the head of the CIA being a political person, advising the presidents on policy matters. He should not be in the policy area at all. They ought to be giving intelligence objectively, given it unvarnished and let policy people make use of it.

In Woodward's book when he said that the president, after listening to a presentation of the intelligence said relative to Iraq's weapons of mass destruction, is that all there is. And then Tenet came back and said, well it's a slam dunk. You had Tenet, at that point, saying to the president we're going to produce much more certain intelligence than you just heard from his deputy. That's not the way it should be.

PILGRIM: You've been very publicly critical of the CIA, saying they withheld critical information at a time when we were deciding to go to war in Iraq or not to go to war in Iraq. Can you spell out for a little bit, for our viewer, what your criticisms are?

LEVIN: Well, two things. One is, I believe that they exaggerated the intelligence in many, ways that the public statements and the public reports of the CIA relative to a whole host of issues, including the presence of weapons of mass destruction and having stockpiles in Iraq of weapons of mass destruction went beyond the underlying intelligence. So they exaggerated in their public statements and went beyond what the classified material was.

But also, Tenet misstated, and I think, misled us in terms of the number of suspects sites in Iraq that was shared with the U.N. He exaggerated that directly, despite given an opportunity to correct it. And so I think that we also had some exaggeration.

But again, he doesn't bear sole responsibility here. The intelligence that was given to this administration was exaggerated much further in the area of biological weapons, in terms of the vans. The CIA didn't say those were mobile, biological vans. That was the president and vice president, particularly the vice president, who said that after the CIA decided they couldn't say that those vans that were found were biological weapons vans. Same thing with the uranium, same thing true with the aluminum tubes on the nuclear weapons programs.

So the administration top policy people exaggerated this intelligence beyond what was given to them by the CIA which had also been hyped and exaggerated in the public statements.

PILGRIM: All right. Thanks very much for joining us, Senator Carl Levin. Thank you.

LEVIN: Thank you. PILGRIM: A reminder to vote in tonight's poll. What impact do you believe George Tenet's resignation will have on the intelligence community?

Will it help, hurt, or make no difference?

Do cast your vote, cnn.com/lou. We'll bring you the results later here.

And that brings us to "Tonight's Thought." "There is nothing wrong with America that cannot be cured with what is right with America." And those are the words of the 41st president of the United States, Bill Clinton.

Well, the phrase playing politics will take on an entirely new meaning in a new video game this summer. The game is called the political machine. It will allow players to virtually manage the campaigns of President Bush or Democratic challenger Senator John Kerry. They can play as campaign managers and the players will have to manage a budget, coordinate strategies, even give mock television interviews to a mock show called 60 seconds. It will be released between the Democrat and Republican conventions later this year.

Still to come, Aerial Sharon pushes forward with a major plan. That's despite opposition from his own cabinet. We'll get reaction on that plan from chief Palestinian negotiator Saeb Erakat.

And a student who is used to getting all A's needed one a to spell the winning word at this year's National Spelling Bee. We'll have it.

(COMMERCIAL BREAK)

PILGRIM: Israeli Prime Minister Ariel Sharon is pushing with his plan to withdraw from Gaza, that's despite opposition from much of his cabinet. Sharon says he will present his plan to the cabinet on Sunday. And he expects it will be approved. And Sharon's comments came after an Israeli offensive into the refugee camp in Gaza last month. Israeli soldiers killed 45 Palestinians in that operation.

Joining me from Washington is the top Palestinian peace negotiator, Saeb Erakat. And thank you for joining us, sir.

The second Sharon plan is in the process, in the political process.

Is there anything in that plan that would make it acceptable to Palestinians?

What would you like to see changed?

And what would make it a successful plan, in your view?

SAEB ERAKAT, CHIEF PALESTINIAN NEGOTIATOR: Well, from the beginning we wanted to see if we can maximize the opportunities of this plan and minimize the risks. We (UNINTELLIGIBLE) to break this vicious cycle between the two sides. But at the same time when he is meeting with his Likud party, with his coalition members, with the Americans, I'm the chief negotiator. I want him to come and negotiate with me. After all, it is my future and the future of Palestinians. For Mr. Sharon to declare he will have unilateral withdraw, Gaza, we say we want to maximize the opportunities and the Americans adopt this plan, but the only people who have not adopted his plan is his own government.

So, is this going to be part of the road map?

Is this going to lead to the occupation of the West Bank?

Is this going to lead to a Palestinian state next to Israel?

All the questions must be addressed. The only way to address this is by resuming negotiations. Mr. Sharon's ideas cannot succeed without a full Palestinian partner.

PILGRIM: Let me just interject. After the Bush/Sharon press conference on April 14, you called it a charade and said it was a solution that was imposed on the Palestinians. Yet, we were clearly at an impasse on the peace process.

What would it take to move forward to make your position, again take it into consideration?

What would you need to do and what would you like to do?

How would you reinsert yourself back into this process?

ERAKAT: Kitty, first of all, on the 14th of April I think the decision of the American administration to decide for us as far as settlement, (UNINTELLIGIBLE) on the grounds, and many other issues, they have no right to do it. All I said that day is nobody can make the decisions on our behalf. We're the ones with the Israelis who will negotiate and make the concessions required by both sides. Now how do I see things done? I think today Egypt doing a good draw. I think Egypt should be supported in terms in acquiring first a mutual cessation of violence by Israeli's against Palestinians and Palestinians against Israeli's. That's the road map.

Secondly, we're going to begin a process of rebuilding Palestinian security force which were literally destroyed by the Israeli Army in the last two and a half years in order to resumen our security responsibilities actively.

Thirdly, we want to move into elections. We need elections. That's Palestinians, that's why I'm here in Washington and yesterday in New York, trying to gather as much support for the possible of Palestinian elections. We are ready to carry out major elections, legislative, presidential and local elections in the next 6 months. And we need the United States to help us and to invest in us and with the Europeans to do the same. Same to the United Nations and the Russians. I believe we can package the ideas of Sharon and make it part of the road map, and not an alternative to it. And the first thing we need to do is break this vicious cycle by mutually declaring a cessation violence against the other.

PILGRIM: Let's also talk about Egypt, which is very key. They have stepped forward and said they would -- they have suggest training 200 security advisers to the Gaza Strip this month.

Would that be useful to you?

And they would also help train Palestinian policemen to maintain security in Gaza after an Israeli withdrawal?

Are both of those useful to the Palestinian position?

ERAKAT: They are not only useful, they're essential. And We appreciate the efforts being exerted by Egypt. And we are fully on board with the Egyptian proposals they are trying to make. The Gaza withdrawal as part of the road map and not an alternative to it. The link between the West Bank and Gaza is established. And here I think the United States, Europe and everybody else in must help and assist Egypt. But at the same time the Egyptians are awaiting answer from us. Also we have to give answers as far as our security possibilities, but at the same time Mr. Sharon has to give an answer to stop incursions, assassinations, demolition of homes, settlement activities in order to revive the hope in the minds of Palestinians, and Israelis this is do able. I think today for the first time in three years, Kitty, I have some hope in my heart that we may be going in the right direction with the Egyptians.

PILGRIM: We take heart from that. Thank you for joining us.

Saeb Erakat, thank you sir.

Tomorrow we'll have a different view of the road map and peace and Middle East. We'll talk with Israeli Council General Ambassador Alon Pinkus.

And when we return, we'll share some of your thoughts on the tapping of the strategic petroleum reserve.

Also a 14-year-old spells word most of us can't pronounce and one word in particular won him the title in the National Spelling Bee Championship. We'll have that.

(COMMERCIAL BREAK)

PILGRIM: It was a down day on Wall Street. That's despite some relief in oil prices. The Dow lost just over 67 points. The Nasdaq dropped about 29. The S&P 500 closed down more than 8. Surprising strength last month in stores across the country. Christine Romans has the details.

CHRISTINE ROMANS, CNN CORRESPONDENT: Kitty, really a big surprise here. Record high gas prices did not keep shoppers out of the stores in May. From Costco to Wal-Mart to the luxury retailers, May same-store sales much stronger than anyone had thought. Even after Wal-Mart warned that high gas prices was sucking 7 bucks a week out of its customers' pockets, sales there still grew almost 6 percent.

Also perhaps some relief ahead in gas prices. The government says the average price at the pump should fall back below $2. Wholesale gasoline prices are down 16 cents since mid May. That savings should be passed on eventually. Don't get too excited. A little relief but the government expects prices will remain much hotter than last year. At the same time, high hopes for a recovery in the jobs market. Monster.com reports a surge in help wanted advertising for jobs in agriculture, hotels, restaurants finance, transportation and warehouses but the proof comes tomorrow. More than 600,000 jobs have been created in April and March. 225,000 expected in May. We'll get that report tomorrow.

PILGRIM: We will all be waiting for that. Thanks very much.

Let's take a look at some of your thoughts on whether the United States should tap into its emergency oil stockpile. Eric of Boston, Massachusetts writes, "the Strategic Petroleum Reserve should not be tapped at this point. The recent gasoline price spikes reflect a supply squeeze more than a supply disruption."

And David of New Orleans, Louisiana says, "the Strategic Oil Reserve is just that, a reserve. We need to save the oil in case of a serious emergency."

On broken borders, Rich Kellum of New Jersey writes, "why do we need border security? With 12 million illegal aliens in this country, our borders have already been breached." We do love hearing from you. E-mail us at loudobbs@CNN.com.

A 14-year-old boy from South Bend, Indiana today won the 77th annual Scribbs National Spelling Bee in Washington, D.C. David Tidmarsh beat 264 other spellers aged 9 to 15. We'll let him spell the winning word for you.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: A-U-T-O-C-H-T-H-O-N-O-U-S.

UNIDENTIFIED FEMALE: You are the champion.

(END VIDEO CLIP)

PILGRIM: That is an adjective. It means indigenous native, formed or originating in the place where found. That's new for me. The spellers competing in this year's events are a shining example of America's bright future. But how important is the art of spelling to the rest of the nation's youth? Louise Schiavone reports.

(BEGIN VIDEOTAPE)

LOUISE SCHIAVONE, CNN CORRESPONDENT (voice-over): Most youngsters haven't even heard of words like this.

UNIDENTIFIED MALE: May I please have a definition for this word?

SCHIAVONE: Just thinking about it makes them fear the dreaded bell. In reality, even at the best schools, English teachers are slightly skeptical about the National Spelling Bee.

DAVID HORGAN, ENGLISH TEACHER, PYLE MIDDLE SCHOOL: At the risk of offending generations of Spelling Bee people, as an English teacher I find the whole Spelling Bee thing very remote and almost unrelated to academic -- to spelling and to English because the words that they use are just words that we hardly ever use in the English language. It is more like Trivial Pursuit.

SCHIAVONE: Most youngsters are in awe of Spelling Bee challengers.

MADELINE OLIVER: When I watch that, I'm, like, oh, my god. They have to spend so much time studying for that.

DANIEL FLESHNER: Those are amazing. I couldn't ever imagine spelling those words.

SCHIAVONE: Indeed, teachers say most students are stumped by far less exotic words like beginning, surprise, occasion, and rhythm. That's where a computer's spell check comes in and there is an ongoing debate about whether that hurts or helps and what's more, these 21st Century students say they have already gotten out of the habit of writing longhand.

JULIA DEUTSCH: Now, I can barely do cursive but my mom says when she was a kid, like, everything was in cursive.

NIKKI BRAND: Eventually, there will be no such thing as pens. Everybody will just have their little mini laptops.

SCHIAVONE: Teachers say people notice bad spelling.

CELIA HARPER, ENGLISH DEPT. HEAD, PYLE MIDDLE SCHOOL: It is sort of like smiling with egg on your face if you sent something off that has a misspelled word.

SCHIAVONE: In short, good spelling is a mark of good manners.

(END VIDEOTAPE)

SCHIAVONE: Kitty, I have a feeling that you are probably a good speller but here are some tips for good spelling. Teachers believe that some people are just born with the talent but lots of reading helps. Like so much in life, it also helps to correct your mistakes as you make them.

PILGRIM: I can't claim any great honors in that. Thanks very much.

Still ahead, we'll have the results of tonight's poll.

(COMMERCIAL BREAK)

PILGRIM: Here are the results of tonight's poll. More than half of you believe George Tenet's resignation will make no difference to the intelligence community. Thanks for joining us tonight. Please join us tomorrow. Senator Kerry's military adviser, former joint chiefs chairman, General John Shalikashvili and in our special report "Out of Gas," waste, the next revolution in energy production.

For all of us here, good night from New York. "ANDERSON COOPER 360" is next.

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